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Old Ways

Old Ways

Congress has been discussing whether elected officials should hire
their own relatives. A congressman explained why he hired his own mother: "She put me
on this world, and I only hire people I can trust… who could I trust more than
her?"
By Adhemar Altieri

Brazil, it seems, will always have its share of people who work hard to maintain
perhaps the most beaten cliché ever used to describe this country—that favorite
phrase of any photo spread showing glistening downtown skyscrapers and shanty towns a
stone’s throw away: "Brazil, Land of Contrasts". Yes, Brazil certainly is that,
and although much has happened to eliminate or diminish just the type of contrast that led
to the phrase, numerous powerful pockets of resistance remain.

They’re responsible for holding back this country on several fronts, to a degree they
would like everyone to believe they’re unable to grasp. In fact, a close look at who
"they" are usually reveals there’s no ignorance involved at all.
"They" are perfectly able to grasp what they do, "they" are at both
ends of the political spectrum, and quite often "they" do it because they like
the status quo.

Over the past few weeks, there were numerous examples of this ongoing battle one can
now witness on a daily basis in Brazil, between old and new. This is not to say that
everything new is good and everything old is bad, although recent examples would appear to
favor the new. One such example deals with the now very public dispute between
AmBev—the would-be result of a proposed merger between Brazil’s top two breweries
(Brahma and Antarctica)— and Kaiser, the third-place brewery accused of opposing the
merger for "global" reasons, on orders from one of its shareholders: The
Coca-Cola Company.

Here are a few more recent examples, which together exemplify the dilemmas Brazilian
society and its institutions must overcome. These also illustrate how entrenched some of
the old ways really are:

1) Self-serve? Not in Brazil…

For several months, gasoline distributors announced they were about to introduce
self-service in gas stations throughout the country. Unemployment rates being as high as
they are, the frentistas—people who make a living pumping gas, opposed the
novelty with support from labor organizations and left-wing opposition parties.

Negotiations ensued, but no progress was made. As the date for self-service to start
approached late last year, the issue had become a target of political exploitation by all
sides. President Fernando Henrique Cardoso settled it by decree, announcing a nationwide
prohibition of self-service gas pumps "to preserve thousands of jobs". It went
over very well with low income sectors of society, but the consequences are worth
examining.

On average, frentistas make about R$400 a month (about US$250), and running a
household on that is as possible in Brazil as it is anywhere else. Anticipating the
arrival of self-service, gas station owners invested heavily in convenience stores.
Clients would come into the store, pre-pay and then fuel their vehicles. This trend has
actually been blamed for the departure from Brazil of the 7-Eleven chain—analysts say
the company left when it couldn’t reach an agreement with any of the major gas
distributors, which chose to set up their own convenience stores.

With the self-serve prohibition, station owners must continue to pay frentistas,
and witness the torpedoing of the main strategy behind the idea of convenience stores in
gas stations: customers tend to buy something when they come inside the store to pay for
gas. Now, without a reason for customers to step inside, the future of hundreds of brand
spanking new convenience stores is in some doubt. Worse than that is the notion that
pumping gas is still a viable occupation. In fact, keeping frentistas pumping away
means ignoring the jobs created through construction and refurbishing of gas stations,
additional sales of various types of merchandise, delivery to and maintenance of those
stores, equipment sales, and the list goes on…

2) Surrealism may be the word…

The past weeks saw Congress dedicate a fair chunk of time to a discussion about whether
elected officials should be able to hire their own relatives as aides, or to fill
positions in their staff. The discussion was sparked by a proposal that would prohibit the
hiring of relatives altogether.

Some of the reactions are quite remarkable. Lower House president Michel Temer of the
government-allied PMDB party, said perhaps there should be "a limit of two"
relatives. More than that would be improper, of course… A member from the Brazilian
northeast, where nepotism is the norm, went on national television to explain why his own
mother was employed with public funds: "She put me on this world, and I only hire
people I can trust… who could I trust more than her?"

Perhaps emblematic was an explanation by congressman Gerson Peres of the
government-allied PPB party: "It is the duty of a father to help his children. Damned
be the father who doesn’t. If a father won’t help his own, then it would be best if the
children weren’t born at all." The proposal to prohibit hiring relatives is yet to be
voted on…

3) The end of poverty is surely near…

Brazzil readers may recall quite a commotion back in August of 1999, when the
controversial, hard-edged president of Congress, senator Antônio Carlos Magalhães of
Bahia’s PFL party, proposed a new tax to create an anti-poverty fund, "to eradicate
poverty once and for all". In a heavily overtaxed society, where in spite of recent
improvements tax collection and revenue allocation are still terribly unfair and
disorganized, the last thing anyone wants to hear about is a new tax.

The issue went away for a few months, and appeared to be gone for good… until last
week, when it resurfaced with a new twist. Seems the government sat down with members of
Congress, plus senator Magalhães, and arrived at a version that all could live with.
Instead of a new tax to generate funds, the government agreed to divert and commit funds
from other areas—including funds obtained through the privatization of state
companies, directly to the new anti-poverty fund. Once approved, the fund will have R$4
billion a year (about US$2.3 billion) to spend.

This issue made a comeback because it was too good an opportunity to miss for senator
Magalhães and the government. In its original form, the senator would be the only
"benefactor", which explains much of the criticism he received. At the time,
president Cardoso, the senator, and members of the left-wing opposition, all battled in
the media over who was "first with the idea" of creating such a fund. In its
revised form, the new "authors" are the senator and the government.

This, of course, incensed the left, which ended up off the stage on a topic where
left-wing involvement is a point of honor. Workers’ Party (PT) and PPS (former Communist
Party) senators tried to defeat the proposal at the Commission level, and stop it from
reaching the floor of the senate for a vote, where given its proponents, victory is a
shoo-in. But the Commission vote was 12-3 in favor.

Will it work? The International Monetary Fund’s representative in Brazil, Lorenzo
Perez, doesn’t think so. He says he’s concerned that the fund may harm Brazil’s debt
reduction efforts. Brazil already spends significant amounts on social programs, and what
it needs to do is spend more efficiently, not increase the amounts, he concluded. Finance
minister Pedro Malan responded quickly, with a pinch of nationalist rhetoric: the IMF
representative "is not fully aware of the proposal’s nature, importance and
reach", and the allocation of budget revenues "is not and never was a topic of
discussion with the IMF". According to Malan, how Brazil spends is not a matter
subject to IMF approval or assessments.

Indications are that Mr. Malan isn’t laying it all out as clearly as he could. His
predecessor, former finance minister Mailson da Nóbrega, described the proposal as an
"accounting trick", designed to hide a government decision to increase spending:
"It would have been better if the government simply stated it was going to spend
more, since its fiscal performance has been better than expected".

Net result: for $2.3 billion a year, senator Magalhães and president Cardoso will get
to say, at appropriate campaign moments, that they care about the poor. Finance Minister
Malan, who acts more and more as if he might take a run at the presidency in 2002, gets to
claim part of the credit for the fund’s existence—he was directly involved in the
negotiations, and was first to defend it against IMF criticism. Whether Brazil’s destitute
can actually look forward to better days is a whole different story.

Adhemar Altieri is a veteran with major news outlets in Brazil, Canada
and the United States. He holds a Master’s Degree in Journalism from Northwestern
University in Evanston, Illinois, and spent ten years with CBS News reporting from Canada
and Brazil. Altieri is a member of the Virtual Intelligence Community, formed by The
Greenfield Consulting Group to identify future trends for Latin America. He is also the
editor of InfoBrazil (http://www.infobrazil.com),
an English-language weekly e-zine with analysis and opinions on Brazilian politics and
economy. You can reach the author at editors@infobrazil.com

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