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Brazil’s Lula Starts to Throw His Weight Around

Blue eye President Luiz Inácio Lula da Silva’s statement that the financial crisis had been caused by “white people with blue eyes” must be one of the crassest comments ever made by any leader. The fact that he said it in front of the visiting British prime minister, Gordon Brown, who incidentally only has one eye, does not make it any worse as Lula, who incidentally only has nine fingers, probably did not even know this. 

It is typical of his approach to this crisis which has been to try and blame others for spoiling his party. The crisis has overturned his dream of ending his mandate next year and handing over a booming economy to his successor. However, just as the boom Brazil has enjoyed in recent years was stoked by external events (with little input from Lula) it is now being jeopardized by external events.

Lula is now heading for the G-20 summit in London but whether anyone will listen to his proposals for dealing with the crisis is unlikely. In fact, his outburst is only the latest in a series of comments and actions involving the Central Bank, the electorate and the law which have shown that he is becoming increasingly authoritarian and intolerant.

Until recently, the Central Bank enjoyed an actual if not legally defined independence although it has come under criticism from within the government, virtually every political party, the trade unions and the industrial associations, such as FIESP, which supposedly believe in free enterprise but are quick to demand government interference when it suits their interests.

Lula has stood above the fray and let the Central Bank get on with its tough task of maintaining monetary policy in line with the government’s inflation targeting system.

However, he has made it clear in recent months that he expected interest rates to start falling sharply as the crisis has begun to affect the real economy, throwing people out of work, reducing consumption and even denting his North Korean-style popularity ratings of more than 80%.

The Central Bank slashed interest rates at its latest meeting by 1.5% to 11.25% and is expected to continue to cut them throughout this year. The Central Bank certainly had good grounds for doing so as inflation no longer poses much danger since the crisis has cooled economic growth.

However, there is no doubt that the Central Bank has come under extreme pressure and had it not made such a deep cut there is a good chance that some members of the monetary policy committee and perhaps even the chairman, Henrique Meirelles, would have been fired.

Several months ago I said that the Brazilian Central Bank could no longer be considered to be “independent” and I think this will be seen to be the case much more as this crisis unfolds. Meirelles is likely to stand down later this year to contest an election in his home state of Goiás. It will be interesting to see who replaces him – another banker or a political nominee.

Lula has also been using his weight to force his favorite candidate, Dilma Rousseff, down the throats of the electorate and his Workers Party (PT). Rousseff is Lula’s chief of staff and has never held any elected position. She is a former guerrilla and was imprisoned and tortured during the period of military rule.

She was energy minister until she replaced the disgraced José Dirceu who became mired down in the votes for bribe scandal known as the “mensalão”. However, she was virtually unknown outside Brasília until Lula started presenting her as the “mother” of the so-called Accelerated Growth program to boost the economy.

He has wheeled her around the country to such an extent that she now has a national recognition rating of around 10% and looks like being the PT’s candidate in next year’s presidential election whether the PT likes it or not.

Lula has also taken on the judiciary over the case of an Italian called Cesare Battisti who is wanted in Italy in connection with four terrorist murders. Battisti is a former member of a militant left-wing group and was convicted in absence and given a life sentence. His supporters claim he is innocent and that the charges against him are politically motivated.

Lula’s justice minister, Tarso Genro, ruled that the Italian should not be extradited and claimed that his decision was not politically motivated although no-one believed that. This case has led to a diplomatic row with Italy and the Italian ambassador was recalled to Rome for consultations in January.

The Brazilian Supreme Court is due to make a ruling on the case shortly but Lula has made it clear that Battisti will not be extradited regardless of the court ruling. Under Brazilian law, the President has the final say in such a case.

It is almost unbelievable that Lula could risk upsetting a country like Italy with which Brazil has such close ties over the fate of a terrorist but then it is almost unbelievable that a president of one of the world’s largest nations could blame an international crisis on “white people with blue eyes. 

John Fitzpatrick is a Scottish writer and consultant with long experience of Brazil. He is based in São Paulo and runs his own company Celtic Comunicações. This article originally appeared on his site www.brazilpoliticalcomment.com.br. He can be contacted at jf@celt.com.br.

© John Fitzpatrick 2009

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