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Brazil’s
Historic Turn
Progressive Politics in 21st Century South America
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| Brazil’s
PT: A challenge? |
In
the pre-election debates, the candidate aimed for clarity. Via
spin-doctor genial Duda Mendonça, Lula da Silva painstakingly
briefed Brazilian voters on the restrictions and realities facing
the country. The political and economic platform of the party he was
leading, the Brazilian Workers Party (PT), would have to be
considerably different from what any of its staff had upheld years
earlier. As a whole, the party could no longer live in the comfort
of opposition politics and utopian daring. The only problem was that
few voters believed any of it.
Conservatives
and liberals, rekindling Lula da Silva’s rabble-rousing days as a
post-Trotskyst trade union leader, jittered at the thought of what
the party might usher in upon taking office. Their financial wing,
the Brazilian banking sector, made a fortune in 2002 by speculating
on their fears. While Brazil’s economy grew by a weak 1.52% in
2002, and the non-financial sector (industry, trade and services)
expanded by 5.6%, Brazilian banks, on average, leaped by a walloping
24.5%, according to Austin Asis consulting.
Lula’s
ascension has been feted as an historical event. |
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As
for progressive voters, they listened uneasily at the alliances
anticipated in the speeches of Lula and his chief economic advisor
Guido Manteiga, now Minister of Planning. It was logical enough that
criticism launched at the economic policies of the previous
government triggered their attention. After all neither former
Finance Minister, Pedro Malan, nor President Fernando Henrique
Cardoso himself had hidden their espousal of the Washington
Consensus doctrine of neo-liberalism. Were there one variable left
uncontrollably floating in that model, it was risk. And the perceive
risk of Lula as president stirring around the WC theorems was enough
to bring the country to the brink of disaster.
When
Lula opted for conciliation, progressives often shrugged it off as a
sundry measure required to gain power. Radical perception had it
that the gentle harmonies of uniform understanding could not partake
of policy without damaging the party’s commitment to social
reform. Yet for those who most believe in salvation - Brazil’s 130
million poor - the harsh realities of market risk and lines of
credit may be yielding to an ever-receding horizon of hope.
Progressive
Tensions for Lack of Populist Promises
|
| President
Lula da Silva |
Brazil’s
new president, Lula da Silva, is the embodiment of a radical’s
evolution into the high priestdom of peace-and-love Zen politics. To
claim that most of Brazil’s disenfranchised love him as their
wonder-child is all but an overstatement. Born into the impoverished
Northeast, Lula’s childhood now reads as a mythic continental
American dream. Like countless others, his parents left the agrarian
region in the 1940s, heading south to the more prosperous havens of
industrial Sao Paulo. From his early adult years, Lula filled the
assembly line ranks that drove the booming Brazilian automobile
industry.
During
the middle period of the military dictatorship that occupied Brazil
from 1964 to 1985, Lula turned to politics, and eventually
co-founded the Workers Party. This was the time of Solidarinosc in
Poland and a democratic surge within leftwing political movements
worldwide. Lula’s popularity as a trade union leader reached such
heights that, when the military finally stepped aside, he decided to
run in the first democratic elections held in the country for over a
generation. He has done so in every election since.
His
Hunger-Zero program lifts the weight off Brazil’s
underclass. |
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On
the domestic level, Lula’s term began with his dedication to the
Hunger-Zero program. In any nation, there are many tiers to fighting
poverty. Opting for reform instead of revolution dictates a
case-by-case process of praxis. Lula’s commitment is eventually to
increase the minimum wage. Also, a reformed income tax system in
addition to export taxes will help create jobs. So is it that
Lula’s aim has been to settle the pendant weighing most heavily on
Brazil’s underclass. The fifth-world conditions prevailing in many
areas of the country have engulfed even the most affluent State of
Sao Paulo. And unemployment is so chronic it fails to be measured
appropriately.
In
this program, he is also tapping into the energy of a vast area of
civil society for his party’s goals at sustained reform. With
politicization comes not only a sense and purpose, but education.
Concertation and deliberation are part of a game that is expected to
enforce the political norms attested to by Brazil’s remarkably
open media. This is the key ingredient to Lula’s vision of
education, one that sows its seeds most thoroughly through a
heighten sense of citizenship.
His
aim is to humanize an emerging market. |
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While
campaigning, Lula spoke stoically and serenely of the risks the
country faces. With its debt to GDP ratio at over 60%, his
government would first have to concentrate on bolstering the
country’s economy. For an “emerging” economy, this primarily
means reassuring the market and its players. Despite slashing
Brazil’s risk rating as against American Treasury C-Bonds to its
lowest level since late spring 2002 (at 1,211), electoral victory
has only intensified Lula’s concern.
As
his economic staff moves ever closer to matching market challenges,
Lula tries to stall a slow slide from wonder-child to orphan.
Battling between the hopes and fears of his people, his aim is to
humanize an emerging market. In less specious times, such an
attitude faces a wall of suspicion. Managing this tension is also
how Lula’s Brazil has come to exemplify the wedge driven between
21st century progressivism and 20th century emerging market
vulnerabilities.
So
it was of the highest importance that the ministerial meeting held
on Monday, February 10th, be touted as a defining moment for the
government. Lula’s change of course from the programs and policies
of his predecessor, the social democrat Cardoso (1994-2002), would
finally be set. For eight years, the distinguished sociologist stood
over his triumph, a new currency, the “Real.” In the
early 1990s, inflation spiraled until ebbing at 50% per month, a
crisis that would soon precipitate the subsequent lesson in
corruption of the (Fernando) Collar Plan. Cardoso’s economic
decision brought that disaster to a smooth landing, and the country
to long sought for stability.
The
fixed exchange rate device of pegging the real to the
American dollar considerably increased the purchasing power of a
large segment of Brazilians. It also allowed industrialists to
import expensive foreign technology to up-grade their own sectors.
Although the strong currency chipped away at exports, imported
technology would prompt an import substitution market.
Notwithstanding the consumer confidence of those years, falling
investor confidence abetted by the Asian economic crisis of 1997
began to take a toll on the currency and stock market even within
Cardoso’s first mandate.
When
the Asian crisis gave way to Russia’s defaulting on the ruble,
“hot” short term capital steam rushed out of the Brazilian
economy. The real could no longer be sustained at its
pegged standard. The currency was made to float and began its
grueling slide, wiping away the gains achieved in Cardoso’s first
term.
Caught
in the Inertia of Circulation and Repetition
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“For an ailing economy, I’ve named a physician.” |
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Weekend
papers announced high expectations for the February 10th meeting.
From it came silence, offset only by the embarrassment of a secret
tape recording. Late that evening the major news source announced
more belt-tightening, this time to the tune of R$14.1 billion (US$
3.5 billion). This was a measure leading beyond appearances directly
to austerity. Appearing on the evening news, the president morosely
left the Planalto palace where the meeting had just been
adjourned. He approached admirers outside, as he has every day since
inauguration. “We have to make sure the situation is secure before
undertaking the greater plan,” he assured the faithful.
Once
a party virtually holding a monopoly on political honesty in Brazil,
the PT now faces a daunting task. It seeks ever so slightly to
separate itself from creditors, investors and speculators, i.e. the
global finance networks determining the worth of currencies. In the
lead up to the election, Lula could not have taken the risk of
disagreeing with the terms of an IMF bailout. State coffers stood
dramatically low. The real had come wildly under attack,
losing 25% of its value in a matter of weeks. Had Lula opposed the
terms and the Cardoso government led to default on its loan
servicing on the eve of election time, the PT would surely have lost
the presidential race, as well as its standing in the two houses of
Congress. In exchange for Lula’s adherence, the IMF granted Brazil
a $US 30 billion bailout package, the largest the institution has
ever offered.
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| Brazilian
Finance Minister Antonio Palocci |
In
light of the financial turbulence, the two most awaited appointments
Lula was to make were to the Finance Ministry and Central Bank. At
the helms of Finance is Antonio Palocci, an M.D., who headed the
transition and was formerly mayor of an affluent Sao Paulo suburb.
“For an ailing economy, I’ve named a physician,” Lula declared
in December. Yet the physician had deferred to the economist weeks
earlier, when calling his soon-to-be predecessor, Pedro Malan,
“without doubt, the most serious politician in Brazil.” For all
his seriousness and integrity, Malan was still Chicago’s man in
the tropics.
At
the Central Bank, Palocci is joined by Henrique Meirelles.
Ex-president of Global Banking/Financial Services at Fleet-Boston,
his job is foremost to regain and keep investor confidence. To do
so, he has convinced Palocci of the need to increase the primary
fiscal surplus projection to 4.25% from 3.75%, unheard of even
during the Cardoso years.
As
for what the strategy regarding Brazil’s currency is, this remains
unclear. The pre-election position of Lula’s chief economic
advisor Manteiga was that the real should be trading at
2.5-2.75 to the dollar. But after 2002’s record trade surplus, due
largely to the weak or “more competitive” currency, economists
have been quiet about a real hanging at 3.6. Were analysts of
PT ardor, they would be hedging their bets that export turnover
allowed by this rate will stimulate a return to 4% growth.
|
| Brazilian
Central Bank President Henrique Meirelles |
Still,
the export surplus has not softened what both Palocci and Meirelles
have been uttering and ushering. Apart from boosting the primary
fiscal surplus, they have agreed on the urgency of curbing a
stubbornly rising inflation rate by an ever-higher increase of the
prime interest rate to 26.5%. The aim here is to curb debt-to-GDP
ratio back to 55% and inflation down below 1%. Palocci has
furthermore emphasized the need to reinforce the Fiscal
Responsibility Law whereby governments of all tiers are bound by law
to keeping a budget surplus.
How
the cabinet intends to jump-start job creation with money costing as
much to borrow, and banks refusing to take even the slightest risk
with small and medium sized companies, has become a mystery to all
Brazilians who still believe in the “greater plan.” Reality did
strike a seeming note of understanding with the February 10th
mega-cut of R$ 14.1 billion as R$5.1 billion was carved straight out
from social spending. Health and education, the PT’s highest
priorities, even Lula’s prized “Hunger Zero” program, have had
to bite the bullet so that “global” finance may rest assured.
Aside
from insider scuffling, the February 10th meeting did deliver an
unusual innovation. Lula has established a presidential research
think tank, joining forces from a broad spectrum of Brazilian
society and industry. The Council for Economic and Social
Development will have no legislative mandate, though it is in charge
of regularly formulating policy guidelines for the executive. Given
its voluminous size of 82 members, the PT rank and file in the lower
house has grown suspicious as to its intentions. A non-elected body
is always grounds for concern in a democratic system when close to
the presidency. Given that it is largely made up of lobby and
special interest groups, it may in fact be a way for Lula to
constantly keep them in check, instead of allowing them free sway to
undermine his efforts at keeping partisan control of the two houses.
Lula’s
Brazil is trying to prove that there is another way. |
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This
possibility has not prevented many PT members of the lower house
from fumigating. To counter their vocal criticism, president of the
PT, José Genoino has chosen the dubious route of quashing the
dissents. Meanwhile, the mainstream press has eagerly been lapping
up the PT style as a conflict between radicals and realists.
Whatever the fairness of Genoino’s measures, radicals have seized
the spotlight. Contrary to myopic mainstream misrepresentations, it
could not have happened sooner.
Many
are already beginning to wonder where the radical reformist dream
has fled to so early in the running. Could voters really have
claimed to be surprised when Palocci insisted on February 5 that
“we made a program to govern, and not to win the election” or
that “if the radicals thought that Lula’s campaign promises were
meant only to win the elections, they were fooling themselves”?
Lula’s
government has been in power for a little over 40 days. His
ascension has been feted as an historical event. It holds a
potential for reverting Latin American history to completing the
popular reforms begun over a generation ago and brutally stunted by
military coups, torture and mass murder. Once again, the continent
is rife with violent popular uprising in Argentina, Peru, Venezuela,
Colombia and now Bolivia. As the largest country in South America,
Lula’s Brazil is trying to prove that there is another way.
Norman
Madarasz is a
Canadian philosopher residing in Rio de Janeiro, Brazil. With a
Ph.D. from the University of Paris, he frequently writes on
international North-South relations and on the political economy and
culture of Brazil. He is also a regular contributor to Counterpunch
and has published think pieces and philosophical research
extensively. You can reach him at nmphdiol@yahoo.ca
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