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BRAZIL
Presidential pragmatism
NA, LADB
1/14/2003
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Despite his leftist background, Lula da Silva avoids radical moves.

Facing the reality of governing a large and problematic country has been sobering for Brazil’s new president, Luiz Inácio Lula da Silva, who took office Jan. 1. Da Silva — a former lathe operator who won the presidency on his fourth attempt (LP, Feb. 7, 2000) — kicked off his four-year term by pledging to fight corruption, hunger and poverty. Fifty million people, nearly one-third of Brazil’s population, live in poverty, income distribution is among the most inequitable in the world and the latest financial crisis has led to renewed fears of inflation.

"In a country with so much fertile land, hunger should not be an issue, but many in Brazil survive by a miracle, unless they die of poverty and disillusionment trying to find a crust of bread," da Silva said in his inaugural address.

The president’s first high-profile decision was to postpone for a year the US$760 million purchase of 12 fighter planes. The move will allow the government to emphasize its top priority, the "Zero Hunger" program, according to Defense Minister José Viegas Filho.

Da Silva has set himself apart from other leftist populists in Latin America by distancing himself from radical government policies. The need for international capital and dependence on support from other parties to enact political reforms has pushed him and his Workers Party (PT) into a new political arena marked by negotiation and compromise.

"It is possible to implement social policies and at the same time be responsible and not engage in populism," Lula said at the Inter-American Development Bank (IDB). That stance, however, could create identity problems for the PT.

Most members of the new Cabinet belong to the PT. In a surprise move, da Silva named Henrique Meirelles, former head of global banking at FleetBoston Financial Corp., to direct Brazil’s Central Bank. The decision was based on the need to appoint someone experienced in international finance and who could instill investor confidence in the new government. Six other candidates turned down the job.

"During the electoral campaign, an alliance with the business class was proposed and the country approved," said José Dirceu, a close da Silva aide who will serve as his chief of staff, in response to critics. "The presence of businesspeople in ministries and Henrique Meirelles in the Central Bank is the result of an alliance to develop the country."

The appointment of Antônio Palocci, who coordinated the party’s platform and the transition team, to head the Finance Ministry was also intriguing. Palocci, a physician and former mayor of Ribeirão Prêto in São Paulo state, seemed an odd choice, but da Silva said, "The country’s economy is in the emergency ward, so I appointed a doctor."

While saying that he will increase the primary surplus to a level that will ensure that the country can meet its debt payments, Palocci was able to dissuade the International Monetary Fund (IMF) from imposing a higher limit until later this year.

PT Sen. Marina Silva of the Amazonian state of Acre, was appointed to head the Environment Ministry. She promised a comprehensive environmental policy in all spheres of the federal government, "otherwise, the Environment Ministry will continue functioning as if it were a non-governmental organization embedded in the government and seen as a problem, not a solution," she told the Carta Capital newsweekly.

Da Silva tapped career diplomat Celso Amorin, Brazil’s ambassador to London, as minister of foreign relations. Luiz Fernando Furlan, chairman of Sadia, an agribusiness company, was named to head the Development, Industry and Foreign Trade Ministry. Observers say Amorin and Furlan will form the front line of the PT’s emphasis on exports and trade agreements.

With loyal party members and professionals selected for key ministries, da Silva and his advisers sought to obtain support from other parties by providing them with other Cabinet posts. Although the PT has the largest number of lawmakers — 91 — in the lower house, it still falls short of the 257 majority needed to pass legislation.

"Our government must be marked by ethics and honesty," da Silva said in late December before meeting with his Cabinet on Dec. 27. A handful of ministers who had fought the military governments (1964-85) as guerrillas called on the armed forces to help implement social programs. Several posts — including the Food Security Secretariat, headed by José Graziano Filho, and the Cities Ministry, headed by former Rio Grande do Sul Gov. Olívio Dutra — are new.

Da Silva named former finance minister and presidential candidate Ciro Gomes to head the National Integration Ministry and Rio de Janeiro Gov. Benedita da Silva (LP, April 5, 1999) as chief of the Social Welfare Ministry. Tarso Genro, former mayor of Porto Alegre, a city known for citizen participation in budgeting (LP, June 17, 2002), was tapped for the Secretariat for Social and Economic Development.

PT economist Guido Mantega was named minister of planning and budget, Miro Texeira of the Democratic Workers’ Party (PDT) was appointed communications minister, and political scientist Roberto Amaral of the Brazilian Socialist Party (PSB) was named to head the Science and Technology Ministry. Miguel Rossetto, vice governor of the southern state of Rio Grande do Sul, was named agrarian development minister.

Da Silva’s relations abroad have gotten off to a good start. During a December visit with US President George W. Bush, the union leader showed that he could put aside the PT’s historically critical stance toward the United States, but also defend Brazil’s interests. It remains to be seen how US-Brazilian relations evolve as specific issues such as the conflict in Colombia, Cuba, and the war on terrorism arise.

Da Silva faces immediate challenges. The latest financial crisis has led to increasing fears of inflation (LP, July 15, 2002). Despite the PT’s promise to lower interest rates, the Central Bank will have to keep rates high to contain price increases. The increasing cost of capital will forestall investment, growth and job creation.

The PT also promised to reform taxes, social security and labor laws to make industries more competitive. On the domestic political scene, Brazilian states — most of which are governed by other parties — want to renegotiate debts they owe the federal government. If the government gives in to their demands, the country’s financial position will weaken further.

Da Silva must overcome enormous economic and political hurdles if he is to deliver on the promises he made to the poor and marginalized Brazilians who are his largest constituency. The Landless Workers’ Movement (MST), which suspended land takeovers until Lula was elected, has resumed its activities. Leaders say they expect the new leftist president to be true to his ideology and support their cause.

 


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