Lula's Moment (Page 2)

Porto Alegre, Brazil

Lula's first month in office illustrated the PT's awareness of the importance of symbols in holding together its popular majority. The president's executive jets were mothballed, the gourmet cook dismissed and plans to spend $760 million on a fleet of new fighter planes were postponed. Lula then led his entire Cabinet on a two-day "reality tour" of one of northeastern Brazil's vast swaths of misery. At its conclusion, a teary-eyed Luiz Fernando Furlan, one of the few businessmen in the government, said he will be forever marked by the experience. "Without a doubt," he said, "I'll be more socially aware." Lula also immediately raised Brazil's international profile, offering trade assistance and political support to languishing Argentina and mediation in the Venezuelan crisis engulfing Hugo Chávez (in the latter case, keeping a studied distance from the messianic ex-comandante). Most dramatically, Lula set off for the Swiss Alps to take his message of fairness and equity straight into the lion's den at Davos.

Lula's twenty-eight Cabinet appointments broke precedent left and right, and are in themselves a mini-revolution. Two are black--a first--and another seven are unionists. Environment Minister Marina da Silva, a former rubber cutter, learned to read at age 16; Benedita da Silva, the Minister for Social Development, used to pick through rubbish during her upbringing in a Rio slum. José Dirceu, Lula's chief of staff and top strategist, was trained as a guerrilla fighter in Cuba and re-entered Brazil after plastic surgery; his own wife didn't know his real identity until years later.

But while the social portfolios all went to the left, Lula packed his economic team with conservatives: Vice President José Alencar is a textile magnate, and Central Bank president Henrique Meirelles is orthodox enough to calm the troubled sleep of Brazil's Wall Street investors and inspectors. Indeed, there is ample room for skeptics to suggest that the great Lula experiment might soon have to abandon its radical pretensions because of international financial pressures, a possibility its chief architects deny. "We are only in the government now because we did not and will not forget our past, nor will we abandon our ideals," answers Dirceu. "But there is no possibility of change without alliances among different political sectors."

Lula's going to need some real and productive alliances to achieve his major campaign vow: to eradicate hunger, which afflicts at least the 24 million citizens who are officially destitute and a good many of the 30 million more who survive under the poverty line, out of a total population of 174 million. The obstacles are daunting: Unemployment in the main industrial region of São Paulo hovers near 20 percent, the economy is anemic and inflation remains pesky. Per capita income has dropped sharply in recent years. In addition, Brazil is second only to the United States in cocaine consumption, and its powerful drug gangs almost co-govern Rio de Janeiro, whose murder rate is 50 percent higher than that of Washington, DC.

But the darkest and most immediate storm cloud on the horizon is the burden of Brazil's crushing debt, now the equivalent of 65 percent of GDP, compared with 45 percent for Argentina when it went belly up in 2001. Lula's predecessor, Fernando Henrique Cardoso, promised that opening the country to a torrent of foreign capital would be a quick route to economic modernization. As usual, things didn't quite work out that way, but before leaving office Cardoso secured a front-loaded bridging loan through the IMF that some consider impossible for Brazil to pay. The country's new leaders will go into debt negotiations enormously vulnerable not only to IMF demands but, lurking close behind, speculative pressures on the country's currency, which could quickly throw Brazil into an economic tailspin.

Lula desperately needs breathing room to start work on his ambitious program: land reform, overhaul of the tax and pension systems and minimum-wage increases, as well as Zero Hunger. Underlying the strategy is an implicit shift of Brazil's economic model away from dependence on exports and foreign capital and back to industrial production and concentration on the internal market. That's what Dirceu means about building alliances--specifically, with national capitalists devastated by the past decade's free-market policies. "The project is schizophrenic after all the concessions," said Luis Fernando Novoa, a sociologist and member of the PT's organized left wing--about a third of the party. Brazil's big industrialists support Lula, said Novoa, because he has promised continuity and is "more Catholic than the Pope" on the debt question. Instead, he said, Lula should initiate a deep transformation to "a real national development project, not just redistribute the crumbs left by the IMF."

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