Lula Raises the Stakes (Page 3)

But while Lula may be able to exercise real power in the international trade arena, and even pull the giant's beard, he is vulnerable at home--from both the right and the left--with regard to trade policy. The Brazilian economy is stable but growing quite slowly, too weak to produce the jobs and rising incomes he has promised to deliver for his working-class and poor constituencies. Lula's governing coalition includes Cabinet ministers from important industrial sectors--manufacturing and agribusiness--who are extremely nervous at seeing their government in confrontation with the colossus of the North. "I really like what they're doing here," said one Brazilian financier, "but the government definitely got too excited and overplayed their hand. They've given the United States the easy way out--the opportunity to pin the blame on Brazil."

On Lula's left flank, the Workers Party he has led for a generation and the movement of landless peasants are nervous for opposite reasons, fearing that Lula's exertions for expanded trade and investment may eclipse social objectives like reducing Brazil's extreme poverty and inequality. If Lula backs down from the fight with Washington, that might reassure business interests but disillusion his core supporters. The president's poll ratings are still quite high but beginning to decline. Popular wisecracks now depict Lula as Brazil's Bill Clinton, triangulating between supporters and the business lobbyists.

The United States holds most of the cards, including crucial trade concessions it could grant to Brazil's leading agricultural exports: soy products, citrus, sugar and beef. Since no one expects the Bush Administration to injure those domestic sectors in the run-up to the 2004 election, it is difficult to envision terms that could rescue FTAA without also humiliating Lula. An international relations authority in São Paulo predicts the two Latin allies can resist US pressures, but in that event "Brazil and Argentina will drown holding each other's hands."

And yet even Latin America's business leaders seem to love the man's go-for-broke politics--what Lula has called his "sure-fire democratic gamble." According to a Zogby International poll, only 39 percent of the continent's business and government elites think FTAA would benefit everyone equally, while a majority expect the United States to be the big winner. Businesspeople may fear reprisals from the colossus, but only 12 percent give Bush a positive rating (only 8 percent in Mexico and 2 percent in Brazil). Lula, by contrast, is the most popular political leader in Latin America among elites--supported by 78 percent in Mexico. Maybe his "democratic gamble" has a stronger future than the smart money realizes.

Why is this happening now? It's about much more than Lula's nerviness. The Brazilian president has made himself point man for a deep shift under way in the politics of globalization--new values were dramatically surfaced by the worldwide popular movement born at Seattle in 1999. Even if Lula falls short, the global landscape has changed since the heady boom time of the 1990s. The establishment has nothing much to say in response, and its usual tactics are no longer so successful at controlling the outcomes.

George W. Bush's go-it-alone foreign policy unwittingly encouraged the emerging realignment of interests. Jose Genoino, president of Lula's Workers Party, explained: "With the end of the cold war and a new US foreign policy, the world has acquired a unilateral nature, with the imposition and pre-eminence of US interests. The discord...has created lines of force favoring the formation of a multilateral world." In other words, many nations, rich and poor, now have an interest in creating a political counterbalance to US power. Brazil's leadership, Genoino emphasized, "has no hegemonic ambitions but rather is aimed at consolidating blocs of forces, producing new significant actors on the continental level and in areas of global relations."

The most significant new actor is China, not Brazil. China's entry into the WTO two years ago tipped the balance of power within global governance as well as global economics, Gwynne Dyer, a savvy Canadian observer of globalization, has pointed out. China's economy is three times the size of Brazil's, but is growing explosively and destined to become a world industrial power with girth that threatens even advanced economies. China--like Brazil or India or any other country--will doubtless pursue self-interest first, but will also find political advantage in making alliances with other poor countries. China, also like Brazil and India, has no desire to be governed in its development by WTO rules devised by American and European multinational corporations. But unlike Brazil, China comes to the debate "with an economy too big to be bullied or bluffed," as Dwyer puts it.

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