Porto Alegre, Brazil
"We cannot have some eating five times a day while others go five days without eating," Brazil's newly installed president, Luiz Inácio "Lula" da Silva, told an appreciative crowd here on January 24. But what would be boilerplate in another context, tossed out by one more off-the-shelf Latin American populist to generate de rigueur roars from the faithful, was, in this context, strangely and quietly moving.
For starters, Lula--whose January 1 inauguration was dubbed the "first high point of the international left since the fall of the Berlin wall" by his adviser and renowned radical Catholic theologian Frei Betto--isn't your everyday populist. All Brazil knows how Lula was born in poverty and how his major campaign promise was to wipe out hunger. So when he spoke at the third annual World Social Forum, many of the 75,000 listeners at the Pôr-do-Sol outdoor amphitheater looked down and shook their heads; some wept. None left charged up and ready to chant party slogans or shake their fists in the air. Instead, the mostly Brazilian crowd melted away in a pensive mood, aware that this historic presidency and the entrance of the Brazilian Workers' Party (PT) into the government may be their last chance to make a humane country out of their grotesquely unfair society.
Brazil has the ninth-largest economy in the world but ranks fourth-worst on the globe in the gap between rich and poor--right behind Sierra Leone, the Central African Republic and Swaziland. Ten million citizens live chronically undernourished, while the Brazilian elite ring their highrises and helipads with razor wire and commute to Miami for weekend shopping binges. Today's Brazil, said Frei Betto, represents nothing less than "an offense to God."
President Lula attracted only two rounds of boos during his address: once when he outlined his plans for the next four years ("EIGHT! EIGHT!" the crowd insisted) and again when he mentioned his imminent trip to the rival World Economic Forum in Davos, Switzerland, to plead for the poor before the assembled planetary plutocracy ("DON'T GO! STAY!"). Everyone acknowledges that the PT administration faces vast difficulties, but disagreements are quickly emerging about the proper course for it to take: how far to negotiate with Brazil's adversaries in the wealthy North, and the precise location of the slippery slope where principles are abandoned and Lula, as one insider critic quipped, molts "from president into chief bookkeeper for the International Monetary Fund."
So while the debate thirty years ago around a similar leftist Latin American president--Chile's Salvador Allende--focused on the broad philosophical question of whether a peaceful transition to socialism was possible, today's interrogatives are more immediate, more pragmatic, more concrete: What is the likelihood of even minimal reform within the margins of the international financial architecture? What alternatives to the neoliberal "Washington Consensus" are possible? Can Brazil take regional leadership in fighting for fairer trade relationships with the United States? In short, how practical is a peaceful transition to anything beyond the unacceptable status quo? And, most important, how can Lula balance the pressing needs of a desperate Brazil with the intransigencies of the global market? "Expectations have never been higher," said Kjeld Jakobsen, until recently international relations secretary of Brazil's Central Labor Federation and an ardent Lula partisan. "Everyone knows that change is going to be slow and difficult--Lula said so in his campaign. But you never know just how long this expectation can be delayed before it all collapses."
Lula won the presidency in October with an unprecedented 61 percent of the popular vote, after nearly copping an outright majority in the first round. It was his fourth attempt as the standard-bearer of the PT, an amalgam of liberation Catholics, trade unionists and assorted leftist intellectuals that emerged from the long struggle against Brazil's vicious military dictatorship (1964-85). At age 57, short and paunchy with a whitening beard, Lula is nevertheless an extraordinary, Lincolnesque figure. One of eight siblings from an impoverished town in the arid northeast, his family migrated to gritty São Paulo, where he left grade school to shine shoes, and apprenticed as a metalworker at 14. He entered politics through trade-union activities, which also landed him in jail for a brief stint. In the shadow of Brazil's military dictatorship, Lula led the rejuvenation of the national labor movement and engineered the building of the PT--a sui generis mass leftist party that is neither orthodox Marxist nor social democratic but somewhere in between.
Although now more polished and groomed, Lula is not considered a great orator and was often belittled by his enemies over his struggles with Portuguese grammar. In fact, he belongs to another century, before the advent of the Bob Forehead-type politician, the golem hatched and shepherded by imagemakers and nurtured with cash channeled from on high. As he phrases it, "I wasn't elected by a TV network or because of my intelligence or personality but through the high level of political awareness of the Brazilian people." And unstated, but always present, is the fact that Lula isn't just the first president to be for the Brazilian poor, but to actually be one of them.
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."
Left-wing criticism of Lula, including from respected, long-time militants and parliamentary deputies, is already dogging the new administration. Some of it is less serious, but expressive. At a news conference in Porto Alegre, a woman claiming to represent "Bakers without Borders" gave current PT president José Genoino a cream pie in the face to protest Lula's attendance at the Davos meeting. On the opposite front, the PT's proximity to the militant land-reform movement may cost it some middle-class support; while Lula triumphed nationwide, the PT lost its governorship of the state of Rio Grande do Sul, of which Porto Alegre is the capital, some say in part because of backlash from farmers. By satisfying the most militant, Lula will always alienate part of his coalition, as in the fight over pensions. Balancing these competing interests will require real skill and the maintenance of a high level of overall credibility.
Some critics clearly expect that to occur, pointing, for example, to the PT's openness to negotiate with the Bush White House on the US-initiated Free Trade Area of the Americas. Until recently some 500 Brazilian products, including all its key exports such as steel, coffee, citrus and soy, were excluded from easier import into the US market. Now reports indicate a possible willingness by the Bush Administration to lower tariffs on some of those items if Brazil sings the FTAA tune. The devil, of course, is still in the details.
These critics suggest that the moderate middle doesn't exist under current circumstances. In a foot race with a speeding automobile, some say, it doesn't matter how many gold-medal sprinters you have on your team. If Brazil's debt is in fact unpayable, the prospect of default could threaten the banking system and bury Lula's dreams for good. Indeed, at an evening soiree a few hours after his moving address in Porto Alegre (an industrial city of 1.3 million that has been run by the PT for the past fourteen years), an NGO activist and PT sympathizer predicted that the Lula administration "won't be any different from its predecessor." Zero Hunger, said this dissident, is mere "marketing" to neutralize the left opposition and distract attention away from the plans to proceed with business as usual and solidify all sorts of nefarious alliances. In this view, Lula cannot and will not resist whatever Washington and the IMF overlords dictate.
But Frei Betto, reflecting the low-key optimism of Lula's circle, argued that the forty-year social process that produced Lula is a source of great strength that may not be immediately apparent. "How is it possible to elect a lathe operator to the presidency of the republic?" the friar said with a smile. "Those who ask that question don't understand how over forty years we have built up this popular movement." Brazil, he said, can exercise enormous moral suasion, and the figure of Lula is symbolically compelling.
Furthermore, driving Brazil into bankruptcy is hardly an attractive prospect for some of the biggest banks in the world, like Citigroup, whose exposure here amounts to 10.2 percent of its total equity. If Brazil is pushed beyond its limits and tanks, investors are also liable to take a nasty hit. Twenty percent of all US exports go to Latin America, and US direct investment in the region amounts to $163 billion. The idea of watching Brazil nosedive, taking half the continent's GDP along with it, can't be comforting, even for Republican right ideologues put off by the Lula entourage. And this at least partially explains why Lula has--so far at least--found Washington far more accommodating than Salvador Allende did.
So for every sworn enemy, for every commentator already comparing him to Fidel, Lula has plenty of allies in the world of business, among them many members of the financial press. Conservative writers suggest that he might be capable of combining reform with stability, which is increasingly undermined by the ever-grosser inequalities Lula wants to address. Bad alternative examples abound, such as bankrupted Argentina, polarized Venezuela and the new populism in Ecuador, embodied in recently seated President Lucio Gutierrez, a politically untested former army officer. The conservatives' cautious, wait-and-see attitude reflects a grudging recognition that the orthodox models, while good for quick profits, have failed to resolve the continent's long-term structural problems. Brazil might provide, mused Britain's Prospect Magazine, "a social democratic model for Latin America."
One area where Lula, the IMF, the World Bank and Wall Street may find themselves in harmony is on the new government's determination to revamp Brazil's demented retirement system, termed by the newsweekly Veja as "Robin Hood in reverse." The country's coffers are currently drained of some $2 billion a year to cover the growing deficit caused by the civil service elite's pension arrangements. While private-sector retirees may get $100 a month, public servants average $650, military officers over $1,000 and federal judges $4,200. Lula and the PT's announcement that they would go after this system's skewed priorities immediately raised howls of protest from the vested interests. But the PT will be backed on this one by its erstwhile foes at the IMF, albeit in the name of cutting back government spending and "making markets work."
At the Porto Alegre cocktail party, the Lula skeptic had few takers for his business-as-usual analysis. Instead, all the others seemed sympathetic to the new government. "When Lula talks, it gets to you," said one partygoer, while others nodded in agreement. "He has a knack for touching a chord, and it's not calculated. His awkwardness, if anything, makes it more real." Said another Lula supporter, anthropology professor Veriano Terto, "People don't expect miracles, but there is a hopeful atmosphere, a change in mentality." If the PT makes gains at the next municipal elections, he said, its skill at administering innovative projects at the local level would generate important new support.
Upcoming trade talks with the United States will be the big test. Lula has repeatedly called the proposed FTAA nothing less than an "annexation" of the Brazilian economy. No surprise, then, that Brazil--conscious of its role as the key player on the continent--clearly wants to get tough and insist that the terms not be dictated by Washington. On the other hand, reaching an agreement with real benefits for both sides--overcoming low growth without too much radical experimentation--would be historic.
Lula's inner circle counters the pessimistic view of what is possible by pointing to the process that brought Lula to the presidency. The Brazilian left, said Frei Betto sardonically, did not have a "metaphysical crisis" of the sort the "academic left" did with the crumbling of the Berlin wall, because it had never lost touch with the popular movement. Davos also emitted a broad signal that the First World is moderately nervous about its own moral authority. ("Building Trust" was the theme of the $22,000-a-head Swiss confab, implying clearly enough that there isn't an overly generous supply of that in the post-Enron environment.) Although it may be a stretch to say that the Washington Consensus on free-market liberalization and monetary orthodoxy has been "defeated," as Lula's chief of staff Dirceu proclaims, some tentative struggle with the straitjacket of dogma is undoubtedly taking place. Unnoticed in much of the commentary about Lula's rise, for example, is the simple fact that his inauguration marked the first normal transfer of power between elected presidents in Brazil in forty years.
Negotiations, several PT spokespeople implied, are the way to go forward, both domestically and internationally; and Brazilians are famously skilled diplomats. Lula, who gained negotiating experience as a union leader under military rule, has said his government's approach will be both tough and loyal: Agreements will be respected but Brazil will not buckle to unfavorable demands. "We will say yes to some things, no to others," said PT chief Genoino. "We will not just denounce, nor just accept; we will get them to change." Just how the coming negotiations over free trade between Washington and Brazil play out could greatly influence the course of overall hemispheric relations. If Brazil holds fast and wins tangible concessions from the United States or if it ultimately refuses to sign the FTAA, Lula will emerge as a key regional leader and US hegemony will be weakened, if not directly challenged.
But, to quote the cliché, four years is an eternity in politics, and reality can intervene in many ways to alter US-Brazilian relations during Lula's tenure, starting with war in Iraq. Some have argued that US preoccupation with Iraq has distracted Washington from taking a harder line against Lula. The Brazilians, for their part, are unlikely to consume scarce political capital fighting Washington over issues not directly related to Brazil.
Yet Lula has consistently criticized Washington's war plans and is likely to be an even more vocal opponent once the bombs start falling. Such a war could be economically devastating to Brazil and to Lula's social plans. Former labor federation official Jakobsen notes that "war in Iraq could raise oil prices. And Brazil imports oil. You can imagine the rest."
In the meantime, Brazil's new leftist government is forgoing all ritual denunciations of "imperialism," eschewing the Sandinista tack of declaring the "yanquis" the "enemy of humanity," and staying away from the rhetorical rants of Venezuela's Chávez. Instead, its response to Washington on all matters is: Let's talk. Filtering through these constant references is the suggestion that President Lula can turn his subjective resources into real facts, including, if need be, direct appeals to the conscience of the world, as he did at Davos.
There is an important precedent for this approach: Brazil faced down and defeated the powerful pharmaceutical multinationals in defending its patent-free generic AIDS drugs; its tactics included confrontational full-page ads in the New York Times. The strategy: Set the stage by building a convincing and respected national program, show it to the world and then go out and kick butt. The message was so simple and compelling--sick people dying of AIDS while drugs are denied them--that Big Pharma was disarmed. Even the notoriously impervious World Trade Organization had to cave briefly; at its 2001 meeting in Doha, Qatar, the WTO exempted some drug patents from its intellectual property protections, a concession the United States is now scrambling to take back. George W. Bush even tried to climb aboard in a way, with his mawkish State of the Union announcement of concern for AIDS-beleaguered African states.
Doing the same for the hungry and malnourished now at the center of Lula's social program won't be as easy. Frei Betto said that during a visit to Santa Monica, California, he found dozens of AIDS groups in the phone directory but none dealing with hunger. "AIDS can affect anybody," he explained, "so everybody feels sympathy. But hunger is only a problem for the poor." Nevertheless, he continued, slavery was once normal too; now, it's a crime. The same thing can happen with hunger, even poverty itself. It's certainly a long shot, but if anyone can pull this off, a soft-spoken, 57-year-old former lathe operator who never finished high school might just be the guy to do it.