Promises and pitfalls in Brazil

...The PT and the Lula administration have negotiated deftly with the Brazilian Congress...

...Right-wing commentators, such as Constantine Menges of the Hudson Institute, claim to know about a sinister plot being engineered by Lula and the PT that will give new life to the international communist conspiracy...

...In addition, the new government is convening a National Forum on Labor to review all the employment, labor rights and labor relations concerns facing Brazil...

...As for the "axis of evil" theory, Menges, Hyde, and other fearmongers should be reminded that Lula has spoken out forcefully against the spread of nuclear arms and has 28 n DISSENT / Spri ng 2003 promised Brazil's total compliance with the Non-Proliferation Treaty...

...More direct contacts between unionists from the United States and Brazil, as well as exchanges involving city and state governments, small agricultural producers and family farmers, educators, musicians, artists, and progressive legislators, can only enhance North American support for Brazil's new democratic hope, as well as help to counter any revanchism on the part of the Bush administration...

...And speaking for the interests of capital, Alencar Burti, president of the Sao Paulo Chamber of Commerce, an POLITICS ABROAD nounced, "I am not interested in talking about what I'm supposed to give up...

...And the number of unregistered, informal workers in the Brazilian economy rose from 42 percent to 58 percent of the total labor force in the last ten years, with more than 4.3 million jobs being eliminated in the formal sector...

...The real question is whether the world can afford for Lula to fail...

...The consumer price index for Sao Paulo revealed a 2.19 percent increase in January, the highest recorded for any January since 1995...

...For example, workers' pension funds are responsible for literally trillions of dollars in financial markets and can exert substantial influence when it comes to Wall Street's relationship with Brazil...

...In addition, hundreds of able PT activists have served in the Brazilian Congress, including Lula himself...

...Although the rating agency Standard and Poor's has praised Palocci and Meirelles for a "prudent and cautious policy stance," it also sent a poisonous message to the markets on January 16, asserting that the Lula administration has "limited room for policy maneuverability in a challenging global and domestic environment...

...Cardoso's administration succeeded in reducing inflation, following the prescription of the Washington Consensus, but it also produced growing inequality, higher unemployment, greater violence, and an astronomical increase in debt and interest rates...

...Moreover, certain public servants, including top military officers, high-ranking judges, and elite personnel in the executive branch, benefit disproportionately from the system...

...The current public system of retirement and disability benefits actually covers only 57 percent of the eligible beneficiaries...

...for all intents and purposes, they created it...

...For example, World Bank President James Wolfensohn has openly praised the new government, and has committed funding to Jaques Wagner's youth employment programs and to Lula's anti-hunger campaign...

...In an obvious effort to show both Wall Street and the international financial institutions that the Lula administration will be fiscally responsible, Finance Minister Antonio Palocci has announced a 2003 primary surplus goal of 4.25 percent of GDP, surpassing the IMF's demand of 3.88 percent...

...Newsweek posed the question last October, "Can Lula really lead...

...The International Monetary Fund's thirty billion dollar loan package negotiated at the end of last year with President Cardoso (once a leftwing sociologist who told big business during his successful 1994 electoral campaign "to disregard everything that I published") imposes high primary budget surplus requirements that may hamstring Lula's program...

...The trade unionists, human rights advocates, progressive clergy, academics, and other opponents of the military dictatorship who founded the Workers Party more than twenty years ago were dedicated to building a DISSENT / Spring 2003 n 27 POLITICS ABROAD new and unprecedented movement, which would break radically from the Brazilian tradition of top-down populist and caudilho politics...

...A A NUMBER OF union leaders who began as young labor activists in the novo sindicalismo movement of the 1970s and 1980s and were founders of both the PT and the Central Unica dos Trabalhadores (CUT), Brazil's largest trade union center, representing more than twenty-two million workers, have long advocated a major overhaul of the state-corporatist system of labor relations and union governance...

...In a 1991 press interview in Mexico City, Lula made it clear that the PT never accepted the Soviet model, nor did it have to "renounce" a dogmatic past: "From its birth, the PT criticized Eastern Europe...

...Already, leftist militants in the PT have accused the Lula government of selling out to the IMF and the markets...

...As Lula declared in his inaugural address of January 1, ending unemployment "will be my obsession" and ending hunger must be "a national endeavor...

...Foreign Affairs Minister Celso Amorim made it clear to U.S...

...Unfortunately, not all the financial analysts are impressed...

...In Sao Paulo, Brazil's largest metropolis, 20 percent of the working population is unemployed, making for two million people without jobs...

...Although Berzoini is not proposing to make the more egalitarian disbursement retroactive, many military officers and judges argue that any reform will interfere with their "acquired rights...

...And the Brazilian majority expects Lula to reform the social security regime...

...The Brazilian people decided to give Lula their mandate after two decades of military dictatorship (1964-1985), a return to democracy followed by the sudden death of the civilian president, a grueling presidential impeachment process in the early nineties, and eight years of the administration of Fernando Henrique Cardoso...

...This latest negotiation guarantees a pro-Lula majority of 283 seats in the Chamber and 47 in the Senate...

...His victory was unprecedented in Brazilian history: fifty-two million votes, 61 percent of the total...

...Nevertheless, by involving all representative groups in the decision-making process, the new government is engaging in constructive dialogue with Brazilian society, as well as with its own current and potential opposition...

...There can be no FTAA without Brazil...

...Although the IMF's draconian pressures and Wall Street's insatiable demand for "fiscal responsibility" could spell political and economic disaster, there are several factors working in Brazil's favor...

...Such a diabolical alliance would have ready access to Brazil's "30-kiliton nuclear bomb" as well as its "ballistic missiles...

...Wagner has spoken of targeted tax incentives and subsidies to employers who hire more workers by reducing hours without cutting wages and benefits...

...Much of DISSENT / Spring 2003 n 25 POLITICS ABROAD Brazilian civil society, including business, opted for Lula because of his commitment to greater growth and social stability...

...He deserves, and needs, many more friends...

...The Lula–PT platform calling for sustainable macroeconomic growth and the reduction of poverty and inequality offers a powerful and tangible alternative to the dominant paradigm of globalization...

...Academics and journalists have been mixed in their appraisal of Lula's capacity to deal with the formidable domestic and international challenges he faces...

...The problem with most of these opinions is that they ignore the remarkable twenty-five year political development of Lula, the PT, and Brazil itself...

...The Lula "Era," as it is being called in Brazil, has raised the hopes of leftists throughout the world...

...He has spoken and written extensively on Brazilian labor and politics and has been a friend and adviser to Lula and the PT for more than twenty-two years...

...And the Argentine tragedy should have taught a serious lesson to the world's financial markets and institutions: if Lula is not allowed to bring a minimal amount of growth and social stability to Latin America's largest economy, the prospects for security in the hemisphere are bleak...

...Over the last twenty years, the Workers Party has built a successful and corruptionfree record of governing hundreds of cities, including the world's third-largest, Sao Paulo, as well as several important state governments...

...Peter Hakim, from the Inter-American Dialogue, in a Washington Post op-ed, asked whether Lula is the "champion for Brazil's poor majority," challenging "the country's power brokers" and battling "its deep social injustices"— or is he "newly moderated," accepting "market economics" and "pluralist politics...

...and cited a Wall Street source who claimed that the new president was thoroughly "untested...

...T T HE LULA administration has so far demonstrated good faith in responding to Brazil's domestic constituencies and their demands...

...All told, public sector employees represent 11 percent of social security beneficiaries and receive 45 percent of the benefits...

...He has pledged to create at least ten million new and decent jobs by the end of his four-year term, as well as guarantee three meals a day for every Brazilian...

...Labor minister Jaques Wagner is considering reducing the standard workweek from fortyfour to forty hours in order to increase employment...

...We criticized the Berlin Wall, state bureaucracy, the absence of union freedom...

...PT militants did not simply "learn to play the democratic game" in Brazil...

...Trade Representative Robert Zoellick that his country would not be rushed into any hemispheric trade agreement—a troubling admoni tion for Washington, as Brazil and the United States will be co-chairing the FTAA negotiations in 2003...

...Now Lula faces the challenge of managing and satisfying the soaring expectations of his supporters...

...Social Security Minister Ricardo Berzoini, former president of the Sao Paulo Bank Employees Union, has called for a more uniform system in which elite public servants will not receive inordinately more than other workers...

...The new government has convened a National Social and Economic Council that directly involves representatives from all segments of Brazilian civil society—national business, the trade unions, the religious community, cooperatives, and civil and human rights organizations— for the purpose of negotiating an inclusive social pact...

...Although the PT accepted members who claimed allegiance to revolutionary ideals (many of whom are currently excoriating the government for compromising its socialist principles), it also rejected Leninist vanguardism and "democratic centralism" as defined by the orthodox communist left...

...However, he has said that Castro needs to encourage internal democracy, and he has admonished Chavez for "acting like a military officer" rather than "a civilian politician" when dealing with the Venezuelan opposition...

...It has generated an unsustainable deficit of more than seventy billion reais (well over twenty billion dollars), exacerbating Brazil's debt crisis and causing interest rates to climb...

...STANLEY GACEK is a labor attorney and AFL-CIO International Affairs Assistant Director, responsible for the Federation's relations with Latin America and the Caribbean...

...After extensive debate and negotiation among government, trade union, and business representatives, the Forum will also have its proposals delivered to the Congress by the end of the year...

...Lula claims that agrarian reform will go forward during his administration precisely because he and his government will actually sit down with the MST and negotiate...

...With the presidency of the country now occupied by a metalworker who once challenged a military regime relying on state control of the union movement to repress collective worker action, these unionists say that it is high time to end labor's dependence on the state for support of union structures...

...Precisely because the new government will not be a pushover on the FTAA, multinational enterprises and global capital, along with POLITICS ABROAD their friends in Washington, will have every motivation to isolate and control Brazil...

...In addition, Central Bank Governor Henrique Meirelles, a former chief executive of FleetBoston, has resisted lowering interest rates in an effort to avoid runs on Brazil's currency and an inflationary spiral...

...In an article appearing in the New York Review of Books last December, Kenneth Maxwell of the Council on Foreign Relations claimed that Felipe Gonzalez and the Spanish Socialist Workers Party represent "one of the models for the Brazilian PT," having also managed to shake off a Marxist past and "move to the center ideologically...

...Like many other Latin American leaders and statesmen, Lula maintains constructive relations with the current leadership in Cuba and Venezuela...

...The plans to multiply domestic credit sources could help reduce the dependence on foreign investment...

...Although the anti-Chavez forces have denounced Brazil for sending oil and humanitarian assistance to Venezuela, Lula's special secretary for foreign relations, Marco Aurelio Garcia, recently assured me that the aid is meant to encourage peaceful negotiations and an outcome that will respect Venezuela's democratic institutions and rule of law...

...Executive Chief of Staff Jose Dirceu persuaded the center-right Brazilian Democratic Mobilization Party, which commands one of the largest legislative blocs, to elect leaders amenable to agreements with the new government...

...And the AFL-CIO and its affiliates have a promising opportunity to work with the Lula government to guarantee labor rights to the more than one million Brazilians living and working in the United States...

...Obviously, these numbers are well short of a majority, and the PT has been compelled to maintain and consolidate alliances with other parties of both the left and the center-right...

...The international union movement can play an important role in helping to ameliorate some of the external pressures...

...He insists that titles must be awarded now to at least a hundred thousand families currently occupying unproductive farms, and promises that the landless movement will continue to pressure the Lula administration until all its demands are satisfied...

...According to Maxwell, "perhaps 30 percent of the PT call themselves radicals . . . but most party members have learned to play the democratic game...

...Nevertheless, Lula's electoral coalition already included other significant parties, and a number of them are represented in his new cabinet, reinforcing the alliance he needs to govern effectively...

...Excessive fiscal conservatism and high interest rates will only stanch growth and erode the support from national business on the right and from unions and social movements on the left...

...In addition to the expectations of domestic constituencies, Lula must confront the antagonistic pressures of external interests and institutions...

...Lula's opposition to any version of the Free Trade Area of the Americas (FTAA) that promotes "an economic annexation" of the South to the North augurs a substantial delay if not a fatal blow to any North American Free Trade Agreement expansion in the hemisphere...

...Not surprisingly, these activists see a political opportunity: they want a new labor law that will weaken the position of more conservative trade union leaders...

...The growth of the informal sector erodes the tax base and cuts revenue...

...As Johns Hopkins political scientist Margaret Keck has correctly observed, the PT's socialism was never a dogmatic ideology, but rather an "ethical proposal, within which a number of alternative visions of the good society competed . . . " For Keck, the party's moral aspiration for socialism has been "an aspiration for democracy...

...They succeeded in constructing a political force that is thoroughly open, ecumenical, non-doctrinaire, mass-based, and internally democratic...

...Lula's PT is now the largest party in the Chamber of Deputies, moving from 58 to 91 seats (out of a total of 513), as well as the thirdlargest party in the Senate, with an increase from 8 to 14 (out of 81...

...Several of the new government's ministers have proposed specific public policy initiatives...

...T T HE NEW government's understandable attempts to avoid subversion by international finance also threaten to undo Lula's plans for macroeconomic recovery and social justice...

...This inclusion of Brazilian civil society in serious negotiations is something that Lula's predecessors were both unwilling and unable to do...

...Gilmar Mauro, one of the top leaders of the MST, is demanding that the new government immediately expropriate "all lands belonging to owners who owe money to the state, as well as all lands left fallow...

...we defended Walesa from the moment we were founded...

...By the end of the 1990s, the official unemployment rate (which does not reflect chronic underemployment and the high number of Brazilians permanently discouraged from seeking work) exceeded 7 percent...

...Brazilian textile magnate Jose Alencar of the Liberal Party (PL), Lula's running mate and now vice president, represents the strong belief among national industrialists that macroeconomic stimulus is desperately needed...

...By the end of 2003, the Executive will have presented the Council's proposals to the Congress that address the country's most pressing issues, including social security, tax, and agrarian reform...

...This new relation of forces concerning trade and the world economy led Emir Sader, a well-known University of Sao Paulo sociologist, to announce "the beginning of the end for the neo-liberal project in Latin America...

...And with the accumulated public debt rising from 29.2 percent of gross domestic product in 1994 to well over 55 percent at present, a total of approximately 250 billion dollars, the Lula government is particularly vulnerable to the demands of international creditors and financial institutions...

...For example, the landless movement, or Movimento Sem Terra (MST), responsible for many of the rural conflicts and occupations of the last decade, expects sweeping agrarian reform to overturn a system in which less than 3 percent of the population control more than 60 percent of the arable land...

...It is also misleading to imply that a "newly moderated" Brazilian Workers Party has only recently learned to deal with "pluralist politics" and "market economics" and that Lula is "untested...

...Without question, the task is not an easy one...

...Although Menges's published musings border on the psychotic, they certainly influenced Representative Henry Hyde, chair of the House International Relations Committee...

...None of this could have happened had the PT not respected the principles of democratic pluralism and coped with the realities of a market economy...

...labor movement who were present at AFL-CIO headquarters to receive him during his visit to Washington last December...

...In addition, the labor-friendly social development projects of the Lula administration suggest interesting partnerships with international workers' capital...

...And the leaders of the CUT-affiliated federal employee unions, many of whom supported Lula's electoral campaign and are among the most left-wing activists in the Brazilian labor movement, will resist tampering with the current system...

...Economist Paul Singer, recently named Secretary of the Economia Solidciria (Solidarity Economy), is proposing the massive creation of service, family farm, labor, and microcredit cooperatives as a means of putting thousands of Brazilians back to work...

...CUT President Joao Felicio has already made it clear that social pact discussions do not mean that labor will give in on wages and working conditions...

...For the real question is not whether "Lula can lead" or whether "Lula can succeed...

...ON OCTOBER 27, 2002, Luiz Triad° Lula da Silva—lathe operator, leader of the independent Brazilian labor movement that emerged in the late 1970s to challenge the military regime, a founder of the Brazilian Workers Party (Partido dos Trabalhadores—PT), and a former congressman from Sao Paulo—was elected president of Latin America's most powerful state, the world's fifth largest country, with more than 170 million inhabitants, and the ninth largest economy on the globe...

...DISSENT / Spring 2003 n 29...

...The Brazilian labor movement will also expect Lula to make good on his announced in 26 n DISSENT / Spring 2003 tention to create jobs...

...Lula is well aware of the importance of international union solidarity to his success, as he made clear to hundreds of admirers from the U.S...

...Hyde wrote to President Bush on October 24, warning that Lula was a dangerous "pro-Castro radical who for electoral purposes had posed as a moderate," and likely could form "an axis of evil in the Americas" with Cuba and Hugo Chavez's Venezuela...