Lula vs FHC revisited

Craven de Kere
Reply Fri 30 May, 2003 07:41 pm
A general cycle among Latin American countries.

fbaezer once quoted a poet who lamented the wasted revolutions. I couldn't find it.

I think the unrest was due to several factors.

One: short memories

I lived in Brazil 3 times. Each time I went it was like a new country. I could see them progressing rapidly in many areas. They don't seem to remember what Brazil was like and how much it has changed simply because their lives have not been dramatically changed yet.

I did find this quote by fbaezer and I agree with his take:

fbaezer wrote:
A big problem for young democracies is that often people expect too much from government.
In authoritarian systems government is seen as a father (providing and scolding), and citizens feel as children. This rooted syndrome is difficult to take away.
That's the reason characters such as Chavez and Lula arrive in power. They promise to be giving fathers, giving big allowances to everybody.
The IMF, in the other hand, is a 4 letter 3 letter word: the foreigner who tells dad he must not be a giver, but a taker, if he doesn't want to become bankrupt.
Only a better understanding of elemental economic laws and a culture of social participation will prevent populists from coming now and then into power (and from losing it often, since they seldom can deliver their promises).

Two: ignorance. It's facile for me to say that but let me explain. FHC's administration's legacy is that he ended hyperinflation. In my short time in Brazil I have seen several currencies (I still have them). It's not like he was the first to try to fix it. He was just the first to succeed.

So, he started with a pegged dollar (semi-pegged really, it did float a wee bit).

In many Brazilian's minds the economy was a simple matter of what is their money in comparison to the dollar. They did not grasp that it was the stability that was necessary, not whether the dollar was worth 2 Reais.

Because of this fact FHC had to keep the Real pegged to be reelected. I think it was a mistake. The Real was between 1.15 -1.40 when the world knew it was overvalued and should ahve been at over 1.50 to the Dollar.

FHC held it until the elections before unpegging and by then foreign investors wre waiting for it and ready to pull the cash from Brazil.

What resulted was an exodus of foreign investment and a free falling devaluation.

If it had been a controlled devaluation it would have been better but to do it the right way would have guaranteed FHC's replacement at the elections.

That is when FHC ceased to be a god in Brazil. The Real was not close to 1 dollar anymore.

When I say ignorance what I am referring to is that in the unpegging FHC avoided disaster. He nuanced the interest rates and managed to keep hyperinflation at bay through an astronomical interest rate. The reason he did this was because the enemy was inflation. This was proven by the fact that Brazil's economy continued to grow despite the interest rate. What Brazil needed was a modernization of it's market (which had been protectionist and stagnant).

Brazil needed foreign investment and to get that they needed to show stability.

Brazil was sloooowly changing their culture. It was becoming more consumer driven by the day.

Better products were cometing with Brazilian products so Brazilian products had to improve and they did.

So much so that Brazil started competing in other S.A. nations.

The modernization of the markets is a no-brainer to most educated folk, but the masses saw it as selling Brazil. When Telephonica bought Telesp people said FHC was selling Brazil etc.

Telephonica was required to hire more people and improve São Paulo's telecommunications infrastructure (which they did, helping make it one of the fastest growing telecommunications markets in the world) but their initial missteps were "scandals" and the privatization and the devaluating currency made people disillusioned.

It was seen as a necessary step, a growing pain if you would by investors in Brazil and abroad. But in Brazil José Mané (Joe Blow) said it was a sellout.

Despite the devaluating currency the inflation was kept to a minimum. The essentials of life were regulated to soften the blow to the poor.

The main problem was that the people were seeing small bumps in their progress and started saying "what have you done for me lately?".

The inflation had been restrained for almost 8 years and now with the next step (which was to move to a floating market) the inherent difficulties amde people restless.

Three: FHC had no charismatic replacement. Lula is VERY charismatic. It was kinda like how Al Gore had a tough job trying to follow Clinton.

Four: 9/11, it hurt Brazil's economy as did the bursting US bubble

Five: Years before the elections drew near people were worried. When I realized that FHC couldn't be re-elected I thought about leaving Brazil. Foreign investors just made sure they were ready to pull the cash.

As the elections grew near the situation worsened simply due to uncertainty. Brazil has a terrible economic track record and the only guy to reverse that was leaving office.

As the situation worsened (because of, IMO, these factors: 9/11 and the US burst, unpegging and market evolution, and uncertainty) people started to think something needed to be changed.

FHC, the softspoken, intellectual was suddenly not "strong" enough. In this time of uncertainty Brazilians wanted a "strong" leader.

They did not care that Lula could not deliver his promises (after all politicians do that all the time) they only wanted to believe Lula was the ticket. That a man like them would make Brazil for them.

It's sad, because Brazil's social programs were already lauded far and wide.

Brazil fought aids and disease very well.

And despite being a poor country Brazil's problems with hunger are not too huge. There is food growing everywehere in Brazil.

But teh masses decided "Agora é nossa" now it's ours. By that they meant they needed a guy like them, a guy from the street.

Lula couldn't really do much, realists knew that. But the masses hoped. Lula played up the "I'm one of you" thing and it almost became a class war type campaign (to Lula's credit, it didn't).

So they wanted improvement. And they didn't get it.

What they did get is a question mark. It's notable that Lula's success is measured in that Brazil hasn't collapsed.

Under FHC I had hopes of Brazil becoming a much better nation. I think it would have been hard, even for FHC's party.

Most analysts said taht everything would have to have gone right for Brazil to make it. What was sad is that with Lula they worried (whether valid or not) that everythign would go wrong.

Brazil has a hard time instilling faith in investors, whether the concern was valid or not is a toss up. But the concern became the "facts on the ground".

Do you get what I mean by that? It's a bit hard to explaina nd I've been rambling.
0 Replies
Craven de Kere
Reply Sun 1 Jun, 2003 12:05 am
Another quick and dirty translation:

an email circulating in Brazil wrote:
Now that the campaign is spread throught the internet and we are a democracy, it's necessary to give equal space to all.

You are the director of a company and you receive two resumes to analyze:

* Education:
Ap to the 5th grade in basic education (grades re different, I need to check the exact equivalency but I think it's equialent to a grade in high school).
Mechanics course in SENAI
* Proffesional Experience:
Factory of screws
Independent metal worker
Metalworker (not sure on that other word)
Member of the house

* Education:
Civil Engineering from Escola Politécnica (São Paulo).
Masters in Economical Science at the Universidade do Chile
Doctorate in Economy at Cornell University (USA)
* Proffesional Experience:
President of UNE
Proffesor and researcher for the Latin American Comission of the UN
Proffesor and researcher for the Instituto de Economia (Economy Insitute) of Universidade do Chile
Professor of the Institute of Advanced Studies at Princeton University
Professor of Unicamp
Secretary of Planning (odd translation) for the state of São Paulo
Member of the House
Minister of Planning (odd, i will ahve to look for a better way to translate this position)
Minister of health

The job in question is:
Manager of your firm. It has the following characterstics:

Annual income of close to 500 billion dollars
Around 170 million workers
It owns one of the largest mineral reserves in teh world
It owns the largest forest area in teh world
It's the owner of a good portion of the useable hydrolic resources of the world
Has control of one of the world's largest IT markets
It is the largest company in terms of size and revenue in its continent

Of course, the company that we speak of is called Brazil and th respective candidates are Lula and José Serra.
The director of the company is you. It's up to you to choose who will manage this, your company, for the next four years. You know that your participation in the wealth of this company depends on how this manager will perform. It's a position of extreme responsibility with the potential for great accomplishments

Who your company will choose, you decide!!!
Good Luck!
0 Replies
Reply Wed 4 Jun, 2003 12:46 pm
Thank you for your long answer, Craven - and I promise I will get round to trying to contribute something to this thread again, too ...
0 Replies
Craven de Kere
Reply Wed 4 Jun, 2003 01:42 pm
I look forward to it.

I have received a few more emails from Brazilian friends about Lula, they talk about his recent comments stating that his iseology has not changed and other "commie scare" concerns.

I'll translate them later.
0 Replies
Reply Fri 7 Nov, 2003 04:45 am
A very positive radio broadcast this pm about Brazil's economy and Lula piqued my interest. Could not find the actual broadcast - but found this article in "The Economist".

Any comments?

Brazil's economy

A battle won, another begun

Nov 6th 2003 | SÃO PAULO
From The Economist print edition

Macro optimism, micro scepticism

THE government of Luiz Inácio Lula da Silva, which spent its first ten months in office apologising for tight budgets and high interest rates, is now, cautiously, celebrating. ?We have won [the] battle? against inflation, declared the finance minister, Antônio Palocci recently. Country risk, as measured by the interest-rate premium of Brazilian bonds over American ones, has dropped from 24 percentage points to below six. Budgets still pinch but domestic interest rates are falling. Most important, the economy is picking up, after a recession in the middle of 2003. Industrial production grew by 4.3% in September, compared with August. J.P. Morgan, an American bank, predicts that the economy will grow by 3.6% next year.

On November 5th, the government confirmed that it is close to reaching agreement with the IMF on a new loan programme, which should allow a bit more public spending at little cost to Brazil's creditworthiness. The new loan would be for $14 billion (in addition Brazil will delay repayment of $5.5 billion to the Fund). The government will stick to its current target for the primary fiscal surplus (ie, before interest payments) of 4.25% of GDP. Since it saved more than that this year, the new deal may allow some extra spending in 2004 on public services, such as sewage.

Beneath the good cheer, though, are two worries: that growth will not be strong enough to produce many jobs and that firms will not invest enough to sustain it. Unemployment, now 13%, is not expected to fall much in 2004. Some longer-term investors temper ?macro-optimism? with ?micro-pessimism?.

The government lacks the money needed to ease the bottlenecks in infrastructure that bedevil the economy. But it has not done enough to encourage private enterprise to fill the gap. Overall, investment is running at a scant 17% of GDP.

Sao Paulo


Latin American economies

Brazil's central bank and its finance ministry post information on the country's economy. The IMF gives information on its dealings with Brazil.

President Lula rattled investors back in February when he complained that having independent agencies to regulate power, telecoms and other utilities amounted to an ?outsourcing of the state?. Then the telecoms minister encouraged consumers to challenge in court a tariff ruling by the regulator. They won at least a temporary cut in the rate increase, costing the industry $100m a month, says Carlos de Paiva Lopes, head of Abrafix, the main telecoms lobby. Recently, the government has changed tack. In October, it proposed a regulatory reform that dropped the contentious idea of making regulators' tenure coincide with the president's. It also proposed a framework for ?public-private partnerships? designed to lure private investment into such public works as roads and electricity.

Yet neither proposal offers investors the security they want. Regulators would be answerable to the government under ?management contracts?, exposing them to political whims. The guarantees offered under the proposed partnerships are worth little without robust regulators.

Mr de Paiva Lopes believes that regulatory policies are now ?going in the right direction.? The government is expected to present a revised reform proposal this month. Investors are also watching closely the government's evolving plans for a new regime to encourage investment in the battle-scarred electricity sector. These will draw less notice than the new IMF agreement. But for Brazil's long-term economic prospects, they matter more.
0 Replies
Reply Fri 7 Nov, 2003 04:49 am
And NYT:

Brazil Eases Its Dependence on I.M.F.

Published: November 7, 2003

ÃO PAULO, Brazil, Nov. 6 - Confident it has stabilized Brazil's economy, the country's left-leaning government said this week that its 12-month extension of a standby agreement with the International Monetary Fund signals an end to years of dependence on I.M.F. bailouts.

Confounding market fears of just a year ago that he would lead Brazil into a free-spending dash for growth, President Luiz Inácio Lula da Silva and his pragmatic economic team have succeeded in reining in inflation and public spending. Though Brazil has increased exports to earn much-needed hard currency to plug holes in the current account, the government still faces the daunting task of getting the economy growing again without upsetting the country's delicately balanced accounts.


Outlining the agreement Wednesday to extend Brazil's current $30 billion standby agreement that runs out next month, Antonio Palocci, the finance minister, said the government would draw on the new $14 billion I.M.F. package, which includes $6 billion of fresh cash and eases debt repayments terms over the next four years, only if absolutely necessary.

"It's a sort of insurance policy against the ever present risk of external shocks and unforeseen difficulties," Mr. Palocci said. "We believe we should, after a long period, propose an end to this series of deals with the fund."

Anne Krueger, the I.M.F.'s first deputy managing director, said she would support the proposal before the I.M.F.'s board.

Brazil has been relying on I.M.F. aid since a currency crisis in 1998. The country has proved unable to wean itself off support as it experienced stop-start growth and a series of international financial crises that shook confidence in emerging markets.

But Mr. Palocci insisted there were now "real and effective" signs that the next economic recovery would be on the back of sustainable growth.

Whether such optimism is justified or not, the markets hailed the I.M.F. extension as a signal that Brazil would not stray from the path of fiscal and monetary orthodoxy. Fitch Ratings on Thursday upgraded Brazil's sovereign debt from B to B+.

"The I.M.F. agreement was just one factor in the upgrade," said Roger Scher, managing director and head of Latin American sovereign debt at Fitch in New York.

"Generally, there is a feeling the Lula government has been very successful in macroeconomic policy," he said. "Basically, they have made few mistakes and surpassed everybody's expectations.''

But the success has not been without pain. The economy, anemic since 1998, is expected to grow just 1.1 percent this year. Spiraling inflation forced Mr. da Silva to increase interest rates to 26 percent early this year, decimating business and consumer confidence. Industrial output has slumped; the jobless rate has soared to 13 percent nationwide and is over 20 percent in São Paulo, the country's economic heart.

In recent months, however, the threat from inflation has waned and interest rates are ticking down. With a weak currency and feeble domestic demand, exports are booming. The trade surplus is expected to top $23 billion this year, leaving Brazil's current account in the black for the first time since 1993.

In contrast to 12 months ago, when Mr. da Silva's leftist past and pugnacious election campaign sent markets into a panic, investors are returning to Brazil with enthusiasm. São Paulo's stock index, the Bovespa, is up 59 percent this year and the benchmark C bond is trading at more than 90 percent of its face value, after being below 50 percent last fall.

"This time last year, we were one step away from the abyss, now it seems we've taken quite a few steps back," said Rodrigo Azevedo, chief economist at Credit Suisse First Boston-Garantia in São Paulo. "So I think this is a good agreement. It creates a framework for better perspectives next year and, I hope, beyond."

Like Mr. Azevedo, many economists say the Lula administration must now get down to tackling potentially unpopular changes to make the economy more flexible and attractive to foreign investment.

Two crucial moves - realigning Brazil's bankrupt social security network and its byzantine tax system - have already cleared the principle hurdles in Congress, but smaller, yet important, measures await action.

A bankruptcy law that would make it easier for banks to seize collateral to recoup the value of bad loans would ultimately allow banks to lower interest rates and should stimulate the economy. Liberalizing labor laws to make it easier to hire and fire workers is also seen as important, though that is bound to meet resistance from many members of Mr. da Silva's Workers' Party.

Another problem with a return to growth is that a revival of domestic demand will make a dent in the trade surplus.

Mr. Azevedo expects this year's projected $23 billion trade surplus to shrink to $16 billion next year if the economy recovers, turning this year's projected $2.6 billion current account surplus into a $6.4 billion deficit in 2004.

One answer to that would be to push the currency, the real, down against the dollar. As Brazil has stabilized, the real has gradually recovered, and is now trading below 2.9 to the dollar. Exporters say the currency must stay above 3 to the dollar to keep Brazilian goods competitive on world markets.

"Growth is the question," Mr. Scher said. "G.D.P. growth and export growth - that's the only way Brazil can pay off its domestic and foreign debt."

If Brazil cannot guarantee growth, Mr. Palocci might be thwarted in his hopes of never knocking at the I.M.F.'s door again, Mr. Scher said.

"Brazil's balance of payments still remains quite vulnerable to external shocks," he said.
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Reply Fri 7 Nov, 2003 04:55 am
Ah! here is a transcript of the broadcast:

Peter Robb discusses his history of Brazil PRINT FRIENDLY EMAIL STORY
PM - Friday, 7 November , 2003 18:34:00
Reporter: Hamish Fitzsimmons
MARK COLVIN: When Brazil elected a new left wing President last year, there were more than a few predictions that the country's relations with the United States and the International Monetary Fund would soon be fraught.

Instead, South America's biggest and most populous nation seems to have gained a new political stability, and the IMF yesterday even praised Brazil for its strong track record of exemplary economic management.

And a recent analysis in the leading journal The Economist predicted that eventually, Brazil would lead a South American economic bloc to rival the European Union.

The Australian writer Peter Robb ? best known for his book Midnight in Sicily ? has spent years in Brazil, and watched its transition from backward military dictatorship to modern democracy over two decades. Now he's written a history of the country, in his book A Death in Brazil.

Peter Robb's been speaking to PM's Hamish Fitzsimmons.

PETER ROBB: In the history of that continent, there's never been a leadership role taken by Brazil, or indeed by any other country. The fact that Brazil takes very seriously its role as the leading regional power and the importance of solidarity with the other countries of South America, means that for the first time in its history, really, the continent is going to be more or less united, which is particularly important, given their rather troubled history of relations with the United States.

HAMISH FITZSIMMONS: Why do you think it's taken so long for that to happen?

PETER ROBB: There's always been a curious division in Latin America between Brazil and the rest of the continent, which is a matter of language and culture and its very different history ? the extraordinary importance of slavery in Brazil and so on. That's part of the story. Partly I would say that the United States has always been quite adroit in dividing and ruling.

HAMISH FITZSIMMONS: Modern Brazil seems to be typified by the life story of President Lula de Silva. He rose from very poor beginnings and worked his way up in the union movement and now he's President. Is this the case? He seems to typify the modern democracy of Brazil. It's moved from a system of very wealthy individuals to now this more robust democracy.

PETER ROBB: Lula's personal history is extraordinary, but so is the turning around of a history of about 500 years of mal-government in Brazil. A more than 20-year military dictatorship finally imploded and in that time ? just over 20 years ? the formation and the extraordinary growth of the Workers Party.

It's very important not to personalise Lula's role, I think, in Brazil: extraordinary though he is, as a person, and extraordinary though is biography is. He is, nevertheless, just the leader of a party that was formed of a very heterogenous bunch of coalition groups in late-70s and is now a force of massive social implantation and a huge following. This is a very solid government that Brazil has now, with a huge consensus behind it.

HAMISH FITZSIMMONS: In many other counties that transition can be quite painful and often there are civil wars, which typify that movement from a military dictatorship or a country ruled by wealthy individuals to a more stable democracy.

Why has Brazil's transition been relatively easy in that regard?

PETER ROBB: Well, you might say that it's in some ways the payoff of a very long and terrible history. From the early 60s to the mid-80s, there was a military dictatorship, which in its uglier second phase was an extremely ugly dictatorship.

And there was a fairly chaotic period immediately after that, from the mid-80s to the mid-90s of partial openings to democracy and aborted elections and sudden deaths and then the extraordinary and fortunately very brief presidency of Fernando Collor ? a monumentally corrupt presidency.

Again, Brazil is the great success story of the last few years that the rest of the world has really to a large degree missed: an extraordinary consolidation of democratic practice, democratic consciousness that has turned around this dreadful history of 500 years of misrule by a tiny group of oligarchs.

HAMISH FITZSIMMONS: Much of what we see about South America, and particularly Brazil, is quite a violent portrayal in many cases. There was the popular film recently, City of God and before that other films set in the slums, which suggested this terrible violence that's the experience of many Brazilians.

In your book, you also say that the levels of death related to crime almost fall under the UN's classification of a low-intensity civil war.

PETER ROBB: Uh, not almost, they do. They do. The figures come from the United Nations itself. It's a very paradoxical thing, this violence in Brazil. In the short-term, it is simply the consequences? I mean this is almost entirely violence by the poor against the poor. It's the scrabble for survival at the bottom of the heap that produces it.

The longer explanation is, I think it's the legacy, the terrible legacy of slavery and the terrible contempt for the value of human life that the slavery produced.

MARK COLVIN: The writer, Peter Robb, speaking to PM's Hamish Fitzsimmons, about his new book, A Death in Brazil.
0 Replies
Reply Tue 14 Dec, 2004 06:39 am
I was reading this in the International Herald Tribune the other week ... found it fascinating. The story behind the success of Brazil's newly invigorated foreign policy. The week after the launch of a new continent-wide Latin American union seems an appropriate moment to post it!

Brazil's top diplomat fills out the plot line

By Carolyn Whelan
International Herald Tribune
Saturday, December 4, 2004

His strategy wins nation clout on the global stage

BRASÍLIA - Foreign Minister Celso Amorim, a cinema buff and former movie producer, likes to go over a script in his mind of Brazil's future.

In it, Brazil shakes its postcolonial insecurity and takes the helm of South America to the United Nations, where it lands a full-time seat on an enlarged Security Council, along with its "kindred spirit," India. Latin America's largest country also helps rewrite rules about access to global agriculture markets. Finally, it shrinks poverty for its 184 million residents through stronger trade ties with Asia.

It is certainly a utopian vision - and one that many would shrug off as yet another overly rosy scenario for the historically crisis-wracked country. But these days, Amorim's vision is more than just an imaginary script.

Since 2003, developing countries have come together to form a powerful new bloc, the Group of 20-plus or the Group of 21, to fight for their interests against wealthy nations at the World Trade Organization. Together, they scored major new global accords to end agricultural subsidies in August, about the same time that poor countries also won courtroom victories against subsidies for sugar in Europe and cotton in the United States.

Brazil has also signed billions of dollars' worth of investment deals with China and other Asian countries, a move that officials hope will bring a stream of jobs and production to help offset the country's lingering problems of poverty and development. And it has steered the South American trading bloc, Mercosur, toward freer trade within Latin America.

The soft-spoken Amorim, 62, with his salt-and-pepper beard, can claim a great deal of credit for these victories. He maneuvered himself into a position of influence during WTO talks this summer, taking on the role of a spokesman for the Group of 20-plus, whose members joined forces to strengthen their bargaining position in global trade. And, under President Luiz Inácio Lula da Silva's stewardship, Amorim has helped set a cooperative tone that has big countries cozying up to Brazil.

"It's been an exciting year," Amorim said in a recent interview, sitting in front of an enormous world map in his office. "We accomplished many things largely due to Lula's image and leadership."

Da Silva is credited with tackling tough reforms while Brazil's economy rebounded on booming commodity sales and a strengthening currency. Those forces are helping to bring unemployment, inflation and interest rates down.

Amorim's star - and Brazil's - has been rising along with that of da Silva, a former union leader and metal worker who initially worried investors with his leftist roots but won them over for his business-friendly stance.

Wall Street is also enamored of Finance Minister Antonio Palocci because of his fiscal prudence. But it is Amorim who has maneuvered skillfully to forge alliances with other countries that are turning Brazil into a trade force to be reckoned with.

"Amorim is a talented man, with extraordinary command of the issues, and a tough negotiator," said Peter Hakim, president of Inter-American Dialogue, a research group based in Washington.

"Brazil has been extremely effective at shaping the trade agenda and giving leadership" to the Group of 20-plus, Hakim added.

Things were not always so successful for Amorim, an amiable, self-made man. In the 1960s, he was swept up in Rio's heady student movement at the same time that he began his lifelong love of film. He saw a role in his country's government as the ideal way to enact change.

Stories of racism, violence and poverty in his favorite films of that era, like "Barren Lives" and "The Grapes of Wrath," inspired him at a time when social movements like one for land reform also sparked his streak of activism. He joined the External Relations Ministry in 1965, but his activities were initially confined to paper-pushing and postgraduate study at the London School of Economics, where his thesis focused on social change in Brazil. Amorim's first ministerial postings coincided with a new 20-year military dictatorship.

Under a more relaxed but still military regime in 1979, Amorim joined his love of film with civil service in a role heading up the Brazilian Film Corp., a government-run entity.

But driven by a desire to reveal the truth, Amorim said, he approved financing for a film on torture in the early years of Brazil's military dictatorship, a move that ultimately cost him that post.

After languishing in what he calls a "period of obscurity," he was ultimately able to shift within government to dealing with social issues. Over time, his dossier widened to include issues ranging from tobacco control, labor reform, sustainable development, disarmament and peace. His big break came in 1993, when a boss's illness created an opening for him as External Relations Minister. There, Amorim cut his teeth as Brazil's global representative.

Amorim is most proud of his recent achievements: helping to create Mercosur, the agricultural victory this year for poor nations at the WTO, and helping poorer countries win the right to buy cheaper life-saving medicines without violating patents.

He has pushed a number of issues until they made their way into the public eye, where global sympathy was likely. And he has ruffled feathers for his hard-line tactics; critics accuse him of empire building.

Hakim, the president of Inter-American Dialogue, added: "Amorim has sometimes pushed Brazil's aspirations too far. He's frank, but can sometimes be abrasive."

But that style ultimately clinched the WTO deal, Amorim said.

"The G20-plus changed the dynamic," Amorim said. "We were firm, honest and decisive and had real leaders. Together we changed things."

The ministry cited some estimates that said that successful implementation of those new rules could lift 500 million people out of poverty in poorer nations, and add $200 billion to developing economies.

Brokering such deals is not easy. Recently, talks about a U.S.-driven hemisphere-wide free trade deal, known as Free Trade of the Americas, have stalled, largely on issues over agricultural subsidies and intellectual property. So have efforts for a similar deal with Europe. Now the focus is on enlarging Mercosur, first with Andean and Central American nations, and clinching trade deals with India and South Africa.

But forging stronger ties with South Africa and India, with which Brazil formed the G-3 grouping last year, may be the apex of Amorim's career. He points to a three-way century-old chair in his office, originally meant for courting couples and their chaperones, where foreign ministers from the three nations first came together in 2003.

That new alliance is already exploring ways to harmonize efforts in their quest for more prosperity and peace. As the largest democracies in their regions, the three nations hold sway in global negotiations, Amorim said, and could be a stepping stone to more trade between those regions from which to expand globally.

"We have affinity and influence," he said.

Despite these achievements, Brazil is still navigating its way through painful adjustments. A budding economic recovery is still unfolding far too slowly for the ranks of the unemployed. The jobless rate has fallen from nearly 13 percent a year earlier - but at 10.5 percent, it is still achingly high. For the ranks of the impoverished still scrabbling for a living in Brazil's honeycomb of shanty towns, economic change is not a tangible reality.

Taxes and regulations continue to stifle investment and economic growth in Brazil, the world's fifth-largest country when measured by size and population.

"Further steps appear to be required to accelerate and ensure the sustainability of growth," the World Bank said in a report issued in November.

Yet Brazil's economy is unmistakably stirring after a deep sleep.

Growth reached 6.1 percent in the third quarter from the year earlier. Some analysts have raised their growth estimates for the year to over 4 percent from 3.5 percent earlier. In 2003, the economy shrank by 0.2 percent. Exports this year have also started to boom, and the country's November trade surplus was $2.08 billion. Tax receipts have been rising steadily throughout the year, allowing the government to whittle down the national debt at a slightly quicker pace.

The decline in unemployment has helped fuel household purchases of big-ticket items like appliances and autos, which jumped 20 percent in September from a year earlier. New cellphone subscribers in October shot up 42 percent from October 2003, while retail sales in August rose for the ninth straight month. The economy is expected to grow at a better-than-5.3 percent clip this year, the fastest pace since 1994, according to government projections, and inflation has stabilized at around 7 percent.

In a gauge of investor optimism, Brazil's stock market posted its biggest monthly gain in November.

The rebound in Brazil is being fueled largely by the global economic recovery, which lifted Latin American performance across the board. But the government also used the favorable trade winds from booming commodity prices to pare state costs like pensions and shutter ministries as part of market-friendly reform efforts many of its neighbors eschew today.

The upshot? In November the International Monetary Fund assessed the country's performance as "very good."

One of the most profitable strategies of da Silva and Amorim to enhance growth has been their careful cultivation of ties with China. Trade between the countries reached about $8 billion last year, propelling China to rank as Brazil's third-largest trade partner after the United States and Argentina.

China has gone on a veritable spending spree in Latin America, buying up vast quantities of raw materials and shipping finished products back to the region for sale. And da Silva has rolled out the red carpet.

"Annual trade with China could double to $20 billion a year," Amorim said. "Brazil is becoming more competitive, not just for prestige, but for practical reasons."

Amorim's skills could come in handy if Brazil, like Chile, pursues free trade with China later.

"There's a global shortage of commodities and Mercosur has them," said John Price, president of InfoAmericas, a market intelligence firm in Miami. "If Brazil is smart, it will realize China needs it more than Brazil needs China."
0 Replies
Robert Gentel
Reply Mon 6 Oct, 2008 04:04 pm

For the last few years I've made sporadic attempts to find the original discussion we had on Lula that this thread was revisiting, but I'm not sure if it was even on this site.

In any case, I have to say that Lula did not enact any of the economic policies he'd preached and that I'd feared and has been a much better president than I had given him credit for.

Took a few years for me to see it, and since then I've been meaning to find where I argued wrongheadedly but this is the closest I have found.
Reply Mon 6 Oct, 2008 04:59 pm
@Robert Gentel,
Is it this one?


Probably not, because I think I remember the original one, and I seem to recall it was long and heated.
Reply Mon 6 Oct, 2008 05:48 pm
In the meantime, I had missed this thread, or forgotten it, and last year read Robb's book, Death in Brazil, as a followup to Midnight in Sicily, a book I found compelling at the time.

Robb writes in a fairly chat like way, covering a lot of history of different sorts, and offering various commentaries, undoubtedly with his own biases. I didn't end up thinking Lula was any saint, but was interested in how it would go.

Now I'd like to skim it again, as I tend to read as a kind of 'wash'. Now where's the damn book? Diane might have it, or it's somewhere in this thicket. I'd send it to you, Craven, if you wanted to check it out and if you could get packages more easily than I think you can.
0 Replies
Reply Mon 6 Oct, 2008 06:55 pm
The one in which Craven was so very much anti-Lula was one in Abuzz, if not in the Raven's Realm, if I recall right.

I agree that he was better than expected... still I'd take Cardoso over him any time.
Robert Gentel
Reply Mon 6 Oct, 2008 07:20 pm
fbaezer wrote:
I agree that he was better than expected... still I'd take Cardoso over him any time.

Same here, but I'd take Cardoso in almost any country over almost any person.
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Reply Mon 6 Oct, 2008 07:38 pm
fbaezer wrote:

The one in which Craven was so very much anti-Lula was one in Abuzz, if not in the Raven's Realm, if I recall right.

I agree that he was better than expected... still I'd take Cardoso over him any time.

That makes sense because I remember it clearly (because of Craven's extreme heatedness) and there's nothing like it here.
Reply Mon 6 Oct, 2008 10:36 pm
It's a pity that here threads about anywhere except the USA generally don't raise that level of interest and heat....I learned a lot from that Lula thread (wherever the hell it is)...as I do whenever folks with knowledge of South and Central America post.

I don't suppose you'd ever have the time, Fbaezer, to do a kind of ongoing stuff about Mexico etc (or the continent) thread, or blog, here? Whether political, historical, a mix...?

I know you do a heap of writing for work, so that's probably a totally repellent thought.....but I think you (and other folk) would have a big following if you ever found time.
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Robert Gentel
Reply Fri 10 Oct, 2008 04:27 pm
More thoughts on this:

A big part of the reason he was better than expected is because he used to oppose all of the Cardoso administration's economic policies running as an opposition candidate and then once elected he embraced them all.

He used to be as radically socialist as Hugo Chavez, calling for Brazil to nationalize private companies and all, but his administration's economic policies have been decidedly centrist.

Lula's Way
When he was first elected in 2002, many feared that Lula and his leftist Workers' Party would trash Brazil's emerging economy by pursuing socialist policies. Instead, Lula shrewdly embraced fiscal sobriety, strengthening Brazil's currency, the real, and reforming a bloated civil service pension system. Those policies and a windfall in commodities fueled a boom--the economy will grow 5% or more again this year, and inflation is historically low. Even his rivals acknowledge that despite his firebrand image, Lula has been a deft political operator. "The danger with Lula is that he can be rather messianic," says Rubens Ricúpero, a Finance Minister in the 1990s, when Lula opposed the market reforms he now backs. "But he's one of the most intelligent politicians in the world."
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