Jaspe, Alvaro

English

Whenever the BRIC nations are mentioned, arguably the one most often overlooked by English language sources is the one with the greatest hemispheric influence, Brazil. Athough Evo Morales in Bolivia and Hugo Chávez in Venezuela may grab the most news headlines with their policies of indigenism or 21st Century Socialism respectively, it is Lula’s Brazil, given its size and economic importance which many in and outside the American continent perceive as being the new role model post Washington Consensus, for the developing nations of the region, striking a balance between social reform, State intervention of the economy, and free market policies. When Lula Inacio da Silva of the Workers’ Party (PT) was first elected President by an overwhelming majority of Brazilians in November 2002, the financial markets and Western economic media reacted with fear. Six years on, his blend of policies have reduced poverty, caused a split within his own party, and made Brazil a safe haven for foreign investment ($35billion in 2008 alone) in these turbulent economic times. This paper would propose to examine the Lula ‘third way’ effect on Brazil and would hopefully seek to address one of the main themes of the conference, can the BRICS, in this case Brazil, regenerate capitalism, albeit in a paternalistic form

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Lula da Silva’s Brazil.  A genuine ‘third way’ and NEM for the Latin American continent?Whenever the BRIC nations are mentioned, arguably the one most often overlooked by English language sources is the one with the greatest hemispheric influence, Brazil.  Athough Evo Morales in Bolivia and Hugo Chávez in Venezuela may grab the most news headlines with their policies of indigenism or 21st Century Socialism respectively, it is Lula’s Brazil, given its size and economic importance which many in and outside the American continent perceive as being the new role model post Washington Consensus, for the developing nations of the region, striking a balance between social reform,  State intervention of the economy, and free market policies.  When Lula Inacio da Silva of the Workers’ Party (PT) was first elected President by an overwhelming majority of Brazilians in November 2002, the financial markets and Western economic media reacted with fear.  Six years on, his blend of policies have reduced poverty, caused a split within his own party, and made Brazil a safe haven for foreign investment ($35billion in 2008 alone) in these turbulent economic times.  This paper would propose to examine the Lula ‘third way’ effect on Brazil and would hopefully seek to address one of the main themes of the conference, can the BRICS, in this case Brazil, regenerate capitalism, albeit in a paternalistic form?Alvaro JaspeHead of SpanishMageeUniversity of UlsterEven the UK television media were aware that something ‘big’ had happened on the non-English speaking American continent (an increasingly rarer occurrence with time) when the BBC’s Economics Correspondent, Stephanie Flanders, gave a brief report on the reaction of the financial markets to the previous day’s election of Luiz Inazio Lula da Silva of the Workers Party (Partido de os traballadores) from a Samba bar in London.  Amid the usual warnings from well paid JP Morgan market analysts in New York that “residual doubts over the Workers Party commitment to fiscal discipline” still prevailed and that the new governments “unsustainable” promise to increase the minimum wage were still on the table, the report commented that “at least” some of Lula’s more radical proposals had been “toned down” during his campaign.  The basic dichotomy for his presidency, of walking a political tightrope between the expectations of the majority of the population that had voted for him and the need to keep foreign investors and institutions happy was clearly highlighted.  As she sipped her Curosa, Ms Flanders conspiratorially ended her piece by adding that, as one City expert had told her, “An awful lot would have to go right for things not to go badly wrong in Brazil.”  Nobody, in the IMF would be celebrating that night.  Investor confidence in the latest neo-populist American regime would evaporate, interest rates would have to be raised as a result, budget targets would suffer and growth forecasts would not be met.​[1]​  Seven years on and the man originally viewed by many as the natural ally of President Hugo Chávez of Venezuela, of representing the inexorable rise of a new left alternative in South America that would turn its back on the Washington Consensus, market orientated, neo-liberal socio-economic policies of the 90s is challenging the economic hegemony of the IMF and post-Bretton Woods legacy, but not in the way that those initial pessimists could have foreseen.  At the recent first summit meeting of the heads of state of the so-called BRIC nations (Brazil, Russia, India and China) held in Moscow, the Brazilian leader was indeed calling for a new economic post recession world order to rise from the ashes of the IMF and WB lead crash, based on “speculation” and excessive “individualism”.   He was the one lambasting the recklessness of the boom years of the developed nations who, like badly performing children at school, were trying to hide from their parents their weak scores.  With the world economic crisis, nobody could hide how badly they were doing.​[2]​  Brazil, alongside fellow BRICS, wanted change, for example, the removal of the dollar as the international currency, the dissolution of the IMF as in the new 2009 economic reality, the time for dependency on the IMF “to get you out of trouble” had ended, according to Lula.  Far from faltering, collapsing or moving toward a traditional Latin American leftist or Cuban communist regime, putting a further nail in the coffin of economic neo-liberalism as many Washington based observers feared, the Brazilian president, leader of a buoyant economy, with $85 billion of direct foreign investment in 08, 5.8% GDP growth, a strong currency (the real) and with a reduced public sector borrowing deficit, was warning them that their time of economic ascendency was over.  Yet he was doing so, not as the leader of a neo-populist, but as the working class President of a solidly democratic and still capitalist country.  The new economic order, he declared in Moscow, with Brazil at its head would no longer be dictated to by the ancien regime.  The City analyst’s prediction that an awful lot had to go right seemed to be correct for the Brazilian case, whilst much had gone wrong elsewhere. The Lula phenomenonWhen the term BRIC was coined by economists at Goldman Sachs in 2003 to describe what they predicted would be the dominant global economies by 2030, their forecasts were based on the expectation that the economic policies implemented by previous Brazilian governments, most notably that of reformist Fernando Henrique Cardoso would continue.  Cardoso’s emphasis on fiscal reform, the reduction of the traditionally dominant  state in the economy, and move toward more market orientated policies married very well with the Goldman Sachs prediction.  The fact that the Brazilian economy had suffered at the hands of the so-called Asian flu during that time in 1998, when a billion dollars a day were leaving the country’s economy, which was bailed out by a 40 billion bridging loan from the IMF; that the government debt, which represented 30% of GDP, at the start of Cardosos presidency in 1995, had doubled by 2002, only seemed to confirm in the minds of many the impossibility of Brazil achieving BRIC status.  It appeared to be another false dawn, in a long list of false dawns, which had been predicted for the 8th largest economy in the world.  The old platitudes such as “the country of the future, where the future never comes,” and “God is a Brazilian, with a sense of humour” seemed to be more applicable than ever. Lula’s election, at the fourth attempt, where he eventually overcame the O Globo media group and Brazilian elite opposition/paranoia of his worker and trade unionist background seemed to seal the end of this buoyant forecast. His electoral promise to immediately deal with the social inequality of his country, with the highest ratio gap between the wealthiest ten percent (18 million people) earning 32% of the country’s 1,000 billion/ 1 trillion dollar total GDP, whilst 54 million lived on less than a dollar a day, through measures such as his policy of zero hunger (fome zero), made the Goldman Sachs prediction even more fanciful to most western observers.  The weight of popular expectation, the spectre of inflation, unemployment, poverty and crime would ensure that the paternalistic attitude of Brazil as being nearly there, but not quite, would continue for some time.  At best, if Brazil could overcome its economic difficulties it would be at the expense of its grudging embrace of the markets as the state would increase its paternalistic and hegemonic role within the economy to bring about economic well being for the majority, but at the expense of financial discipline.  The Brazilian post war ‘economic miracle’ of the 50s and 60s, where the economy grew at 5-6% rates of GDP, would be repeated, but with the same long term consequences of foreign debt, hyperinflation and the bitter experience of authoritarianism. Another lost decade, such as the one experienced post 1982 by Brazil and Latin America, would be the long term consequence of his presidency. This time the authoritarianism would be at the hands of a neo-populist in the style of an anti-US, anti captitalist Brazilian Chávez, not the military who governed between 1964-1985.  This has singularly not been the case. The strong arm tactics of the Latin American populist have not been evidenced.  After winning in 2002, and again in 2006, with an increased percentage of the vote, (60% second time around) Brazil under Lula finds its democratic status at its highest level since 1985.  His electoral victories the were the most transparent since the return to democracy in 1985, unlike the shameful media and electoral manipulation to keep him out three previous times, caught on record by an indiscreet pro-Cardoso minister in the 1994 campaign. Despite US fears to the contrary, Lula has rejected the populist path of other Latin American leaders of the early 21st Century such as Morales of Bolivia, Correa of Ecuador, Ortega of Nicargua, and to a lesser extent Vázquez of Uruguay, or the Kirchners of Argentina.   He says he prefers to be known as popular president, rather than populist.​[3]​ So with political and macro-economic economic success assured, it is no wonder that the Lula model for Brazil is being put forward as a viable ‘third path’ for the emerging nations of the American continent, between the painful neo-liberal experience of the 90s under the umbrella of Free Trade for the Americas and the return to the previously tried and found wanting nationalising, anti-gringo populist, most typified by the uber neo-populist Hugo Chávez.  The secret of his success? At an Economist Conference in Brasilia in the summer of 2008 Lula addressed another audience of business correspondents and leaders he revealed his magic formula.^1	  BBC Newsnight, Stephanie Flanders, 28 October 2002^2	  Gionta Chatillard, El Mundo, 9-6-09.^3	  Maitena de Amorrortu, Cambio 16, 20-1-03

Lula da Silva's Brazil: a genuine third way and NEM for the Latin American continent?

https://pure.ulster.ac.uk/ws/files/11807936/DSAconf09-abs-Alvaro_Jaspe_Lula's_Brazil.doc

Lula da Silva's Brazil: a genuine third way and NEM for the Latin American continent?

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