Tuesday, September 28, 2010

President Lula Ends His Reign In October

Lula proves hard act to follow on political stage
By Jonathan Wheatley in São Paulo
Published: September 27 2010 18:57 | Last updated: September 27 2010 18:57

Dilma Rousseff with Luiz Inácio Lula da Silva at the Porto Alegre rally: critics say the frontrunner for the presidency wants a bigger role for the state
In the crush of people pushing their way to join the 35,000 in the main square of Porto Alegre, southern Brazil, shouts rise above the noise of fireworks, music and glaringly amplified speeches: “I want to see Dilma!” and the rejoinder, “I want to see Lula!”

President Luiz Inácio Lula da Silva and his chosen successor, Dilma Rousseff, are the headline acts in a rousing campaign rally – one of the last before Brazil’s elections this Sunday – that at one point has the crowd in Ms Rousseff’s home town, the capital of Rio Grande do Sul, Brazil’s southernmost state, giving a stirring, word-perfect rendition of the state’s anthem.

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Yet when Ms Rousseff finally takes the stage before the patriotic multitude, it is to a surprisingly muted reception. She gets most applause for comments on the $67bn share issue by Petrobras, the national oil company, announced officially that morning, which she compares with the $4bn sale of Petrobras shares by the previous, centrist government in 2000. “Did we sell any part of Petrobras to get [the $67bn]? No! Today we bought back what had been sold, for Brazil, for the Brazilian people!”

Only when she passes the microphone to President Lula himself does the crowd go wild. He has to wait for shouts of “Lula! Lula!” to fade before he can speak.

It seems odd that, in front of her home crowd, just nine days before an election pollsters say she will win by a thumping majority, Ms Rousseff should be second on the bill to Mr Lula da Silva and be so thoroughly upstaged by him.

But this, together with her comments on Petrobras, hints at much about her personal style and about what kind of government she will lead – if the pollsters are right – from January 1 next year.

“Under Lula, the main role of the presidency has been communication,” says Alberto Almeida, a political scientist in São Paulo. “My view is that Dilma will run it more as a generator of public policy. But the one thing only a president can do is communication – the rest you have to delegate.”

Mr Lula da Silva, indeed, has proved a consummate communicator and delegator – often to Ms Rousseff. He may seek an international role at the G20 or other international body but is expected to remain active in Brazilian politics.

She may lack her patron’s communication skills but few doubt her dedication to policy. During almost eight years as a senior figure in the Lula administration, her role was that of hands-on manager. She oversaw the government’s flagship infrastructure investment programme and others to provide cheap housing and electricity for the poor. She also masterminded legislation now before Congress that would give the state a much bigger role in Brazil’s fast-growing oil industry.

The daughter of well-to-do Bulgarian immigrants, she joined the armed resistance against Brazil’s military dictatorship and was jailed and tortured. More recently she was diagnosed with lymphoma, from which she was pronounced cured just as she was emerging as Mr Lula da Silva’s preferred successor. Many doubt she has the political skills that have enabled Mr Lula da Silva, for example, to keep a former member of the centrist opposition as governor of the central bank, often in spite of fierce opposition from his own party. Critics also suspect that Ms Rousseff would like to see a bigger role for the state across the economy.

Indeed, her comments on the Petrobras share issue make explicit what had previously only been hinted at: the operation was partly designed to amplify public control over the company. Guido Mantega, finance minister, said the share of Petrobras’ capital held by the government and other public entities rose to 48 per cent after the issue from 40 per cent before. (The government has a majority of its voting stock.)

Yet her advisers insist oil is a special and isolated case. One senior economic adviser assured the Financial Times there would be no change to the central pillars of Brazil’s macro-economic stability: inflation targeting, a floating exchange rate and gradual reductions in public debt.

Whether public debt really is falling is a moot point. By the government’s narrow definition of net debt, it has been on a downward trend throughout the Lula administration. But gross debt has recently been on an upward trend.

It is this kind of ambiguity that has raised doubts over what direction a Rousseff administration would take. She insists there would be no change to policies that appear set to deliver economic growth of over 7 per cent this year and are likely to keep the economy expanding at what many economists see as its potential, non-inflationary rate of about 4.5 per cent. Many of these policies were inherited from the opposition by Mr Lula da Silva in 2002. Though he kept them in place, he ended the previous government’s liberal reform programme.

Ms Rousseff appears less likely than Mr Lula da Silva to resume those reforms. At most, advisers say, there will be some fine tuning of macro policies. Otherwise, continuity is the word.

That is certainly what the crowds in Porto Alegre appear to want most.

The realities behind the cult of Lula
By Gideon Rachman
Published: September 27 2010 20:56 | Last updated: September 27 2010 20:56

Next week sees the retirement of the man described by Barack Obama as “the most popular politician on earth”. President Luiz Inácio Lula da Silva of Brazil, known simply as Lula, steps down after eight years in office, with a stratospheric approval rating of about 80 per cent. As a result, the Brazilian presidential election on October 3 will be a celebration of the past, as much as a signpost to the future. The almost certain winner will be Lula’s hand-picked successor, Dilma Rousseff.

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Lula has not quite achieved the global renown and secular sainthood of Nelson Mandela. But the Lula and Mandela myths have something in common. In both cases, a moving personal struggle has merged with a compelling national story, turning a single man into a potent symbol of a whole country’s transformation.

The Lula story has already been turned into a film, even before the man has left office – and it is easy to see why. Lula was one of eight children in a poor family from one of the remotest regions of Brazil. He left school early, worked as a shoeshine boy and then as a lathe operator before becoming a militant trade-union leader. He was briefly imprisoned under Brazil’s military dictatorship. His first wife died young, while pregnant. But Lula triumphed over the odds to become “the poor boy who came from a shack to be president of Brazil”.

Brazil grew richer and more powerful during his presidency. But, like Mr Mandela, Lula resisted the temptation to cling to power. He has not tried to rewrite the rules to get a third term in office. In any case, with a protégé to succeed him, he will remain a very powerful figure.

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Lula’s personal story has merged with the national narrative. For many years, Brazil has had something of a national inferiority complex. But like the poor boy made good, the country is now increasingly confident and assertive. The country has foreign reserves of more than $250bn and has recently discovered massive oil deposits offshore. Brazil provides the first letter of the Bric acronym that now defines the emergence of new, global powers. But it is less scary than China, less authoritarian than Russia and less chaotic than India.

The smiling, bearded avuncular Lula was the perfect, charismatic frontman for Brazil, reflected in successful campaigns to win the right to host both the Olympics and the football World Cup. Lula’s formal retirement will allow Brazil to reflect on how far the country has come.

Of course, there are elements of myth in the Lula story. His personal and political life contain episodes of ruthlessness that are glossed over in the biopic version. Brazil’s transition to democracy took place well before he took office. The foundations of the country’s economic success were laid by the reforms of his predecessor, Fernando Henrique Cardoso. One of Lula’s biggest economic contributions was simply not to mess things up – and this was achieved by the abandonment of the far-left policies that he had once advocated. It is true that Lula inherited a fiscal crisis and handled it with determination and aplomb. But much of the subsequent economic boom was down to the lucky fact of a global commodities boom, powered by Chinese demand. Lula has gained deserved credit for his anti-poverty policies. He has done less well in fighting corruption.

The notion of Lula the freedom-fighter also needs qualification. At home, the outgoing president has defended democracy. But he has pursued a foreign policy that is either cynical or naive – praising authoritarians such as Hugo Chávez in Venezuela and Fidel Castro in Cuba and pursuing an unlikely and irresponsible courtship of Iran’s President Mahmoud Ahmadi-Nejad.

Yet, for all the inevitable qualifications, Lula will deserve much of the hoopla and praise that surrounds his retirement. He will go down as the president who oversaw two historic transitions.

The first was the completion of Brazil’s embrace of capitalism and globalisation. In his early campaigns for the presidency, Lula had denounced “neoliberalism”. In office, he tackled inflation, paid back debt and fostered the conditions for Brazilian business to thrive internationally. As he noted wryly in a recent FT article: “There is no little irony in the fact that the union leader who once shouted ‘IMF out’ in the streets has become the president who paid off Brazil’s debts to the same institution – and ended up lending it $14bn.”

Brazil’s embrace of international capitalism under Lula has laid the foundation for the second transition, which has global significance. That is the emergence of a new “new world order” over the past decade. Unlike the previous “new world order” the latest iteration is not based on a “unipolar world” centred around the US and dominated by the west. The defining characteristic of this new “new world order” is the emergence of major economic and political powers in Asia and Latin America – with Brazil right at the forefront.

Just a few months ago, at a summit of the Brics, Lula proclaimed that – “Brazil, Russia, India and China have a fundamental role in creating a new international order”. Eight years ago, when Lula first took office, that statement would have sounded like hyperbole. Today, it simply sounds like a statement of fact. That is why the story of Brazil under Lula is much more than a movie-friendly myth.