10/11: Brazil: Lula and economic development

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Critical Analysis

Foro de Sao Paulo: Latin America Moves Left and Forward ( 0) Print This ShareThis

By Carmelo Ruiz Marrero writing from Puerto Rico

Counterpunch

Wednesday, Jul 18, 2012

The Foro de Sao Paulo (FSP) was attended by leaders of the Left from countries throughout Latin America in it's 18th conference on July 4-6. This year, the meeting was hosted by the Bolivarian Government of the Republic of Venezuela in Caracas. The Secretary General of Foro de Sao Paulo, Valter Pomar (center, white shirt) inaugurated the event. (Photo: AVN)

The Foro de Sao Paulo (FSP), a forum that brings together most of the Latin American left, had its 18^th meeting in the Venezuelan city of Caracas on July 4-6. In attendance were representatives of practically all of the Foro’s member organizations, including El Salvador’s FMLN, Nicaragua’s Sandinistas, Guatemala’s URNG (all three of them former guerrilla groups), the Cuban Communist Party, Ecuador’s Alianza PAIS, Uruguay’s Frente Amplio, Bolivia’s Movement Toward Socialism and the Puerto Rico Socialist Front, as well as leftist and socialist political parties from countries like Mexico, Costa Rica, Panama, Dominican Republic, Haiti, Barbados and Argentina.

The host country’s left pulled out all stops in helping to organize the event. Countless youth volunteers of the ruling party- president Hugo Chavez’s PSUV- looked after every detail of logistics and protocol, and the local communist party, the PCV, was also out in force. There was also a substantial number of observers and dignitaries from other parts of the world, including Russia, China, Vietnam, Saharaui, Lebanon, Palestine, France, Spain and Greece. VIP’s included Nobel laureate Rigoberta Menchú from Guatemala, and writers Ignacio Ramonet and Atilio Boron, who sat in places of honor near president Chavez at the closing activity.

Brazil’s delegation, which included the ruling Workers’ Party (PT) and the Communist Party (PcdoB, now celebrating its 90 years), had a commanding presence in Caracas. The PT was indeed the main driving force behind the FSP’s founding, and the meeting’s proceedings were presided over by the extremely capable Brazilian political strategist Valter Pomar, who is not only the Foro’s executive secretary but also a member of the PT’s top leadership.

Currently one of the world’s leading economies, Brazil has a gross domestic product dozens of times the size of any of its neighbors’. The country’s political and economic shadow looms over all South America. The PT has won the last three presidential elections- in the first two of these the winning candidate was former factory worker and labor organizer Luiz Inacio “Lula” Da Silva, and the current president is the former guerrilla and political prisoner Dilma Roussef. It must be regarded as the most important political institution of the Latin American left and one of the single most important political parties in the hemisphere. Lula fully intended to come to Caracas but could not do so due to health problems. He did, however, send a video greeting in which he expressed support for president Chavez’s reelection bid.

The FSP is definitely not to be confused with the World Social Forum, which also began in Brazil. Whereas the Social Fora are non-partisan, the Foro de Sao Paulo is openly, brazenly and proudly partisan and leftist. The terms of debate and discussion at the FSP are far to the left of what most American progressives would be willing to consider. In it there is open talk of class struggle, anti-imperialism, wealth redistribution, and yes, the dreaded “s” word, socialism. Socialism is indeed becoming an increasingly mainstream proposition all over the world- except in the USA, where the word is still used as an insult.

I must have been the only delegate in Caracas that noticed the total absence of Americans, which says plenty about the provincialism of most American leftists and progressives. But on the other hand, it was also evident that the Americans were not missed at all, nobody bemoaned their absence. Latin America is increasingly looking south. Only the right wing and ruling classes are looking north for answers and help in these changing times.

A little history

The FSP was founded in 1990, when the left was in its worst moment. The collapse of the Eastern European socialist bloc, the Soviet Union’s implosion, Tiananmen Square, the Sandinista electoral defeat. But the outlook was not all bad. After all, the dictatorships in South America and the genocidal wars in Central America were coming to an end, Haiti had its first freely elected president, Mandela was free and so was Namibia, apartheid ended, the Iran-Iraq war stopped, and cold war conflict zones like Afghanistan and Angola were cooling off. However, the new post-cold war “democracy” was a hollow political formality. The doctrine of neoliberalism reigned supreme- all talk of social justice, labor organizing and addressing economic inequality, or even merely suggesting that another world was possible, was thrown out the window. Leftists were jumping ship all over the place, repenting of their past and repackaging themselves into something more user-friendly.

Brazil’s PT, back then an opposition party, formed the Foro as a rallying point for all the stalwarts who refused to let the dream die, who insisted on believing in socialism and on choosing the difficult road, the one that leads to the rational society where there are no oppressors or oppressed.

How have times changed since then! The FMLN, which in the 1980′s was an outlaw band of guerrillas that the US was bent on stamping out, won the last presidental election in El Salvador, the Sandinistas are back in power in Nicaragua, in Uruguay the leftist Frente Amplio has won its second presidential election in a row and its current president, José Mujica, is a former Tupamaro guerrilla, the Cuban revolution survives, the people of Ecuador and Bolivia overthrew neoliberal governments and rewrote their countries’ constitutions, and Venezuela’s president Chavez, reviled by the corporate media, gets reelected again and again.

Brazil is now practically a different country. The PT has rescued the country from neoliberal stagnation and turned it into the world’s sixth economy. The national oil company Petrobras is the world’s second largest, it is larger than Microsoft and Walmart. Brazil’s government development bank, BNDES, is by far the largest public sector development funder in the world- yes, larger than the World Bank. Sao Paulo’s stock exchange is the world’s second largest. The PT’s political line is felt all over the world thanks to Brazil’s activist foreign policy, which is forging solid trade and diplomatic links not only with Latin American neighbors but also with countries in Africa, the Middle East, the Asia Pacific region, China and India. Brazil is one of the BRICS (Brazil, Russia, India, China, South Africa) countries, which together are expected to outgrow the G7 economies by 2032.

And then there’s the regional initiatives. The governments of Argentina, Brazil and Venezuela teamed up with civil society activists in trashing then US president George Bush’s proposed Free Trade Area of the Americas and replaced it with the Bolivarian Alternative of the Americas (ALBA). And in the last couple of years, under the initiative of Hugo Chávez, the region’s countries are grouping together as the Community of Latin American and Caribbean States (CELAC), which explicitly excludes the US and Canada. When was the last time that the US progressive media even mentioned this last development?

Caracas 2012

The Caracas FSP meeting took place in a context of upbeat optimism in the face of these substantial advances. But there is also concern and precaution because of the actions of an implacable enemy that refuses to give up. Only two weeks earlier Paraguay’s president Fernando Lugo was overthrown by the country’s right-wing and oligarch-dominanted legislature. The coup d’etats in recent years in Honduras, Venezuela and Ecuador- only the first of these successful- were fresh in the memory of all those present. The meeting’s final document, the Caracas Declaration, stated that,

“The Honduras coup and the overthrow of Fernando Lugo indicate that the right is willing to use violent means or the manipulation of institutional means to overthrow governments that do not serve its interests.”

All over Caracas, in every street corner, there is overwhelming evidence that the presidential campaign has started. It is a totally polarized country. Its public life has no room for the dilettante or the undecided. The tension in the streets is palpable. The Paraguay coup and the even more recent massive electoral fraud in Mexico, courtesy of the right-wing PAN party, are making the mix more volatile. Opinion polls agree that Chavez has a solid advantage over his rival, the reactionary Capriles-Radonsky, in the upcoming October elections. But the left has taken for granted that Venezuela’s right wing is and always will be a bad loser. According to the Caracas Declaration,

“The right already considers the victory of Chavez to be a certainty… (it’s) preparing the conditions to refuse to accept the result… Faced with this situation, the Foro de Sao Paulo calls on all progressive and leftist forces to support Venezuelan democracy, and to reject the right wing’s attempts at destabilization.”

The meeting’s participants were emphatic in condemning the starring role of right-wing news media in the subversion against progressive governments and against the region’s leftward trend (If you think Bill O’Reilly and Glenn Beck are bad, you should see what’s on Latin America’s right-wing television). Quoting the Caracas Declaration again,

“The right wing has unleashed a broad media campaign operated internationally through powerful communications consortia… Major corporations develop destabilization plans and behave as factors of power, capable of placing themselves above the public powers that emanate from universal suffrage. Large media enterprises defy democracy and its institutions on a daily basis. This is perhaps one of the biggest challenges that leftist governments face: democratizing communications”.

The Caracas Declaration also included expressions of solidarity with the Haitian and Paraguayan people in their struggles against oppression, with the Colombia peace process, and with presidents Correa of Ecuador and Morales of Bolivia. The document also declares support for Palestinian self-determination, for the release of Puerto Rican political prisoner Oscar Lopez, who has been incarcerated in the US for 31 years, opposition to military intervention in Syria and Iran, and has statements on other issues such as the environment and discrimination against women. With regards to decolonization, it calls for the return of the Falklands islands to Argentina, the self-determination and independence of Puerto Rico, the decolonization of the French and Dutch Guyanas, and support for the brave struggle of Northwest Africa’s Saharaui. Valter Pomar presented Ecuador’s chancellor Ricardo Patino, who was in Caracas heading his country’s delegation, with an FSP declaration calling on his country to give asylum to Wikileaks’ Julian Assange.

A long way to go 

But let’s not fool ourselves. There is still plenty of work to do in Latin America. The process of change is riddled with contradictions, as any process of social change would be. The region still has a long road to go towards socialism. And the failure of the FSP and leftist governments to address environmental issues in any meaningful way is nothing short of alarming. As much as Bolivian president Evo Morales and the new Ecuadorian constitution may talk about the environment, mother earth (pacha mama) and right livelihood (sumak kawsay), the fact is that Latin America’s leftist revolution runs on oil and natural gas. Fossil fuels are an indispensable source of foreign exchange for Brazil, Venezuela, Ecuador and Bolivia, and dependence on their export is increasing.

The agribusiness model of farm production, incompatible with ecology or food sovereignty, is running amok in South America- and among the pesticide-drenched monocultures, Monsanto’s genetically engineered Roundup Ready soy is king. The construction of mega hydro dams in the Amazon jungle (like the controversial Belo Monte project) and of super highways linking Brazil to the continent’s Pacific coast continue apace. Contrary to popular perception, bringing greens and reds together is not an easy task. One can argue that is has never been successfully done yet (the insights of social ecologist Murray Bookchin could really come handy now).

It would be a huge disservice to uncritically worship and glorify the leftward surge and progressive governments of the new Latin America and sweep their failings and inconsistencies under the rug. But it would be equally unhelpful and unfair to dismiss them out of hand for “not being leftist enough” or for being environmentally destructive. It’s a fine line to walk. Ultimately, it is better to embrace these movements and work within them to try to steer them into the right path than to oppose them and bark at them from the sidelines. The latter course of action would play right into imperialism’s strategy.

Carmelo Ruiz Marrero is a Puerto Rican author, journalist and environmental educator. He is also a research associate of the Institute for Social Ecology. His blog on global environment and development issues is at http://carmeloruiz.blogspot.com/search/label/eng. His Twitter feed is @carmeloruiz.

http://axisoflogic.com/artman/publish/Article_64747.shtml

Lula and economic development

18 - June - 2010 | 1

Issue 20/April-June 2010
By Guy Burton

If economic development under the Lula administration can be likened to a football match, it may be seen as a case of two distinct halves - and which may be heading for extra time. That it does so will be regardless of whoever follows him in the presidency, whether it remains in the hands of his Workers Party (PT) or the opposition.

Lula’s successor will undoubtedly use the same strategy, the primary focus of which has been inflation control and which enabled him to introduce two key state-led programs in each half of his presidency: redistribution through the ‘family grant’ (bolsa familia) system in his first term and a package of infrastructure investment through the Accelerated Growth Program (PAC) during his second.

The government’s economic and social actions are credited with not only raising Brazil’s global status alongside that of other developing BRIC economies and G20, but also in helping insulate Brazil’s economy and society from the worst effects of the 2008 financial crisis. Lula will leave office at the end of 2010 with Brazil in a strong position, but much of that achievement may also be attributable to his commitment to maintain the economic policy of his predecessor.

In the beginning…

While the 2000s has undoubtedly been Lula’s, the 1990s belonged to the sociologist and former finance minister, Fernando Henrique Cardoso. In 1993-94 he introduced the anti-inflationary Real Plan which brought in a new currency, the real, which was pegged to the dollar. Cardoso aimed to put end to the ‘Lost Decade’ of the 1980s, when high input costs and low productivity resulted in economic decline and pressure for structural adjustment across the region.

The fall in inflation was almost immediate and delivered electoral success to Cardoso’s alliance between the centre-left Brazilian Social Democrat Party (PSDB) and centre-right Liberal Front Party (PFL, now Democrats) in the presidential election in 1994. In the years that followed, low inflation ensured a more stable business environment which along with various neoliberal measures such as privatizations and financial and trade liberalization led to a surge of foreign investment. Imports rose from US$27.8bn in 1992 to US$75.7bn in 1998 while the economy expanded by 4.2% of GDP in 1995, followed by 2.2% in 1996 and 3.4% in 1997.

Fernando Henrique Cardoso , former President of Brazil, Chairman of the Panel of Eminent Persons on United Nations-Civil Society Relations, addresses a press conference at headquarters. UN Photo/Mark Garten

However, Brazil’s economic growth during the 1990s was modest, even superficial. In order to pay for imports the country required greater levels of foreign resources. The downside was that this contributed both to growing public debt and the risk of capital flight. The latter was realized in the wake of the 1997-98 Russian and East Asian financial crises when investor confidence in developing countries such as Brazil was weakened. Following his successful re-election in 1998 Cardoso was obliged to loosen his economic policy, by deval‎uing the real and loosening the inflation target.

This was the economic model that Lula inherited after winning the 2002 election. But rather than change it, he embraced it. That he did so was due to both short- and long-term factors. First, the PT underwent a policy re-eval‎uation during the 1990s. At Lula’s first presidential contest in 1989 he failed to win over both the public and the media. He and the PT were seen as dangerous socialists who were swimming against the tide of history, especially following the fall of the Berlin Wall and the collapse of state socialism in Eastern Europe. During the following contest in 1994 Lula and the PT opposed the Real Plan, assuming that it would fail like previous anti-inflation programs. The party’s mistaken position election results highlighted the need to adopt a more pragmatic approach and support for more monetarist policies.

Second, Lula and his close associates in the PT leadership had become detached from the wider party. The 1989 and 1994 contests the party’s presence had been largely collective affairs that involved a wide range of party activists and social movements, including human rights activists, intellectuals and new independent trade unions. These groups had formed the basis of the party since its foundation in 1980. However, following his second presidential election defeat Lula demanded more control over strategy in the future. This coincided with two developments occurring during the 1990s: one, the party’s membership began to change, to include more professionals and middle class supporters who were less ideological in their views; and two, the PT’s more pragmatic stance appeared successful, contributing towards electoral success, including control of several important cities and state governorships. By 2001 Lula’s direction seemed sufficiently successful to encourage the membership to trust the leadership to make any cross-party alliances that it wished, including with the free-market Liberal Party.

Third, Lula and his election team saw no alternative to the model in 2002. Although Lula supported the prevailing economic model, it was not apparent that the markets believed this. As the election date approached the markets remained highly volatile. This encouraged political and business leaders to demand that Lula and the other election candidates commit themselves to pre-existing contracts made by the Cardoso administration, including the servicing of the public debt and the enforcement of a new IMF agreement. At the same time Lula and his election team published their ‘Letter to the Brazilian People’ which spelled out their commitment to Cardoso’s economic policies. This manifesto was significant in several ways, from the narrow nature of its drafting through to Lula’s refusal to qualify it following his election (1).

Insufficient economic growth

That Lula held to a policy of low inflation, high interest rates and liberalization caused considerable consternation among some of the PT’s constituencies. This included those left-wing intellectuals and members of the organized labor and the peasant movements who did not share his pragmatic stance and middle class concerns.

However, even if Lula had been predisposed to their views, there were two additional factors following the election that prevented him from doing so. Politically, he did not command a legislative majority in Congress. The PT won 91 out of 513 deputies in the 2002 election, which made it the largest party but did not give it a majority. He was therefore obliged to seek cross-party support with the catch-all and centrist Brazilian Democratic Movement Party (PMDB) both in the legislature and in cabinet. This only served to dilute the strength of the left in the PT.

Economically, Brazil was in a weak position in early 2003. Externally, the country faced lower levels of foreign credit following the financial crises of the late 1990s and the short recession in North America and Europe a few years later. Internally, the public deficit was large and continuing to rise. Although the markets had recovered following Lula’s support for his predecessor’s policies, the situation remained fluid. An IMF agreement dating back to 1992 also limited the state’s capacity to invest in infrastructure; breaking it could have undone the already weak levels of business confidence in the new government.

Given the political and economic situation, the new government’s economic policy was limited during its first year. A Development Plan was drawn up which identified several sectors for future work, including on semi-conductors, software, pharmaceuticals and capital goods (the latter which remained largely undefined). The administration also began to diversity its international economic relations by seeking ties beyond the US through closer links with the EU and non-OECD countries. This include the formation of the G3 with India and South Africa, followed by alliances with China and other developing countries against the North over agricultural subsidies during the abortive WTO negotiations in Cancún in 2003. At the same time the government was also burnishing its pro-market credentials. This included the passage of legislation relating to public private partnerships (PPPs) and the creation of a neo-corporatist Economic and Social Development Council (CDES) to provide advice to the president, half of whose members came from the business world.

Luiz Inácio Lula da Silva, President of Brazil. UN Photo/Mark Garten

The economy remained virtually static in this period, growing by only 0.54% of GDP. Recovery began the following year, rising above 5% of GDP in 2004 before settling back to 3.2% in 2005 and 4% in 2006. The main driver in this period was a rise in exports, of which agricultural commodities and a cheaper real played a significant role. For Lula and his supporters, economic growth was essential since it was believed that it would contribute to more jobs, higher incomes and lower levels of poverty.

The government’s optimism was misplaced, however. The Brazilian economy remained structurally weak and its growth both unsustainable. The impact of the late 1990s and early 2000s illustrated this, through what Csaba Deák called ‘hindered accumulation’ (2). Reviewing the first year of the PT administration he noted that the economic policy of both Cardoso and Lula was similar to that of followed that of previous governments, going back to the colonial period. Since the nineteenth century production surpluses had been largely expatriated through import consumption, foreign debt repayments and profit remittances. What little remained went back into the productive process as reinvestment, but never at a sufficient level to achieve substantial economic or social transformation across society as whole. As a result, most Brazilians were ‘losers’ of this process, remaining poor. By contrast a limited group who benefited from this surplus acquisition and spending constituted the ‘winners’. That the situation remained was evident in those sectors that did best in the early Lula years: large landowners and farmers working in the export sector whose economies of scale were more effective than those of small-scale and domestically-oriented tenant farmers.

In addition, that the economic growth in this ‘golden half decade’ was insufficient was apparent in two further ways. First, the growth rate was low, both historically and comparatively. The 1960s and 1970s, when the economy grew by 6% and 8.6% of GDP respectively, were the periods when transformation was achieved through the development of an industrial and manufacturing base. By contrast, a growth rate of 3.2% between 2001 and 2009 does not appear significant, especially against that of other comparable middle-income countries. Second, the reliance on agricultural exports meant that the larger proportion of poor people in the cities remained unaffected by the boom: while poverty declined across the country during the 1990s in urban areas it increased, from 13.5% in 1995 to 15% by 2004 (3).

Social democracy in action: the bolsa familia and PAC

Despite Brazil’s relatively poor economic performance, Lula continues to be extremely popular and the country stronger than before. How to account for this? The roots may be found in another aspect of its economic structure, along with the two key programs undertaken by the government in its first and second terms respectively: the bolsa familia and the PAC.

First, although the Brazilian economy is structurally weak and has failed to grow fast enough, it does have a comparative advantage over several of its neighbors in the region. This includes a much larger internal market (around 200 million in population) and a relatively more diversified and protected economy. This is apparent in particular sectors, including the aerospace industry and in the less onerous demands that its membership of the regional trading bloc, Mercosur, has had when compared to that which NAFTA has had on Mexico.

Second, Brazil has benefited from a redistribution mechanism introduced during Lula’s first year of office. “The bolsa familia” consists of four different programs that provided social security to previously excluded and marginalized people, combining several different social assistance and conditional cash transfers. They include some that predated the Lula government with others that were introduced for the first time, from payments made to mothers to send their children to primary school (the school grant or bolsa escola) and to discourage child labor along with financial assistance for basic foods and maternal nutrition.

The government moved quickly to increase the number of recipients of the program. Between 2003 and 2006 the number of beneficiaries increased from around 5 million to 11.1 million, of which 1.8 million mostly based in the poorer Northeast joined in the months preceding Lula’s re-election. The importance of the bolsa familia was especially important, given that for the proportion of employment earnings to household income had declined across Brazil from 90% to 48% between 1995 and 2004. As a result, the poor became an extremely important social and electoral constituency whose influence helped determine Lula’s re-election in 2006.

Lula’s re-election in 2006 was significant for the separation in the electoral base of the PT in the presidential and congressional elections that year. The effect of the bolsa familia was noted through the shift in Lula’s support from the professional and middle class voters in the PT’s historic heartlands in the South and Southeast to poorer and more rural voters in the North and Northeast. This latter region not only included a great number of bolsa recipients, but was notable for the fact that between 60% and 85% of all valid votes went to Lula (4). The scope of the bolsa familia has not been fully tapped politically though: despite the substantial increase in beneficiaries prior to Lula’s re-election, it only reached 40% of the eligible population.

Third, Brazil’s economic prospects have been helped by a stronger role for the state in response to the limits presented by economic liberalism. At the start of Lula’s second term in 2007, the government launched the Accelerated Growth Program (PAC). Its purpose was to overcome the constraint of low economic growth by expanding the country’s transport, energy, sanitation and housing infrastructure. The four year program was calculated to cost around R$504bn and would use both public and private funds, the former being provided mostly through state banks such as the National Bank of Economic and Social Development (BNDES). The government believed that it would add an additional one percentage point of economic growth each year, which would help push the country in a more dynamic fashion. According to Finance Ministry figures, the PAC soon appeared to have the desired effect: GDP growth increased from 4% in 2006 to 6.1% and 5.1% in 2007 and 2008 respectively.

The slowdown in 2008 may be traced to the financial crisis that swept the globe in the months after September. In contrast to several of its neighbors and other countries in the North, Brazil appeared to weather the storm reasonably well. The result was a highly self-congratulatory tone by the government which while stopping short of claiming advanced foresight of the crisis, emphasized the role that the PAC had as a form of insulation and sustaining productive activity during a period of growing retrenchment.

Beyond the PAC, the government’s other responses to the crisis included a loosening of the money supply and the injection of state credit into the country’s banks, sectors and firms. The effect of these measures helped turn the economy around, bottoming out by the middle of 2009 after economic growth fell from 6.8% of GDP to 1.3% between the final quarters of 2008. Currently the government estimates economic growth for 2010 will be around 5% of GDP. This is slightly down on anticipated growth rates at the time of its launch but may be attributable to the lower level of private contributions following the crisis (5).

Brazil after Lula: continuity whoever wins

In October 2010 Brazilians will go to the polls. For the first time since direct presidential elections returned in 1989, Lula will not be a candidate. Instead his hand-picked successor, Dilma Rousseff, a former energy minister and currently the president’s chief of staff, will be the PT candidate. Her main rival will be the same man that Lula beat in 2002, the PSDB’s José Serra. A former health minister in the Cardoso government, Serra subsequently carved out an independent base of support as a former mayor (2005-06) and governor (2007-10) of São Paulo city and state respectively. In mid-May, several months before the campaign will officially begin, public opinion appeared evenly split between the two.

Aiming to get the upper hand in this contest, Lula and Rousseff launched PAC2 in March, which is set to run from 2011 to 2014. Estimated at around R$959 billion over the period (nearly double what the first PAC cost), the government will finance it though revenue from the recently-discovered oilfields in the South Atlantic. It is planned that half of the funds will be spent in the energy sector, followed by a quarter for low cost housing and 11% towards transport (6). The publicity surrounding the event was designed to link Rousseff to Lula, who retains high popularity in the final year of his presidency, as the candidate of continuity and of the PAC and social redistribution. Given the dependence on oil revenues to fund the program, question marks may be raised about both its accessibility and the political will to achieve it, especially in the wake of the current environmental disaster following the deep sea oil spill in the Gulf of Mexico.

For his part, Serra also seems to offer Brazilian voters more of the same. When he announced his candidacy in April he noted that poorly maintained roads and overcrowded airports had served to slow Brazil’s economic growth. His economic manifesto is primarily concerned with achieving more effective implementation of infrastructure projects than present, along with lower taxes to stimulate growth - which he believes could be at least 50% higher than it currently is. At the same time he has proposed creating a PAC for health and public security while also endorsing his support for the bolsa familia - a position that the PSDB also held during the 2006 election. That Serra appears to offer much the same as that presently offered by Lula and the PT highlights the extent to which the political and economic situation in Brazil has stabilized since the 1990s

Just as the potential successors to Cardoso lined up to declare their commitment to the economic model set out by the Real Plan in 2002, the main contenders in 2010 are keen to show their support for the two main hallmarks of the last eight years: the bolsa familia and the PAC. The Real Plan provided for low inflation, even as it exposed the country to fiscal deficits and occasional instability during times of crisis. Those low levels of inflation and limited opening up of the Brazilian economy, along with a modest economic boom, have in turn provided the basis for public investment, both in social redistribution programs and infrastructure development.

The coming campaign will doubtless consist of both main candidates denouncing and criticizing the other. The value of the prize at stake will mean that the tone will no doubt be shrill as each tries to portray the image of the other in the presidency in suitable apocalyptic terms. Yet the reality remains that there has been and remains considerable overlap between the two, areas where the difference is more style than substance. Consequently, both Rousseff and Serra will have more in common than they care to admit. But this should not disguise the fact that the main parameters of Brazil’s economic policy look set to continue whoever takes office next January.

Guy Burton
Research associate on the Latin America International Affairs Program at the London School of Economics (LSE) Ideas Centre. He holds a PhD in Government from the LSE with particular focus on the Cardoso and Lula governments.

References

(1) MOLLO, M de LR & SAAD-FILHO, A “Neoliberal Economics Policies in Brazil (1994-2005): Cardoso, Lula and the Need for a Democratic Alternative,” New Political Economy, 11(1): 99-123, 2006.

(2) DEÁK, C, “Brazil: The Partido dos Trabalhadores in government,” Soundings, 28: 143-155, 2004.

(3) HALL, A, “Brazil’s Bolsa Família: A Double-Edged Sword?” Development and Change, 39(5): 799-822, 2008.

(4) HUNTER, W & POWER, T, “Rewarding Lula: Executive Power, Social Policy, and the Brazilian Elections of 2006,” Latin American Politics & Society, (49)1: 1-30, 2007.

(5) GOVERNO DO BRASIL, Balanço 3 Anos Programa de Aceleração do Crescimento (PAC): Fevereiro de 2010.
http://www.brasil.gov.br/pac/relatorios/por-balanco/balanco-3-anos/balanco-3-anos/parte-1-abertura [accessed 18 May 2010]

(6) LATIN AMERICAN NEWS, “On to the virtuous circle,” March, 2010.

The views and opinions of contributors expressed herein do not necessarily state or reflect those of Global Affairs

http://www.globalaffairs.es/en/lula-and-economic-development/

BRAZIL: FUNDING FAMILIES, FEEDING MINDS

Wednesday, 25 July 2012 11:37 Francis McDonagh

President Lula lifted millions of Brazilians out of extreme poverty and at the heart of his social policies was Bolsa Familia, his family grant scheme that has been much praised abroad. But how key a role was actually played by Bolsa Familia?  Francis McDonagh takes a look.

Funding Families, Feeding Minds*

Francis McDonagh

Brazil's social policies under President Luíz Inácio Lula da Silva, in office from 2003 to 2008, lifted millions of Brazilians out of poverty and at the heart of this process is his family grant scheme (the Bolsa Família). The programme arouses huge enthusiasm among policy-makers and beneficiaries, but has it really reduced inequality and improved the educational outcomes of the poorest children?

The World Bank is unequivocal, though it is an interested party, because it helped to design the programme and funds it: 'Can social policies go beyond assistance and become active tools of social and economic transformation? Brazil is showing us that they can.' And a recent Financial Times article referred to 'Brazil's Bolsa Família, a welfare programme that pays poor families for sending their children to school, is renowned in development circles as one of the biggest and most effective programmes for poverty reduction in the world.'

So what is this programme? It is what is technically called a 'conditional cash transfer programme'. According to Brazil's social development ministry, the programme supports 13 million families with a per capita income of less than R$70 (US$34) a month with a payment – usually to the mother - of between R$32 (US$16) and R$306 (US$150), depending on family income, the number of children and their age and whether the mother is pregnant or nursing. It is conditional on the children attending school, being vaccinated, and links the family into various other support programmes. The Lula government, with the advice of the World Bank, launched this integrated programme in 2003, but it goes back to local initiatives in at least 1995, and Lula's predecessor, Fernando Henrique Cardoso, introduced a school grant programme. Cardoso, as finance minister, was the author of the 1994 economic stability programme linked to a new currency, the real, and the continuation of conservative economic policies under Lula did much to encourage the economic growth of the last 10 years that has increased employment and made poverty reduction possible.

The early versions of the programme aroused great interest, and Mexico sent researchers to Brazil in the late 1990s before starting a similar programme.

Beneficiaries talk of having their lives changed by the programme. Typical of the testimonies is this reported by the World Bank from a mother in a favela near Brasília, Dinalva Pereira de Moura: 'The programme has been a marvellous thing for me and my family. I have three children and my husband is unemployed. The Bolsa Família helps me buy food. Sometimes I can even buy fruit for the children. My children know that when we receive the money, they will have more to eat, and that makes them happier. And they don't skip school, because they know that the money depends on their going.' A phrase that recurs in beneficiaries' descriptions is 'dignity'. of its own. According to the World Bank, something like 20 other countries have started or are developing programmes modelled on Brazil's.

What this testimony makes clear is that the programme really is reaching the very poor, and the support it provides is at the level of ensuring that a family has an adequate diet. But it goes far beyond a simple cash grant. One of the keys to its success is the integration of various lines of support, including training and loans to set up a small business in areas such as hairdressing or dressmaking. Under Lula's successor, Dilma Rousseff, the programme forms part of an umbrella anti-poverty programme, 'Brazil without extreme poverty', which increases the links to other support programmes. The programme is also is extremely economical, costing 0.5% of Brazil's GDP, and provides a stimulus to the economy much greater than the initial outlay. This brings is support from quarters not normally keen on social spending. The Financial Times article mentioned above quoted a Brazilian banker as saying: 'With nearly 100 per cent of 15- to 16-year-olds attending school thanks to the Bolsa Família, this is investment in human capital. It creates a middle-class. This is where the productivity will come from, and where the consumer demand will come from.'

But to claim that this programme by itself has pulled millions out of poverty is open to question. The World Bank itself notes other factors: 'Key drivers of this have been low inflation, consistent economic growth, well-focused social programs, and a policy of real increases for the minimum wage.' In fact, crucial to reducing poverty and income inequality was the Lula government's policy of increasing the minimum wage at an average of 5.8% a year, above inflation and above the growth in the economy; it stands today at R$622 (US$305) per month or R$2.83 (US$1.17) an hour.

The specifically educational achievements of the Bolsa Família are less clear. The results of the 2010 sample census show that the percentage of young people aged 7-14 not in school fell from 5.5% to 3.1%, which represents progress, but not a dramatic transformation. The greatest increases in attendance were in pre-school education and in the 15-17 age range. More serious are questions about the quality of state education in Brazil. In the PISA international comparison of educational achievement Brazil's ranking is 54 out of 65 countries, compared with 20 for the UK, though PISA describes this as representing 'impressive gains from a very low level'. Serious efforts are being made to improve state education: the proportion of GDP Brazil spends on education (5.7%), is higher than in most of the other rapidly growing economies known as BRICS (China 3.3%, Russia and India 4.1%, South Africa 6.1%), and slightly higher than in Britain (5.6%), and set to rise to 7%. On the other hand, it was only in 2009 that Brazil decided to increase the period of compulsory education from ages 6-14 to ages 4-17. There is also the problem that responsibility for schools is divided between the federal government and Brazil's 27 states and 5,500 municipalities, and the financial resources vary considerably from the rich South-East to the much poorer North-East and North, so much so that nine states, catering for a third of Brazil's pupils, are unable to find the funds to cover the legal minimum spending per pupil, and require additional support from the federal government.

These public policies, however, operate in a social and cultural context that is highly unfavourable to equality of opportunity in education. Brazil remains one of the world's most unequal societies. While income inequality has been reduced in recent years, wealth inequality, the ownership of assets, especially land, remains highly unequal. This is reflected in the disparity of spending between state education and the private sector, which caters for 18% of the school population. Where the state of Rio Janeiro, a relatively generous funder of education, pays R$3,500 (US$1,715) a year per pupil, parents of pupils in private schools will pay R$12,000-R$24,000 (US$6,000-12,000) in fees, allowing for much higher levels of staff qualifications and quality of premises and equipment.

In a survey of 'the 50 best schools in São Paulo', by the news magazine Veja, all the schools listed are private, just over half of them Catholic – all state schools in Brazil are secular. The magazine summed up the advantages of these schools as follows: 'In addition to the high academic level of the teachers, they have a range of parallel activities in arts and sports. They use a variety of techniques to assess both students and teachers and keep to a reasonable limit of pupils per class, which allows for personalised support. Finally, they offer laboratories, sports grounds and gymnasia, computers, libraries and other equipment and facilities that allow the staff to reach maximum efficiency.' It is a different world from the state sector, and helps to explain why the proportion of student

In addition, as the government economic institute, IPEA, commented in its latest report on education policy, Brazil still bears 'the legacy of the agricultural exporting and slave-owning past'. A dramatic sign of this comes in the illiteracy statistics. While the overall percentage of illiteracy in Brazil in 2009 was 9.7%, and roughly equal between men and women, the percentage among whites was 5.7%, but among Afro-Brazilians it was 13.9%. There are some disadvantages that cash transfers alone cannot overcome.The proportion of students from the state sector reaching one of São Paulo's top universities, USP, is only 28%.

*An edited version of this article appeared in The Tablet. The photos, by Manuel Romário Saldanha Neto, show conditions in a state school in a poor district of Recife, where the Bolsa Família is important.

This article was submitted to LAB by:

Sue Branford

http://www.lab.org.uk/index.php?option=com_content&view=article&id=1489:brazil-funding-families-feeding-minds&catid=66:analysis&Itemid=39

Brasil

The former guerrilla set to be the world's most powerful woman ( 10) Print This ShareThis

By Les Blough (Axis of Logic); Hugh O'Shaughnessy (The Independent);

Axis of Logic Commentary. The Independent.

Tuesday, Sep 28, 2010

Dilma Vana Rousseff, likely to be elected president of Brazil next weekend.

Editor's Commentary: Dilma Rousseff was a guerilla fighter who led a resistance movement against a military dictatorship in Brazil 40 years ago and was imprisoned and tortured by the U.S.-backed regime from 1970 to 1972. It's difficult to know if she has retained that revolutionary commitment or if she has softened to President Lula's "center left" political agenda. But if she's made of the same stuff as she was back then, she may give new meaning to "blowback" for Washington. Lula appointed her Chief of Staff in 2005 and she is now expected to become Brazil's next president in the election next weekend. The following article features Dilma Rousseff as an example of women in powerful political positions. It's interesting that the authors list a number of countries, exemplary of women in leadership positions, but ignore Venezuela which has one of the greatest numbers of women of all in powerful government posts and elected offices.

In Venezuela, women head 4 out of 5 branches of government, all except the executive office. They head the National Assembly, Supreme Court, National Electoral Council and Human Rights Office. A 2009 study by International IDEA showed women holding 31 (18.6%) of seats in the National Assembly giving Venezuela the 8th highest level of women's participation in congress in Latin America, more than the average for the region and higher than Chile, Brazil, Colombia and many other countries. Before President Chávez was elected, women held only 5.9% of the seats in congress, the 3rd lowest rate in the region. Women in the Venezuelan congress more than tripled since Chávez came into power. Only 3 of the 25 state governors are women, the 3rd highest in the region, but here again, women are making political gains in Venezuela.

One of the reasons this trend is likely to continue is because women are rapidly taking charge of many of the country's communal councils, first established in 2001 and empowered by central government. The communal councils enable citizens to participate in local and national political life. There are now over 30,000 communal councils in Venezuela with millions of members, and women hold various leadership positions in most of them. A report by Sujatha Fernandes, a U.S. sociologist concluded: "barrio women in Chávez's Venezuela… have sought to take the initiative at the local level to make decisions regarding their community and the implementation of local programs. … these women are agents who are building new spaces of democratic community participation."

If Dilma Rousseff is elected president of Brazil next weekend, she will join the ranks of other powerful women in Latin America like Cristina Ferdández, President of Argentina, Colombian Senadora Piedad Córdoba and the women who are the vangaard of the Bolivarian Revolution in Venezuela.

- Les Blough in Venezuela

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Brazil looks likely to elect an extraordinary leader next weekend

Dilma Rousseff in her 1970 police mugshot, when she led a revolutionary group

The world's most powerful woman will start coming into her own next weekend. Stocky and forceful at 63, this former leader of the resistance to a Western-backed military dictatorship (which tortured her) is preparing to take her place as President of Brazil.

As head of state, president Dilma Rousseff would outrank Angela Merkel, Germany's Chancellor, and Hillary Clinton, the US Secretary of State: her enormous country of 200 million people is revelling in its new oil wealth. Brazil's growth rate, rivalling China's, is one that Europe and Washington can only envy.

Her widely predicted victory in next Sunday's presidential poll will be greeted with delight by millions. It marks the final demolition of the "national security state", an arrangement that conservative governments in the US and Europe once regarded as their best artifice for limiting democracy and reform. It maintained a rotten status quo that kept a vast majority in poverty in Latin America while favouring their rich friends.

Ms Rousseff, the daughter of a Bulgarian immigrant to Brazil and his schoolteacher wife, has benefited from being, in effect, the prime minister of the immensely popular President Luiz Inacio Lula da Silva, the former union leader. But, with a record of determination and success (which includes appearing to have conquered lymphatic cancer), this wife, mother and grandmother will be her own woman. The polls say she has built up an unassailable lead – of more than 50 per cent compared with less than 30 per cent – over her nearest rival, an uninspiring man of the centre called Jose Serra. Few doubt that she will be installed in the Alvorada presidential palace in Brasilia in January.

Like President Jose Mujica of Uruguay, Brazil's neighbour, Ms Rousseff is unashamed of a past as an urban guerrilla which included battling the generals and spending time in jail as a political prisoner. As a little girl growing up in the provincial city of Belo Horizonte, she says she dreamed successively of becoming a ballerina, a firefighter and a trapeze artist. The nuns at her school took her class to the city's poor area to show them the vast gaps between the middle-class minority and the vast majority of the poor. She remembers that when a young beggar with sad eyes came to her family's door she tore a currency note in half to share with him, not knowing that half a banknote had no value.

Her father, Pedro, died when she was 14, but by then he had introduced her to the novels of Zola and Dostoevski. After that, she and her siblings had to work hard with their mother to make ends meet. By 16 she was in POLOP (Workers' Politics), a group outside the traditional Brazilian Communist Party that sought to bring socialism to those who knew little about it.

The generals seized power in 1964 and decreed a reign of terror to defend what they called "national security". She joined secretive radical groups that saw nothing wrong with taking up arms against an illegitimate military regime. Besides cosseting the rich and crushing trade unions and the underclass, the generals censored the press, forbidding editors from leaving gaps in newspapers to show where news had been suppressed.

Ms Rousseff ended up in the clandestine VAR-Palmares (Palmares Armed Revolutionary Vanguard). In the 1960s and 1970s, members of such organisations seized foreign diplomats for ransom: a US ambassador was swapped for a dozen political prisoners; a German ambassador was exchanged for 40 militants; a Swiss envoy swapped for 70. They also shot foreign torture experts sent to train the generals' death squads. Though she says she never used weapons, she was eventually rounded up and tortured by the secret police in Brazil's equivalent to Abu Ghraib, the Tiradentes prison in Sao Paulo. She was given a 25-month sentence for "subversion" and freed after three years. Today she openly confesses to having "wanted to change the world".

In 1973 she moved to the prosperous southern state of Rio Grande do Sul, where her second husband, Carlos Araujo, a lawyer, was finishing a four-year term as a political prisoner (her first marriage with a young left-winger, Claudio Galeno, had not survived the strains of two people being on the run in different cities). She went back to university, started working for the state government in 1975, and had a daughter, Paula.

In 1986, she was named finance chief of Porto Alegre, the state capital, where her political talents began to blossom. Yet the 1990s were bitter-sweet years for her. In 1993 she was named secretary of energy for the state, and pulled off the coup of vastly increasing power production, ensuring the state was spared the power cuts that plagued the rest of the country.

She had 1,000km of new electric power lines, new dams and thermal power stations built while persuading citizens to switch off the lights whenever they could. Her political star started shining brightly. But in 1994, after 24 years together, she separated from Mr Araujo, though apparently on good terms. At the same time she was torn between academic life and politics, but her attempt to gain a doctorate in social sciences failed in 1998.

In 2000 she threw her lot in with Lula and his Partido dos Trabalhadores, or Workers' Party which set its sights successfully on combining economic growth with an attack on poverty. The two immediately hit it off and she became his first energy minister in 2003. Two years later he made her his chief of staff and has since backed her as his successor. She has been by his side as Brazil has found vast new offshore oil deposits, aiding a leader whom many in the European and US media were denouncing a decade ago as a extreme left-wing wrecker to pull 24 million Brazilians out of poverty. Lula stood by her in April last year as she was diagnosed with lymphatic cancer, a condition that was declared under control a year ago. Recent reports of financial irregularities among her staff do not seem to have damaged her popularity.

Ms Rousseff is likely to invite President Mujica of Uruguay to her inauguration in the New Year. President Evo Morales of Bolivia, President Hugo Chavez of Venezuela and President Fernando Lugo of Paraguay – other successful South American leaders who have, like her, weathered merciless campaigns of denigration in the Western media – are also sure to be there. It will be a celebration of political decency – and feminism.

Female representation: A woman's place... is in the government

In recent years, female political representation has undergone significant growth, with dramatic changes occurring in unexpected corners of the globe. In some countries women are dominating cabinets and even parliamentary chambers. By comparison, the UK falls far behind, with only 22 per cent of seats in the Commons currently held by women.

Bolivia In the Bolivian cabinet, 10 men are now matched by 10 women. In 2009, women won 25 per cent of seats in the lower chamber, and 47 per cent in the upper chamber.

Costa Rica In 2010, women won 39 per cent of seats in the lower chamber.

Argentina In 2009, women won 39 per cent of seats in the lower chamber and 47 per cent in the upper chamber.

Cuba In 2009, women won 41 per cent of seats in the lower chamber.

Rwanda In 2009, women won 56 per cent of seats in the lower chamber and 35 per cent in the upper chamber.

Mozambique In 2009, women won 39 per cent of seats in the lower chamber.

Angola In 2009, women won 38 per cent of seats in the lower chamber.

Switzerland Has a female-dominated cabinet for the first time. In 2007, women won 29 per cent of seats in the lower chamber.

Germany In 2009, the cabinet had six women and 10 men. That year, women won 33 per cent of lower chamber seats.

Spain Nine women compared with eight men in cabinet. In 2008, women won 37 per cent of seats in the lower chamber.

Norway Equal numbers of men and women in the cabinet. Women won 40 per cent of seats in the lower chamber.

Denmark Nine women and 10 men in cabinet. In 2007, women won 23 per cent of seats in the lower chamber.

Netherlands Three women and nine men in cabinet. In 2010, women won 41 per cent of seats in the lower chamber.

Source: The Independent (UK)