Sue Branford Thursday July 10, 2003 The Guardian
After more than two decades of economic stagnation, Latin Americans are mobilising for change. From the street protests of the unemployed piqueteros (picketers) in Argentina to the road blocks of the cocaleros (coca growers) in Bolivia, they are calling for radically new policies to redistribute wealth and power and to get the regional economy growing again. The man who symbolises the new mood is Luiz Inacio Lula da Silva, universally known as Lula, a man who lost a finger in an industrial accident, and who on his fourth attempt was elected president of Brazil last October. The electoral triumph of Latin America's first working-class president was celebrated all over the region.
President Lula will be arriving in London later this week to attend the progressive governance conference, designed to relaunch the "third way" set out by Clinton and Blair in the 1990s. Lula dismisses suggestions that his attendance calls into question his credibility as a leftwing leader. "Brazil isn't interested in a first, second or third way," he says. "It wants to find its own way." He hopes to use the meeting to present his ideas for combating global poverty and to press for a permanent seat for Brazil on the UN security council.
But there are more important reasons than attendance at this meeting for concern over the ideological direction of the new Partido dos Trabalhadores (PT) government. To the alarm of many PT activists, Lula has so far continued with the economic policies implemented by his predecessor, carrying out even steeper cuts in public spending than demanded by the IMF and keeping interest rates high.
Instead of beginning to create the 8 million jobs that were promised, the government has so far put another half a million workers out of work. Unemployment is running at a record 20% in Sao Paulo, the country's industrial heartland. Not surprisingly, international bankers seem quietly triumphant, confident that Lula has been tamed. Can it be true that a "New PT" has emerged that will betray the hopes of the thousands of party activists who worked to get Lula into government?
Luiz Dulci, Lula's closest adviser, strongly denies it. He says that people have to understand the powerful economic forces the PT has to confront. In the weeks before Lula took power, he said, Brazil suffered "an act of financial terrorism". About $6bn (£3.6bn) fled the country in three months. Interest rates rocketed. "Financial instability was disorganising Brazil to such an extent that it was becoming a plaything in the hands of the creditors. We were heading for a massive financial disaster." This was the background, he says, to the government's decision to get bankers involved in running the economy. Henrique Meirelles, the first Latin American ever to have headed an international bank (BankBoston), was appointed governor of the Central Bank (although under the direction of finance minister Antonio Palocci, a high-ranking PT member). Dulci says that it was a traumatic period. "We suffered, not because we were forced to change our views. That didn't happen. Our suffering came from having to put monetary stability before our programme." Lula went through a period of anguish, barely sleeping and visibly tormented by doubts.
The policy worked, in that it reversed the outflow of capital and restored Brazil's financial credibility. Yet the PT achieved this success by renouncing many short-term goals. As yet, the party provides no answer to the question of how a developing country can, democratically and peacefully, implement far-reaching reforms, if every time it promises change it is held to ransom by "big capital".
It is true that the PT has a strategy to democratise the country's elitist power structure so that the millions of excluded Brazilians - the shanty-town dwellers, the rural poor, the homeless - can participate in decision-making. But this strategy will take a long time. Lula's election has raised expectations. Thousands of landless peasants are mobilising, confident that the time has finally come for agrarian reform - but this would require a heavy outlay on land and on technical assistance, and this is clearly incompatible with economic orthodoxy. Palocci recently said despondently that, despite the severe squeeze on public spending, Brazil was still paying only one-third of the interest on its huge debt and would need nine more years of cuts to stop the debt from growing.
Lula identifies strongly with the rural poor. Earlier this month he incensed landowners by donning, before TV cameras, a red cap from the landless movement, the MST. But it will take more than gestures to reshape Brazil, one of the most unequal societies on earth. For all his conciliatory messages of "peace and love", Lula will have to decide whether to give up on radical reform or to fight powerful interests to achieve them.
· Sue Branford is the author, with Bernardo Kucinski, of Politics Transformed: Lula and the Workers' Party.
==================================== To this day, no one has come up with a set of rules for originality. There aren't any. [Les Paul]