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Death Wish for Reform in Brazil

by NORMAN MADARASZ

Valentine’s Day is not celebrated in Brazil. Lover’s Day is. Regardless, Brazil’s governing PT had not expected the day to end with a kiss from Al Capone. On February 14-15, Lula’s government suffered the single most devastating blow to its legislative power since taking office on January 1, 2003.

After weeks of campaigning for the election of Luiz Eduardo Greenhalgh (PT representative for Sao Paulo) to the Leadership of the lower house of Congress, the PT suddenly found itself dealing with embarrassing competition from a self-nominated party member, Virgilio Guimaraes (PT representative for Minas Gerais state).

Never suspecting Greenhalgh had a chance of being edged by Guimaraes, by the early morning hours of February 15 the PT ended up losing out on both candidates in a shifted alliance of parties.

As a result, the low-profile ultra-conservative member of the lower house, Severino Cavalcanti (Partido Progressista (PP) for Pernambuco state), was elected by a landslide victory of 300 to 195 votes.

The “long knife” nature of these congressional elections was reinforced by Cavalcanti’s victory speech. He immediately confirmed his intension to raise the salary of house representatives and senators, as well as federal judges, and maintain the three-month vacation plan for house representatives, which was set for major axing.

He also plans to impede the Executive from running through a tax hike on service-providing companies (Provisional Measure 232). His agenda also features an unpopular draft on extending the presidential mandate to six years-but barring the possibility of re-election.

What this means for Lula’s government is that the roughshod alliance it managed to built in the Congress has evaporated. Cavalcanti, also known as the king of the backbenchers, has a long history of repressive policies.

A fundamentalist Catholic, in 1980 he snitched on an Italian priest, Father Vito Miracapillo, leading to the priest’s expulsion from Brazil by the then military government. Father Miracapillo had refused to celebrate a “mass for the people” on Independence Day since, in his view, Brazilians could not be independent while under dictatorial rule.

(Belonging to the Church’s progressive wing, the priest saw the expulsion order lifted in 1993, but cannot live in Brazil as he is still awaiting amnesty.) Although a nationalist, or rather a populist, Cavalcanti can easily become one of Bush’s bedfellows in South America.

The results of the Congressional elections, either at the lower or upper house levels, are an unexpected turnabout for Lula’s cabinet. Historically, the party holding the highest number of seats in the Assembly heads the directing “board”, which organizes the voting agenda especially regarding the Executive’s decision to pass “Provisional Measures”.

Due to the nature of Brazil’s post-dictatorial 1988 Federal Democratic Constitution, the political landscape is spread widely across several parties, rendering it next to impossible for a single party to govern as a majority. Provisional Measures, roughly equivalent to American Presidential decrees although they require Congressional approval, facilitate governance under these circumstances.

Despite the high profile exiting and debarring of the most vocal radical members of the PT, a strain of participatory democracy still runs through the party. The nomination procedure for the house leader is one of its unfortunate effects.

Greenhalgh was the nominee to have received the most nominations from house representatives in the three choices they were each given. The problem was that he was edged in first-place finishes by Guimarães. This information was revealed only after the party’s defeat so as to justify what had seemed to be Guimarães’ stubborn adamancy to remain in the race.

By the end of the first round on February 14, Greenhalgh was largely ahead of Cavalcanti, who held a small lead over Guimaraes and thus eliminate him from the run-off. But then, Guimaraes supporters, who reportedly gathered more of the left-wing of the party and allies, voted in opposition to Greenhalgh.

Whatever their motivation, distraught representatives have ushered one of Brazil’s oldest ultra-conservative politicians to the seat of the third most powerful post in Brazil’s governing hierarchy, right after the president and vice-president.

For the Brazilian population who gave Lula a landslide victory in 2002, the Congressional elections amount to nothing less than intra-political negligence. For Lula, it was clearly a stab in the back. The landscape of federal politics in Brazil has reverted back to old times.

Basically, without any inkling of a majority in the Congress, Lula’s executive risks being legislatively paralyzed. Worse, he is going to have to take the blame for Congress’s attempt to rule as an independent body.

For the time being, though, the still popular President has proved to be optimistic. He told BBC news on Wednesday February 16, “I’ve already spoken to Severino today. He has always voted with the government, and has always been part of the alliance base. I have no doubt that our bills will be enacted as they have been [until now].”

Some ten years older than Lula, Cavalcanti is also a Pernambuco state high school drop out, but the comparison between the two men stops there. By Thursday evening, the scenario did not look as clear with House Leader Cavalcanti exposing his own agenda and conditions to the President in a personal meeting.

Faced with the prospect of legislative resistance, this time around, Lula might be able to contest the booing he gets from the opposition within his own party. Not that the rowdy reception given to the President at the World Social Forum in Porto Alegre was undeserved.

On a practical and administrative level, not much in his government’s policies has amounted to a major shift away from the principles of neo-liberal governance, notwithstanding its concerns for sustainable development.

On the economic front, it is true that Lula’s government has been able to overcome the devaluation suffered by the national currency, the real. It managed to jumpstart a logistically ill-prepared export sector and boost it into a world leader.

Despite outstanding port facilities in Santos, Vitória and Rio, and the private ports run by companies such as Vale do Rio Doce, Brazil’s industrial infrastructure is painfully underdeveloped given the country’s heavy reliance on exporting natural resources and agricultural products.

Lula’s government freed up desperately needed credit lines for companies to take advantage of the weak currency abroad. Their contribution went on to set record after record in yearly export surpluses.

Meanwhile, Brazil’s economic performance has allowed the government to negotiate conditions with the IMF on servicing its public loan. Still, Lula’s Finance Minister, Antonio Palocci, has convinced himself and the government of the need to hold firm on neo-liberal “developmental” policies as dictated by the World Bank.

According to him, it is necessary in order to get out of the volatile situation Wall Street and the City placed the country in owing to the apparent shift of its voting population toward the “left-leaning” candidate, Lula da Silva in 2002.

Ken Maxwell reminded the Anglo-American financial sector in the Financial Times in 2002 that while magic realism had faded as a literary movement in South America, Wall Street was manifestly intent on keeping it alive. It was portraying Lula as a leader hell-bent on defaulting on the debt and waging a revolution.

Various House representatives in the US still do tend to paint in similar numbers. Upon closer inspection, anyone can call their bluff as their main beef with Brazil has to do with nothing more than the country’s great competitive export power.

In a bid to convince Brazil’s middle classes of his moderation, candidate Lula even decided to hire spin-doctor cynic (and coq fighter) Duda Mendonça to refurbish his image. By doing so, he had forgone a revolutionary experiment that would have plunged Brazil into international isolation before it could pull itself out from the hole.

By the end of 2002, though, the IMF’s dictates to neighboring Argentina proved misguided as they led to the collapse of the country’s economy and a palace coup. The following year, Joe Stieglitz nailed the IMF on incompetence for the economic recovery policies it was imposing on countries suffering from collapsing currency markets.

Examples of Russia, South Korea and Malaysia all refused IMF assistance in the face of economic breakdown and defaulted on their public loan servicing. And they all managed to post outstanding growth only a few years later and managed to maintain those levels with real GDP growth rates of 7.1%, 6 %, 7%, respectively, in 2004 alone.

On the other hand, under IMF escort, Brazil finally managed some 4.3% growth in 2004, but after three years of utter stagnancy, which saw it slip in GDP rank from 8th to 15th in the world.

As the Argentine crisis headed for collapse in late summer of 2002, the Financial Times held a knife to Lula’s throat about naming his finance minister and central bank president before the elections took place. As it turned out, it was all a skillful power play contributing to the rampage that tore international hot-money and short-term investments out of the country.

In the turmoil, Lula could not get out of appointing Henrique Meirelles as Central Bank President. As a former executive director of Fleet-Boston, Meirelles stands directly over the conglomerate’s 30 million dollar investment in Brazil. This figure resounded with the loan proposed to stranglehold Lula in late summer 2002 when the real fell prey to “international” speculation.

Judging by the hushed up scandal of Meirelles’ alleged income tax inconsistencies, he is the IMF’s guarantee to keep the prime lending rate up (now at 16.5%) and spending on infrastructure down. Nonetheless, with its outstanding economic results the government forced through a law on raising minimum wage to R$ 300 (roughly, US$ 90 per month) against IMF dictates, after it had been slapped on the hand by the working poor for penny pinching a month earlier on the same issue.

Lula’s victory as president in 2002 was a historical landslide. Yet his gains in Congress are built upon an alliance with parties often completely at odds with the PT’s program of deep social and constitutional reform. Lula’s attempt at overhauling a completely elitist “public” sector within his first year of government, and axing the pension plans and sundry handouts offered to the country’s wealthiest, had to be watered down in order to avoid a Machiavellian turnaround.

The threat to cut absurdly overpaid pension plans to federal judges was cynically used by the latter to mobilize lower-paid civil servants who were being asked, in a gesture of fairness, to bear proportional cuts. With raises on salaries for public servants stalled during the post-1998 real devaluation period, and despite mounting inflation to near double-digit levels, neither the bottom scale nor the top-despite the extreme disproportion-would accept cuts to pensions. To avoid a social crisis Lula’s team had to pull back.

Like any capital, Brasilia lives on a cloud of privilege. Not all countries in the world, however, are as proto-revolutionary as Brazil is. Without giving some slack, the politicians of the two houses of Congress, senior civil servants and the judiciary, despite how buffered they might feel on the plateaus of Goias, are playing with fire.

Less than a 100 km away, hundreds of “sem tetos”, homeless squatters, have been battling a brutal military police attack ordered by the state government. In Para, as Lula attempted to crush illegal deforestation of the Amazon forest and the use of slave labor, the 73-year-old American missionary Sister Dorothy Stang was assassinated.

Now the lower house of the Congress is ruled by a man who stands against constitutional reform, against homosexual common-law union and marriage, and social reform in general. A catholic fundamentalist, Cavalcanti is the oligarch’s new man in power-two steps back for Lula’s half step forward.
Lula’s executive is now near paralysis. It may have to adopt yet another tactic from former president Fernando Henrique Cardoso, whose own government was often paralyzed by the PT opposition and similarly had to accept power sharing with the oligarchs.

But Cardoso discreetly went after his political opponents by pinning long-term corruption charges against them. With white-collar crime blooming in Brazil as much as in the G7 zone, such tactics might lay out of reach. The problem is criminal powers also learn not to repeat mistakes.

NORMAN MADARASZ, a Canadian, is Visiting Associate Professor of Philosophy (Bolsista CAPES / Brasil) at Universidade Gama Filho, Rio de Janeiro. He welcomes comments at nmphdiol2@yahoo.ca

 

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