[Marxism] Another view of Lula

Louis Proyect lnp3 at panix.com
Thu Mar 25 10:23:57 MST 2004


Counterpunch, March 25, 2004

Rebuffing the IMF
Brazil's Begins to Throw Off Austerity Plans
By ROGER BURBACH

The cabinet ministers of Luis Inacio "Lula" da Silva's government who 
have kept the Brazilian economy in a neo-liberal economic 
straight-jacket are coming under sustained attack from the more popular 
sectors of the governing Workers Party. Even Lula himself has given 
signs he is moving away from the budgetary and financial prescriptions 
imposed by the International Monetary Fund that he has adhered to during 
his first fifteen months in office.

Interestingly the start of the discord had nothing to do with economic 
policy. In mid- February Lula's chief of staff and closest political 
adviser, Jose Dirceu, became embroiled in a political scandal. Waldomiro 
Diniz, a close friend of Dirceu's who serves as his aide on 
congressional affairs, was caught on video camera accepting payoffs from 
the head of one of the country's major bingo parlor operators. The funds 
were allegedly used to back the political campaigns of candidates of the 
Workers Party.

Diniz was quickly fired and the opposition in Congress began calling for 
a full-scale investigation and the removal of Jose Dirceu from office. 
As Emir Sader of the Public Policy Laboratory of the State University of 
Rio de Janiero noted: "The reactionaries are making their move. They are 
trying to bring down Dirceu and gut Lula's government." Dirceu however, 
is not an easy target, having served for years as a talented political 
strategist at the head of the Workers Party before becoming Lula's most 
powerful aide in the government. His first line of defense to prevent 
Congress from opening an independent investigation was to point out that 
the video camera taping occurred before the 2002 election and that the 
bingo scandal had only taken place in Rio de Janeiro, not in other parts 
of Brazil, therefore not allowing for federal prosecution. Then in early 
March to smash the opposition, Dirceu began to mobilize the Workers 
Party behind him by openly criticizing the finance minister and the 
economic policy team.

The case Dirceu presented against them was fairly straight forward. 
During 2003 the economy had grown at less than 1%, and unemployment in 
Brazils largest industrial center, Sao Paulo, stood at around 19%. This 
economic lethargy was due to Brazil's high interest rates (10% in real 
terms, among the highest in the world) and the following of IMF 
guidelines demanding a budgetary surplus of 4.25 % so that Brazil could 
make payments on its international debt. Even large sectors of the 
Brazilian business community were deeply upset with this no growth policy.

Dirceu's attacks initially focused on the Minister of Finance, Antonio 
Palocci, a technocrat aligned with the head of the Central Bank, 
Henrique Meirelles, who formerly worked as the worldwide president of 
the US Fleet Boston Financial Group. The Central Bank is autonomous, but 
the Finance Minister is influential in its decision-making. In early 
March Palocci indicated that when the bank next met, interest rates 
would be held steady. Dirceu criticized this stance, mobilizing most of 
the leadership of the Workers Party along with its membership behind 
him. The bulk of the party had been simpering and complaining for months 
about Lula's economic policies that appeared to mimic those of his 
predecessors and produced little of the "New Brazil" that Lula had 
promised during his election campaign. A handful of Senators and 
representatives from the Workers Party had even been forced out when 
they refused to support budgetary legislation that reduced the 
retirement income of public employee pensioners.

While Lula has thus far remained above the domestic fray among his 
ministers, he threw down the gauntlet against the IMF and other 
international institutions when he met with Argentine President Nestor 
Kirchner in Rio de Janeiro on March 16. The presidents of South 
America's two largest economies jointly released "The Declaration of 
Cooperation On Cooperation for Economic Growth with Equality." It 
demanded that the international financial institutions act "sensibly" 
and that they end the deep contradictions between the economic demands 
they place on the developing countries and the countries' real needs for 
sustainable development. The two presidents stated "this financial 
architecture requires mechanisms to avoid causing the crises that have 
afflicted Latin America." As a step in this direction Lula and Kirchner 
asserted that investments in productive infrastructure projects should 
not be included as part of regular government expenditures. Brazil and 
Argentina called on the other full and associate members of the Mercosur 
trade bloc--Uruguay, Paraguay, Bolivia, Peru and Chile-to sign on to the 
declaration. The presidents also issued "The Act of Copacabana," a wide 
ranging document that called for the formation of a "Community of South 
American Nations."

Emir Sader of the Public Policy Laboratory, who has been severely 
critical of Lula's economic policies, declared that "in the foreign 
policy arena Lula is making a profound difference. He is staking out a 
new agenda in Latin America and the global South in general." Prior to 
the Iraqi war, Lula was one of the most outspoken opponents of the 
impending US invasion. Then, he helped forge the bloc of 22 nations that 
stopped the World Trade Organization in its tracks at Cancun in August 
2003. Next at the close of the year he lead the charge that forced the 
Bush administration to back off from its plans to impose the 
corporate-dominated Free Trade Area of the Americas on the entire 
Western Hemisphere by 2005.

Right-wingers in Washington, like the State Department's top aide for 
Inter-American Affairs, Roger Noriega, are becoming obsessed with Brazil 
as they fear the emergence of another "evil axis." Lula has provided 
political and economic support to Hugo Chavez, the charismatic president 
of Venezuela who is at odds with his country's economic elites as well 
as Washington. In December, Brazil extended a billion dollar loan to 
Venezuela to enable it to purchase Brazilian goods it urgently needed. 
Conservatives in the Bush administration fear an emergent alliance of 
Cuba, Venezuela, Brazil, and now Argentina as Nestor Kirchner works with 
Lula to challenge the political and trade policies of the United States.

full: http://www.counterpunch.org/burbach03252004.html
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