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 Brazil seems distant from the many prickly issues that are involving the world's powers at the moment. The Hamas' victories in Palestine, the change of ownership of Peninsular and Oriental (P & O), the nuclear ambitions of Iran and India, continuing chaos in Iraq and the spread of avian flue, while they may eventually affect Brazil, are remote.
2006 may turn out to be another lost year for Brazil as far as making progress toward a more just society through economic growth. The 2005 figures show that Gross National Product barely increased enough to compensate for the gain in population. Congress, for the last eight months involved in parliamentary investigations of many irregularities of sundry nature, have not even looked at any of the much needed reforms of taxation, political parties, labor laws and union activity. Nor have the investigations resulted in the punishing of those responsible for stealing public funds in the form of kickbacks ranging from the purchase of sneakers for mail carriers to the over invoicing on advertising contracts of federal government entities and the Banco do Brasil. Congress, itself discredited for scheduling a special session during vacation months and then seldom showing up for a quorum, will in all probability accomplish little this year because of the elections coming up in October. Providing another distraction will be the World Cup in Germany in June and July. Brazil, a perennial favorite, is seeking its sixth championship in this football (soccer) classic. Lula, who claims to not have known of the misappropriation of funds going on around him, could wind up being reelected for another four-year term. His approval ratings have improved lately with recent polls showing that he would defeat any of the possible candidates were the election to be held now. In violation of electoral legislation, he is actively campaigning using taxpayers' funds to jaunt around the country to inaugurate public works and make speeches criticizing the opposition and past government. Thus far, he has had the stage to himself as officially and legally the political campaigns may not begin until July. The PSDB, known as the Tucanos (toucans), is the principal opposition party. They together with the conservative PFL and certain elements of the amorphous PMDB, ruled for eight years during the presidency of Fernando Henrique Cardoso, recognized by many as Brazil's best president since Juscelino Kubitschek. The Tucanos and the PFL missed the boat by not being more outspoken in pointing out Lula's shortcomings during all these investigations, which by now after eight months have lost much of their steam as the populace tires of endless testimony and little concrete results. The opposition did not want to be perceived as creating difficulties that would make it more difficult for Lula to govern. This attitude may have not been the proper behavior for them to adopt, as the recent surveys seem to indicate. Brazilians have a short memory. Lula's popularity plummeted during the early days of the revelations of corruption and investigations. Several key officials of his Workers Party, (PT) including José Dirceu his Chief of Staff, were forced to resign. Land of Illiterates It must be remembered that 70% of Brazil's population is functionally illiterate, according to published studies. With a population of 186 million, the IVC (Instituto Verificador de Circulação or Institute of Circulation Verification) shows that only 3.4 million read a daily newspaper. While the press and the weekly news magazine Veja have been tireless in their coverage of the many scandals close to Lula, it seems that his support is intact among the low income masses and people with little education. It may be difficult to dislodge Lula from his position as president. He has managed to allow sensible, although controversial, economic policy continue with the result that inflation is less than 4 or 5%, dependency on foreign loans has diminished and the IMF and Paris Club creditors have been paid off ahead of time. The boom in exports can somewhat be attributed to high prices for some of Brazil's commodity exports, such as sugar and orange juice, and increased productivity in the industrial sector. Cell phones, passenger aircraft and autos have moved well for last couple of years. However, the strengthening of the real is beginning to hurt many exporters as they earn less reais for their dollar or Euro denominated exports. I doubt if the spectacular rate of export growth can be maintained this year. Politics and the World Cup will attract a great deal of attention diverting the government from facing the real problems of poor educational facilities, inadequate healthcare, crumbling infrastructure, an inefficient and archaic judicial system, excessive taxation and sky high interest rates. Sales of tee shirts and TV sets, on the other hand, should be strong as the country gears up for these two major events. The Tucanos have yet to decide who will be their candidate against Lula, presuming that he will run for reelection. The two most probable candidates are José Serra, currently mayor of São Paulo, and Geraldo Alckmin, governor of the State of São Paulo. Serra ran and lost against Lula in 2002. When campaigning in 2004 for the post as mayor of South America's largest city, he stated that if elected he would finish out his four-year term, which now has more than two years to go. Should he give up his job as mayor to run for president, he would be a vulnerable target for the PT and others who could easily accuse him of being a liar. Alckmin, not as well known outside the State of São Paulo as Serra, who was a good Minister of Health in the Cardoso government, in my opinion would be a better president. The question is "Could he win against Lula." In another week or so the Tucanos should announce who will be their candidate. The Tucanos' logical partner, the PFL, is becoming impatient. Both the vice mayor and vice governor of São Paulo are PFL men who will take over if Serra leaves his post and certainly when Alckmin, who has already declared that he is running for president, steps down by the end of March as required by law. The PFL is backing Serra since it is anxious to get its hands on Brazil's third largest budget, the city of São Paulo, for more than two years. The PSDB selection process is not democratic. It appears as if the Tucanos will leave it up to three men, Senator Tasso Jereissati the party president, the former president of the Republic, Fernando Henrique Cardoso, and Minas Gerais governor Aécio Neves to sort out which man of these two will be the Tucano standard bearer. Were the party at large to be consulted, Alckmin would no doubt be selected as some see Serra as a loser and he is not an agreeable person, so they say. By fumbling around and possibly losing some support from the PFL, which naturally aspires to name the vice presidential candidate, the election may go to Lula. In my opinion, a combination of the competent, clean Alckmin and a PFL figure from the Northeast, where Lula is strong, will have the best chance of returning Brazil to better leadership than Lula and his cronies have displayed. On a positive note, Brazil has reached self sufficiency in crude oil and is far ahead of the rest of the world in the use of ethanol, natural gas and biodiesel to fuel vehicles. The rating agencies such as Standard and Poor's and Fitch and Moody's have upgraded Brazilian debt paper making it less expensive to borrow abroad. The local banks have reported record profits for 2005. The Bovespa, (São Paulo Stock Exchange) is setting record highs nearly every day. These are indications that Lula has not been the complete disaster than many feared. Richard Edward Hayes first came to Brazil in 1964 as an employee of Chase Manhattan Bank. Since then, Hayes has worked directly and as an advisor for a number of Brazilian and international banks and companies. Currently he is a free lance consultant and can be contacted at
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Yeah, right! hehehe