Brazzil
Politics
March 2003
Some years ago I was talking to a São Paulo-based Swiss banker about the glacier-like slow pace of institutional change. He quoted former President Fernando Collor de Mello as having said that "In Brazil, time takes time." I was struck by this phrase although it may be apocryphal because I have never encountered it and would be grateful to any reader who could confirm it.
However, the essence of the remark is certainly true. There are many reasons for this situation—the size of the country, the strong regional loyalties, the weak state of the political parties etc—and it is unlikely to change in the near future.
One of the reasons it will not change is that vested interests will not permit it. Unfortunately, President Luiz Inácio Lula da Silva is showing no sign of shaking the system up. The man who (thankfully) jettisoned a lifetime's convictions overnight and convinced the Brazilian people to put their trust in him has gone back to being a timid tortoise instead of using the momentum to streak ahead like a hare.
Style and not substance is marking his government. For example, the showpiece Fome Zero campaign against hunger is losing its impetus. An ambitious project like this would always be long term but the goodwill—the Portuguese expression boa vontade gives a better idea of the vibrancy and enthusiasm for this campaign—is already petering out. The minister in charge, José Graziano, has been an uninspiring leader.
In an unfortunate gaffe, he recently suggested that hungry Northeasterners were coming to São Paulo to take up crime. By implication, he said, ending hunger would mean that the law-abiding citizens of São Paulo would no longer need to drive around in armored cars. I believe Graziano's remark was taken out of context but by speaking as he did, he appeared to be slandering a large part of the Brazilian population, including his own boss, the President.
More worrying than this is the government's attitude towards pension and tax reform. Brazil's iniquitous pension scheme pampers public employees and throws private sector workers to the wolves, even though it is the private sector which raise the taxes to pay the public employees' salaries and pensions. Bridging the gap between what the government has to pay in pensions and what it raises in revenues is one of the reasons why the Brazilian economy is being held back. Lula said tackling pension would be a priority. This was excellent news since the PT has been against reform.
However, the minister responsible, Ricardo Berzoini, has vacillated over the kind of reform. One of the main issues has been whether to have a single system for everyone, including serving civil servant and the armed forces, or separate systems. The minister said this week that he had practically abandoned the idea of having a single system yet, at the time of writing, the chief of staff, José Dirceu, has stated publicly that no decision had been made.
This is not the first public telling off ministers have been given by Lula's two strong men—Dirceu and the finance minister, Antonio Palocci. Instead of overruling their subordinates and telling us that no decisions have been made it would be heartening if these men at the center of power told us what decisions have been made and what was going to happen.
It is about time Lula took the pension issue on and made it as much of a priority as the Fome Zero scheme. Lula is in a good position to get this reform really moving. First of all he is enjoying enormous approval ratings, much more than his predecessor, Fernando Henrique Cardoso, ever enjoyed. A poll at the beginning of February gave him a personal approval rating of 83.6 percent and his government an approval rating of 56.6 percent. On top of that, 65.6 percent believe Lula will succeed in reforming the pension system. To this observer, this figure is quite astonishing and shows that there is much wider support for this reform than would be expected.
However, instead of assuming responsibility and striking while the iron is hot, Lula has turned the matter over to a recently created body called the Economic and Social Development Council. This group of 82 worthies from all sectors, ranging from business leaders to trade unionists and landless peasant representatives was set up to advise the government on social and economic issues.
The observer could conclude that establishing this council when the country, which already has a Congress which is supposed to be tackling Brazil's problems, shows that the Congress is being sidelined. Perhaps the council will be dynamic and come forward with ideas, but it is unlikely that such a disparate range of opinions will agree on something as contentious as pension reform. It will certainly take time and even then the Congress will have the final word.
By spreading the net and bringing in more views Lula is showing that he is prepared to listen. But leadership demands action. Time is pressing. Instead of thinking of the legacy he could leave in four years time—or even eight years if he were to win a second election—Lula is being urged by some advisers to think of the negative effect contentious reforms could have on the congressional elections in two years time. He should reject this view and, while listening politely to the views of the council, push through the necessary measures using his popularity as a weapon.
As to tax reform I think we can almost forget it. At the inaugural meeting of the council, finance minister Palocci stated bluntly that there would be no reduction in the tax burden, as the government needed the resources. So those of us who pay taxes can look forward to surrendering around 36 percent of our income to the government. This is a higher rate than in some developed European states, which provide their citizens with security, health care and educational opportunities for their children. We pay First World taxes for Third World services and will continue to do so for a long, long time.
John Fitzpatrick is a Scottish journalist who first visited Brazil in 1987 and has lived in São Paulo since 1995. He writes on politics and finance and runs his own company, Celtic Comunicações— www.celt.com.br , which specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at jf@celt.com.br
© John Fitzpatrick 2003
You can also read John Fitzpatrick's articles in Infobrazil, at www.infobrazil.com