Lula's Plane Takes Off

A draft prepared by the Executive to reform the public pension system
has been approved by a
Brazilian House Committee. This is just the start,
though. Meanwhile, the failure to get the Zero Hunger
project up and
running has caused Lula little loss of face because people
are still giving him the benefit of
the doubt.

by:

John Fitzpatrick

Well, well… after five months with Brazil’s President Luiz Inácio Lula da Silva in charge, we are finally
getting somewhere. On Thursday, June 5, the Lower House’s Constitution and Justice Committee—which analyzes
the constitutionality of proposals before they’re debated by the full house—approved the draft prepared by the
Executive branch to reform the public pension system.

The bill was passed by a wide margin—44 to 13—and the government enjoyed wide support from within and
outside its alliance. The debate was not exactly dignified, with one opponent accusing the committee chairman of
being a traitor. Another reactionary supporter of the status quo threatened to punch a reformer, and protesters
wandered around the meeting holding up posters. Never mind, this is Brasília not the House of Commons, and no
Serjeant of Arms with gaiters and sword was there to protect the dignity of Congress.

There is still a long way to go, but this was a good start. Not only will it hopefully lead to a radical
restructuring of the current, costly system, but it is also a sign that, at last, things are moving. After almost half a year of
speeches, pledges and promises, Lula is finally coming up with the goods. But while Lula’s honeymoon with the
electorate continues—the latest polls give him a personal approval rating of almost 80 percent—things have started to drift
recently, and look a little out of hand.

Zero Hunger—Zero Progress

The Zero Hunger project, for example, appears to be moribund. Almost every week we read of fund-raising
events and donations being publicized, but so far the scheme is paralyzed. Lula spoke about the need to end hunger
in his speech at the G-8 summit in France last week, but he would have sounded more convincing had he been
able to show how he was helping stop it.

The failure to get this idea up and running has caused Lula little loss of face because the people are still
prepared to give him the benefit of the doubt. Another reason, as we have stated before, is that hunger is not really a
major problem in Brazil since no one is actually dying through lack of food. Malnutrition is a problem but starvation is not.

Another area where things have started to go awry is the ongoing argument about interest rates, which has
pitted heavyweights like Vice-President José Alencar and São Paulo state Governor Geraldo Alckmin against the
Central Bank. In the absence of substantial news, this issue has dominated the media over the last few weeks.

The government tried to stage a show of unity by having Finance Minister Antonio Palocci and Alencar meet
in the past week, and make public statements of mutual support and admiration. Alencar referred to the minister
as "President Palocci", presumably a slip of the tongue. Or was it? This issue is likely to continue until the next
meeting of the Central Bank’s Monetary Policy Committee, the COPOM, later this month. If interest rates are not
reduced then, we will have a newsworthy story and can expect dramatic developments.

Thanks partly to the media fuss, cabinet ministers, the economic team and the Central Bank are spending
time on this matter which would be better spent elsewhere. For this reason, the breakthrough in terms of pension
reform is welcome. The next stage is the creation of a special committee that will consider amendments to the
government’s draft. Each amendment will need the support of 171 deputies before it can be considered.

The government is aiming to conclude this preparatory work by the end of this month and have a final
plenary vote in August. Whether this will go as planned is not certain. For example, at the time of writing, PT members
in the Lower House of Congress alone have tabled 154 amendments. The government leader, Congressman Aldo
Rebelo, was quoted as saying that the government would not accept any compromise over the backbone of the
reforms. The most controversial items cover proposals to tax pensioners’ benefits, and set a ceiling for the amount a
retired civil servant can be entitled to.

Adding Up the Figures

To win the main vote on pension reform, the government will need yeas from 308 out of 513 members of the
Lower House. It can rely, in theory, on 287 votes from the PT and allied parties. And it hopes to gain some votes from
the PMDB—which is on the threshold of officially joining the alliance—and the PDT.

The two main opposition parties—the PSDB and the PFL—are officially in favor of reforming the system, but
are split. For example, at last week’s Constitution and Justice Committee meeting, five members of the PFL voted
in favor of sending the proposal forward, and five voted against.

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

This article appeared originally in
Infobrazil, at www.infobrazil.com

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