The fact that the U.S. Congress had extended the ethanol import tariffs until January 2009, which will do little to dissuade Lula from trying to drive a hard bargain. Let’s look at some of the facts.
After more than 30 years of investment in ethanol technology, Brazil can produce sugar-cane ethanol at a cost of US$ 0.83 per gallon, one third lower than the cost of the U.S. corn-based ethanol, at US$ 1.14 per gallon (ICONE).
For a given amount of input, the Brazilian sugar-based ethanol technology can return four times more energy per unit as is the case of U.S. corn-based technology (World Watch Institute). There are also three times more ethanol plants in operation in Brazil, 335, than in the U.S., 114.
Moreover, using sugar-cane as raw material to produce ethanol will have a minimal impact on Brazil’s existing agricultural sector. On the other hand, the U.S.’s National Chicken Council reports that the ethanol’s demand for corn (around 14% of the country’s corn production) has inflated corn prices in such a way that the wholesale price of chicken increased by six% per pound in January, and the National Cattlemen’s Association similarly reported that the cattle industry expects to be less profitable in 2007 for the same reason (DOE EERE).
As a result, in 2006, Brazil had a 20% ethanol surplus, while the U.S. still needed to import ethanol; actually, two-thirds of the U.S. ethanol imports came from Brazil (ICONE and RFA).
As Lula declared in April 2006: "to be self-sufficient [with respect to energy] is a formidable triumph of stability and economic security that political lucidity has added to our beloved Brazil" (Folha On-Line April 21, 2006).
Brazil’s energy-independence has been possible because it has replaced 40% of its oil-consumption with ethanol. On the other hand, the U.S., with all of its renewable fuels accounting for just 3.4% of its fuel consumption, is still cripplingly dependent on oil (ICONE and Green Car Congress).
In short, these figures mean that after years of being projected as a future superpower – the B in Goldman Sachs’ BRIC 2003 thesis – Brazil finally is clawing its way to that status.
Nonetheless, Washington seems to still be underestimating Brasília. Its new plan for achieving energy security is to create in the long-run both a US$ 36 million program to produce sugar-cane ethanol in Hawaii, Florida, Louisiana and Texas, and a US$ 650 million cash grant program for producing cellulose ethanol, which in the short-run might be capable of promoting the use of the Brazil’s sugar-cane technology in the CAFTA-DR member countries (Energy Policy Act 2005).
It should be recalled that Central America and Caribbean countries are exempted from U.S. import tariffs under the terms of the existing Caribbean Basin Initiatives (CBI). Yet, what will Brazil gain from exporting some sugar-cane technology and in so doing, giving up a piece of its lucrative ethanol export market and some of its tropical applications? For the time being, Lula simply doesn’t seem to have any inducements to comply with this Washington plan.
Brazil’s Cinderella Man
In 2006, Luiz Inácio Lula da Silva was re-elected as president of Brazil with the highest number of votes ever achieved by one of the country’s office seekers – 58,295,042. Since 2003, Brazil under Lula, has been one of the leading voices among a group of developing countries (G-20) whose main objective has been to gain a reduction of agricultural subsidies maintained by the developed countries for their high-cost farmers. This would be consistent with both the goals of the Doha round and the aspirations of the G-20 at the World Trade Organization (WTO).
Most importantly for Brasília, however, are Lula’s own predilections. He appears to be fast becoming President Bush’s most sought after regional comrade in the latter’s newfound strategy of catching up in Latin America for a woeful loss of time. He is doing this by promoting biofuels, thereby decreasing U.S., as well as the rest of the hemisphere’s oil-dependence.
Two questions remain, though: Who is this man that the Bush White House has singled out as a partner in its frantic quest for energy security and will the U.S. President be successful in having Lula help push the Bush administration … out of the morass of its own failed regional energy policy?
Lula’s Origins
Lula was born Luiz Inácio da Silva in a district of Garanhuns, Vargem Grande (today the city of Caetés), in the countryside around Pernambuco. At that time, Vargem Grande was an extremely poor area in the impoverished northeast of Brazil, resulting in the early deaths of four of Lula’s 11 siblings, due to poor health and malnutrition.
The nickname Lula, later incorporated into his official name, was given to him soon after his birth, in order to distinguish him from the many other "Luiz’s" in the Silva family. On its own, Silva is the most common last name in Brazil. By itself, the name Luiz Silva connotes the abstract tag of the country’s anonymous common man, something akin to "John Doe."
Lula’s date of birth remains uncertain. He was registered only at the age of five by his normally absent father, who happened to be back home visiting the family at the time. There are two possible dates contending for his birthday.
The official date of birth is October 6, 1945; though Lula’s mother remembers the correct day to actually be a few weeks after, on October 27.
In a striking coincidence, in 2002, when Lula was running for the fourth time for president, finally being elected to office, the election dates were the same as the putative dates of his birth: October 6, for the first round, and October 27, for the second round (Brazil uses a two-round electoral system, with delayed runoffs).
Lula is the founding father of the Brazilian Labor Party (PT), a former labor leader of the metallurgical union and a bitterly poor northeasterner by origin; Lula embodies the idea of social mobility in the Brazilian culture.
Being one of the leading voices of the Left since he led a series of auto-industry stoppages in the last years of the military regime (1964-1985), Lula emerged as a prime example of the wave of moderate-left post-Washington Consensus hemispheric reformist presidents who came to office in recent years.
On the one hand, this generation of leaders has been deeply concerned with the expanding social agenda, but on the other, they called upon orthodox finance ministers to run their economies. Lula stands out drastically when contrasted with other critics of U.S. regional policy, in being more graciously accommodating to U.S. policy makers and more inclined to sign topical bilateral understandings with U.S. officials.
In assuming this stance, Lula has proved to be in marked contrast with Venezuela’s Hugo Chávez, who is characterized by a populist rhetoric and a more markedly socialist-driven vision.
From any point of view, Lula is an important Latin American leader, but he is also an important world figure, coming from a country that at once encompasses a formidable range of striking characteristics: it is the Latin America’s largest single country, possessing the most advanced economy and the most developed democracy. It also possesses the world’s largest rain forest and has one of the most extensive potable water reserves in the world.
Brazil is a leading country in the production and consumption of alternative biofuels; and since Fernando Henrique Cardoso’s administration (1994-2002), it has been pursuing the role of spokesman for the developing world. Thus, it is relevant to look at how both regional and social class factors have shaped Lula’s value system and how his content and style have evolved into his particular decision-making approach.
Northeastern and Poor
Lula was born in the legendary harsh environment of Brazil’s Northeast, the son of its typically poverty-stricken inhabitants. The region’s characteristic ethnic imprint combines the physical traits of the indigenous population with the genetic traits brought over by the African slaves and the European settlers they encountered.
In Lula’s case, according to his own account, he descends from the caboclos, the mixture of the indigenous – his father’s family – together with the whites. In 1989 he tried, unsuccessfully, to confirm his mother’s family traditional belief that it came from an Italian background (Paraná: 2002, 57-8).
Lula’s perception is that he is a northeasterner, more precisely a northeasterner from the poor countryside, the sertão, as it is called. Lula stresses the merit of the person from the sertão, who is a tough optimist and an extremely hard-worker. The sertanejo can favorably be compared with someone from the southeastern urban middle class that "complains excessively because [they] never really suffered" (Paraná: 2002, 61-2).
Lula’s complaints about the self-pampering urban middle class aren’t entirely regional, though. He also has contrasted the urban low-income labor force with the urban middle class, who he identifies as belonging to a self-absorbed elite which doesn’t even attempt to deny that in Brazil the richest 10% of the population controls almost 50% of the entire country’s income (Franko: 2003, 353-5).
According to Lula, if one belongs to this elite, then he has a "great job." So even if he gets fired, he can find a new job just by calling on people. But with the low-income worker, the peão, it’s different; he needs to walk the streets, knocking on door after door in order to even attempt to find a lead for a job (Paraná: 2002, 88).
Talking about the Brazilian population, Lula continually compares the value of the peão with the sertanejo. "You get a poor Brazilian dude [such as a peão], I don’t know if he even still believes in God, but I know that he is an optimist, he walks with his head straight. In the Northeast, you ask a sertanejo if things will get better and he says that they will. That’s very positive. With a people like that we can make a revolution, we can save this country" (Paraná: 2002, 62).
Thus, it seems reasonable to argue that the Lula of today, although the nation’s president, in his mind still identifies himself more with the underprivileged than with the elite. This identification should be quite helpful in understanding the kind of leader that Lula has been and will turn out to be.
Even though during his first administration (2002-6) he guardedly played the cards of liberal economic policies, Lula eventually began to come up with his major social justice programs – first Zero Hunger and then the Family Fund – as his flagship initiatives.
It is clear that the revolution that he talks about has more to do with accommodating social reform than promoting a clash of social classes. In short, Lula aims to leave as his legacy both domestically and internationally, the image of protector of the poor rather than the head of a revolution.
Voice of the Underprivileged
As a child, Lula’s first job was as a street vendor of oranges and peanuts, along with one of his brothers. He recalls that at the time, he was markedly shy, so he couldn’t physically shout loud enough to be a good street vendor.
Because of this failing, his brother had to slap him to speak up, but even that didn’t work. "I was afraid of shouting," Lula says (Paraná: 2002, 74). That was a feature that was still present when he was first elected president of the Metallurgist Labor Union of São Bernardo do Campo e Diadema, in 1975:
"Until that time I had never talked into a microphone. In my inauguration speech I was going to read my speech, [it was to be his only written speech during his entire time of union service] but I couldn’t, I just trembled. I don’t know what trembled more, my leg or the paper in my hand. As far as I wanted, I couldn’t speak" (Dantas Jr. 1981: 27).
That difficulty, together with having made no public statements during his tenure, was particularly damaging during his first years as a union president. Ultimately, as Lula remembers, it almost ended his political career.
At the time, there was a very influential syndicalist called Paulo Vidal. He had been the union president before Lula and had served as general secretary when Lula came into office. He was also a remarkable speaker, as Lula well remembers.
"When we arrived in an assembly nobody could speak after him. He talked for 30 or 40 minutes and after there was nothing else to be said. In the trips and in contacts with the board of directors of other unions, everybody thought that I was his puppet" (Morel: 1981, 115).
The fear of being seen as a function of others led Lula to try to cope with his almost crippling shyness, and indeed he did. He was re-elected president of the union, later was elected a congressman and eventually became president of Brazil – all of this was mainly due to his U-turn on the matter of public speaking.
Today’s Lula is not only a remarkably effective speaker, but in fact a rather compulsive one: in the first 135 days of his presidency he delivered 72 public addresses. However, at the same time, he gave no interview to the press, in spite of 222 requests from them.
It is important to understand that when Lula speaks, he does so directly to the major part of his public, the underprivileged. All of his discourses follow the same pattern: they are extremely accessible, in a popular style, and full of metaphors, especially concerning soccer (Reato: 2006, 188).
Lula’s emphasis on soccer isn’t just some eccentricity; the game represents something that all Brazilians immensely care about as well as exactingly understand. Moreover, Lula sounds genuine when he talks about it. Thus, he uses soccer-inspired metaphors quite often to reinforce the belief that, although he is the president, he is very much like the guy next door. However, if Lula wants to go beyond the domestic scene and be acknowledged abroad as the protector of the underprivileged, he will need to expand his rhetoric to be relevant.
Lately, Lula has been refocusing his speeches from merely rhetorically criticizing a polarized world divided between rich and poor to helping provide a more concrete model that focuses on ways to reduce poverty. That new approach goes beyond deciding to forgive the external debts owed by several countries to Brazil, and on such matters as his acceptance of La Paz’s repudiation of a binding bilateral trade agreement with Brasília, even though this stirred considerable ill will among many Brazilians.
President Lula’s recent new alignment with President Bush regarding ethanol carries some irony with it. Although the U.S. has been increasing its ethanol production in recent years, its ethanol industry still is highly protected by a subsidy of 51 cents per gallon, as well as by an import tariff of 54 cents per gallon plus 2.5% of ad valorem tax. Brazil won’t be satisfied until, at least, the U.S. import tariff is removed. Lula must be perceived, both domestically and internationally, as negotiating as an equal with Bush.
Lula’s upcoming trip to Washington may reflect a demonstration of a desire to be of help to the U.S. with its energy security concerns, but the White House would be wise to be prepared to negotiate with a fox rather than a sheep.
This analysis was prepared by COHA Research Associate Thomaz Almeida. The Council on Hemispheric Affairs (COHA) – www.coha.org – is a think tank established in 1975 to discuss and promote inter-American relationship. Email: coha@coha.org.