According to Lupi, as everyone knows, Brazil got sucked into the international  financial crisis later than most countries, managed to avoid the worst consequences of the crisis and then escaped earlier than most countries.

Employment numbers for 2009 and 2008 present a picture of what happened. Although an estimated 1.1 million new jobs were created in 2009, which is certainly good news in light of what has happened in many other places, Lupi pointed out that that was 350,000 fewer new jobs than in 2008.

Brazil was not completely unscathed by the crisis, in other words. Even so, the minister pointed out, the numbers are confounding all the pessimists.

Lupi also pointed out that it is normal for a sharp reduction of jobs to occur at the end of December, after the holiday season. He said the December negative employment average was 300,000.

But, last year the crisis did raise its ugly head in Brazil and the number of jobs lost at the end of December 2008 reached 650,000. “That was atypical,” said the minister. “This year we expect things to get back to normal. Losses should be between 200,000 and 300,000.”

According to Lupi, Brazil’s labor market is strong because the country has inflation under control, purchasing power has risen with increases in the minimum wage and domestic demand continues high. He said expectations are that 2010 will be better.

Construction was one of the hardest hit sectors in 2008, but recovered in 2009 and should expand vigorously in 2010, he predicts. “The outlook for 2010 is positive. We should create two million jobs,” declared the minister.

ABr

The agreement was reached during a friendly dinner at the presidential residence in Brazilian capital Brasí­lia with the participation of the main leaders of the PMDB and the PT (Workers Party), the president's own party, as well as Rousseff, who is the current chief of staff for the presidency.

PMDB chairman Michel Temer said that the "political agreement" entails support from the conservative party for the candidacy of Ms Rousseff and naming her companion in the presidential ticket.

However Temer added that the PMDB, PT "marriage" must have the approval from both parties' conventions which will take place sometime at the end of 2009 or beginning of next year.

Temer, who is currently president of the Lower House, is mentioned inside PMDB as the most probable name for the second person of the 2010 presidential ticket next to Rousseff.

"The name of the vice president (hopeful) will be decided by political circumstances to be defined next year," said Temer who underlined that more important is to bring other parties of the current government coalition in support of Ms Rousseff.

Another ten parties of all sizes, ideological background or representing interest group make up the coalition which supports Lula.

"It would be most useful to have a block of parties supporting the candidacy of the minister," pointed out Temer.

PMDB joined the government coalition back in 2005 when Lula's Workers Party was rocked by major scandals involving massive handouts to members of Congress to have bills passed. Since then the PMDB has consolidated as the most influential party in the ruling coalition.

Temer has also managed to make it the strongest electoral force in Brazil which was ratified in the governors' election of 2006 and municipal of 2008.

In 2006 when the PMDB backed the reelection of President Lula, the PMDB won 7 out of 27 governorships and in 2008 took control of 1.201 town halls out of 5.563.

The PMDB also holds the presidency of the Lower House and of the Senate with a most controversial figure, but still very influential, José Sarney, a former president of Brazil.

Congressional sources in Brasí­lia quoted in the press anticipate that at least five of the small parties from the ruling coalition will throw their weight behind Ms Rousseff.

But above all Ms Rousseff will be "Lula's candidate", since he happens to be the most popular president in recent Brazilian history with a public opinion polls sustained support of almost 80%, and could easily have forced a constitutional amendment to have him elected for a third consecutive mandate.

Mercopress

fPT chairman Ricardo Berzoini made the official statement after meeting with President Lula in the Planalto, the presidential office in Brazilian capital Brasí­lia.

"We have great love and respect for Dilma, she can be the party's presidential candidate for the elections of October 2010," said Berzoini, according to a report from daily O Estado de São Paulo.

Berzoini's statement was interpreted as a signal the PT, as with the opposition party PSDB (Social-Democrats) are preparing for an informal launching of the 2010 campaign.

"Democracy inside the PT is guaranteed but the word of the president will have an enormous weight," added Berzoini. The ruling party will formally nominate its 2010 presidential candidate and "the party does not discard other hopefuls."

Lula, with an 80% public opinion support, can't aspire to a third running mandate according to the Brazilian constitution. He has also rejected his ruling party's attempts to introduce a constitutional amendment, arguing: "Eight years is enough and three running periods are not good for democracy".

Last week in a meeting with foreign correspondents reiterated that Dilma Rousseff, currently cabinet chief "has all the aptitudes to dispute the presidency."

Meantime, according to the Brazilian press, Rousseff remains in Porto Alegre, south of Brazil, where last Saturday she underwent facial plastic surgery.

Brazilian political analysts see this as another clear signal that it is part of Rousseff's image marketing in her bid for the presidency.

Mercopress

It is not too early to begin thinking about what will happen when Lula da
Silva’s term as President of Brazil ends in 2010. Commentators often shy away
from offering predictions, finding it safer to write about the recent past as if
they knew what was going to happen all along. Predictions are risky, but also
more fun. My predictions are specific enough that we will know, within five
years, whether they came true or not.

Prediction 1: The presidential election will be held on schedule in 2010 and Lula will leave office in an orderly fashion. Lula continues to be very popular, and there is talk of a constitutional amendment to allow a third term. But there would be very strong opposition from forces in Congress that would have the votes to block an amendment.

Lula recently stated that “I will give the Presidential sash to another President of the Republic on January 1, 2011, and I will make my roasted rabbit which I have not done for five years.”

He also said, in a clear reference to Hugo Chávez, that “when a political leader begins to think that he is irreplaceable or unsubstitutable, this is the beginning of a little dictatorship.” (Estado de S. Paulo, August 26).

These statements would make it difficult for him to reverse himself and decide to run in 2010. He will be free to run in 2014, but that is beyond the time frame for these predictions.

Prediction 2: The new President will not be from the Workers Party. The Workers Party has no strong candidates, and knowledgeable party leaders privately express the view that the Party cannot win in 2010. Lula’s heir apparent, José Dirceu, was removed by the corruption scandals.

Other impressive emerging leaders, such as Belo Horizonte mayor Fernando Pimentel, have not yet developed the needed national recognition. Lula has stated that he may give his support to a candidate from one of the parties in his coalition other than the Workers Party, and suggested that the Party might not even nominate its own candidate.

By all accounts the strongest candidates are José Serra (governor of São Paulo) and Aécio Neves (governor of Minas Gerais), both of the Party of the Brazilian Social Democracy, and Ciro Gomes (governor of Ceará) of the Popular Socialist Party.

Geraldo Alckmin, Lula’s last opponent and former governor of São Paulo, is likely to become mayor of the city of São Paulo and may run again for the presidency.

Governors of major states are traditionally the leading candidates for the Brazilian presidency. Since things have been going reasonably well, Brazilians are unlikely to choose a charismatic outsider in 2010.

Prediction 3: The new government will continue the market-friendly economic model established by Fernando Henrique Cardoso. On a global scale, the success of China, India and Chile, among others, has convinced most economists and business leaders and many intellectuals that there is no viable alternative to competing vigorously in the global marketplace.

Economic growth has picked up in 2007, undercutting any remnant of pressure for a return to statist policies. The chances of a shift to a fundamentally different economic model seem very small. The following more specific and testable predictions are corollaries of Prediction Three:

Prediction 3.1: The Privatization of the Companhia Vale do Rio Doce will not be reversed. The Landless Farmers’ movement and some Catholic activists are lobbying to declare the privatization invalid on the grounds that the company has succeeded so well that it must have been sold too cheaply.

But getting rich is not a crime in a market economy and the courts are unlikely to rule that the privatization was invalid. The company is paying more in taxes than the profits it made as a state corporation, and it would be too expensive to buy it for its current market value.

Prediction 3.2: The annual inflation rate of the Brazilian currency will stay in single digits. A stable currency is a strong priority for the Lula government and for any likely government that will follow. Low inflation has also been a global trend, with a few noteworthy exceptions such as Zimbabwe and Argentina.

This assumes that inflation in the U.S. and Europe will also be low, although some increases are expected in the next five years. The two-digit dividing line is symbolically important and Brazilian authorities will make a real effort not to exceed it.

Prediction 3.3: A Free Trade Area of the Americas or some equivalent bilateral arrangement will be negotiated. Opposition from the leftover left will be increasingly linked to Hugo Chávez which will lessen its appeal to Brazilians.

The trend in Brazilian foreign policy is towards greater emphasis on relationships with the major economic powers, and economists and business leaders will see this as important to maintaining economic growth. With the failure of American intervention in Iraq, the post-Bush United States government will be eager to mend relationships elsewhere in the world.

Prediction 3.4: Brazilian economic growth will be about average for world economies. It will not match the high growth of India or China, but neither will it lag significantly behind the global trend. Continued macroeconomic stability and openness to world markets will encourage investment and growth, but political factors will not allow the tax and spending reforms that would be needed to generate exceptionally high growth.

Prediction 4: Violent crime rates will decline as other states emulate São Paulo’s success. The remarkable success in the state of São Paulo has demonstrated that effective policing measures can reduce violent crime without a prior lessening of socio-economic inequalities.

Brazil’s strong gun control legislation will contribute to this as it is more effectively enforced nationwide. This does not state that violent confrontations with drug gangs will lessen, it predicts that the overall violent crime rates, including especially the homicide rates, will decline due to a decline in everyday violence.

Prediction 5: Corruption will decline as a political issue and Brazil’s ranking on the Transparency International corruption perception survey will improve. The Federal Police and Federal Attorney General have been increasingly effective in uncovering and prosecuting important corruption cases and taking them out of the political arena.

As important cases such as that of José Dirceu are processed by the courts, corruption accusations will increasingly be handled by the judicial system. It seems likely that the overall level of corruption will decrease, but there is no reliable measure of this so it is not possible to make a testable prediction. The Transparency International survey, based on a survey of knowledgeable people, should reflect the lessening prominence of the issue.

Prediction 6: Political reform will give political parties a stronger role in the legislature. Recent court rulings have threatened legislators who shifted political parties, and leaders of all major parties support party fidelity reforms.

Prediction 7: Brazilian elections will increasingly split along north/south lines. Lula and the Workers Party have increasingly built their base in the northeast and in the poorer states based on income transfer programs. These programs impose a tax burden which is a constraint on economic growth in the wealthier southern states.

Prediction 8: Land reform will peak during the Lula years and the number of families settled each year will decline. This prediction goes against the most recent trends because the number of families settled has increased sharply as the Lula government has finally organized itself to fulfill promises to some of its most militant supporters.

But the costs of land reform are too high, from 30,000 Brazilian reais (US$ 17,000) to over 70,000 reais (US$ 39,000) per family settled, and there is little “underutilized” land available for settlement. Brazilian commercial agriculture is highly productive and purchasing land to give away is simply too expensive.

Prediction 9: Deforestation will continue at a rate of at least 10,000 square kilometers a year. This prediction also goes against the most recent trends since the Lula government has recently announced that deforestation was cut to 9,600 square kilometers between August 1 and July 30, 2007. They take credit for stronger enforcement measures that cut it from a high of 27,429 in 2004.

Nevertheless, the economic forces behind deforestation are very strong and the demand for land to grow soybeans and other crops is high. A global market for ethanol may increase this pressure. Environmentalist forces seem weak in comparison to the developmental pressures.

These predictions are intended to generate discussion. Readers are challenged to offer predictions of their one, predictions that are specific enough to be testable. In five years we will see how they come out.

Ted Goertzel, Ph.D. is Professor of Sociology at Rutgers University in Camden, New Jersey. He is the author of a biography of Fernando Henrique Cardoso, available in English and in Portuguese. He can be contacted at goertzel@camden.rutgers.edu and his WEB page can be found at http://goertzel.org/ted.

In this concluding article of a mini-series about the Brazilian election, I would like to do three things:

* search for the causes of Lula’s victory, especially in respect to the corruption scandals that dominated his first term

* assess what is at stake in the second term, especially the main issues, forces and names likely to dominate the next four years

* argue that the current political situation in the country is marked by a mixture of old problems and new politics.

Charisma Retained

Lula’s political life entered troubled waters in June 2005, when a rightwing congressman, Roberto Jefferson, accused the president’s Partido dos Trabalhadores (Workers’ Party/PT) of buying votes in the Brasília parliament. The scheme operated via undeclared payments made each month (thus mensalão) to congressmen and some small parties in exchange for political support. The money was laundered through a publicity agency owned by a businessman called Marcos Valério (thus valerioduto).

From June 2005 to October 29, 2006, politics in Brazil became an almost one-word song: corruption. In the event, the scandal drew little blood among the political elite, but those it did fell were among the most powerful: those felled included the president’s chief aide José Dirceu and the Finance Minister Antonio Palocci.

Dirceu and Palocci were the two vertices of a triangle of power running Brazil, with Lula at the top. Dirceu was the president’s political CEO, while Palocci kept the economy stable, controlling inflation and public spending – with the unfortunate but necessary by-product of high interest rates.

The waterfall of scandal and revelation continued until the very eve of the election’s first round, when some PT officials close to the president – including his campaign manager Ricardo Berzoini – were caught attempting to buy documents that contained (false) allegations against two of Lula’s leading rivals: Geraldo Alckmin, his main challenger for the presidency, and José Serra, the former mayor of São Paulo. Serra had lost to Lula in the 2002 presidential race, and was standing (successfully, as it turned out) for the governorship of São Paulo.

Both Alckmin and José Serra belong to the Partido da Social Democracia Brasileira (PSDB). The party of the former president Fernando Henrique Cardoso is the main adversary today for Lula’s PT in Brazilian politics.

The political fallout of the last pre-election scandal was that Lula was forced to contest a second round. What had long seemed unbelievable came true: Alckmin had won himself another month of campaigning – and a couple of TV debates with Lula (who had absented himself from all of them until then, and been bitterly criticized for it).

During the debates, the PSDB candidate tried to press the president into answering questions about the origin of the money used to buy the illegal documents supposedly incriminating him. But Alckmin’s campaign was compromised by serious errors, including his alliance with Anthony and Rosângela Garotinho, the religious populists who control Rio de Janeiro state. He also failed to defend himself and his party properly against Lula’s attacks on the PSDB’s privatization program (an inheritance of the Cardoso years).

The result was that Lula won on October 29 by a margin of more than 20 percentage points. There are at least three ways to explain Lula’s powerful victory, even after the series of corruption scandals that marked his first term in Brasília:

* he proved capable of distancing himself from the scandals, and allowing responsibility for them to be assumed by José Dirceu and the PT (and more widely by parliament and the institutions, with the familiar argument that "it has always been like that")

* he was successful in keeping inflation low and under control, enabling him to fund government programs of direct assistance to the poor (resulting in a reduction in the numbers of poor people in Brazil by around 8 million during his first term)

* Lula retained his personal image as the charismatic standard-bearer of the left in Brazil, and proved that it still had potent appeal.

All three elements may be part of the explanation, but the significance of the third should not be underestimated. Lula is a historic figure in Brazilian politics, associated with the struggle against the military regime (1964-85), the "re-democratization" process that followed, and the fight for the workers and the poor.

This profile continued to serve him well when contrasted with Alckmin’s Catholic-conservative image, especially in a country where the income of more than half of families is below even minimum-wage levels.  

The Economics of Power

"It is the end of the Palocci era," said PT leader and Lula’s Education Minister Tarso Genro, winning headlines in all major newspapers in Brazil the day after the re-election. The former mayor of Porto Alegre is now one of the PT’s strongest figures, and among the current favorites to be the party’s nominee for the 2010 presidential elections.

His barbed reference to the chief architect of Brazil’s economic policy in Lula’s first term carries a firm message: "There is no need to focus neurotically on the control of inflation."

Lula himself quickly disowned this view. But Genro has staked out a clear position in the emerging debate over public spending in Brazil. For amid the intense, often sensationalist coverage of the corruption issue, a key outcome of the election is to have consolidated two distinct arguments about how best to run Brazil’s public finances. Each argument is represented by leading figures in the PT and the PSDB respectively, though there is no doubt where the political momentum lies.

Tarso Genro believes that there is no need to cut public spending: what is needed is to reduce interest rates and let the economy steam ahead, producing growth (and thus, in time, increased tax revenues).

This will solve two current economic problems: high daily state spending (perhaps more than 20% of Brazil’s GDP) on salaries, costs and benefits, not least on the famous Bolsa Família program, where 11 million poor families receive money from the government; and very low levels of investment (1.8% of GDP) in health, education and infrastructure.

The problem here is that 8% of Brazil’s GDP is spent on paying interest rates on the public debt (and a further 4.5% on savings). This puts added pressure on revenues raised by tax, which amount to around 38% of GDP – yet which do not produce a single public benefit to the Brazilian society, neither basic free education nor equal access to justice, health or security.

Dilma Rousseff, Dirceu’s successor as Lula’s chief-of-staff, shares Genro’s view. She opposes cuts in public spending and supports weaker inflation controls. But it is possible to read Genro’s emphatic post-election statement as an early claim that he – rather than Roussef – should be the president’s chosen candidate in 2010.

Genro’s and Rousseff’s view is that of the PT in general. It also had wide support in the Partido do Movimento Democrático Brasileiro (PMDB), which controls seven governorates (out of 27) and 86 seats in the lower chamber of the Brazilian congress (out of 513).

The alternative argument is in favor of reductions in taxes and in public spending. It is strongly held inside the PSDB, especially by Alckmin; but it also allies in the government, such as the current president of the Brazilian central bank, Henrique Meirelles (whom Genro and Rousseff have recently criticized).

At the same time, there are others who seek to take a middle path, albeit with different degrees of emphasis; they include Finance Minister Guido Mantega, the probable new health minister Ciro Gomes and São Paulo’s PSDB governor José Serra.

Old Problems, New Politics

The outcome of the contest over economic policy will help to shape Lula’s second term and thus his place in history. But even more fundamentally, the president will over the next four years have to adjudicate the defining political contest in Brazil: the one between nationalists and liberals.

Brazil’s 2006 election has clarified this double-sided polarization. Its first aspect is the party system itself, where the political environment is shaping itself around the PT-PSDB opposition.

Its second aspect is a deeper political and intellectual division centring on the question of what the state should do and how should it do it. (The "nationalist" and "liberal" answers to this question are reflected in several fields, such as foreign policy: should Brazil pursue a "third-world" strategy or one close to the major powers?)

There are variants of these respective currents. The PT and the PMDB tend to be nationalist, but the former’s adheres to a more "progressive" variety while the latter is more conservative. The PSDB and the Partido da Força Liberal (PFL) are more liberal, but with contrasting leanings to left and right.

But the larger picture here is as significant as the detail. After all the events of the last 30 years in Brazil – the military regime, the process of re-democratization, the problems of political and economic instability, the real plan and the victory over hyperinflation – the country is experiencing stable politics again, with clear and different positions being consolidated across the spectrum.

It is useful to remember that Lula’s first four years marked the first time since the 1964 military coup when an elected president started and ended his term according to constitutional propriety.

Besides, there was in practice no effective constitution during the twenty years of the dictatorship; the first president elected after the dictatorship (Tancredo Neves) died before being able to govern; the second (Fernando Collor de Mello) was impeached; and the third (Fernando Henrique Cardoso) changed the law to permit his re-election.

Even José Sarney (1985-90), who was not elected but inherited the presidency after the death of Tancredo Neves, changed the constitution to have one more year in the job.

The polarization between the PT and the PSDB, and around nationalists and liberals concerning the role of the state, is the great achievement of Brazil’s 2006 elections. But every answer raises a fresh question. In the case of Brazil today it is: if politics is an expression of society, how can politics change society?

Political science offers many answers to this question. A persuasive one is "consensus-building": the careful, patient, political gathering of social consensus around common issues.

The evidence of the failure to provide real public benefits to Brazilian citizens is everywhere. This is the shared, tragic predicament of the Brazilian people (as well as of millions of South Americans). Whether these are to be provided by a small or a very large state does not matter. Welcome to politics, Brazil.
 
Arthur Ituassu is professor of international relations at the Pontifícia Universidade Católica in Rio de Janeiro, Brazil. You can read more from him at his website: www.ituassu.com.br. This article appeared originally in Open Democracy – www.opendemocracy.net.