news.bbc.co.uk Thursday, 30 January, 2003, 21:10 GMT

The Brazilian president has launched an ambitious programme to eliminate poverty in Brazil, the biggest country in Latin America.

President Luiz Inacio Lula da Silva, better known as Lula, aims to make a real difference for millions of people by the end of this year alone.

Everyone... [will] eat a decent meal three times a day, every day, without needing donations from anyone

Lula Zero Hunger, as the programme is known, is one of the principal pillars of the new, leftist president's social agenda.

"We are going to create the conditions so that everyone in our country can eat a decent meal three times a day, every day, without needing donations from anyone," he said at the launching ceremony in Brasilia.

The president toured the vast country's poorest regions soon after taking office this month and promised help to the destitute.

The new programme is meant to supply 1.5 million of the poorest families, especially in the north-east, with a monthly income of $15 to buy basic foods by the end of the year.

It will also continue previous government initiatives, such as cash handouts given on condition that children are sent to schools where they get free meals.

Earlier this week, Lula called on world leaders in Davos, Switzerland, to set up a global anti-poverty fund.

Cash cards Lula launched the new programme in front of an audience of 500 invited guests.

The government, which has earmarked $500m of its funds for the programme, is also appealing to Brazil's wealthy to donate and supermodel Gisele Bundchen has already given almost $30,000.

Brazil's poor World's 10th biggest economy 46 m out of 170 m people live on less than a dollar a day

The president warned that hunger could not de defeated by "isolated government measures".

"Conquering hunger will demand a lot of effort, a lot of persistence, a lot of courage and dedication from all of us during the next four years," he said.

The BBC's Tom Gibb reports that most of Brazil's projects for the long-term elimination of hunger are still on the drawing-board, with serious arguments within Lula's administration on how to proceed.

Lula is asking the rich to pitch in like model Gisele

Initially, the centrepiece of the programme was to be through handing out coupons to buy food, but the idea was dropped after experts said it would merely create a black market in coupons.

So now recipients will be given an electronic card which will allow them to claim their $15 a month in cash to buy food.

The first recipients will be in Guaribas and Acaua, in the northeastern Piaui region, where more than 700 families will shortly collect their aid cards.

Areas badly hit by drought are being given special attention under the programme.

In Brazil, a nation of about 170 million, about 46 million people live on less than a dollar a day.

www.forbes.com Reuters, 01.30.03, 2:03 PM ET

In BRASILIA story headlined "UPDATE 2-Brazil posts record budget surplus, beats IMF goal," please read in paragraph 13 "... up from 3.49 percent in 2001, " instead of "... down from 4.61 percent in 2001." Corrects percent of GDP. A corrected version follows. (Adds comments, details, byline) By Isabel Versiani BRASILIA, Brazil, Jan 30 (Reuters) - Brazil posted on Thursday a record primary budget surplus of 52.4 billion reais, ($14.7 billion) last year, beating its annual IMF target for the fourth time in a row. The surplus was the highest ever posted, and as a proportion of the gross domestic product, at 4.06 percent, it was the biggest surplus since 1994, said the Central Bank's Economic Department head Altamir Lopes. "It illustrates our desire to clean up the fiscal accounts. And we expect this to continue. In some ways it's irreversible," Lopes said. The primary buget surplus, which excludes interest payments, is a gauge of the government's capacity to service its $250 billion debt. Economists said the surplus was in line with expectations. It beat a targeted 50.3 billion reais, or 3.88 percent of GDP, as mandated by a $30 billion loan deal with the International Monetary Fund. All eyes are now on what what target Finance Minister Antonio Palocci will unveil for 2003 next week. "The new government has promised a target that will be pretty to the eye, but the question is what will Palocci announce," said Cristiano Oliveira, chief economist at Banco Schahin in Sao Paulo. Markets are widely expecting Palocci to hike the primary surplus goal -- which does not include debt costs -- above last year's result and the 3.75 percent of GDP targeted with the IMF. The move should help the new center-left government of President Luiz Inacio Lula da Silva win investors' confidence that it is serious about keeping its finances in order and paying down its $260 billion public debt. "The target for 2003 is going to have to be effectively better than what we did in 2002 to impact the market. I think 4.06 percent is now going to be the base," said Odair Abate, chief economist at Lloyds TSB in Sao Paulo. Brazil beat last year's target despite posting a deficit of 4.71 billion reais in December. It reported a surplus of 3.17 billion reais in November. The nominal budget deficit -- which includes debt costs -- was equivalent to 4.38 percent of gross domestic product in 2002, up from 3.49 percent in 2001. The Central Bank also said the government's total public sector debt finished the year at 881.1 billion reais, or about 55.9 percent of GDP. "It's obvious that's a high number, almost 60 percent of GDP, but we have already passed our worst moments," Schahin's Oliveira said, referring to improving market sentiment that has helped Brazil's currency appreciate, lowering the cost of its dollar-linked debt. ($1 = 3.56 Brazilian reais)

www.alternet.org By Jennifer C. Berkshire, AlterNet January 30, 2003

Porto Alegre – When tens of thousands of protesters streamed through the center of this city in Southern Brazil last week, denouncing George W. Bush and his war on Iraq, it was the second major anti-war gathering in the Americas in as many weeks. The World Social Forum in Porto Alegre was supposed to be about globalization, but talk of war dominated everything.

"Can there be any progress, civil, social or economic, while the American military project continues?" mused one European delegate. It wasn't just the anti-globalization crowd that found itself preoccupied by military matters. The few tycoons who showed up for this year's World Economic Forum in Davos, Switzerland spent most of their time wringing their hands over the prospect of war.

Despite being separated by thousands of miles – and a not insignificant distance on the thermometer – the anti-war protests in Washington and Porto Alegre weren't all that different. Both took place in contexts of economic uncertainty, looming austerity and an air of inevitability about the war itself. Both were notable for the huge presence of ordinary citizens who had made lengthy trips to march against war.

The majority of people who came to Porto Alegre – more than 100,000, say World Social Forum organizers - -were neither seasoned veterans of the anti-globalization circuit nor political movers and shakers.

"I came here from Foz do Iguacu," a teacher told me over lunch one day, referring to the dramatic falls near the Argentina border, mentioned by the Bush administration as a possible next frontier in the war against terror. "It's a long trip. Fifteen hours," he said, counting them out on his hands.

But while the two marches may have looked alike – demonic effigies of George W. Bush are as popular in Brazil as they are in Washington – that's where their similarities ended. The Jan. 18 demonstration in the US sprang out of a uniformly bleak political context, peopled mostly by protesters whose only organizational affiliation was a church group, a school club or a small network of friends and coworkers. The Porto Alegre protest, more shimmying spectacle than tribunal, was powered by deep organization – trade unions have a powerful presence here – and above all a sense of hope. After all, this is the same country that recently elected to the presidency Workers' Party candidate Luiz Inacio “Lula” da Silva.

A few days after the march, Lula spoke to an audience of tens of thousands of fans at the amphitheater in Porto Alegre. There are people in the crowd today who don't speak our language, he said, referring to WSF delegates who had traveled from some 130 countries to come to Brazil. For them I have a simple message, he said. "Look into my eyes."

I thought of Lula's statement on Tuesday night while watching George Bush's State of the Union address. I imagined Bush extending the same offer and wondered who would take him up on it. And what, I wondered, would they see in there?

For the people in Porto Alegre who marched against war that day, Lula's victory is the proof that organization and militant mobilization can work. The Workers' Party, or the PT, is everywhere here, from the flags that flutter about the city to the number 13 (the PT's spot on the electoral list) with which Porto Alegrenses adorn their clothes and cars. In the US, there is simply no equivalent. The Americans who traveled from Cleveland, Chicago and beyond to protest their president do not yet have an organized alternative with which to contest him. Should they join with the rancid Workers' World Party? Jump aboard the Lieberman campaign?

Another World Is Possible – But What World?

The war was the glue that held this, the third World Social Forum, together. "Another World is Possible" may be the official slogan (trademark pending) of the anti-globalization movement, but there is little agreement over what that world should be like. The range of conflicting visions was on vivid display in Porto Alegre; the gulf is as wide as ever between the reform crowd, which seeks fair trade and better managed capitalism vs. the revolutionaries, who want to tear the whole thing down and start over.

Lula essentially walked right into that divide with his decision to go from the people's forum directly to the annual ruling class reunion in Davos. "He's making a terrible mistake by going to Davos," Chris Nineham from the UK group Globalize Resistance said in a talk on the global anti-war movement. "It will lead to disappointment and to the kind of compromises that let people down."

The United Socialist Workers Party, or PSTU, a left split-off from the PT, was firmly on the side of keeping Lula in Porto Alegre. They staged regularly rallies during the forum, imploring Lula not to go, and they were the first to arrive at his speech, armed with huge banners and flags. As the crowd waited for the president to arrive, the PSTU kept up an ominous drum beat and alternated between chants condemning Bush, Sharon and Lula. But as the president began to speak, the PSTU contingent was as rapt as everyone else in the crowd.

When Lula announced from the stage that he couldn't stay, that he was, in fact, on his way to Davos, the audience fell silent. The PT flags stilled, and the soccer chants, "Lula, Lula, le-oh-le-oh-le," stopped as well. They would not have invited me to Davos if it weren't for you, Lula told them. "I'll say to them what I'd say to my comrades, that it's impossible to continue to live in a world where some people eat five times a day and others just once in five days."

But there is another conflict looming, one that won't be smoothed over as easily as this: Brazil's position on the Free Trade Area of the Americas Agreement, known here by its Portuguese acronym, ALCA. Activists in North and South America who hope that Lula's administration will simply walk away from the trade deal are likely to be sorely disappointed. On the campaign trail, Lula and other PT candidates criticized the FTAA as it had been negotiated by the Brazil's last president, Fernando Henrique Cardoso. But their intention all along has been to fight for the best trade deal for Brazil, not to appease the anti-globalization movement.

"I keep hearing talk that another FTAA is possible," Canadian labor activist Michelle Robidoux told me. "If that's where things are headed, people are going to be devastated. Canadians have seen what has happened as a result of NAFTA."

Like many at the forum, Robidoux seriously doubts that capitalism as we know it can be reformed. She and a friend were peddling red "anti-capitalista" buttons, spelled out in the Coca-Cola logo. "I believe that another world is possible," she said. "It just can't be capitalist."

One, Two, Many Social Forums

Since the anti-globalization movement burst into Northern consciousness in 1999, some of its novelty has worn off. The 'globo-trotters' who make their way from forum to forum (Genoa? It must be July), clad in movement swag, are already cliché. While they were out in force in Porto Alegre – I sat behind Jose Bove on the flight to Sao Paulo – the World Social Forum was about much more than movement stars.

What was on display here was the kind of spark and energy produced when huge numbers of people come together around an idea. Young, old, in-between, they turned out in force to learn about what globalization would mean for them. They crammed into theaters to hear live, streamed testimony from newly freed death-row inmates in Illinois. They stood in line to get into classrooms in order to hear about the US movement against the war in Iraq.

It may sound vague ("simpleminded" was the description that one American lent to the event); far more time was devoted to talking about demands than in figuring out how to make them. But for once, the statement "another world is possible" seemed like more than trite globo-talk; we were watching it unfold here. As in the US, much of public life in Brazil has been eroded by privatization, income inequality and a relentless process of malling. There are few places where ordinary Brazilians of all walks of life can simply go to mingle together.

"Public life has moved behind walls and gates," explained my friend Gianpaolo, a sociologist who grew up in Porto Alegre and now lives in the US. For five days, though, Brazilians and the people who had traveled from countries all over the world to join them took that world back.

One of the most contentious debates this year was over where the 4th WSF should take place, indeed, whether it could take place anywhere in the world but Brazil. And while there was general consensus coming into the meeting that the 2004 event would be moved to India, the Brazilians, the real power behind the WSF organizing structure, have been loathe to let it go. So too the merchants of Porto Alegre, who have made a killing during each of the last three Januarys. In the end, a compromise was reached: WSF 2004 will take place somewhere in India then return to Porto Alegre in 2005. Hyderabad, India played host to a successful Asian Social Forum in 2002.

Moving the event is important, says Njoki Njoroge Njehu, director of 50 Years is Enough.

"This shows that the World Social Forum isn't just a Brazil thing, but part of a global movement. The choice of India is important because of the strength of the social movements there."

But wherever civil society comes together to oppose globalization, says Njehu, people have an opportunity to experience solidarity. "Whether they're fighting water privatization in Bolivia, electricity cut-offs in South Africa, or demanding community control in the US, they're not alone. There are other people involved in the same struggles. Amongst all of the people here, if I call out for help, someone will answer."

Jennifer Berkshire is a freelance journalist in Boston who writes about globalization and immigration. Parts of this article first appeared on counterpunch.org. Contact her at jenniferberkshire@hotmail.com.

www.nytimes.com By TONY SMITH

ÃO PAULO, Brazil, Jan. 28 — Despite Brazil's smooth transition to a left-leaning government, two major American banks — J. P. Morgan Chase and Bank of America — announced today that they were reducing their operations in the country.

J. P. Morgan Chase said it was selling J. P. Morgan Fleming Asset Management, with 7 billion reais ($1.9 billion) of assets, to Banco Bradesco. It did not disclose the sale price. Morgan Fleming is based in São Paulo.

Bank of America, meanwhile, said it was cutting back its Brazilian operation sharply, eliminating at least three-fourths of its work force of 200. Bank employees in São Paulo said operations were "practically shutting down," with investment banking activities and the trading desk being deactivated. Advertisement

While the news was hardly a vote of confidence in the new government of President Luiz Inácio Lula da Silva, analysts said Brazil's major banks would be rubbing their hands at another sign they are gradually squeezing the foreign competition out of asset management and generally consolidating control of their home market.

With today's deal, Bradesco's asset management arm, BRAM, will manage more than 60 billion reais ($16.6 billion) of portfolios. Bradesco, Brazil's largest privately owned bank, has recently bought the local operation of Banco Bilbao Vizcaya Argentaria of Spain in a stock-and-cash deal worth over $800 million, and also acquired the asset management arm of Deutsche Bank.

Bradesco's rival, Banco Itaú, bought BBA-Creditanstalt from the HVB Group of Germany last year, after swallowing the private banking and asset management units of Lloyds TSB of Britain in 2001.

"Last year was a hard year for all of us, and it's difficult to paint an optimistic scenario for 2003," said Bruno Pereira, a bank analyst with UBS Warburg in Rio de Janeiro. "So either you make a bet that the markets will recover or you downsize."

"I think we must be getting close to the pinnacle of the mountain of risk aversion," said Tomás Awad at Itaú's stockbroker unit in São Paulo. "Some of the foreign banks simply weren't making the returns they expected and their headquarters must now deal with that in a bear, rather than a bull market."

J. P. Morgan Chase's president in Brazil, Patrick Morin, said the bank was staying in Brazil but would now give priority to investment and private banking and local markets.

In New York, a Bank of America spokesman, Jeff Hershberger, said the downsizing was part of a drive to reduce exposure to emerging markets worldwide.

"We have now decided to restructure our operations in Brazil and Argentina to focus on the bank's global treasury services business in both countries," Mr. Hershberger said.

Bank of America's asset management arm in Brazil, which manages some 2.1 billion reais ($580 million), was not affected by the cuts but could be up for sale, analysts said.

Bank of America's track record in Brazil has not been the best, said Carlos Coradi of EFC, a banking consultancy in São Paulo.

After buying Banco Liberal in 2001, it discovered a $40 million hole hidden away in the institution's offshore operations in the Bahamas. It also made loans to the troubled soccer club Vasco de Gama and the crisis-ridden business daily Gazeta Mercantil. Even loans to some of its foreign-backed clients turned sour. Elektro, a financially sound power generator in São Paulo state, was owned by Enron, while the local wireless operator BCP defaulted after ownership wrangles between BellSouth and a Brazilian banking family, the Safras.

"It looks like Bank of America got nothing right in Brazil," Mr. Coradi said. "It didn't do its homework and embarked on a few adventures."

Several Brazilian banks were swallowed by foreign institutions as the market opened up in the mid-1990's, but those that survived, like Bradesco, Itaú and Unibanco, have expanded and now have retail networks across Brazil. They enjoy better brand recognition and have millions of captive clients — Bradesco alone has more than 13 million — to sell products to.

"When the foreigners came in, there was a huge process of natural selection, but the Brazilian banks that survived have discovered how to position themselves well," Mr. Awad said. "Brazilian banks are obviously less risk averse in Brazil, it's the risk they deal with day to day."

www.economist.com Jan 30th 2003 | PORTO ALEGRE From The Economist print edition

PERHAPS no other world leader could have pulled off the feat achieved last weekend by Brazil's new president, Luiz Inácio Lula da Silva. First, an ebullient crowd of 75,000 at the World Social Forum, a global gathering of the radical left, hailed him as its leader. “He provides hope not only to his own people but to struggling people all over the world,” said Thomas De Castro, a Canadian trade unionist, as he listened to Lula at the forum in Porto Alegre, a tidy state capital in southern Brazil. Then Lula flew directly to Davos, the Swiss town that hosts the World Economic Forum. There, his speech was greeted ecstatically by the assembled businessmen and bankers who symbolise everything that the Porto Alegre event was set up two years ago to oppose.

A month into his term, Lula does not discourage the idea that his Brazil will provide the world with a new paradigm. In Porto Alegre, he cited several Latin neighbours which, he claimed, “have high expectations” of his government. In Davos, he called for the creation of a fund, backed by rich countries and multinationals, to “fight misery and hunger” in the third world. We'll look into it, replied the head of the Davos forum.

World Social Forum, World Economic Forum, Workers' Party (in Portuguese), Brazil's presidency (in Portuguese), Free Trade Area of the Americas, Brazil and the IMF

Yet what brings joy to Davos Man ought to alarm Porto Alegre Woman, and vice versa. The Porto Alegre “progressives”, as they call themselves, are strident folk. Many routinely equate George Bush with Adolf Hitler. The proposed Free-Trade Agreement of the Americas (FTAA) amounts to crimes against humanity. Capitalism itself is thought to be toxic. But while Davos Man may be a little crestfallen of late, his faith in capitalism has been stirred, not shaken.

Ironically, if Lula is to satisfy them both, it will not be by creating a new paradigm but by working creatively within an established one. There are two reasons to think this. The first is that Lula is a reconciler. The marchers' slogan “Don't spill blood for oil” becomes, in Lula's mouth, “the world needs peace, not war,” and drew cheers in Porto Alegre nonetheless. “Down with the FTAA” turned in Davos into “we want free trade” but with “reciprocity”. And for leftists disenchanted with traditional democracy, Lula's election represents the possibility of reprieve.

Second, Lula seeks to achieve progressive ends largely with means that Davos would endorse. His economic team has swallowed the IMF's remedy for countries with weak finances and rising inflation: budget surpluses and high interest rates. Last month, the central bank raised interest rates, already astronomic, by half a percentage point. Brazil's currency and its bonds have weakened recently, but that has more to do with investors' war jitters than with any financial wobbling by the Lula government.

Nevertheless, some of the features of Lula's new paradigm are acquiring definition. In local government, his Workers' Party (PT) pioneered ways to bring ordinary citizens into policymaking through “participatory budgeting”. It plans to take the principle to the federal level, through a new Council of Economic and Social Development. This is supposed to build consensus on reforms within “civil society” and industry. The foreign minister, Celso Amorim, is expected to visit the PT's trade-union arm to discuss trade policy. “We never had ministers consult us before,” said a union official in Porto Alegre.

The government's flagship programme, to be launched over the next few days, is Fome Zero (“zero hunger”), a national version of Lula's proposed international fund to fight misery. But this programme, like others of Lula's policies, is not nearly as novel as he and his supporters claim. It is likely to expand and improve upon anti-poverty schemes set up by Lula's predecessor, Fernando Henrique Cardoso.

Asked to define the new model, Tarso Genro, head of the new council, mentions first “realising the vast possibilities of the internal market”. This entails such unexceptionable measures as investing in infrastructure and research and development and giving small enterprises access to credit. Does the government want to raise taxes, already a weighty third of GDP? No, it would prefer to lower the burden and widen the revenue base, says Mr Genro. This would be done partly by bringing into the formal economy the half of the labour force that works off the books. The new model “is not a radical change,” he admits.

Caution is no guarantee of wisdom. The government could err in many ways that would pass unnoticed by the financial markets, at least for a time. Money could be squandered on badly designed poverty programmes or on bail-outs of failing companies. Rather than trying to prise open North American markets, Brazil could close the door to its own. This week it took action to stem imports of textiles from East Asia to protect its domestic industry.

Porto Alegre progressives would cheer each retreat from “market fundamentalism”, but the Lula government looks unlikely to give them many such satisfactions. What, then, does the PT's pragmatist majority have in common with the Porto Alegre radicals? Opposition to “neo-liberalism”, says Mr Genro. But that convenient political swear word means different things to the two groups. For radicals, the term stands for capitalism; for Lula, a narrow conservative version of it.

Already it is clear that the obstacles to Lula's success may come less from Davos than from within his own camp. On the one hand, he has accepted the support of backwoods political barons whose problem with “neo-liberalism” is that it means a smaller state to plunder. And on the other, his most vocal public critics are on his party's left, preparing to oppose the IMF, and the pension and labour reforms which Lula has accepted are essential to generate the growth and resources needed to fight poverty. If he does show that Davos is no obstacle to economic and social justice, his welcome may be chillier in Porto Alegre by the end of his term.