Incoming Brazilian president adept at checkmating Bush
By Roger Burbach* 13 December 2002
Luis Inacio Lula da Silva, the incoming president of Brazil, is demonstrating an uncanny ability to move forward a progressive agenda while keeping his conservative antagonists at bay. This was clearly demonstrated in his meeting with George W. Bush in Washington on 10 December 2002. Pablo Gentili, an Argentine international analyst at the State University of Rio de Janeiro, declares: "Da Silva reaped the support of the Bush administration while making it clear that his government will set its own agenda and priorities. He has an extraordinary capacity to build broad support for his left-leaning policies in the face of domestic and international adversity."
Before da Silva's arrival in Washington key Republican Congressional figures, along with right-wing conservatives identified with the Reagan administration's bellicose policies in Central America, were calling for Bush to take a tough stand against the incoming president who is commonly referred to as "Lula". They decried the new leftist threat in Latin America, asserting that a "Lula, Castro, Chavez axis" was in the making, referring to Presidents Fidel Castro of Cuba and Hugo Chavez of Venezuela.
Lula had also been hit by international speculators prior to his visit to Washington. Fearful that the social policies advocated by the new government will adversely affect Brazil's ability to make payments of its huge international debt totalling 240 billion US dollars, the investment bank of J.P. Morgan on 2 December downgraded its rating of Brazil from "neutral" to "negative". This shift led to a slide in the value of Brazil's currency, the real, and a slump in the country's stock market.
As Francisco Meneses of IBASE, an independent research institute in Rio de Janeiro, notes, "Before coming to Washington, Lula positioned himself so that international institutions and politicians like Bush would find it difficult to go after him." The day after he won the Brazilian election, Lula declared that his number one priority when he takes office on 1 January 2003 was to end hunger among 23 million Brazilians, approximately one-seventh of the country's population. The campaign will be accompanied by increased subsidies to poor families aimed at keeping their children in school, by a fairly radical agrarian reform programme and by significant government support for agricultural cooperatives.
"By making the ending of hunger his number one priority, Lula has inoculated himself against many of his detractors," says Meneses. As an expert on agrarian issues, Meneses has been participating in the planning meetings for the government's campaign against hunger. He says the World Bank, along with the United Nations Food and Agricultural Organization, have already informally committed their institutions to spending 5 billion US dollars over the next four years on the campaign against hunger.
Even the most orthodox international lending institutions have been checkmated by da Silva's announced policies. Just days before Lula left for Washington, the head of the International Monetary Fund, Horst Kohler, went to Brazil. After meeting Lula, Kohler proclaimed that the incoming president "is a leader for the 21st century". He even endorsed Lula's call for increased social spending and lamented J.P. Morgan's downgrading of Brazil's investment rating.
One major area of discussion between the Bush administration and Lula in Washington focused on the Free Trade Area of the Americas (FTAA). Bush has made this agreement the lynchpin of his Latin American policy, calling for all the countries of the hemisphere (except Cuba) to begin reducing trade barriers in 2005. Lula has repeatedly expressed reservations about FTAA, asserting that it favours US domination of Latin America.
Lula positioned himself strategically in the FTAA debate by meeting regional allies before going to Washington. As Marcos Arruda, a foreign policy consultant to the incoming government notes: "Lula intentionally visited neighbouring countries before visiting Bush to make it clear he would not grovel for US support and that Brazil has its own agenda and interests in South America." On 2 December Lula visited Argentina, Brazil's leading partner in MercoSur, the regional trade block that also includes Uruguay and Paraguay. Next he went to Chile, an associate member of MercoSur. In his major address in Buenos Aires Lula called for a strengthening of MercoSur "so we can take control of our destiny" and end "our dependency on international currency flows". In Argentina as well as Chile, Lula asserted that MercoSur should take priority over other trade agreements, and went on to call for a common currency among MercoSur nations and the formation of a regional Parliament.
In Washington Lula was able to seize the commercial high ground by pointing to a series of US protectionist measures that actually run counter to authentic free trade. Approximately 25 per cent of Brazil's exports valued at over 14 billion US dollars currently go to the United States. Twenty of the leading products face average US tariffs of 39 per cent. If the trade barriers were removed on just four products - orange juice, steel, meat and soy products - it is estimated that annual Brazilian exports to the US would jump by 2 billion US dollars.
Francisco Meneses of IBASE believes it is doubtful that the talks between Lula and Bush will actually lead to any significant reduction of US trade barriers, particularly on products like orange juice. "Bush's brother Jeb, as governor of Florida, obviously has a stake in keeping out Brazilian juice because of his alliance with local orange growers." Moreover, Meneses worries that even the apparently favourable rapport between Lula and George W. Bush will soon sour. "With Iraq and the Middle East, the administration has its hands full; it doesn't want to create a crisis with the Lula government for now. Bush is biding his time. He will wait for the inevitably deeper reactions of domestic and international interests opposed to Lula's progressive social policies before moving against the new government."