DAILY EXPRESS: Real Politik
www.tnr.com by Robert Lane Greene Only at TNR Online | Post date 10.29.02
Rarely does a candidate for high office in a major democracy enjoy simultaneous billing as both a moderate and a radical. Never does it happen as often as it did to the Brazilian president-elect, Luiz Inacio "Lula" da Silva, during his recent campaign. Often within the same article commentators would seize on various physical attributes and use them to make conflicting points. On one side, there was the finger Lula lost in an industrial accident, a symbol of his years of activism within the country's labor movement. On the other side, there was the trimming of Lula's beard, which was supposed to symbolize his transformation from radical union agitator to statesman. (Not since Jimmy Carter reversed his part in 1979 has a candidate's hair seemed to portend so much.)
In truth, Lula is neither the market-embracing moderate some say he has become nor the unapologetic hard-leftist who previously made three unsuccessful bids for the Brazilian presidency. He has renounced a pledge to "renegotiate" (that is, stop paying) Brazil's huge debt, promised to honor the terms of an IMF deal that requires Brazil to run budget surpluses, and has, in principle, agreed to aim for low inflation. But his party is hostile to many aspects of orthodox economics. Free trade is one: The Workers' Party has sworn to prevent the "annexation" of Brazil in the American-inspired Free Trade Area of the Americas. Using higher interest rates to control inflation is another: Lula has simplistically argued that America lowered rates during its recession, so why not Brazil? And while he has said he will spend responsibly, his campaign promise to double the minimum wage would be costly, driving up public wages and the pensions that are indexed to them.
Taken together, Lula gives the impression of a leftist, but in a mold familiar to moderate social democrats in Europe and America. And that's what makes his victory so comforting.
Latin America's history with democracy has been an unruly one, to say the least. The region's strong illiberal tendencies have come in various forms over the years--whether military autocracy (Brazil 1964-85, Chile 1973-90, Argentina 1976-83), populist quasi-democracy (Mexico under the 71-year rule of the PRI), or the rule of corrupt upper-class elites (take your pick in Central America). Though there has been progress recently--witness Chile since Pinochet and Mexico since President Vincente Fox's victory in 2000--it has come only in fits and starts. Ecuador faces a choice between a hard-left former colonel and the country's richest businessman in its upcoming presidential poll; Peru is desperately trying to put the trauma of Alberto Fujimori's staggering corruption behind it. And in Brazil's neighbor, Venezuela, Hugo Chavez, a leftist and former paratrooper who was elected after spending time in jail for a failed coup, has polarized his country, shamelessly altering the constitution and driving the economy into the ground. Needless to say, the march of liberal democracy and free economies is not inevitable.
In this context the Brazilian system, chaotic though it can be (there are 19 parties in congress), stands out as a refreshing example. The military plays no role in politics. A lively press keeps politicians on their toes (aggressive journalism led to the resignation of a corrupt president in 1992). And this year's election was technically smooth, with electronic voting machines used across the vast country that would put Florida to shame.
In fact, the peaceful shift from moderate right to moderate left is something to be cherished politically even if it is less than perfect economically. Lula's predecessor, Fernando Henrique Cardoso stabilized the economy with sometimes-painful orthodox measures after his election in 1994. But the electorate proved patient and resilient enough to renew his mandate in 1998--rebuffing a left-wing populist named Luiz Inacio Lula da Silva along the way. The upshot was that the experience brought Lula to the center, where he could draw attention to the ill effects of inflation-fighting and budget austerity in ways that resonated with Brazilians without scaring them. So when the government's handpicked candidate, José Serra, offered more of Cardoso's increasingly unpopular neoliberal policies, he was greeted with a polite "thanks, but no thanks" from voters, giving the reconstructed Lula his long-awaited presidential term. For his part, Lula, in a gesture most Americans demanded (and received) from their own president-elect in 2000, graciously accepted his victory by promising to govern "for all Brazilians."
Of course, all this goes out the window if the markets don't believe Lula is sincere. Pre-election fears of this scenario battered Brazil's currency and bonds, as nervous investors pulled out of the country for fear of a debt default or runaway inflation. The governing party played on the fear that Lula would cost Brazil its hard-won stability, and he had to respond with a campaign ad denying that he was "the bogeyman." Since Sunday's election the markets have been quiet but expectant, hoping that Lula will appoint a cabinet and central bank chief investors can trust.
But in the end markets are most at ease when democracy is sturdiest. After all, it does little good for a country to follow a strict liberalization regimen if that regimen promptly undermines political stability. Thankfully, this year's election proved that Brazilian voters can repudiate those policies without demanding a radical lurch in the opposite direction. If Lula can live up to his promises and govern from the middle-of-the-road left, he may do as much to satisfy the markets as his neoliberal predecessor.
Robert Lane Greene is countries editor at Economist.com