www.latintrade.com 02/14/2003 - Source: Latin American Newsletters

Brazil's benchmark inflation rate leapt to a six-year high of 14.5% in January, on rising fuel prices.

January's inflation rate accelerated to 2.25%, from 2.1% in December, even though interest rates have been raised to a record 25.5% and pressure on the currency has subsided. The problem is that Gulf War speculation has led to rising world oil prices, which, in Brazil, has translated into higher transport costs and higher food prices. Gasoline prices increased by 8.8% in January, bus fares by 4.99% and food prices by 2.15%.

The inflationary surge makes it likely that the central bank will raise interest rates when it meets next week. A rise in interest rates would hinder President Luiz Inácio Lula da Silva's plans to create jobs through faster economic growth. It would also add to the debt-servicing burden.

Brazil's inflation target for this year is 8.5%, but few independent forecasters think they will achieve it. The 120 economists surveyed by the central bank expect inflation will end the year at 11.8%. Last year, inflation ended the year at 12.5%.

washingtontimes.com By Carmen Gentile UPI Latin America Correspondent

     SAO PAULO, Brazil, Feb. 13 (UPI) -- Brazil's president told his nation Thursday that he had inherited a grave situation and that the policies adopted by his predecessor did not prioritize economic growth or great equity in the distribution of income.      Luiz Inacio Lula da Silva painted a dire portrait of Brazil saying that income distribution had remained unchanged for the last 30 years and that former President Fernando Henrique Cardoso did little to change that during his eight-year mandate.      "But I was not chosen to lament, rather to face this situation," said Lula, who since assuming office on Jan. 1 has been steadily pushing for comprehensive reform in an attempt to narrow one the world's largest economic divides.      Brazil's left-wing leader stressed that the need to reform government institutions such as pension programs, welfare and taxes "was urgent" so that the country could grow and foster greater social cohesion.      Lula's dire assessment and demand for change came on the same day of the first meeting of his Council of Economic and Social Development.      Known locally as the CDES, the group of 82 non-elected business and labor leaders will advise the administration on how to cure Brazil's various social and economic woes and assist in the development of a reform package to present to Congress.      The president went on to assure Brazilians that CDES members were not chosen "because they are friends of Lula, or of his Workers' Party," nor would they diminish the role of elected officials. Rather, the council, said the president, would provide private citizens the opportunity to assist in forging their country's future.      "The council will not, under any circumstances, substitute nor will it diminish the power of the National Congress, which, in the Brazilian democratic system, is the privileged forum for the country's strategic deliberations," Lula said.      "The search for consensus in society, the search for an authentic strategic social accord, can be very useful to the work of the executive and the legislature itself, without removing any of its prerogatives, instead, adding to their importance."      Some elected officials, however, don't see it that way.      Jose Carlos Aleluia, a leader in Brazil's lower house and member of the right-leaning Liberal Party, said he didn't recognize "the party as a deliberative organ" and "guaranteed that Congress won't accept reform proposals" put forward by the CDES.      Some analysts are forecasting pitfalls in Lula's future for introducing what amounts to another, unofficial branch of government in his quest to implement reforms.      While the approval of the CDES may help create consensus among voters, it "might create some tension" with Congress, where Lula's Workers' Party does not hold a majority, predicts Tendencias Consulting Group analyst Christopher Garman.      "The government will play it up as, 'We are consulting society,'" said Garman, "though Congress could end up regarding it as an unnecessary mechanism that could subvert its authority."

washingtontimes.com By Bradley Brooks UPI Business Correspondent

     RIO DE JANEIRO, Brazil, Feb. 13 (UPI) -- Brazil's inflation figure for January ticked up to its highest 12-month total in six years, the government said Thursday. Top Stories • U.S. rebuffed on using force in Iraq • Bin Laden son, al Qaeda terrorists spotted in Iran • Ridge cautions against panic • A war of words on the French • Ex-SLA radicals draw 6-8 years for '75 killing • We hardly knew ewe • State tells Vietnam it opposes bill on flag

     The reading came as new President Luiz Inacio Lula da Silva underscored that reform is the key to economic growth.      The government reported that inflation in January was 2.25 percent, higher than what most analysts were forecasting. Inflation was 2.1 percent in the previous month.      The January number puts the 12-month inflation reading at 14.5 percent -- its highest level since August 1996.      Government officials said the biggest culprit in the inflation surge was a sharp devaluation in the local currency and a jump in fuel prices -- which in turn pushed the price of other goods and services higher.      Analysts say the numbers point toward another hike in the key interest rate next week when the central bank convenes its monthly policy meeting. The Selic interest rate stands at 25.5 percent -- its highest level in four years.      The high interest rates -- needed to dampen inflation -- have the byproduct of hampering efforts by Lula to spark the economy and create jobs, analysts say.      "We're expecting a growth rate of 1.9 percent of (gross domestic product) this year, and this isn't enough to create enough jobs to reduce the unemployment rate," said Luis Lima, a senior economist with BBV Bank in Sao Paulo.      "This, in the long wrong, will bring problems to Lula's government."      The unemployment rate sits above 10 percent, though some analysts argue that number is a little high due to a change in the methodology used to calculate it.      Speaking at a ceremony marking the creation of the new Council on Economic and Social Development, Lula said that austere -- and unpopular -- economic moves he's made in his first month in office were needed, as he inherited an economy in a dangerous situation.      "That forces us to take tough measures that we don't like to take, but that are indispensable so that the situation doesn't get out of control," he said.      "Therefore, our reforms make economic and social sense. The social security, tax, political, labor and agrarian reforms can't be postponed and the country cannot do without them."      Analysts say that reforms to the social security and tax systems are essential if Brazil is to lessen the burden of its $240 billion debt and return to economic stability.      But the reforms are likely to face stiff resistance -- not the least of which from within Lula's own Workers' Party, which for years blocked such reforms in Congress during the two terms of former President Fernando Henrique Cardoso.      Meanwhile, the government said Thursday that it was suspending payments on some $2 billion in expenses from 2002, to review that the contracts had gone through proper channels.      That news comes on top of Lula's announcement earlier this week that he was slashing $14.1 billion in spending from this year's budget in an effort to meet ramped-up fiscal targets.      It was last week that Brazil's finance minister revised the country's primary budget surplus target from 3.75 percent to 4.25 percent of GDP.      These moves have pleased economists who like to see the belt-tightening done by a government many worried would spend the country into default.      And some analysts have pointed out that despite the increase of inflation, a closer examination of the numbers spells better times ahead for Brazil.      "Current inflation is indeed high, but it reflects many seasonal one-off factors, such as the late December hike in fuel prices and the readjustment of urban bus tariffs in Sao Paulo," said Gustavo Reis, an economist with the Rio de Janeiro-based Pactual investment bank.      "That is why analysts in Brazil like to track core inflation" -- a reading using more specific data -- "which is on its way down at 1.3 percent in January."      Reis said he expects February will see that core inflation -- and the headline reading -- to be lower, and that it should continue heading down for the rest of the year.      But both Reis and Lima said that it looks all but impossible for the government to meet its inflation target for this year of 8.5 percent.      January's inflation reading "was more than 25 percent" of the year's target, Lima noted. "To reach the target, we'll have to have a monthly inflation rate that averages 0.66 percent."      The consensus is this is an impossible average to reach, with most economists forecasting inflation for this year of at least 11.5 percent.

abcnews.go.com The Associated Press RIO DE JANEIRO, Brazil Feb. 13 —

Soaring fuel prices pushed inflation to 2.25 percent in January, the biggest jump for the month since 1995, the government said Thursday.

January's rise in consumer prices was higher than the 2.1 percent jump in December and above the 0.52 percent increase in January 2002, the IBGE statistics institute said.

In the past 12 months, prices measured by the key IPCA inflation index have risen 14.47 percent, compared to 12.53 percent in 2002, the institute said.

Fuel prices were the main culprit, rising 8.82 percent in January, while bus fares climbed 5 percent, the IBGE said. Food prices rose just 2.15 percent, compared to 3.91 percent in December.

The prospect of higher fuel and transport costs in the event of a U.S.-led war against Iraq could force the government to raise interest rates to keep inflation in check. The government hopes to limit inflation to 8.5 percent this year.

Many economists expect the central bank to raise its prime lending rate when its monetary policy committee meets next week. The rate now stands at 25.5 percent.

Higher interest rates would slow an already sluggish economy and could hamper the government's plans to create jobs, a top priority of leftist President Luiz Inacio Lula da Silva.

The government hopes the economy will grow 2.8 percent this year, up from an estimated 1.45 percent in 2002.

www.everyweek.com Vol.   14     No.   7 Issue Date 2/13/2003

By Ari LeVaux

Our man abroad reports from the World Social Forum

PORTO ALEGRE, Brazil—For over 20 years, the owners of the world have been meeting yearly in Davos, Switzerland, at an event called the World Economic Forum. Davos is where the theory of world domination by capital begins manifesting into practice.

For several years, small-scale “anti-Davos” meetings have been held around Europe. Three years ago, a group of activists had the idea of coalescing growing anti-Davos (as well as general anti-corporate-globalization) sentiment into a singular, world-scale forum, to be held at the same time as the World Economic Forum. Thus, the World Social Forum (WSF) was born.

The intention of the WSF is to bring together citizens from around the globe who are actively working for a better world, in arenas such as peace, environment, social work, culture, politics, agriculture, economics, etc. The idea is to create a space for networking, strategizing, sharing of stories, morale-boosting, and general collective searching for alternatives to the dominant, capital-centric paradigm.

I was among the 100,000 attendees from 156 countries at the WSF, held in Porto Alegre, Brazil. Although over 4,000 journalists were in attendance, pitifully few were from the U.S. I wrote this dispatch from Brazil in an attempt to include North Americans in the discussion, since we were excluded by our own corporate media. In light of the overwhelming disgust at U.S. policies evident in Porto Alegre, this exclusion is all the more unfortunate. The people of the U.S. need to know how the world is reacting to our policies.

Yet, despite the flag burning and anti-U.S. rhetoric, attendees did not confuse U.S. policy with the will of most Americans, especially those who made the trip to Porto Alegre. People know that Bush stole a very close election, and the few Americans who showed up at the WSF were eagerly embraced. And many Americans made presentations, including Noam Chomsky, who drew an audience of 15,000.

Other “left-wing rock stars” in attendance were Nelson Mandela, Vandana Shiva, Danny Glover, Aleida Guevara (daughter of Che), Eduardo Galeano, Naomi Klein, and Deepak Chopra. Hugo Chavez, president of Venezuela, made a surprise appearance, and announced that his embattled regime was part of the movement, affirming his resolve to fight the U.S. empire’s attempts to oust him from his majority-elected position.

While Chavez cast himself as a revolutionary, Brazil’s wildly popular new president-elect, Luiz Inacio Lula da Silva, aka “Lula,” made a speech in which he presented himself as a peacemaker, determined to end hunger and inequity in Brazil—without destabilizing the Brazilian economy. Lula also announced his imminent trip to Davos, and his intent to keep the discussion at the World Economic Forum focused on ways in which capital might serve people—not the other way around.

The speeches were inspiring, educational, and altogether valuable, but the real engines of the WSF are the workshops and activities organized by the various groups in attendance. These were a sort of civil laboratory, mixing up ideas, strategies, stories, processes, and discoveries from around the world of ideals.

The workshops were held at the Pontificia Universidade Catolica, the major university of Porto Alegre. It was pretty much the ideal college utopian scene. Imagine going to a school with course offerings like “The global water grab,” “Encounters with the truth,” “A feminist challenge to the market: the gift economy,” “Community food security in North America: building alternatives to the global food system in the belly of the beast,” “The transformational power of hip-hop,” “Prostitution and Globalization,” and “Medicinal plants of the Guarini Indians.”

Imagine a campus crowded with students from 156 countries, the symphony of languages filling the halls and stairwells, poking heads into different rooms, with hundreds of options to choose from at any given time. You can check out a class and if it doesn’t stoke you, get up and go to another one. If you arrive late, it’s probably because you got stuck behind a samba parade, or were entranced by a dance of neon-feather-decorated Indians from deep in the Amazon.

I attended a series of workshops on “Individualization, globalization, and civil society.” The workshops were spearheaded by the sustainable development organization GlobeNet 3 of Stuttgart, Germany, with contributions from Merkur of Sweden, and the New York Open Center. I was impressed by their process for running workshops, integrating their own material with comments and ideas from the group, always moving forward while integrating. When asked if Germans had a certain knack for this, one speaker explained:

“From Germany, we can look to the East and see the loss of freedom in the name of solidarity; we can look to the West and see the loss of solidarity in the name of freedom. This motivates us to search for a middle path. Also, we have this lingering national wound of the Holocaust, and a tremendous collective desire to become a nation that promotes peace and unity, to be a leader in international problem-solving.”

These folks definitely had a knack for finding middle ground. Middle ground between the individual and the collective; middle ground between politics, economics, and culture; middle ground between conflicting viewpoints arising in the workshops that were, upon closer inspection, not necessarily in conflict at all.

For me, the most spine-tingling moment of the whole event was when a group of people held hands in the middle of the packed Gigantinho soccer stadium. One read the following statement:

“We, Israeli and Palestinian pacifists, are determined to find peace, justice, and sovereignty for our people, and an end to the Israeli occupation of the occupied territories of 1967; a creation of an independent Palestinian state, side by side with Israel; Jerusalem as an open city, with independent capitals for both states. We call on the international community, in particular the UN, to intervene and arrange an end to this tragic situation and an end to the violence on both sides, by guiding the peace negotiations. Porto Alegre, January 27, 2003.”

Following this declaration, the pacifists on stage began passionately embracing each other, while the crowd roared and the band played John Lennon’s “Imagine.” The stadium rang with voices from all over the world singing along. I get chills, still, just writing about it.

The event was not without criticism from within. Canadian writer Naomi Klein diminished the WSF as a watered-down and mediocre “old paradigm” version of what it was supposed to be, asking: “How on earth did a gathering that was supposed to be a showcase for new grassroots movements become a celebration of men with a penchant for three-hour speeches about smashing the oligarchy?…For some, the hijacking of the forum is proof that the movements against corporate globalization are finally maturing and ‘getting serious.’ But is it really so mature, amidst the graveyard of failed, left political projects, to believe that change will come by casting your ballot for the latest charismatic leader, then crossing your fingers and hoping for the best? Get serious.”

I found Klein’s criticism, while grounded in some important truth, to be more of a downer than necessary. Her conclusion that “the theme of the WSF was big” is only true if you focus on the big events, rather than the 1,000-plus small and intimate workshops. And while she dismissed Chomsky as “another big man,” she failed to mention the small woman, Arundhati Roy (a writer, like Klein) who spoke after Chomsky, batting clean-up for the event. Her short, sweet, and powerful speech ended with these words:

“…No doubt Saddam is a ruthless dictator, and the people of Iraq would be better off without him. But then, the whole world would be better off without a certain George Bush. It’s clear that Bush is determined to go to war against Iraq, regardless of the facts and of public opinion. In its recruitment drive to build allies, the U.S. is prepared to invent facts. The charade of weapons inspectors is the U.S. government’s insulting, offensive obsession to some twisted form of international etiquette…like leaving the doggie door open for last minute allies, or maybe the UN, to crawl through. But for all intents and purposes, the new war against Iraq has begun.

“So what can we do? We can call on our mem-ory. We can learn from history. We can continue to build public opinion until it becomes a deafening roar. We can turn the war on Iraq into a fishbowl of the U.S. government and its excesses. We can expose Bush, Blair, and their allies as the cowardly baby killers, water polluters, and long distance bombers that they are. We can re-invent civil disobedience in a million different ways; a million ways of becoming a collective pain in the ass. When Bush says ‘You are either with us or with the terrorists,’ we can say ‘No thank you.’ We can let him know that the people of the world don’t have to choose between a malevolent Mickey Mouse and a mad mullah.

“Our strategy should not only be to confront empire, but to lay siege to it, to deprive it of oxygen, to shame it, to rock it with our art, our music, our literature, our stubbornness, our joy, our brilliance and our ability to tell our own stories, stories that are different from the ones we are being brainwashed to believe. The corporate revolution will collapse if we refuse to buy what they are selling.

“Remember this: We be many, and they be few. They need us more than we need them. Another world is not only possible, she is on her way. And if you listen carefully, you can hear her breathing.”

While criticism like Klein’s is important for keeping the “movement” on task and moving forward, and preventing it from falling into “old paradigm” patterns, I tend to agree with the assessment of “big men” like Lula, Chomsky, and Kofi Annan—as well as that of many big and small women—that the WSF is one of the most important events in contemporary history. Personally, it moved me from the fence, and made me a firm believer in the power and importance of activism.