www.planetark.org

BRAZIL: February 6, 2003

RIO DE JANEIRO, Brazil - Brazil's new Environment Minister Marina Silva yesterday asked the federal advocate general to suspend a ruling due on Feb. 14 on genetically modified organisms (GMOs).

The ruling concerns a request by the previous government of President Fernando Henrique Cardoso that an environmental impact study was an unnecessary precondition for legalizing the commercial production of GM food.

In a statement, the Environment Ministry said that the new government of President Luiz Inacio Lula da Silva, which took office on Jan. 1, needed more time to re-examine the issue.

In addition, the National Environmental Council, which controls GMO licensing, decided in June 2002 that it was up to the Environment Ministry to implement the measures.

Brazil is one of the few major agricultural producers that still bans the sale of GM seeds and foodstuffs.

Bioscience seed companies like Monsanto (MON.N) have been trying for years to persuade Brazil to authorize commercial GM crops. Monsanto is seeking approval for its Roundup Ready soybeans that need less herbicide protection and allow farmers to make considerable cost savings.

www.infobrazil.com by John Fitzpatrick          Feb 01 - 07, 2003

John Fitzpatrick is an occasional guest Editor on InfoBrazil. He is a Scottish Journalist who first visited Brazil in 1987 and has been based in São Paulo since 1995. His 27-year career in journalism includes stints as a Reporter in Scotland and England, Deputy Editor of an English-language daily newspaper in Cyprus, News Editor of a radio station in Switzerland, Financial Correspondent in Zurich and São Paulo, and Editor of a magazine published by one of Switzerland's largest banks. He currently runs Celtic Comunicações, a São Paulo company which specializes in editorial and translation services for Brazilian and foreign clients.

It's payback time for President Luiz Inacio Lula da Silva, who now has to settle up his accounts with the disparate band of opportunists who put their shoulders to the wheel and pushed him to power. The main supporters outside Lula's own PT – the PL, PPS, PC do B, sections of the PFL and PMDB – are already being paid back with positions and promises that they will get their share of the pie, when jobs in various government areas are distributed to the boys.

Among those who have been rewarded is Ciro Gomes, who stood against Lula in the presidential race as the PPS party candidate. Now sporting a beard, like so many members of the current government, Gomes is a cabinet member and back in the limelight. Former President Jose Sarney of the PMDB, who represents the old-fashioned Northeastern oligarch style of politics which the PT is supposed to be against, is almost certain to be elected the next Senate President on February 1st*.

There is nothing especially noteworthy about this, since any coalition or grand alliance brings odd partnerships. And Lula's catch-all policy has given him a strong position. According to the “O Estado de São Paulo” newspaper, the new Congress, in office as of February 1st, is more favorable to the government than the one elected last October. Over the last four months, the PT has managed to expand its base in the Lower House, from 225 to around 260 deputies, by negotiating party-swapping among elected members, from opposing parties to those aligned with the new government.

If one considers that the PMDB will join the PT-led governing alliance, as could happen, then the new administration would have the backing of 330 of the 513 members. This is 22 more than the 308 votes needed to pass amendments to the Constitution, which is excellent only on paper: one can only imagine such a disparate band of interests acting in unison on extremely rare occasions.   

What we are now starting to see in Brazil is not just a strange combination of forces in power, but also the lack of an official opposition. For democracy to succeed the government needs a proper opposition, with an alternative program. Governing alliances should also have something in common. We have commented before on the way in which the PMDB and PFL, in particular, have twisted and turned to suit themselves. During Fernando Henrique Cardoso's two mandates, both parties blew hot and cold from time to time when it suited them, resulting in phoney crises and high profile resignations or sackings of ministers.

The PFL's Antonio Carlos Magalhães, in particular, treated Congress with utter contempt by breaking the Senate rules he had been appointed to enforce. Although he eventually lost that battle and was forced to resign in 2001, he certainly did not lose the war. Like Sarney, he publicly backed Lula during the campaign, and is himself now back, re-elected Senator for Bahia, as a prominent leader and behind-the-scenes king maker. Despite breaking all the rules, he is likely to be elected chairman of the Constitution and Justice Committee, the most powerful of all Senate committees. Such is ACM's supreme self-confidence that he even claimed this week that he had been the ”driving force” behind Lula’s campaign to end hunger in Brazil, called “Fome Zero”, or Zero Hunger. According to Magalhães, the original idea was his, and indeed there is a government anti-poverty fund in place that he pushed through two years ago.   

Since it is difficult to know exactly what the PMDB or PFL really stand for, perhaps it is a bit naive to criticise them for doing whatever they can to gain power. One wonders, however, what makes a person actually dedicate his or her vote to such groupings – a term used deliberately because it is difficult to see them as political parties. Maybe voters actually deserve what they get.

As if this were not enough, we are now seeing former President Cardoso's own PSDB, and its unsuccessful candidate, the luckless former Senator and Health Minister Jose Serra, greasing up to the Lula government. Recently, PSDB President Jose Anibal, and PFL President Jorge Bornhausen, held separate meetings with the PT President, former Congressman Jose Genoino, to discuss getting reforms to the scandalous pension system pushed through Congress. After the meeting, Anibal, who has a reputation as the PSDB's rottweiler, seemed full of bonhomie and promised Lula's government collaboration and a positive approach to the reforms.

Meanwhile, Bornhausen and Genoino were photographed hugging each other while the PT leader pledged that the government would hold a dialogue with the opposition parties on the Congressional agenda. All three men were, of course, playing to the gallery and a high price will be paid before any major reforms – such as on the pension, tax or the electoral system itself – are made. But it is a bit alarming at this early stage to see the “opposition” behaving so feebly.

Let us hope this grasp for power at any cost ends soon and that the PSDB, of all parties, sticks to its principles. Without harming Brazil's interests, let us see it make life for Lula as difficult as the PT did for Cardoso during his two terms, when the PT opposed virtually all proposed reforms. This is important not only for the sake of democratic government, but also for the PSDB itself. It should be recalled that the governors of two of Brazil's richest and most politically influential states – Geraldo Alckmin of São Paulo and Aécio Neves of Minas Gerais – are from the PSDB. Both are obvious potential future presidential candidates.

Related sites: (all political party sites available in Portuguese only) PT – Worker's Party www.pt.org.br

PSDB – Brazilian Social-Democratic Party www.psdb.org.br

PL – Liberal Party www.pl.org.br

PPS – Popular Socialist Party www.pps.org.br

PC do B – Communist Party of Brazil www.pcdob.org.br

PFL – Party of the Liberal Front www.pfl.org.br

PMDB – Party of the Brazilian Democratic Movement www.pmdb.org.br

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InfoBrazil Interactive Brazil's new government has made fighting hunger its top priority. A year from now, do you believe it will produce significant, positive results?   Yes   No

www.infobrazil.com by Alcides Ferreira          Feb 01 - 07, 2003

President Luiz Inácio Lula da Silva's honeymoon with the public is sweet. His political support among Brazilian voters, according to the latest surveys, is still at record high levels. And, as is usually the case following elections in Brazil, congressmen run to the parties that side with the high-flying Lula and his PT in Congress, expanding his support base in the federal legislature.

Conservative economists and analysts, mostly from banks, are surprised by Lula's early measures in the economic arena. As predicted here some weeks ago*, Lula's economic team has put forth a conservative start to this administration. They raised interest rates and, soon after, announced an even greater budget surplus than the target set by former President Fernando Henrique Cardoso.

These are quite logical moves. The economic team had to gain approval from the conservative side of public opinion, since the leftist or sympathetic segments had already voted to elect Lula. And, again as expected, reactions are already popping up, initially – and predictably – among diehard Lula supporters and PT members.

The past week saw a most interesting development in this context. Finance Minister Antonio Palocci met with the Worker's Party contingent in the newly-elected Congress, and although it was a closed meeting whose topics were never meant to reach the news media, one participant taped the proceedings and gave the recording to Brazil's top national news service, Agência Estado. The contents made it clear that while Lula's honeymoon with the public may be sweet, the same cannot be said about his Worker's Party and its relationship with the government economic team. Palocci had to address bitter arguments from party members, against his initial measures as Finance Minister. Party leaders were decidedly angry about the leak, saying this was the first time a PT meeting had been "bugged".

Also in the past week, Worker's Party Senator Heloisa Helena, who has become the most prominent voice for "far left" party members in opposition to what the government has announced so far, went further. In a raging interview published by Brazil's top weekly newsmagazine, Veja, she harshly criticized Lula and much of what he and his government have done in just over a month in office.

The fact is the Worker's Party was elected promising heaven, but the first items it delivered were precisely of the type that the extreme left within the party believed only the devil himself could offer up: even higher interest rates, and further budget cuts and restraint. Enough to make many within the PT who thought they were winners in the presidential election feel somewhat like losers.

More of this is likely to be on the horizon, since the government will soon have to announce the new salary levels for public servants. The amounts are likely to seem quite old, as the type of upward movement servants have been hoping for is not in the cards. Then there's the pension system reform, which will certainly affect what many in the public service consider to be unshakable rights. In May there's the annual Labour Day ritual, with the "new" minimum wage announced by the government, and again, there will be little to celebrate as any adjustment will seem remarkably like the meager raises of the past few years under President Cardoso.

Since there is no reason to state or believe the economy will suddenly begin to expand at a vigorous pace, the obvious conclusion is that bad news will begin to pile up. All of the above, plus high unemployment and low wages – frequent headlines in the final months of the Fernando Henrique Cardoso administration, which will not go away without strong, sustained economic growth.

The question then is, will Lula stay the course or be tempted to try a more populist approach, and perhaps hang on to the support he so obviously enjoys at this stage? Sticking to the current track means using monetary and fiscal policies to curb inflation, something that is caustic anywhere in the world. A populist approach in this case would mean trying to allow the economy to grow at a faster pace than the country can handle without allowing inflation to roar its way back into the lives of Brazilians.

Like many in Brazil, outside investors and companies that sell to, buy from or have a subsidiary in Brazil are likely asking the same question. And like many in Brazil, they will probably wait a bit longer before reaching any conclusions. This is already quite noticeable: in spite of several positive economic steps during Lula's first month in office, markets are hardly reacting at all.

One could argue the world is afraid of a possible war in Iraq, which would be partly true. It would also help to explain the behaviour of Brazilian markets. But clearly, with or without war in Iraq, players are still waiting for more reassurance from the Brazilian government itself before forging ahead.

In my opinion, Lula has enough political assets to stick with the conservative approach on the economy, while nourishing the social aspects and demands from society so dear to him and his party, with programs like "Zero Hunger". However, if his economic policies don't produce results in a reasonable amount of time – say, one year – such as lower inflation and faster growth, Brazil might then move to a dangerous scenario. Lula might find himself getting bad press, both because of his own failure, and because there is no social program in the world that will solve Brazil's entrenched, secular inequalities in such a short time span.

That's when Lula might be tempted to do "the right thing" in the wrong way.

• See InfoBrazil Year IV, issue 168, week of December 14 – 20, 2002: Lula's Economic Team: New Names, Old Policies? by Alcides Ferreira;

Related sites: Zero Hunger – unofficial website in support of the government's anti-hunger program (Portuguese only) www.fomezero.org.br

Veja weekly newsmagazine (Portuguese only) www.veja.com.br

ipsnews.net Mario Osava and Gustavo Capdevila

The efforts of the Asia, Caribbean and Pacific group (ACP) in Brasilia proved useless Friday, as the former European colonies failed to dissuade Brazil from following through on its complaint at the World Trade Organisation (WTO) against European sugar export subsidies

RIO DE JANEIRO, Feb 7 (IPS) - The Brazilian government's inter-ministerial Chamber of Foreign Trade had decided a day earlier to request the designation of a special WTO panel, a step in the dispute settlement process, to study the legality of both the European Union's subsidies for its sugar exports and the United States' subsidies for cotton producers. The previous step of consultations has been completed in the two cases, and now a decisive phase of arbitration can begin at the WTO. Brazil rejects the notion that a victory in the dispute would mean an end to the import preferences granted by the EU to the ACP countries for their sugar, or that it would hurt these mostly poor economies. Delegates from Mauritius, Fiji, Guyana, Swaziland and Belize, speaking in Brasilia on behalf of the 17 ACP sugar-exporting countries, said their exports to the EU are vital to their economies and that they fear a decline in sugar revenues. The sugar trade allows the ACP countries to obtain income that would be impossible through other products, as the EU pays them the rate set within the European bloc, which is more than three times the sugar price on the international market. EU Trade Commissioner Pascal Lamy also paid a visit to Brazil to pressure the government. Last week he warned the Luiz Inácio Lula da Silva government that its legal manoeuvres at the WTO would ultimately hurt the ACP countries. But Brazil's trade authorities argue that their complaint before the WTO, supported by Australia, is not aimed at the EU's preferential conditions for sugar imports from ACP countries, and therefore should not affect this form of development assistance to those nations. The target of the legal action, say the officials, is subsidised exports. The EU imports nearly 1.6 million tons of unrefined sugar from the ACP group at approximately 620 dollars a ton, and then refines and re-exports it to other markets at around 200 dollars a ton. On top of the sugar imported from the ACP countries are the 3.6 million tons produced within the EU, which the bloc also exports under hefty subsidies, for some 5.2 million tons of sugar competing on other markets under ”disloyal” terms, bringing down prices worldwide, say the Brazilian government and sugar industry leaders. The EU agreement with the ACP ”is not at risk,” says Elizabete Serodio, an international negotiations consultant for UNICA, the Sao Paulo sugar agro-industry union, an umbrella of farmers and companies representing two-thirds of Brazil's sugar output. The EU Court of Auditors report at the end of 2002 makes it clear that any adjustment necessary in the European sugar regimen will have to be in its domestic production, not in its imports from the ACP nations, Serodio told IPS. Furthermore, in the EU-ACP protocols of Lomé and Cotonou, the preferences for sugar imports, unlike for other products, were established for ”an unspecified period” and can only be modified if both sides agree, she pointed out. The EU is exerting pressure, including through the ACP countries, that are ”legitimate”, but Brazil and other exporters also ”have to fight to defend their interests” within the rules of the WTO, Serodio said. The international sugar trade stands at approximately 35 million tons a year, slightly more than a quarter of global consumption of 130 million tons. It is this context that makes the five or six million tons exported by the EU with subsidies such a distorting factor of unfair competition, she explained. Sugar industry analysts estimate that the European subsidies cause Brazil annual losses of 500 million dollars. Australia has already joined Brazil in the complaint filed with the WTO. Thailand could follow suit once it completes the consultation phase. As it waits for a decision from Bangkok, and to carry out further studies of the impacts of the EU sugar policy, Brazil has decided to put off requesting a WTO panel for two months. The sugar dispute is not the first time that developing countries have been on opposing sides, notes Rubens Ricupero, secretary-general of the United Nations Conference on Trade and Development (UNCTAD). ”And we will see many other examples of this kind of dispute in the near future,” Ricupero told IPS in Geneva. Just a few years ago was the banana case, in which Central America and countries like Ecuador and Colombia criticised the special conditions that the EU granted the product coming from the ACP nations, he said. Differentiated treatment by wealthy countries creates this sort of ”confrontation” between developing nations, ”which all compete among themselves, all trying to export their commodities, their agricultural or mineral products.” ”These arrangements are never the best solution” to help the poorest countries, says Ricupero. The ideal approach, he said would be to ”reduce the level of discrimination” and provide poor countries with security for development, allowing them to specialise in the areas in which they are most competitive. The smaller countries of the ACP ”will not have much of a chance” in competing with the geographically larger nations like Brazil and Australia ” for a simple reason: productivity in sugar is a function of the availability of new land,” said the UNCTAD chief. Sugar productivity depends on land because it is the kind of product that can only be profitable if produced on a massive scale, he said. (END)

www.sfgate.com BERND RADOWITZ, Associated Press Writer Saturday, February 8, 2003

(02-08) 11:02 PST RIO DE JANEIRO, Brazil (AP) --

President Luiz Inacio Lula da Silva -- a little more than a month in office -- has impressed financial investors, foreign statesmen and an overwhelming majority of Brazilians.

But his plans for putting Latin America's largest country on a path of economic growth and social justice have stirred up opposition from an unexpected side: legislators from his own Workers Party, known as the PT.

Silva, who was inaugurated on Jan. 1, has avoided any direct conflicts with fellow party members.

But several legislators have criticized the first economic policies adopted by the new leftist government as a continuation of the economic "neo-liberalism" of the previous government.

Silva was elected on Oct. 27 in a landslide by an electorate increasingly disenchanted by the government of President Fernando Henrique Cardoso, which capped years of high inflation but was only able to promote sluggish economic growth.

Finance Minister Antonio Palocci drew criticism Friday when he announced the government was hiking its target for the budget surplus before interest payments to 4.25 percent of gross domestic product to stabilize the country's ballooning debt.

"The cuts will hit the working class fully. The measure means less money for the social area and employment," Workers Party Para state Rep. Joao Batista Baba said in remarks published in Saturday's edition of O Globo newspaper.

Rio de Janeiro state Rep. Lindberg Faria said the measure would "touch the milk for children," and foresaw a "tragic end" of Palocci's policies.

A day earlier, Baba had attacked Palocci personally, saying he didn't trust the finance minister anymore, not even in his profession as a physician.

In January, prominent Workers Party Sen. Heloisa Helena voiced her indignation about Silva making former FleetBoston Financial Corp global banking head Henrique Meirelles the new Central Bank President. The PT barred Helena from a nomination session in the Senate to avoid public embarrassment.

The Senator also stayed away from a voting session that elected former President Jose Sarney from the centrist Brazilian Democratic Movement Party as Senate president in exchange for his support of Silva's government.

But while Helena and other leftists are angered by the appointment of fiscal moderates to key cabinet posts, Silva needs their help to push programs through Congress, where he lacks a majority.

Silva, who campaigned on promises to create 10 million jobs, lower interest rates and increased growth, has argued it will take time.

He and Palocci argue that the government needs a tough budget tightening now, to stabilize the economy sufficiently to be able to carry out ambitious social programs later.

At a meeting on Friday with Workers Party state presidents, he demanded that his party unite behind him and reportedly said "a little bit of patience has not harmed anyone yet."

Economists warn that statements by the prominent leftists, which have gained wide media attention in Brazil in the past weeks, could harm the honeymoon Silva and his moderate economic policies have enjoyed with financial investors.

"The PT needs to bring its radicals in line," Nicola Tingas, chief economist at West LB in Sao Paulo, told The Associated Press.

Fears that Silva might have trouble meeting Brazil's debt payments helped push the local currency, the real, down 35 percent last year.

Workers Party President Jose Genoino said Friday the inner party critics had no real backing in the party and should simply be ignored to dry out the media attention they receive.

The suggested tactics of Genoino, a former guerrilla fighter turned moderate, could work, analysts say.

"Only a small group of PT rebel legislators voices its criticism. Most have opted to stay silent as the government is very strong right now," Alexandre Barros, a political risk consultant in Brasilia, told The Associated Press.