www.sfgate.com Thursday, January 30, 2003

(01-30) 07:13 PST SAO PAULO, Brazil (AP) --

Two major U.S. banks are pulling back from Brazil, joining a growing number of foreign banks reducing their exposure to South America's largest economy after taking a beating in the markets last year.

J.P. Morgan Chase & Co. said this week it will sell its Brazilian asset management division, J.P. Morgan Fleming Asset Management, to Banco Bradesco for an undisclosed price. About $1.9 billion in assets will be transferred to Bradesco, Brazil's largest privately owned bank

Meanwhile, Bank of America will cut about three-fourths of its work force of 200 in Sao Paulo, eliminating its investment banking operation.

The moves came three weeks after Spain's Banco Bilbao Vizcaya Argentaria sold its Brazilian retail and investment banking operation to Bradesco for $600 million and a 4.5 percent stake in Bradesco.

Volatility in Latin America markets last year was a major reason why the banks decided to scale back. Brazil's currency, the real, lost 35 percent of its value last year while the main stocks index fell 17 percent.

Brazil's interest rates, inflation and unemployment remain high in a sluggish economy despite pledges by the administration of the country's new leftist president, Luiz Inacio Lula da Silva, to maintain sound fiscal policies.

Silva, who took office Jan. 1, has generally pleased investors with the appointment of fiscal moderates to key economic posts and a pledge to honor Brazil's obligations, including massive foreign debt.

news.ft.com By Raymond Colitt Published: January 30 2003 4:00 | Last Updated: January 30 2003 4:00

Mercosur, the four-nation South American trade bloc, is preparing to broaden its latest tariff proposal in trade negotiations with the European Union, José Alfredo Graça Lima, Brazil's ambassador to the EU, said.

The statement comes during a three-day visit by Pascal Lamy, the EU trade commissioner, to Brazil in an effort to work with the newly elected leftwing government of President Luiz Inácio Lula da Silva to kick start sluggish free trade negotiations.

santafenewmexican.com

By ADALID CABRERA LEMUZ | Associated Press 02/01/2003 Brazilian President Luiz Inacio Lula da Silva speaks at a ceremony in Brasilia Thursday, where he launched his anti-hunger program. The program will provide $14 a month to 1.5 million families. - AP |

BRASILIA, Brazil — The government's long—awaited plan to eradicate hunger in Brazil has triggered a hail of criticism that it's vague, timid and flawed.

The "Zero Hunger" program, announced Thursday by President Luiz Inacio Lula da Silva, fell short of expectations. Only seven of the expected 60 measures were announced, although the government said the rest would come later.

Even Silva seemed to sense that something was missing. A fiery orator, he announced the plan in a subdued speech that drew only polite applause from an audience of 500 politicians and celebrities.

Many expected a more concrete plan from Silva, Brazil's first elected leftist president. At his Jan. 1 inauguration, Silva said his top priority was to eradicate hunger among the estimated 46 million Brazilians - nearly 40 percent of the population - who survive on less than US$1 (3.50 reals) a day.

"The war on hunger is still on paper because no battle fronts were identified, just objectives without specific goals," political analyst Franklin Martins said Friday on the CBN radio network.

Martins said Silva had essentially outlined broad targets such as improving health, education and sanitation "but he didn't say how he plans to achieve them."

Specifically, Silva promised to double funds for school lunches for children aged 4 to 6.

He also pledged to provide $14 (50 reals) a month to 1.5 million families. The first payments are to start next week to 1,000 poor families in Guaribas and Acaua, in the arid northeastern state of Piaui.

But critics questioned how the money will be distributed. Some families will get a kind of debit card to draw funds from a government bank, while others, in the remote interior, will receive coupons similar to food stamps.

Jose Graziano, the federal secretary of food security, said the coupons will be good for almost anything except tobacco, alcohol or soft drinks, and families must produce some kind of proof of purchase.

The demand to ask poor people for receipts would only add another layer of bureaucracy and produce no real gain, Zilda Arns, the chairwoman of the Children's Pastoral group - a respected church group helping poor children - and a member of the new National Council of Food Security, told television cameras.

The government's requirement was not meant to be a control mechanism, but rather an educational measure to direct people on how to use their assistance money in the most efficient way, Graziano said in an interview with O Globo television Friday.

Graziano added that the government intends to give women the role of controlling the program to prevent fraud. "In Guaribas, for example, there are already mothers controlling merchants. We have to believe that this works out," he said.

Yet, it also was unclear how the government would decide who's eligible for the program.

Guaribas Mayor Joao Santos said only about half the town's families would qualify for the program, adding that what the region really needed was more jobs.

Joao Pedro Stedile, a leader of the Landless Rural Workers Movement, said radical changes in Brazil's market-oriented economy were required to end hunger.

"A declaration of good intentions won't resolve hunger," said Stedile, a long-time supporter of Silva.

The program also has received some 3 tons of donated food, but it's not clear how the donations will be collected, stored and distributed. Graziano said details would be worked out later.

"A lot isn't clear," admitted Katia Maia, a public policy advocate for the anti-poverty group Oxfam International. "But it's a long-term project, and this is a big step forward."

reuters.com Fri January 31, 2003 06:46 AM ET By Carlos A. DeJuana and Todd Benson

SAO PAULO, Brazil (Reuters) - Brazil's new president, Luiz Inacio Lula da Silva, has spent his first month on the job doing everything he can to break protocol.

The burly, gruff-voiced former metalworker cries in public and drives his security detail nuts by jumping out of the car unexpectedly to chat with supporters outside the presidential palace. Recently he flew to Europe on a commercial flight to save his penny-pinching government some cash.

Lula, it seems, is surprising just about everyone, supporters and detractors alike.

"The critical question was always Lula's capacity to lead, and so far he has shown that he is quite adept and frankly better prepared than we thought for the presidency," said Riordan Roett, director of the Western Hemisphere Program at Johns Hopkins University in Washington.

Lula, 57, was elected Brazil's first working-class leader in October, winning a landslide in his fourth bid for the presidency. To get there, he had to overcome serious doubts that he -- a former left-wing union leader who never went beyond elementary school -- could aptly steer the world's fourth-most populous democracy and ninth-largest economy.

Spooked by Lula's radical past, financial markets plumbed to record lows before his victory, expecting him to default on the country's $250 billion public debt and drive Brazil -- and perhaps the rest of Latin America with it -- to ruin.

So far, he appears to be proving the skeptics wrong.

"On the economic front, the government has only put out positive signals," said Sergio Abranches, a political columnist and consultant based in Rio de Janeiro.

Lula's top economic chieftains, Finance Minister Antonio Palocci and Central Bank President Henrique Meirelles, have repeatedly stressed the administration's commitment to low inflation and austere fiscal policies, evoking cries of betrayal from the far left of Lula's own Workers' Party.

Investors took notice and sent Brazil's stocks, bonds and currency soaring in the first half of January before the threat of a U.S. war against Iraq cast a pall over global markets.

LULA SUPERSTAR

Brazilians too are rallying behind their new president who is mobbed like a rock star wherever he goes. A poll this week showed nearly 80 percent of Brazilians believe Lula will do a good or a great job of leading the country.

If anything, Lula has spent his first month in office trying to temper those hopes, saying it will take time to narrow Brazil's yawning income gap, create more jobs and get the economy running at a healthy rate.

Analysts say he is spending his political capital wisely.

While the finance ministry is busy cutting spending across the board, Lula spends the bulk of his time talking up social programs like his flagship "Zero Hunger" project. Some of his first acts as president were to suspend a $700 million fighter jet contract, arguing the money would be better used on social programs, and to take his entire Cabinet on a reality tour of Brazil's poorest ghettos to "look misery in the eye."

He has also been careful to cultivate allies in Congress, skillfully brokering the nomination of former President Jose Sarney to lead the Senate over a rival candidate who was more hostile to the president's agenda.

On the international stage, Lula has won praise from anti-globalization protesters and the world's financial elite alike, while leading a push among six nations to negotiate a peaceful end to Venezuela's political crisis.

"Both in terms of the political handling internally and the foreign policy initiatives, what we've seen so far is very encouraging," said Roett.

STRESS POINTS

But Lula, and Brazil, aren't out of the woods yet.

If the honeymoon is to last, analysts warn, Lula is going to have to move swiftly to pass much-needed economic reforms, like overhauling Brazil's costly pension and tax regimes.

Abranches, the political analyst, fears Lula's penchant for opening each policy initiative to debate with the public could hamper the reform efforts.

"Every time you allow more players in the game, the chances of maintaining the status quo increase violently," he said.

Lula will also to have to get even tougher on the fiscal front to reduce Brazil's crushing debt burden, now equivalent to 56 percent of gross domestic product.

One way to do this would be by pushing up the government's budget surplus above the current target of 3.75 of GDP -- something Finance Minister Palocci has said is in the works.

While raising the surplus would certainly win Lula and his economic team more points on Wall Street, fickle financial investors are unlikely to give the new president an easy ride.

"Lula is beginning to acquire credibility, but this process is far from being consolidated," said Paulo Leme, managing director of emerging markets at Goldman Sachs in New York. "The demanding part will come, which is delivering the goods."

www.corpwatch.org By George Monbiot www.monbiot.com January 28, 2003

Mr Bush and Mr Blair might have a tougher fight than they anticipated. Not from Saddam Hussein perhaps - although it is still not obvious that they can capture and hold Iraq's cities without major losses - but from an anti-war movement that is beginning to look like nothing the world has seen before.

It's not just that people have begun to gather in great numbers even before a shot has been fired. It's not just that they are doing so without the inducement of conscription or any other direct threat to their welfare. It's not just that there have already been meetings or demonstrations in almost every nation on Earth. It's also that the campaign is being coordinated globally with an unprecedented precision. And the people partly responsible for this are the members of a movement which, even within the past few weeks, the mainstream media has pronounced extinct.

Last year, 40,000 members of the global justice movement gathered at the World Social Forum in Porto Alegre, Brazil. This year, more than 100,000, from 150 nations, have come - for a meeting! The world has seldom seen such political assemblies since Daniel O'Connell's "monster meetings" in the 1840s.

Far from dying away, our movement has grown bigger than most of us could have guessed. September 11 muffled the protests for a while, but since then they have returned with greater vehemence, everywhere except the US. The last major global demonstration it convened was the rally at the European summit in Barcelona. Some 350,000 activists rose from the dead. They came despite the terrifying response to the marches in June 2001 in Genoa, where the police burst into protesters' dormitories and beat them with truncheons as they lay in their sleeping bags, tortured others in the cells and shot one man dead.

But neither the violent response, nor September 11, nor the indifference of the media have quelled this rising. Ever ready to believe their own story, the newsrooms have interpreted the absence of coverage (by the newsrooms) as an absence of activity. One of our recent discoveries is that we no longer need them. We have our own channels of communication, our own websites and pamphlets and magazines, and those who wish to find us can do so without their help. They can pronounce us dead as often as they like, and we shall, as many times, be resurrected.

The media can be forgiven for expecting us to disappear. In the past, it was hard to sustain global movements of this kind. The socialist international, for example, was famously interrupted by nationalism. When the nations to which the comrades belonged went to war, they forgot their common struggle and took to arms against each other. But now, thanks to the globalization some members of the movement contest, nationalism is a far weaker force. American citizens are meeting and de bating with Iraqis, even as their countries prepare to go to war. We can no longer be called to heel. Our loyalty is to the principles we defend and to those who share them, irrespective of where they come from.

One of the reasons why the movement appears destined only to grow is that it provides the only major channel through which we can engage with the most critical issues. Climate change, international debt, poverty, the hegemony of the G8 nations, the IMF and the World Bank, the depletion of natural resources, nuclear proliferation and low-level conflict are major themes in the lives of most of the world's people, but minor themes in almost all mainstream political discourse. We are told that the mind-rotting drivel which now fills the pages of the newspapers is a necessary commercial response to the demands of younger readers. This may, to some extent, be true. But here are tens of thousands of young people who have less interest in celebrity culture than George Bush has in Wittgenstein. They have evolved their own scale of values, and re-enfranchised themselves by pursuing what they know to be important. For the great majority of activists - those who live in the poor world - the movement offers the only effective means of reaching people in the richer nations.

We have often been told that the reason we're dead is that we have been overtaken by and subsumed within the anti-war campaign. It would be more accurate to say that the anti-war campaign has, in large part, grown out of the global justice movement. This movement has never recognized a distinction between the power of the rich world's governments and their appointed institutions (the IMF, the World Bank, the World Trade Organization) to wage economic warfare and the power of the same governments, working through different institutions (the UN security council, Nato) to send in the bombers. Far from competing with our concerns, the impending war has reinforced our determination to tackle the grotesque maldistribution of power which permits a few national governments to assert a global mandate. When the activists leave Porto Alegre tomorrow, they will take home to their 150 nations a new resolve to turn the struggle against the war with Iraq into a contest over the future of the world.

While younger activists are eager to absorb the experience of people like Noam Chomsky, Tariq Ali, Lula, Victor Chavez, Michael Albert and Arundhati Roy, all of whom are speaking in Porto Alegre, our movement is, as yet, more eager than wise, fired by passions we have yet to master. We have yet to understand, despite the police response in Genoa, the mechanical determination of our opponents.

We are still rather too prepared to believe that spectacular marches can change the world. While the splits between the movement's marxists, anarchists and liberals are well-rehearsed, our real division - between the diversalists and the universalists - has, so far, scarcely been explored. Most of the movement believes that the best means of regaining control over political life is through local community action. A smaller faction (to which I belong) believes that this response is insufficient, and that we must seek to create democratically accountable global institutions. The debates have, so far, been muted. But when they emerge, they will be fierce.

For all that, I think most of us have noticed that something has changed, that we are beginning to move on from the playing of games and the staging of parties, that we are coming to develop a more mature analysis, a better grasp of tactics, an understanding of the need for policy. We are, in other words, beginning for the first time to look like a revolutionary movement. We are finding, too, among some of the indebted states of the poor world, a new preparedness to engage with us. In doing so, they speed our maturation: the more we are taken seriously, the more seriously we take ourselves.

Whether we are noticed or not is no longer relevant. We know that, with or without the media's help, we are a gathering force which might one day prove unstoppable.

www.monbiot.com

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