For decades Brazil as a nation had some set images, associated with it. It was a land of soccer crazy people, and a country that seemed to produce great soccer players off an assembly line. To many up North America, it was the place, where you went for the sun, the sand, the surf and the sin. Movies like Blame it on Rio, Wild Orchid, reinforced the image of Brazil being the place, where you went to get laid, and for wild pleasures. And of course the carnival, the samba and yeah it was the nation populated with those sexy Latina females. Beyond all that soccer and samba image, there were however some other not too pleasant realities. Rio De Janeiro for all it’s picturesque images and carnival, had some of the most notorious slums, notably the Ciadad E Deus( City of God). Income disparity was widespread in Brazil, with the favelas( slums), sprouting in every major city. Of course the slum dwellers in the favelas, were still better off compared to their counterparts in the countryside, many of whom just managed to eke out a living. Corruption was notorious, and scandals involving the political, business elite were routing.
The fact was for a major period of time since it’s independence in 1822, Brazil was seen as the country that never really lived up to it’s potential or promise. And a vast potential it was, the largest nation in Latin America, you could place Paraguay, Uruguay, Venezuela, Ecuador, Peru in it, and there would still be space left. It is the world’s 5th largest nation, and with over 192 million people, who call it home, the 5th most populated. But yet for a long period of time, Brazil had been in the news for more unpleasant news, a failing economy, high inflation, growing levels of poverty and notorious corruption. And the fact that Brazil was wholly dependent on US, for it’s economy, to the extent that whenever the US sneezed, it caught a cold.
Caetes is a small non descript town located in the state of Pernambuco, in the North Eastern corner of Brazil, traditionally one of it’s more backward regions. It was also the place where Luiz Inacio Lula Da Silva, the 35th President of Brazil better known as Lula was born in 1945, one of the 8 children, of a poor family. Matter of fact Lula’s early childhood, seems straight out of a Charles Dickens novel. Born into poverty, his family broke up, after his father was found living with another woman. His mother raised Lula along with his siblings in the backroom of a small bar in Sao Paulo. With little or no formal education due to poverty, Lula, did work as a shoe shiner, street vendor and at 14 yrs of age, he joined a factory as a lathe operator. It was the period, when Brazil was under the rule of the military junta, and Lula joined the labor union, as a member. His organizing and leadership skills, saw him rise up the ranks quickly, soon becoming a president for the Steel Workers Union in Brazil’s highly industrialized cities of San Bernardo and Diadema. He was also jailed by the military junta, when he succesfully pulled off major strikes.
The bitter experiences with the military junta, the trade union struggles in Brazil’s highly industrialized ABC region, named after the cities of Santo Andre, Sao Bernardo and Sao Caetano, all of them in turn part of the Greater Sao Paulo Region. This region was what saw the birthplace of Brazil’s labor movement, that started primarily as a protest against the military junta, and then morphed into a full fledged political movement. In 1980, the Workers Party or the Partido dos Trabalhadores was launched from here in 1980, primarily by a loose coalition of left wing intellectuals, trade unionists and Catholics believing in liberation theology, Lula was one of the founders of the political movement. Their major campaign, was to have a President who would be elected directly by popular vote, instead of being imposed by the House of Congress, which they saw as a sham. Lula was one of the persons, who played a major role in getting the President elected by popular vote, and after 29 years, 1989, saw the President being elected by a popular vote for the first time.
Lula’s first brush with electoral politics was in 1989, when he ran for the post of President, as a PT candidate, his strident Leftist ideology and advocating of Land reforms, however did not go down too well with the electorate , and a right wing leaning Fernando Color De Mello, was elected as President. During the 90’s Lula, lost twice in 1994 and 1998, to Henrique Cardoso, a Social Democrat leader, who played a major role in the stabilization of the real. The 90’s was the period, when Brazil, was coming to terms with stabilization of it’s economy, after decades of rampant inflation, and the Social Democrats held sway with their fiscal prudence policies. It is important to note that both Fernando Color De Mello and Henrique Cardoso, between 1995 and 2002, presided over one of the most critical phases in Brazil’s economy, the denationalization of many public sector firms. Steel manufacturer Acesita, the state owned Telecom firm Telebras, the mining giant Vale, all were privatized their monopoly broken up. While the public debt shot up, the most significant achievement of the Cardoso era was bringing down the inflation rate, from an average of 31% in 1994 to just around 7% in 1997. While Cardoso, was greatly respected abroad, at home he faced strong opposition to his liberal policies, a factor that went against him.
Lula capitalized on the discontent with Cardoso’s liberal economic policies, also for the fact that he went for an image makeover, discarding his Che Guevera T-Shirts and rebel image, to a more media friendly image, to win the 2002 elections. The result was however met with concern by investors, businessmen, banks, who feared a Chavez style Government in Brazil, considering Lula’s Leftist ideology. However power at times does seem to have an effect of diluting the ideology, and it did seem the same with Lula too. One of the first appointments he made was Antonio Palocci, a former Trotsykist, turned moderate, as Finance Minister. The other important appointment Lula made was however much significant, it was Henrique Meirelles as head of Brazilian Central Bank. It was significant, considering that Meirelles was everything that Lula was not politically and economically. He was politically a centrist, was CEO of Boston Bank and a market economist. This is precisely the kind of political sagacity and wide vision that has been missing from the Indian political leadership for quite some time.
One more important point to note, instead of indulging in a game of political one upmanship with the previous regime, Lula, carried forward the task of the previous regime in renewing all agreements with IMF.Is there a lesson here for our political leadership, somewhere? By late 2005, Brazil paid off all it’s debts to IMF, two years ahead of schedule, a major step forward for a country, that was more often in the news for it’s inflation and debt. By 2005, Lula had gained the confidence of the investors and the market, not seen too much as a doctrinaire Leftist. An interesting trend in fact, all over South America, barring Hugo Chavez in Venezuela, where leaders with a pronounced Leftist ideology, began to adjust according to the market realities. It was not just Lula in Brazil, Kirchner in Argentina, Bachelet in Chile, all doctrinaire Leftists when they attained power, tempering their ideology to the realities.
Lula’s moderated approach extended to other areas too, notably infrastructure development in Brazil. Once a strident critic of privatization, Lula came up with the Growth Acceleration Program, a public private partnership, that would promote investments in infrastructure, construction, sanitation and energy, an ambitious one,considering Brazil’s size and scale. What however has proved to be Lula’s major achievement and one that has made a critical difference to Brazil, has been the two social welfare programs, Fome Zero( Zero Hunger) and Bolsa Familia( Family Allowance). Like India, hunger and extreme poverty have been a major problem in Brazil for long. Fome Zero was not exactly Lula’s brainchild though he improved upon it, it was first started by his predecessor Cardoso, in a series of projects. What worked for Fome Zero, though was a smart mix of populism and pragmatism, that ranges from direct financial aid to the poorest families, to more pragmatic measures, creating water cisterns in Brazil’s arid Sertao region, low cost restaurants that provided employment to the poor as well as extending micro credit.
“This concept has always been controversial in Brazil. In other countries it is not this way, but in Brazil there has always been resistance. When I was in college they (the opponents to the concept of money transfers) used to say: ‘the first thing the poor will do with the money is to get themselves drunk’. Later on, it was no longer getting drunk that people talked about; they would say the money transferred would be used by the poor to buy a battery radio. They assumed that people with less education would not use their money wisely.”
Bolsa Familia however has turned out to be the major game changer in Brazil, again a mix of populism and pragmatism, pretty much Lula’s own brainchild. On the populist side, the program enables direct cash transfers to low income families, using a Citizen Card, that enables them to have their own accounts, draw money. In a way this has reduced corruption to an extent, with cash reaching the beneficiaries directly, avoiding the leakages. While on one hand, short term poverty is seen to be combated with unconditional cash transfers, the program seeks to fight poverty in the long run with a more conditional cash transfer. While the program has had it’s critics, many of whom see it as a welfare program designed to make people lazy, the results have been positive, a 20% drop in inequality and a significant decrease in poverty levels. It is interesting to see what some people have to say about it. As Paul Wolfowitz, former President of World Bank states.
“Bolsa Familia has already become a highly praised model of effective social policy. Countries around the world are drawing lessons from Brazil’s experience and are trying to produce the same results for their own people.”
One significant endorsement comes from Renata Nacimento, heir to a multi billion dollar Camargo Correa group.
I travel a lot around Brazil and see many places where the average monthly income is BRL 50 (approximately US$ 26.32). In these places the Bolsa Familia comes in and adds an extra BRL 58. It makes all the difference in the world and adds a lot for the needy population. What is more important is that it promotes a virtuous circle. If there is more money in circulation, the local market heats up, the purchasing power is increased and the effects spread throughout the whole economy.
What Brazil has been doing is a mixture of policies that both feed fish to the poor, as well as giving them the skills to go fishing. It may have it’s own drawbacks, may not work in every place, but that is the mix of populism and pragmatism, that would be playing a major role.
Under Lula, Brazil became the world’s eighth-largest economy, more than 20 million people rose out of acute poverty and Rio de Janeiro was awarded the 2016 Summer Olympics, the first time the Games will be held in South America- Washington Post.
Brazil winning the rights to host the 2014 World Cup and the 2016 Summer Olympics, was taken as a proof of it’s having arrived on the world stage. And yes the tag of the 4th largest economy in the world, beating out UK recently. More important though, is another key area where Lula has played a major role, that has been in Brazil’s foreign policy. For long seen as the Latin American giant, that has not yet woken up, Brazil has begun to assert itself, in a foreign policy that has been independent of external factors, guided solely by pragmatism. What Lula has done is placing Brazil in the lead, with issues related to South America, both between the nations themselves and the rest of the world. This has seen Brazil play mediator, and reducing the regional tensions between Colombia, Venezuela and Ecuador, with Lula playing the key role. One significant achievement has been the role Brazil played in Iran’s nuclear program, ignoring US pressure, along with Erdogan of Turkey, Lula played the other critical role in ensuring the supply of uranium, after Western sanctions.
Somethings have not changed much in Brazil, soccer still continues to be as popular as ever, Rio is still the world’s party capital, Samba is as much part of the average Brazilian’s life. And inspite of Lula’s efforts( or rather the lack of it), corruption continues to be endemic to Brazil, with scandals regularly claiming political leaders, and it’s political system is one of the most corrupt in the world. And while Brazil has made significant advances in fighting poverty and inequality, it does remain a major problem, notably with the indigenous tribes. What is however clear, that Brazil has been shaking off it’s underperformer tag, and is slowly waking up to it’s true potential. As Lula had put it “Earlier when the US sneezed we got pneumonia, now when the US sneezes, we too sneeze”. While Lula does deserve credit, it is important to note that he built on the economic policies of his predecessors, and did not go for the option of throwing out the baby with the bathwater. While many bored Americans still go to Brazil to get laid, have fun, beyond that fun, frolic image, is a nation, waking up to it’s potential and slowly rising as an economic and political power of it’s own.