Brazil: A Lula Overdose

The sheer energy Lula is displaying is impressive, but it
might be better if he were to move out of the limelight a bit.
It is not unusual for several items on the TV news to be about
him. Internet sites follow his every move. Personality cults,
however, operate in dictatorships, not in democracies.

John Fitzpatrick

 

After eight years of the aloof style of President Fernando Henrique Cardoso, who at times looked as though he would have been more at home wandering around the Chateau of Versailles as a courtier of Louis XV in wig, buckled shoes and frock coat, President Luiz Inácio Lula da Silva makes for a refreshing change. Even when wearing a neat suit and tie, Lula looks as though he is about to burst out of this alien garb and turn into a Brazilian Hulk, ready to grab the nearest tank by the gun barrel, swing it round his head and fling it into the distance.

The sheer energy Lula is displaying at the moment is impressive, but it might be better if he were to move out of the limelight a bit. There is little chance of this happening since it is not in his nature, but one man can only achieve so much, and familiarity can quickly lead to contempt. Personality cults only operate in dictatorships, not in democracies.

This is just a sample of Lula's activities in the ten days to the time of writing: a summit meeting of the Mercosul free trade area in Paraguay; a visit to Washington to meet U.S. President George W. Bush for talks on the creation of FTAA—the proposed Free Trade Area of the Americas; launching a harvest plan for small farmers; announcing the creation of a bank to provide credit to the poor; announcing a special session of Congress in July; telling the telecommunications regulatory body, ANATEL, that he wants it to review tariff increases; and attending a summit meeting of Andean countries in Colombia.

Here, There and Everywhere

On top of all this, his agenda has included various speeches—formal and impromptu—all over the country, to groups including members of the Lower House of Congress, senators, trade unionists and environmentalists, and taking part in the famous "Festa do Boi" regional folk event in Parintins, in the Amazon region. He did not watch Brazil's pathetic efforts in the Founders Cup football competition in France, but maybe he will turn up in São Paulo to cheer on Santos in its crunch match in the Liberators Cup final against Boca Juniors of Argentina this week.

A look at the media shows the exposure he is getting. It is not unusual for several items on the television news to be about him and, in this particular case, TV might be playing into his hands. Lula is supposed to be keen on conveying his message on TV, since most Brazilians do not have the money to buy a daily newspaper or weekly magazine.

Internet sites follow his every move. As I write, the Agência Estado site has no less than three consecutive headline items from the Colombia meeting, each bearing Lula's name. None of these stories has any great news merit, but merely state what Lula has called for or, in one case, the fact that he did not address the media. This latter point is actually good news because a couple of days without Lula in the headlines would be a pleasant break.

Lula's popularity is still astonishingly high, but there are signs that the vested interests that run this country are beginning to get a little frustrated. This week he upset some members of Congress and the Judiciary when he said: "Neither rain, nor frost, nor earthquake, nor moaners, nor the Congress nor the Judiciary—only God can prevent us from making this country occupy the outstanding position which it should never have ceased to occupy." *

Like most of the population, your correspondent is on the president's side in irking these oligarchic forces. The hypocrisy of the Judiciary here is particularly worth highlighting, since the voices of judges are heard at their loudest not in defense of justice, but of maintaining their perks. The pension reform proposal now making its way through the Lower House, and facing strong opposition, could end up in the courts since many of its opponents claim it is unconstitutional.

And yet, leading judges have been among the most vociferous public critics of the reform, which will upset their cozy lifestyle that includes 60 days' paid holidays per year and a fat pension for life when they retire. As for Congress, it has attached so many amendments to the government bill that the final reform will be a watered down version of the strong medicine the country needs.

It is not the first time Lula has upset the judges, and every president in every land ends up in conflict with Congress at some time. Although a statement was issued the following day saying that at no time had Lula intended to offend Congress or the Judiciary, in constitutional terms it does not look good for Lula to hit out publicly like this. By doing so, he gives sustenance to these selfish interests, which can then accuse him of behaving dictatorially.

Several columnists have already started sniping and making comparisons with former president Fernando Collor de Mello who, at this stage in his presidency, was also enjoying an electoral honeymoon and getting a bit above his boots. This is a poor comparison since, unlike Lula, Collor's support was shaky and without depth. Collor was a fly-by-nighter with no substantial party base or congressional support, and his advisors were suspect, unlike the strong team Lula has around him.

Action Man Arrives

Lula may be criticized for shooting from the lip, but he is finally backing his words with some action. It may not have been wise to order his Communications Minister to tell ANATEL that Lula did not want such high tariff increases. However, when ANATEL went ahead regardless, the government accepted the decision, albeit grudgingly.

The scheme to provide credit to those excluded from the banking system was given a cold response by the banks. This scheme will be financed with some of the compulsory deposits banks must leave with the Central Bank. In effect, the government will be using some of the banks' deposits to offer cheap interest to the poorest segment of the population. This is not to the banks' liking, but they will have to accept it. These banks are among the groups that look to their own interests first, and the country's and their clients' interests last.

It is always easy to criticize banks, and only the strongest Brazilian banks have survived the turmoil of the last decade. In business terms, they are successful with high returns on equity. But they also provide valuable social services. For example, the biggest private bank, Bradesco, has a charitable foundation that educates tens of thousands of children, thereby reducing the burden to the state.

At the same time, the big retail banks have invested heavily in information technology, at the expense of client care. Long queues, too few counter assistants, account managers who know little about the financial system, investment counselors who push their own products and services, a reluctance to grant credit to companies or alternatively trying to ram credit down private individuals' throats, thereby leading to high default rates which, in turn, are passed onto the client, are some of the qualities which mark the Brazilian banking system.

Only in the last few weeks, following ferocious criticism of the high interest rates here—which can amount to 80 percent or more a year—have banks started to react slightly, instead of shrugging their shoulders as they usually do and claiming they are helpless. Even then, the reductions they have announced have been minuscule, and they are now complaining that the proposed Banco Popular—that government bank that will use part of commercial banks' compulsory deposits to offer cheap credit—will increase the spread between the cost of raising money and lending it.

In fact, banks have a choice and are not being forced into anything to complain about. They have the option of doing it themselves, by releasing two percent of their sight deposits for cheap micro credit. Or, they can leave it with the Central Bank. The bankers will be checking their calculators to see what is the cheapest, rather than the most socially just way out. If it costs less to leave the money with the Central Bank than make it available in cheap loans, then that is what will happen. If they can make money out of lending it to the poor, they will do it and pat themselves on the back for their magnanimity. 

By taking some action, whether to complain about high telecom tariff increases or offer cheaper credit, Lula is showing that things are changing. The market may not like it, but the market only likes what brings a profit—whether that profit comes from selling cancerous products like cigarettes or politically correct products like shampoo made with natural resources harvested by Indians in the Amazon. Lula cannot ignore the market, just as he cannot ignore the Congress or the Judiciary, but he deserves applause for his latest efforts.        

* This is a very free translation of Lula's rhetoric.

John Fitzpatrick is a Scottish journalist who first visited Brazil in 1987 and has lived in São Paulo since 1995. He writes on politics and finance and runs his own company, Celtic Comunicações—  www.celt.com.br, which specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at jf@celt.com.br 

© John Fitzpatrick 2003

This article appeared originally in Infobrazil, at www.infobrazil.com