Letter from the Front

A Day in the Political Life of Brazil

Cardoso tried to reach Bush by phone, but ended up talking
to Condoleeza Rice, Bush's national security adviser.
Better this way. The American president's
knowledge of Brazil is embarrassing.

John Fitzpatrick

Dear Reader,

The World Cup has dominated the headlines at home but a lot of other things have been happening on the political and economic front. However, rather than summarize recent events or concentrate on one subject let's take a day at random—Tuesday, June 25—and sample from a veritable gallimaufry of political riches:

***

President Fernando Henrique Cardoso opened, in Rio de Janeiro, a UN-sponsored meeting on sustainable development, only hours after gunmen had launched a nighttime attack on the mayor's office during which they fired 275 shots and threw two hand grenades. Instead of a picture of Cardoso shaking hands with the visiting South African president and the Swedish prime minister we see him holding spent cartridges and looking genuinely shocked.

Violence and insecurity had gone beyond the limits, he declared, and threatened to do something about it. Empty words indeed. Less than a week earlier the handyman who looked after the President's country retreat was shot dead apparently for criminal, rather than political, motives. Earlier this year, members of the MST (Movimento dos Sem Terra—Landless People's Movement) invaded a country home owned by the President's family and made themselves at home, watching TV and drinking whisky. If the President himself is a recurrent victim of crime then how can the rest of us feel protected?

***

The PT's presidential candidate, Lula, compares Cardoso to the captain of the Titanic in his handling of the battered Brazilian economy. Cardoso should stop going to "parties of the elite and pay attention to the iceberg ahead", Lula said, whatever that means. His comments came after he had sent an "open letter" to the Brazilian people pledging not to take radical action which could upset the economy even more, such as defaulting on debt or ending the war on inflation.

If Lula thought the financial markets would be relieved by this statement he was wrong. The country risk is rising; the Brazilian currency, the real, is falling and the markets are all over the place. If this is how things are going so far ahead of the election how will they be nearer voting day on October 3? The markets are right not to trust Lula, but Lula is right not to trust the markets. Why? See next item.

***

A CNT/Sensus poll shows that the government candidate, José Serra, is finally on the rise. He gained 7 percent and leapt to around 21 percent, whereas Lula lost 4 percent and fell to 36 percent. Following this announcement the dollar ended the day 2 percent down, the São Paulo stock exchange rose by 3.5 percent, the benchmark C-bond rose by 9 percent and the country risk fell by 11 percent.

However, as the markets are rollercoasting wildly, these "improvements" are meaningless. Speculation rather than investment is driving the market these days. Lula's open letter was naïve but, at least, he deserves credit for publishing it. The fact that the market "ignored" it, will strengthen the hands of the radicals within the party (and who knows whether Lula is still one of them) and we could see the PT moving further to the left.

The PT has plenty of ammunition. It can point not only to sky-high interest rates, a falling real and rising unemployment, but also to the latest financial scandal in the United States involving WorldCom, which is the owner of Embratel, the former state-owned international telecom carrier.

"Neo-liberalism" (the term leftists use to describe Cardoso's market-friendly policies) never really caught on in Brazil and is becoming an easier target every day. As it is essentially American in origin it is also a good stick to wave at the gringos who are always a handy scapegoat. (Incidentally, your correspondent was recently manhandled in a São Paulo café by a ragged Brazilian lout who said he hated gringos as they were only in Brazil to steal the country's money.)

***

Cardoso praises Lula's letter to the Brazilian people. Asked whether he would take up an offer by Lula to meet him, the President says: "He hasn't said anything to me." He probably never will because there would be no meeting of minds and why should the incumbent talk to a candidate like Lula who has never even run the tiniest municipality?

***

Reports say that Cardoso tried to talk to George Bush on the telephone on June 20 to complain about comments by the US Treasury Secretary, Paul O'Neill, that he did not support more IMF aid to Brazil. (As Brazil had not suggested it would ask for more aid one can understand the government's annoyance. O'Neill might have been a good executive in the aluminum business but has shown little diplomacy in relation to Latin America.)

Some reports say Bush was in Florida helping his brother, state governor Jeb Bush, raise money for an election campaign. Others say the US president was in Air Force One and, for technical reasons, the call could not be transferred. Instead, Cardoso spoke to the national security adviser, Condoleeza Rice.

Maybe it's as well the two presidents did not speak, because Bush's knowledge of Brazil is so limited as to be embarrassing. According to the German magazine Der Spiegel, at a meeting with Cardoso last year Bush asked whether there were any black people in Brazil. Cardoso could not hide his astonishment but once again, Condoleeza Rice, who is black, stepped in to help and told her boss that there were probably more black people in Brazil than in the US.

With the World Cup out of the way we return to normal political life. With only three months to go to polling day we can expect more ups and downs as Serra tries to make up ground and catch up on Lula.

Yours faithfully,

Your correspondent

PS: I attended a meeting recently at which a well-connected former minister in the Cardoso government said the PT believed that Lula needed to win the first round of voting by a minimum margin of 15 percent in order to win the second round. This source has been reliable in the past, even though he is anti-PT, and it is worth keeping this in mind in the months ahead.

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, which specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at jf@celt.com.br 

Send your
comments to
Brazzil