What Lula can teach 'white people'

Posted By Paulo Sotero Tuesday, March 31, 2009 - 9:48 PM Share

As the Brazilian president makes good-sense demands at the G-20, rich countries would do well to listen.

By Paulo Sotero

When Brazilian President Luiz Inácio Lula da Silva last week blamed "white people with blue eyes" for the global economic meltdown, it was an odd gaffe for a leader known and respected around the world for his pragmatism.

"Lula had a Chávez day," wrote the São Paulo daily Estadao, discounting the unfortunate utterance made in Brasilia at a joint press conference with British Prime Minister Gordon Brown. Facing domestic criticism for the remark, the Brazilian president clarified what he meant the next day when he joined other world leaders for the Progressive Governance Conference in Viña del Mar, Chile, ahead of the G-20 summit. Addressing Brown, U.S. Vice President Joseph Biden, and Spanish Prime Minister José Luis Rodríguez Zapatero, Lula said that rich countries were "more responsible" for the crisis now afflicting all countries, but especially the poorer ones, and warned his fellow world leaders against failure at this week's meeting in London. "We cannot run the risk of postponing profound structural solutions," Lula said.

Do not expect the Brazilian leader to tone down his rhetoric at the G-20. He will remind his colleagues of the commitment against protectionism that they all made during their first gathering in Washington, last November, and immediately abandoned. The political difficulties of moving ahead with the stalled Doha round of global trade talks will not prevent Lula from reminding the leaders, especially those from rich countries, of their obligation to practice what their countries have always preached to the developing world about the virtues of freer trade and resist the temptation to build fences that could turn the current world recession into a full-blown depression.

Lula will also raise issues that are difficult for Brazil. He is likely to use his country's strengths in energy (its leadership in production of carbon-reducing ethanol, its expanding capacity in oil and gas) and challenges in environmental preservation (the urgent need to stop deforestation of the Amazon) to highlight the importance of putting climate change on the leaders' reform agenda. It is a controversial subject in his own government. An ambitious climate-change plan launched by the Ministry of the Environment last December still needs to be reconciled with the more defensive stance of the Ministry of Foreign Relations on climate negotiations. It is also, as Lula recognizes, an opportunity. Brazil can exercise global leadership by mediating between traditional polluters among rich countries and major new polluters from the developing world, and open the way for a sensible and effective agreement at the U.N. climate change conference this December in Copenhagen.

Expect the Brazilian leader to challenge his colleagues on the institutions of global governance, starting with the International Monetary Fund and the World Bank. It is difficult to understand and accept that both bodies should keep their current voting structure and continue to be managed exclusively by Americans and Europeans in a world where the United States and Europe represent a decreasing share of the world's economy. Brazil brings more than demands to this topic. It has thinkers and doers who could certainly add to the credibility of both institutions if called to service -- leaders such as former Central Bank President Arminio Fraga and former Finance Ministers Pedro Malan and Rubens Ricupero, the latter a senior diplomat who led the U.N. Conference on Trade and Development for two terms.

Last but not least, hard lessons learned in the long fight to stabilize Brazil's economy in the 1990s have equipped the giant of South America with expertise and proven experience in financial regulation. It is an asset that warrants giving Brazil a seat at the table as leading countries start the difficult work of rebuilding better national and global financial structures.

Paulo Sotero is director of the Brazil Institute at the Woodrow Wilson International Center for Scholars.

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JOHN FITZPATRICK

12:59 PM ET

April 1, 2009

My view of Lula´s remark about "white people with blue eyes"

Lula Starts to Throw His Weight Around
29 March 2009
by John Fitzpatrick

President Luiz Inácio Lula da Silva´s statement that the financial crisis had been caused by “white people with blue eyes” must be one of the crassest comments ever made by any leader. The fact that he said it in front of the visiting British prime minister, Gordon Brown, who incidentally only has one eye, does not make it any worse as Lula, who incidentally only has nine fingers, probably did not even know this. It is typical of his approach to this crisis which has been to try and blame others for spoiling his party. The crisis has overturned his dream of ending his mandate next year and handing over a booming economy to his successor. However, just as the boom Brazil has enjoyed in recent years was stoked by external events (with little input from Lula) it is now being jeopardized by external events. Lula is now heading for the G-20 summit in London but whether anyone will listen to his proposals for dealing with the crisis is unlikely. In fact, his outburst is only the latest in a series of comments and actions involving the Central Bank, the electorate and the law which have shown that he is becoming increasingly authoritarian and intolerant.

Until recently, the Central Bank enjoyed an actual if not legally defined independence although it has come under criticism from within the government, virtually every political party, the trade unions and the industrial associations, such as FIESP, which supposedly believe in free enterprise but are quick to demand government interference when it suits their interests. Lula has stood above the fray and let the Central Bank get on with its tough task of maintaining monetary policy in line with the government´s inflation targeting system.

However, he has made it clear in recent months that he expected interest rates to start falling sharply as the crisis has begun to affect the real economy, throwing people out of work, reducing consumption and even denting his North Korean-style popularity ratings of more than 80%.

The Central Bank slashed interest rates at its latest meeting by 1.5% to 11.25% and is expected to continue to cut them throughout this year. The Central Bank certainly had good grounds for doing so as inflation no longer poses much danger since the crisis has cooled economic growth. However, there is no doubt that the Central Bank has come under extreme pressure and had it not made such a deep cut there is a good chance that some members of the monetary policy committee and perhaps even the chairman, Henrique Meirelles, would have been fired.

Several months ago I said that the Brazilian Central Bank could no longer be considered to be “independent” and I think this will be seen to be the case much more as this crisis unfolds. Meirelles is likely to stand down later this year to contest an election in his home state of Goais. It will be interesting to see who replaces him - another banker or a political nominee.

Lula has also been using his weight to force his favorite candidate, Dilma Rousseff, down the throats of the electorate and his Workers Party (PT). Rousseff is Lula´s chief of staff and has never held any elected position. She is a former guerrilla and was imprisoned and tortured during the period of military rule. She was energy minister until she replaced the disgraced Jose Dirceu who became mired down in the votes for bribe scandal known as the “mensalão”. However, she was virtually unknown outside Brasilia until Lula started presenting her as the “mother” of the so-called Accelerated Growth program to boost the economy. He has wheeled her around the country to such an extent that she now has a national recognition rating of around 10% and looks like being the PT´s candidate in next year´s presidential election whether the PT likes it or not.

Lula has also taken on the judiciary over the case of an Italian called Cesare Battisti who is wanted in Italy in connection with four terrorist murders. Battisti is a former member of a militant left-wing group and was convicted in absence and given a life sentence. His supporters claim he is innocent and that the charges against him are politically motivated. Lula´s justice minister, Tarso Genro, ruled that the Italian should not be extradited and claimed that his decision was not politically motivated although no-one believed that. This case has led to a diplomatic row with Italy and the Italian ambassador was recalled to Rome for consultations in January.

The Brazilian Supreme Court is due to make a ruling on the case shortly but Lula has made it clear that Battisti will not be extradited regardless of the court ruling. Under Brazilian law, the President has the final say in such a case. It is almost unbelievable that Lula could risk upsetting a country like Italy with which Brazil has such close ties over the fate of a terrorist but then it is almost unbelievable that a president of one of the world´s largest nations could blame an international crisis on “white people with blue eyes.