If Lula delivers reform alongside financial stability, Brazil could become the social democratic model for Latin Americaby Richard Lapper / January 20, 2003 / Leave a comment
At first glance, the victory of Luiz Inacio Lula da Silva in Brazil’s presidential election in October looks set to bring even more turmoil to a region still reeling from Argentina’s debt default at the end of 2001. The triumph of the former trade union leader better known as Lula was followed last month by the victory of another leftist, Lucio Guti?rrez, in Ecuador, and by gains for the anti-globalist left in Peru. Together with the defeat by President Hugo Ch?vez of a right-wing coup in Venezuela earlier this year, these events seem to offer proof of left-wing ascendancy across the region and confirmation that Latin America’s 15-year experiment with market friendly reforms is over.
But Lula’s triumph could be a sign of something different. There is a chance that his government will introduce precisely the kind of institutional and social reforms needed to make the market-based reforms introduced since 1994 by President Fernando Henrique Cardoso work more effectively. If Lula’s government is able to deliver financial stability, good governance and social reform, it might offer a new social democratic model that would be relevant for the rest of Latin America.
All this may look very optimistic. For one thing, the Workers’ Party (PT) is an organisation with its roots in the utopian tradition of Latin America’s new left. Founded in 1980 by ex-guerrilla fighters, radical Catholics, Marxist intellectuals and militant trade unionists, the party fought its first elections on slogans like “vote PT against the bourgeoisie.” Until quite recently, the party was completely out of sympathy with the efforts of President Cardoso to develop a market-friendly social democracy. When Cardoso set about stabilising Brazil’s economy, reforming public finances and selling off state industry, he was opposed every step of the way by the PT.
Lula opposed the “Real plan” that eliminated hyperinflation, describing it as an attack on the working class. When Cardoso modernised Brazilian infrastructure by bringing foreign capital into the telecommunications and energy sectors, Lula opposed privatisation and promised to renationalise private utilities. While Cardoso carefully cultivated Brazil’s image as a responsible creditor, Lula promised to suspend debt payments. Surely, say his critics, Lula will be hard-pressed simply to maintain financial stability, let alone increase Brazil’s growth rate towards, say, the 4 to 5 per cent needed to address deep-rooted social problems. Dogged by external pressures, Cardoso was only able to manage an average of 2.4…