Lula's Legacy: Challenges and Opportunities for Brazil
With an Address by Brazilian Ambassador Antonio Patriota
About This Event

First elected in 2002 and reelected by a landslide in 2006, Brazil’s president Luiz Inácio “Lula” da Silva is renowned for expanding Brazil’s antihunger and antipoverty programs. Lula has been no less determined to enhance Brazil’s role as an international leader by pushing for the more prominent role of developing Listen to Audio


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countries in international organizations such as the World Trade Organization (WTO), the World Bank, and the United Nations.

Despite his sound macroeconomic policies, Lula is confronted by pressing challenges that threaten his legacy. Domestically, Lula’s presidency has been weakened by accusations of corruption within his party and administration, placing rule of law on his shortlist of necessary reforms. In order to sustain Brazil’s economic trajectory, Lula’s agenda should consider initiatives to liberalize Brazil’s labor market, protect property rights, and simplify an antiquated and complicated tax system, among others. Internationally, Lula should exercise his clout to rescue WTO talks from stalemate over agricultural subsidies. Does Brazil’s president have the will and the means to take on such an ambitious reform agenda?

On April 17, AEI will host Brazil’s ambassador to the United States, Antonio Patriota, to discuss the challenges and opportunities of Lula’s domestic and international agenda and the future of the bilateral relationship. Michael May of the Center for Strategic and International Studies, Bill Perry of William Perry and Associates, and Paulo Sotero of the Woodrow Wilson International Center for Scholars will comment. AEI’s Roger F. Noriega will moderate.

Agenda
8:45a.m.
Registration
9:00
Special Remarks:
Ambassador Antonio Patriota, Embassy of Brazil
9:30
Discussants:
Michael May, Center for Strategic and International Studies
Bill Perry, William Perry and Associates
Paulo Sotero, Woodrow Wilson International Center for Scholars
Moderator:
Roger F. Noriega, AEI
10:30
Adjournment
Event Summary

April 2008

Lula's Legacy: Challenges and Opportunities for Brazil

First elected in 2002 and reelected by a landslide in 2006, Brazil's president Luiz Inácio "Lula" da Silva is renowned for expanding Brazil's antihunger and antipoverty programs. Lula has been no less determined to enhance Brazil's role as an international leader by pushing for the more prominent role of developing countries in international organizations such as the World Trade Organization (WTO), the World Bank, and the United Nations.

Despite his sound macroeconomic policies, Lula is confronted by pressing challenges that threaten his legacy. Domestically, Lula's presidency has been weakened by accusations of corruption within his party and administration, placing rule of law on his shortlist of necessary reforms. In order to sustain Brazil's economic trajectory, Lula's agenda should consider initiatives to liberalize Brazil's labor market, protect property rights, and simplify an antiquated and complicated tax system, among others. Internationally, Lula should exercise his clout to rescue WTO talks from stalemate over agricultural subsidies.  Does Brazil's president have the will and the means to take on such an ambitious reform agenda?

On April 17, 2008, AEI hosted Brazil's ambassador to the United States, Antonio Patriota, to discuss the challenges and opportunities of Lula's domestic and international agenda and the future of the bilateral relationship. Michael May of the Center for Strategic and International Studies, Bill Perry of William Perry and Associates, and Paulo Sotero of the Woodrow Wilson International Center for Scholars commented. AEI's Roger F. Noriega moderated.

Antonio Patriota
Embassy of Brazil

Lula is devoted to democracy, and he has succeeded in proving that it is not necessary to sacrifice freedom for stability or surrender political liberty for economic opportunity. Because of his efforts and the work of his predecessors, Brazil is among the world's most stable democracies. Currently, inflation is relatively low; Brazil has become a moderate net creditor; and the country's trade surplus is over $40 billion, despite an appreciating currency. Brazil seems to be resilient against the current international financial turbulence, and policymakers have recently introduced a tax on short-term financial transactions to combat the currency appreciation.

Brazil, like the United States, has a multiethnic diversity that is central to its identity. Lula's platform when elected was to provide greater emphasis on social policy, and after five-and-a-half years in office, he has succeeded in reaching the United Nations (UN) Millennium Development Goal of reducing by half the number of people living in extreme poverty in Brazil. The UN recently placed Brazil in the "high human development" group in its Human Development Index. Recent statistics indicate that descendents of Africans form the bottom of the social ladder. This presents a challenge for Brazil, but it may be changing because of recent affirmative action policies aimed at afro-descendents.

Lula has also been a driving force behind South American integration, and there is increased political dialogue between leaders in the region. Brazil represents half of the territory, economy, and population in South America and has the responsibility to assume a lead role in this endeavor. Brazil still faces challenges, including an antiquated tax system and urban violence in cities such as Sao Paulo, and Lula wants to focus on improving health care for children and increasing opportunities for education.

Michael May
Center for Strategic and International Studies

Lula has the uncanny instinct to do the right thing nearly all of the time, and he may have already established a strong legacy for himself. He has balanced economic orthodoxy with a strong social agenda. He has also positively changed the perception of capitalism in Brazil while stressing equal opportunity. There have been some class changes within Brazil as well, with poor families moving up to the high lower-class or lower middle-class.

A significant challenge for Lula is the Movimento Sem Terra, or Landless Workers' Movement, which has the potential to be manipulated politically or to evolve into its own entity. Lula will also need to address currency speculation in the banking sector, and the tax system remains a concern amid current attempts at reform. Two final issues that need to be addressed are what to do about urban violence and how to improve the image of defense forces and involve them in both internal and external affairs.  

Bill Perry
William Perry and Associates

Initially, Lula lost three previous elections because his party was considered radical. But after Lula's evolution towards pragmatism, he has run a moderate and sensible government and developed a good relationship with President George W. Bush. Lula has used sound economic policies to lead Brazil, and he has not radically changed the policies of previous governments, which has resulted in a sense of continuity within the country. 

A weakness of the Lula administration is that it has not transcended the political culture of Brazil, and there continue to be a number of scandals and little political reform. Parties that do not represent anything or respond to public opinion continue to exist, and it is disappointing that some of these issues have not been addressed over the last six years. Socioeconomically, Brazil is the best it has ever been, but it remains to be seen whether there will be any political reform. 

Paulo Sotero
Woodrow Wilson International Center for Scholars

Democracy and stable economics are the two factors that have helped Brazil find its direction. While Brazil has achieved macroeconomic stability, it still needs to pursue microeconomic reforms to release the country's economic potential.

Recently, the Brazilian congress, in an effort to increase accountability, approved a law prohibiting politicians from switching parties, yet a culture of impunity continues in Brazil. There must be criminal consequences for those caught in scandals to bring democracy to a higher level.

In Brazil, continuity is very important, and former president Fernando Henrique Cardoso and other presidents have paved the way for Lula. Brazil needs to continue to work on education, opening its economy, and recovering managerial capacity in government sectors. It must also tackle the challenges associated with the new discovery of oil and create new regulations for its energy sector.

AEI intern David Bloomberg prepared this summary.

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