| Brazil's Lula Tackles One Huge Challenge, but Others Loom |
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| By Mark Falcoff |
| Posted: Monday, August 25, 2003 |
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| LATIN AMERICAN OUTLOOK |
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AEI Online
(Washington)
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| Publication Date: September 1, 2003 |
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The big news from Brazil is that President Luiz Inácio “Lula” da Silva has managed to pull off a coup that evaded even his distinguished and widely admired predecessor, Fernando Henrique Cardoso: He has actually managed to force a major pension reform through the lower house of the national legislature. True, the bill itself still must pass the Senate, where it is likely to be amended, and must face some judicial challenges to its constitutionality. Still and all, for a man regarded--still--as an icon of the international Left and the antiglobalization movement to have moved boldly, decisively, and so far successfully to trim the privileges of the public-sector unions in his country is a major achievement.
Up to now Brazil’s civil servants have lived in a charmed world, with the possibility of retiring on a full salary at age fifty-five. The amounts of money in question are not negligible; federal employees in Brazil make nearly six times the wages of a normal worker, roughly the same gap as exists between the Swedish managerial elite and factory employees in that country, with the important difference that the Swedish worker makes about US$1,430 a month as opposed to his Brazilian counterpart, who earns a mere US$80. As José Genoíno, president of Lula’s Workers Party declared after the vote, “This is the end of privilege.”
Not everyone sees it that way, to be sure, least of all the public-sector unions, which have formed an important core of the Workers Party constituency--until now. During the debate in the Chamber of Deputies, the legislative buildings in Brasilia were the scene of riotous, even violent demonstrations. Some 400,000 government employees across the nation went on strike to protest. To what do they object? That in the future men will have to work until age sixty to retire (fifty for women); that retired public workers will have to pay income taxes on their pensions, like everyone else; above all, that functionaries will no longer receive opulent checks each month. As the president told an interviewer, “We still have retirees in Brazil getting 53,000 reals (US$18,000) per month, or 45,000 reals (US$15,000) or 30,000 reals (US$10,000).” Under the new arrangements, “the most anyone can get is equal to the salary of a Supreme Court justice, that is, 17,000 reals (US$5,700) a month.”[1] If retirees want more, they will have to contribute to a private pension arrangement.
Apart from claiming breach of contract, the public employees unions point out that the change will lead their colleagues to opt for additional contributions to stock funds, as federal employees in the United States are permitted to do. This, they complain, will benefit the international banks--which is true as far as it goes, but hardly relevant, unless one believes (as many in Brazil apparently still do) that capitalism is a zero-sum game. Meanwhile, the reform opens the possibility of incorporating some 40 million Brazilians at or near the poverty line into the social security system. Perhaps more important still, it reduces public service benefits by more than $18 billion over the next twenty years. That will have an important and salutary effect on the Brazilian exchequer, since pensions last year cost the country 5 percent of its gross domestic product and consumed fully two-thirds of all public spending. In contrast, social assistance to the poor amounted to 0.4 percent of GDP. He also contemplates revamping the tax system, reforming the rigid labor code--which, like that of many Latin countries, discourages the creation of jobs--and eliminating corruption among the judiciary and the police. His handling of the Brazilian budget has been orthodox by any standard, prompted by the need to reassure the international financial community, which has long wondered whether the country was capable of sustaining its massive $286 billion foreign debt.
Land Reform
A more explosive confrontation is yet to come with another of Lula’s historic hard-core constituencies--the Landless Movement (MST). Founded in the 1980s, the MST uses occupation of land considered unproductive as a tactic to pressure governments to speed up agrarian reform. To be sure, what is “productive” is often determined ideologically rather than based on an agrarian census. For example, the ratio of workers to land area is by its very nature small in cattle ranching, so that to the naked eye such properties may seem to be underutilized. Or sometimes the MST cites alleged environmental violations as an excuse for expropriations. The harsh fact is that, as in neighboring Argentina and Uruguay, the most fertile lands in Brazil have long been under production in one way or another. Government attempts to resettle the landless elsewhere in the country--where in fact there are empty plots that belong to the state and can be passed on to settlers without controversy--have been summarily rejected by the movement leadership.
During the run-up to Lula’s election, the MST cut back on land occupations so as not to embarrass their preferred candidate. For its part, the new administration upon taking office attempted to forestall such actions by seizing nearly 600,000 acres of land deemed unproductive with the announced intention of distributing forty-nine-acre plots to some 60,000 families. So far, however, barely 2,500 families have actually been settled, and what is left of this year’s budget appears to allow less than 7,000 families in all. Meanwhile, the number of poor families living in the estimated 1,300 squatter settlements around the country organized and controlled by the MST has swelled to 150,000.
In the face of government hesitation, both landowners and the landless are gearing up for confrontation. Movement leaders have encouraged members to destroy tractors and other machinery and tear down fences. Governors of two northeastern states have announced they will use force to prevent such actions. In some cases landowners have obtained court injunctions ordering squatters off their land or the arrest of movement leaders, but only some of these have been carried out. As a result, ranchers in at least three states recently started organizing armed militias to protect their properties. Meanwhile, federal justice minister Márcio Thomas Bastos has warned both sides that they could be “severely punished” if they violate the law.
A June meeting held between President da Silva and the MST leadership did not reassure landowners about the government’s ultimate intentions. On that occasion Lula was photographed wearing a baseball cap with the movement’s logo. Even so, the meeting was hardly a love-fest. The MST demanded the settlement of 1 million landless families by the end of da Silva’s term in 2006, as well as preemptory government seizure of ranches where slave labor is employed or drugs are produced (or perhaps, it is better to say, where the MST alleges either condition exists). Lula made no promises but simply pleaded for patience.
The agenda of the MST runs headlong into another priority of President da Silva and Brazil generally, namely, the need to increase revenue from overseas sales. As things stand now, Brazil is second only to the United States in the export of foodstuffs. The president sees an increase in such exports as the fastest way to earn needed hard currency and attract foreign investment. The landless movement sees this as a conspiracy to condemn the poor to hunger. In its view, Brazil should simply get out of agribusiness altogether.
The MST is also at variance, at least potentially, with the aspirations of many of its constituents, though in the present context that may not be immediately apparent. A case in point is one peasant who told a reporter that his dream “has always been to farm a piece of land I can say is mine and that I can pass on to my children.” The MST leadership openly dismisses this as a petty-bourgeois fantasy: “We want the socialization of the means of production,” one of its number told the New York Times (July 27).
“We are going to adapt the Soviet and Cuban experiences to Brazil.” Apparently knowledge of the experience of other countries--from Soviet Russia to Ethiopia, not to mention Cuba, which now agonizes on the bare edge of starvation--has yet to arrive this far south.
For his part, President da Silva has made it clear that he will not be “steamrolled” into a land reform that makes no sense. As he told one journalist, “It cannot take place the old way—tossing the landless into the brush and leaving them at the mercy of God. We have to give them land, infrastructure, roads, financing, so they can produce and build a farming community with schools, a doctor, a place for children to play. We want a civilized, humanitarian land reform.”[2] Such a design presupposes massive resources, and plenty of time, certainly far beyond the writ of the current administration.
The current controversy over land reform has other, more immediate practical considerations--namely, whether in the current environment farmers will feel that it is worth investing in seeds, machinery, and infrastructure for the next crop. In a somewhat similar situation in Salvador Allende’s Chile (1970–73), government tampering with agricultural markets led not only to violence in the countryside but also to the vigorous growth of a black market in foodstuffs and shortages in the formal marketplace.
The MST has also hived off something called the Roofless Movement (MTST), which has staged a few spectacular seizures of urban real estate, most notably a large lot belonging to Volkwagen in São Paulo, and a shuttered hotel in the center of the city. In the former case 500 police were used to evacuate the property; in the latter, they used tear gas to dislodge hundreds of squatters. These events, together with a dramatic rise in urban crime, are chipping away at the government’s popularity, though not (so far) that of the president himself.
Disaffected Traditional Supporters
The slogan of Lula’s presidential campaign was “Another Brazil Is Possible.” “Of course,” Professor Ted Goertzel of Rutgers University sardonically reminds us, “many other Brazils are possible. And many of them would be worse than the one we have now.” For instance, he suggests that Brazil could succumb to the kind of populist demagoguery that is gradually destroying neighboring Venezuela or default on its foreign debt like Argentina. A few in what Goertzel calls “the leftover Left” see models in communist Cuba or North Korea. However, he concludes, “almost everyone would like Brazil to be more like Sweden.”[3] Surely that one is the least likely of all.
The real merit of President da Silva is to have reconciled vast sectors of Brazil’s have-nots to Brazil’s democratic system with all its warts. He believes--and he acts as if he believes--that constructive economic and social change is possible through negotiation, consensus, and constitutional procedures. All of Brazil’s well-wishers cannot but cheer him on in this enterprise. But to get where he is now, he has had to spend twenty years quickening the hopes of constituencies whose other leaders are not necessarily committed to any of these things. Brazil may well contain a majority constituency for what the president proposes. But that base of support would not necessarily be congruent with the forces that have backed his Workers Party in the past. When one takes into account the narrow credit ledge on which Brazil is poised, continuing to move ahead by consensus represents a massive challenge for him and his country, one that must be met sooner rather than later.
Notes
1. August 2003 interview on the radio station Radíobras Radío Nacional, accessed on August 20, 2003, at www.brazzil.com/2003/html/news/articles/aug03/p135aug03.htm.
2. Ibid.
3. “Lula or Cardoso? Who’s Brazil’s President?” accessed August 20, 2003, at www.brazzil.com/p132apr03.htm.
Mark Falcoff is a resident scholar at AEI. |
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