I’ll use one of the preferred sentences President Lula uses to describe its government period: “never in the history of Brazil” has it surfed such a good wave – or at least not in the recent history, since 1988, the Constitution promulgation.
On the domestic front, the president has great popularity; interest rates have reached a historic low of 8.75% (though still too high for international standards); more than 8 million formal jobs have been created since 2003; there have been massive gains in salaries; more than half the population has integrated into a huge middle class; Brazil has successful targeted welfare programmes; foreign investment is soaring (the Real has advanced 36% against the US dollar already this year, which has been harming Brazilian exports and just gave room for the creation of a 2% tax on foreign portfolio investments).
The international boom was partially responsible for this, but so too are the 1990s financial reforms and the responsible management of the economic policy by Lula’s team. In the end, the financial crisis that has deeply affected other countries has just lightly scratched Brazil, where growth projections for 2010 sit around 5%. Further, Brazil has been seen as a natural leader not only in Latin America, but also for other developing countries around the world – both for its size, population and economic weight, and for its vibrant democracy of fair and free elections, freedom of the press, of association and organization, as well as alternation of power.
It is indeed a rosy scenario.
What are then the challenges that lie ahead for Brazil in the new economic order? I would say some very important ones lie on the domestic stage, handling of which will be crucial for advancing Brazil’s new international role. The first concerns keeping the consensus of the last 15 years on economic stabilization. This is a recent victory of the Brazilian population (since 1994) that has been maintained by Lula’s government in the last 7 years. The history of populism in Latin America alerts us to the perils of discontinuity, though many analysts would say this won’t be at stake in the next elections of 2010.
Second, it will be fundamental to build bridges between competing interests that can cause gridlock in the representation of Brazil abroad – both those coming from the private sector and those resulting from turf wars between different realms of the Brazilian burocratic agencies.
Third, Brazil has huge challenges in infrastructure and education, two sectors where results have been consistently poor and that have to be addressed for the country to fulfil its development promises and deliver as an international leader.
Fourth, Brazil has to overcome its dual nature of being a modern, avant-garde country that pushes for new roles and debates and values meritocracy, and at the same time one that nurtures clientelism, patrimonialism, the non-rule of law and old oligarchies in power that dig for private benefits. Overcoming these contradictions will be fundamental for a country that sees itself and is being recognized as a legitimate leader. That means pushing for deeper reforms – labor, tax, bankruptcy etc – that set up a more universalistic framework, as opposed to one based on privileges.
The Brazilian Central Bank has been governed under the principles of a modern and professionalized institution, and has benefited from informal autonomy. Nevertheless, the pressures from the “other” highly politicized and personalized Brazil are still there. Can these parochial values win in the horizon of general elections that will be conducted next year (October 2010), when it seems the current Governor, Mr. Meirelles, will also be a running candidate? That is an important question that also lies ahead.
November 7th, 2009 at 11:41 pm
The article does well in highlighting the most cogent challenges that lays ahead Brazil. I would only respond to the fourth issue, that is, the problem of the two publics. In my opinion, Brazil has overcome the threshold of political abnormalities, earning them a place amongst the leading democracies in the third-world. The country’s economic growth would not be possible if they had no solid political structure, which is the basis of a good economy. A rosy economy further serves to promote political stability. In essence, they possess the developmental necessities of an effective political system and a stable economy. It is on this note I give Brazil a vote of confidence in the fourth challenge, which refers to political contradictions. The threat of “pressures from the ‘other’ highly politicized and personalized” class may still exist, but in my opinion, it is nothing to worry about.