Carlos Rezende is the European Commission's correspondent for several Sao Paulo newspapers. When he mentions the election of Inacio Lula Da Silva to become the Head of State of the country he left 6 years ago in order to settle in Brussels, his eyes begin to sparkle. His Brazilian lilt intensifies, and the adjectives he uses to describe the rise of an old metalworker to the head of the biggest economic and demographic power in Latin America, lend themselves to a Samba-esque rhythm. Indescribable, historic, a real precedent, not only for Brazilian democracy, but also for South America and the rest of the world.
30 Billion Dollars through the IMF
This assessment does not seem to be an exaggeration, as the election of Inacio Lula Da Silva by 52 million voters in last October, is symbolic of the vitality of Brazilian Democracy. Moreover it represents a realistic and fresh hope for a society in which 37% of the population could be considered as poor, according to the estimates of the Economic Commission of Latin America (ECLA).
For six months, the new government has been benefiting from real room to manoeuvre in order to transform the lives of the 175 million Brazilians. Lula has only 91 of the 513 MP's and 114 of the 81 Senators on his side, but he does possess the monopoly on proposing laws relating to the Budget, as well as the possibility to resort to an emergency implementing decree. This room for manoeuvre allowed him to launch the 'Zero Hunger' programme as soon as he entered office, which will cost Brazil around 1.5 billion Euros. With the fight to combat poverty, land reform has become the second main priority of the new team in place, in a country where 1% of landowners hold 50% of cultivable land.
Lula has also promised to double the minimum wage of Brazilians, using his capacity of negotiation, thanks to the support of the Unions, but also to the close contacts with the Industrial elite of the countries linked to Vice-President Alencar, with whom Lula allied himself in order to obtain a sufficient majority during the Presidential Election.
In the implementation of his projects, Lula's prime enemy remains the Public Sector debt, which feeds a vicious circle of macroeconomic effects and disastrous policies.
Despite this sizable pressure, up until now the situation has been dealt with effectively by Antonio Palocci, former Doctor and co-founder of the Labour Party with Lula, and the new Finance Minister, who has seen how to administer the appropriate remedies to the Brazilian Economy. Aiming to stabilize Brazilian Public Finance, the government has gained the confidence of market financiers and the IMF, who, during the brief turbulence of last summer, announced they were to grant a loan of 30 billion dollars.
Multilateralism: A Euro--Brazilian Interest
On the other side of the Atlantic, the governments of the EU (close observers of the first steps taken by Lula), have agreed to consider that this monumental step toward south-American democracy is also an unprecedented occasion for the EU to find a concrete ally in the establishment of an International Order based on Multilateralism. Brazil represents an essential commercial partner for the EU, which is both the main destination for Brazilian exports, and the main importer from Brazil. Given the Accord for Free Trade in the Americas (AFTA) project, the European big-wigs do not want to make the same mistake that they made with Mexico and let the USA remain the main trading partner of Brazil.
For his part, Lula seems to have made the choice to back up Mercosur in order to negotiate on a level with the EU and the US. At the recent summit in Rio Negro (Columbia) the President of Brazil managed to bring together Mercosur, the Customs Union of the Southern Cone, and the whole of the Community of Andean Nations (CAN). In pushing for a strategic alliance with Argentina, Lula Da Silva wants to develop Mercosur according to the EU model: complete the Customs Union in 2006 (fixed objective of the Summit of the Assumption of June 2003), begin the coordination of macro-economic policies, strengthen the institutions of Mercosur (Executive secretariat, creation of a Parliament) and set up common policies, especially Social Policy. With regards to Foreign Policy, Lula's first Initiatives seem to show to the convergence of interests of Brazil and the EU to promote an International and Multilateral Order.
The CAP: A Problem
"The Brazilian Diplomatic Service, Itamaraty, has traditionally been divided between two camps, one pro-American, and the other wishing to strengthen Brazil's relationship with the other big players, namely the EU. For the last few years the latter seems to have gained the upper hand, comforted by the election of Lula", explains Carlos Rezende. This new direction was confirmed with the support of the Venezuelan President Hugo Chavez during the general strike of autumn 2002. However, not content with its emerging regional leadership, on the 6th June Brazil initiated an alliance with South Africa and India. The three countries have already brought about a battle against Multinational pharmaceutical companies to render AIDS care more accessible.
This alliance could take on another scale and significance if it is extended to Russia and China, like some Brazilians would like. Despite an air of deja-vu which was apparent at the Bandoung conference, and at the heart of the Non-Aligned Movement, the project has directed itself to the reform of the UN and its Security Council, as well as the creation of a Multipolar world, to borrow an expression well used in many capitals, in particular in Paris.
In this context, Lula's Brazil would therefore seem to be the ideal partner for the EU in its fight to make an impact in the International Arena. There are however, several obstacles which remain on both sides of the Atlantic, which prevent the convergence of interests from developing into common initiatives. For the EU, the definition of Common Foreign Policy is subject to serious disruptions, as was seen during the Iraqi crisis. In order to work together with Brazil, the increase of readability regarding the EU's external actions, seems to be a sine qua non condition. Thus the reform of the CAP, which was decided in June, which will maintain a certain amount of help for the export of European agricultural products, (before negotiations begin at the World Trade Organisation (WTO) next Autumn) has been badly received in Brasilia, which would prefer to defend the cause of Developing Countries.
For its part, and in order to become a valid partner of the EU, Brazil will have to prove its capacity to undertake the necessary reforms on the domestic front, despite the strict budgetary restrictions. In the International Arena Brazil will be judged by its ability to assure regional leadership, and make Mercosur a real regional power. With 61.3% of the vote, Lula was elected with biggest majority in the history of Brazilian democracy, and has an undeniable legitimacy to help him carry out these tasks, and help Brazil move on from past disasters. But to reform social justice in Brazilian society will certainly be a long-term project. Yet, as Lula likes to say with pragmatism, "We cant do an 180° turn on a transatlantic flight."