Development and Cooperation


	Viewpoint Two continents Kenya: political and popular moves against corruption Brazil: economic policy shaped for and by society Brazil: economic policy shaped for and by society 02/2003		Brazil: economic policy shaped for and by society by Sérgio Costa and Carlos Santos At the fourth attempt, he finally made it: in October, Workers Party leader Luiz Inácio 'Lula' da Silva was elected president of Brazil. But the task he takes on is a daunting one; the people whose votes he won have high expectations. Lula has promised to promote economic growth but also to ensure more social justice than his predecessor Fernando Henrique Cardoso. One of the new president's most important projects, for example, is the welfare campaign Fome Zero (zero hunger). But the conditions for Lula's vision of an economic policy driven by social commitment could hardly be worse: Brazil's economy is stagnating, the country is in debt to the tune of 240 billion US dollars and the International Monetary Fund (IMF) has secured a government pledge for strict austerity measures. Yet there is still a chance that the new president could achieve a lot of what he promised when he was on the campaign trail. This is because Lula is Latin America's first left-wing president who is not a populist but has a realistic political programme and enjoys the confidence of capital. His party started to reinvent itself long before the elections, taming the radical left in its ranks and distancing itself from the socialist rhetoric that was partly responsible for its defeat in previous elections. The make-over worked. In the months up to the election, there were dire warnings of a massive capital exodus from Brazil if Lula came to power. After the election, however, both the São Paulo stock index and the Brazilian real rallied. But Lula has not only won the confidence of the financial markets. His cabinet appointments give a voice to key stakeholders throughout Brazilian society. Lula's team reflects a commitment to the participatory politics which the Workers Party (PT) already practises in the cities and federal states it governs – a commitment to bringing politics to the people and ensuring a broader public debate to heighten the legitimacy of government action. A great deal will depend on whether Lula can push through his plans for pension reform, which is a vital element of his strategy for reducing the budget deficit. To achieve this, though, the government needs to overcome the resistance anticipated from higher civil servants, whose pensions are to be capped. And that will not be possible without vigorous backing from the public. If the government does succeed in reforming the pension system, however, it will boost its political capital for implementing other parts of its reform programme. Having said that, there is still one element of uncertainty which Lula can do nothing about: if the world economy slows down, his government's attempts to combine sound economic policy with urgently needed social reform could be severely impeded. Dr. Sérgio Costa is professor of sociology at the Universidade Federal de Santa Catarina, currently lecturing at the Institute of Latin American Studies of the FU Berlin. Carlos Santos is an economist and member of the academic staff of the Institute of Latin American Studies of the FU Berlin.