THE LAST PRESIDENT WAS A GIANT, AND LEFT GIANT QUESTIONS FOR THE NEW ONE

Brazil began 2011 with a new president and all eyes in Brazil, along with growing number around the world, were watching to see how Dilma Rousseff inherits the successes of her mentor, former president Lula DaSilva.

The biggest questions are economic: Can ‘Dilma’ sustain Brazil’s hard-won economic stability, which is the most important factor underlying its rising global status?

Dilma steps into a confusing economic picture. Brazil has avoided the worst of the global financial crises since 2008. But the threat of those crises — as well as political pressures of a looming presidential election — compelled Lula’s government to unleash a series of stimulus measures in its final months. His government kept those measures in place as Dilma fought through an unexpected second-round in the presidential election.

Now, Brazil faces clear signs of economic overheating: most troublingly, rising indebtedness among low-income families. Both the new president and her Finance Minister, Mr Mantega, have signaled a new round of economic policies focused on reigning in household consumption.

Beyond those immediate measures, Dilma will have to show that Brazil’s development model is sustainable over the long term. Of course, she inherits a much brighter economic picture than Lula did when he became president
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But she must now somehow coax Brazilians to save and invest more in their own economy, clear infrastructure bottlenecks, create more skilled labour, and boost research and development. This probably means more government spending at a time when many Brazilians already consider income taxes, now as high as 40.5%, unsustainable. If the government wants to invest more in economic development, Brazilians now expect it to spend less on other things. Lula was already turning his attention to this before he left office. Does Dilma have the political strength to follow up?

Brazil’s rising prominence today also reflects its foreign policy savvy under Lula and even his predecessor, Cardoso– another realm in which Dilma will be tested.

As the global economic crises pried the G8 system open, Brazil’s great insight was that global systems needed to be democratized. This idea — to ‘democratize globalization’ — was the inverse of the G8’s mission to globalize democracy, and pushed the emergence of the G20. In her first speech as president, Dilma made all the right noises about continuing that mission. One of her closest advisors and former coordinator of her presidential campaign, Marco Aurélio Garcia, is also pressing for an ambitious foreign policy.

News from Brasilia in the months to come will tell the world if Dilma will build on Lula’s success, or simply inherit his shadow.

By Adriana de Queiroz
Executive Coordinator
Brazilian Center for International Relations – CEBRI

 

RELATED MATERIAL FOR THE WEEK OF JANUARY 3

BACKGROUND

Brazil rarely strayed from the news headlines in 2010. From the controversial move by popular President Luis Ignacio Lula da Silva, known as Lula to his people, to act as mediator between Iran and the United States and the other P6 (the permanent members of the Security Council and Germany) to the Brazilian general vote in October, which led to the election of Dilma Roussef as Brazil’s first female president, Brazilian foreign policy and politics rarely failed to capture the world’s attention.

Brazil represents the “B” in the BRIC acronym, a label that speaks to the economic growth that has characterized the country for at least the past decade. Brazil’s economy has been driven primarily by growth in agricultural and primary resource industries.  However, Brazil has begun to expand into new industries, such as pharmaceuticals and technology including aircraft. Though recent reports have speculated that the Brazilian real might be overvalued, a side-effect of the country’s rapid economic expansion and the devaluation of the United States dollar, Brazil remains a serious player in global economic and, increasingly, political affairs.

Earlier this year, Brazil and Turkey attempted to act as mediators in the ongoing Iranian nuclear situation, with Brazilian and Turkish leaders traveling to Iran to persuade Iranian President Ahmadinejad to soften his nuclear stance. Lula has come out staunchly against the imposition of sanctions against Iran, calling them ineffective at best. Brazil also recently became the site of the first Palestinian embassy in the Western hemisphere, making it one of several Latin American countries to advocate for Palestinian statehood.

Brazil has become known more recently for its innovative approach to social programs to address its vast poverty and economic inequality. During his Presidency, Lula expanded the Bolsa Família program, which conditions cash transfers to individual families on factors such as school attendance.  The dramatic reduction in rural poverty and malnutrition in Brazil has been attributed in part to this program, though success has been rather muted in urban areas. Nevertheless the model has become an increasingly popular model for poverty reduction in developing countries.

RELATED MATERIAL AND SITES

  • The Global Brazil Initiative at the Council on Foreign Relations addresses the domestic, regional, and international dimensions of Brazil’s emergence as a world power.CFR also has a backgrounder on Brazil on the International Stage.  This site examines Brazil’s increasing prominence on global trade and energy issues.
  • A December episode of the Agenda with Steven Paikin features Roberto Mangabeira Unger, former minister of strategic affairs of Brazil, and explores the idea of Brazil as the world’s next superpower.Also on the Agenda, Dr. Alan Alexandroff, Director of Online Research at the Munk School, gave an interview on the topic of Brazil as a rising leader in global affairs.
  • Henrique Meirelles, the president of Brazil’s Central Bank discusses Brazil’s rise and economic growth on an episode of Tea with The Economist.
  • CBS News discusses Luiz Inacio Lula da Silva’s 8 year presidency and the transformation of Brazil under his leadership in Lula’s Legacy: A Transformed Brazil.
  • Eduardo Bueno, a popular author and commentator on Brazilian culture, tells Steve Kroft of CBS News that Brazil may be in for hard times when President Luiz Inacio da Silva leaves office. Analyst Paulo Sotero of BBC News also discusses the upcoming challenges faced by Dilma Rousseff, Brazil’s first woman president, after her inauguration on 1 January 2011.
  • BBC News has a feature on the 2010 Brazilian Elections with photos, articles, and backgrounders on key issues and figures.