Lula Watch: Focusing on Latin America’s New “Axis of Evil” – Vol. I – No. 13

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Over the last month and a half, the government of President Luiz Inácio Lula da Silva has suffered from declining credibility. Polls show its public approval rating down by nearly 20%.

This is especially due to the government’s unequivocal association with “social movements” like the Pastoral Commission on the Land (CPT) and the Movement of Landless Rural Workers (MST) which have openly disregarded the right of private property by invading and occupying rural and urban properties.

Accompanying this considerable drop in approval is a feeling of insecurity and instability in the business community, particularly among investors.

The government’s strong neo-statist tendencies and its failure to honor public service contracts have served to heighten this insecurity, which has frayed confidence in the Lula administration among executives of the nation’s major financial institutions.

To avoid a worsening political crisis, President Lula had to cancel a ten-day visit to Africa heralded as one of his most important foreign policy initiatives. Those responsible for his political marketing have since started a strong media campaign to restore confidence.

The note of ambiguity of the Lula da Silva government becomes stronger by the day. Lula’s image-makers try to reinforce his appearance as a moderate. He now says he has never accepted the “leftist” label (in an open and inexplicable denial of his political past). Meanwhile, his government is pushing forward strongly socialistic bills.

Tax reform is the government’s most recent and controversial legislative proposal. Some of the country’s main tax specialists have labeled the new plan as a Marxist-inspired socialist reform that will de-structure the economy and change the capitalist system.

1. Supporting conflict in cities and farms
Over the last few months, there has been a spike in the activities of the so-called people’s movements, which now call themselves “social movements.” All these movements are inspired by Liberation Theology and have always been linked with Lula’s Workers’ Party (PT). They include the Pastoral Commission on the Land (CPT), The Landless Workers Movement (MST) and the Homeless Workers Movement (MTST).

These movements are involved in a wave of violence which includes invading farms and city properties, looting freight from commercial trucks, blockading highways and charging “tolls,” vandalizing public and private property, and hostage taking.

Public concern over this violence grew when Lula fraternized with MST leaders and even donned the cap of their movement, a symbolic gesture seen by many as his endorsement of the MST’s revolutionary ideals and methods.

While these “social movements” violate the law, government leaders issue “strong” statements that the administration will not tolerate disrespect for the law. Such affirmations are but mere rhetoric, since they invariably fail to translate into concrete measures to maintain order. Almost daily criticism from the most varied sectors of society appears in the press about government leniency with such movements.

In an important editorial titled “The MST Declaration of War,” the newspaper O Estado de S. Paulo said the MST, rather than the government, is calling the shots.

Governor Jarbas Vasconcelos, from the State of Pernambuco, one of the states most disturbed by property invasions, warned the government that it must limit the action of mobs to avoid “a breakdown of public order resulting in generalized anarchy” (“Para Rodrigues, tensão prejudica safra,” Jornal do Brasil, 8/12/2003).

Justice Minister Márcio Thomaz Bastos aroused public indignation when he spoke in favor of a “tactical tolerance” toward the illegal actions of the “social movements” and affirmed that government complacency with invasions of private lands is part of the democratic game.

For his part, Attorney General Cláudio Fonteles, closely linked to the Catholic left and recently appointed by Lula at the request of the National Conference of Brazilian Bishops (CNBB), also ruffled feathers when he repeatedly defended land invasion under certain circumstances.

The problem is further compounded by the unrelenting statements of Land Reform Minister Miguel Rossetto supporting MST and its influence in federal agencies such as the National Institute for Colonization and Land Reform (INCRA).

Concomitant with the wave of disorders and statements from government officials calling for tolerance with lawlessness, the Lula government introduced a high-priority bill in the House of Deputies that calls for radical gun-control for the honest civilian population. If approved, this law would gravely curb the exercise of legitimate self-defense and hamper the action of victimized farmers defending their property against squatters. Curiously enough, the proposed bill was written by a PT deputy, Luiz Eduardo Greenhalg, a defense attorney for many of MST’s invasion activists.

2. PT Close links with “Social Movements” – the R Plan
The newspaper O Globo published an analysis of the close links between President Lula da Silva’s party (PT) and the “social movements.” According to the paper, the PT allots huge chunks of its budget to foster such movements, as it becomes ever closer to them. PT’s National Secretary of Mobilization, Francisco Campos, claims more than 90% of these groups are headed by PT members.

The intimate collaboration between “social movements” (particularly the MST) with the PT government, and vice versa, has led to one of the most important and grave denunciations ever to be published by the press.

In an article in the newspaper O Estado de São Paulo titled “O Plano R” [The R Plan], Denis Lerrer Rosenfield, professor at the Federal University of Rio Grande do Sul and a former PT member, shows that a concerted plan is being implemented by the PT government and MST, the leading “social movement.”

According to Mr. Rosenfield, the tandem tactic is nothing new, as it was used by communist parties in many countries to seize power.

He affirms that Lula would never have won the elections if he had shown an intention to subvert democracy.

However, once the elections were over, the government began to show the profound affinities between the president in power (and his party) and the MST.

“It seems, however, that we have now entered a new phase in this process, in which MST no longer needs to play the election games of distancing itself from the government while acting in concert with it. The distancing, albeit cosmetic, is manifested by disobedience to democratic rules. We have seen an increase in ‘pre-revolutionary’ actions that grow in intensity and pick different targets. . . .

The working in concert with the PT takes place through tolerance – rather than encouragement – of these revolutionary actions” (7/28/2003).

The Lula da Silva government thus deepens yet more the profound ambiguity that has characterized it from the beginning: while repeatedly affirming it no longer adheres to many theories and practices of the left, its ideology and praxis remain basically unaltered.

In an interview given in Caracas alongside Hugo Chavez, Lula went to the point of saying that he never liked to be labeled as a leftist.

Many commentators took that statement with a rather large grain of salt. They pointed out that Lula and Chavez – old buddies of Fidel Castro – actually are the left in South America, as they try to create an alternative to the so-called neoconservative model.

An editorial in the Folha de S. Paulo noted that Lula has had a leftist career influenced by the kind of politicized Catholicism that strongly marked the PT – a clear allusion to Liberation Theology, so influential in Lula’s career and in the present administration.

3. Economic Insecurity
Until now, the economy was one of the Lula’s greatest trump cards.

Before his rise to power, many feared that, consistent with his leftist leanings, he would cause the economy to collapse by 1) disregarding the country’s obligations and international contracts and 2) collectivizing the means of production.

This did not happen because the economic team led by Finance Minister Antonio Palocci took austere monetary and fiscal measures and respected international agreements.

Thus, in its first few months, the Brazilian government – and particularly Lula – gained some credibility nationally and especially internationally which helped restore a climate of confidence indispensable to make its platform viable. Many pointed to this economic policy as “proof” that Lula had really broken away from socialistic ideals like that of favoring state control and curbing and finally eliminating private property and free enterprise.

Behind the “armor” of this credibility, the Lula da Silva administration gradually introduced a climate of ambiguity. An important economic and political commentator says ambiguity has been a distinctive mark of this administration.

On the one hand, the government speaks in a moderate tone and maintains certain economic and fiscal goals; on the other hand, it shows unequivocal complacency with leftist groups and their revolutionary actions that frontally collide with and violate private property.

Furthermore, for clearly ideological reasons, President Lula da Silva and several of his ministers are carrying out a campaign to demoralize and finally destroy regulatory agencies and call into question the established rules and contracts for providing public services and utilities.

Finally, specialists note that the Lula government is manifesting a clearly statist tendency by declaring that the cycle of privatization is now closed and by expressing a desire to increase public investment and state control of private investors.

All these factors have brought insecurity back to the economic arena and explain why executives of major financial institutions have only a tenuous confidence in the Lula administration.

Several economic analysts have commented on these new developments in long articles, showing how all these elements are gradually creating a climate unfavorable to investment.

Former Central Bank president Gustavo Loyola reiterated this point saying that to dispel the established pessimism the government must “repudiate the attacks on the right of private property perpetrated by the landless and the homeless” (“’Pessimismo pode ser revertido, mas não será fácil,’” diz Loyola,” O Estado de S. Paulo, 8/5/2003).

Important farm leaders and the Minister of Agriculture himself, Roberto Rodrigues, warned that the tension created by land invasions will have a negative impact on the country’s agricultural production in the medium and long run and drive away investors in agribusiness, by far Brazil’s most successful exporting sector.

In an article in the newspaper O Globo, the respected economic analyst, Miriam Leitão, summarized very well these concerns:

“Foreign investors and Brazilian corporate leaders are leery about the stability of the rules, fear neo-statism and believe there is a high risk that the Lula government will encourage social conflict in Brazil” (“Duas partes,” 8/17/2003).

4. Surveys: ratings drop
The above-mentioned destabilizing factors are reflected in a drop in the Lula da Silva administration’s approval ratings. One pollster notes:

“After six months showing approval levels above 80%, in August President Lula began to notice the first signs of voter dissatisfaction with his policies, mainly because of the Social Security reform and conflicts in rural areas. A Brasmarket/Estado survey carried out between [August] 8 and 16 reports that optimism and good expectations about the government fell from 84.3% in June to 58.9% — or more than 24 million people who no longer have, in regard to the president and his team, the same optimism of the first months in government” (Gabriel Manzano Filho, “No sétimo mês, incerteza desafia a esperança,” O Estado de S. Paulo, 8/24/2003).

Furthermore, the number of people expressing dissatisfaction or doubts in relation to President Lula increased threefold from 7.2% to 20.2%.

Note also that, according to a CNT/Census poll, 73.7% of the interviewed opposed land invasions and 56.1% deemed inadequate the attitude of the Lula da Silva government in relation to the said invasions.

5. A Socialist Tax Reform
Due to an extremely complex tax system and an exceedingly high tax burden, tax reform has long been an issue in Brazil.

National and international financial consultants see tax reform as an indispensable condition to free the Brazilian economy from certain obstacles that seriously hinder its natural growth. It would further prove government resolve to control public expenditures and the size of the state bureaucracy. The Lula government announced that it would carry out tax reform.

However, the country was surprised by a clearly socialist and confiscatory tax reform proposal. Instead of relieving the already high tax burden, the PT-proposed bill allows for an actual increase in taxes, including a draconian “death tax” on inheritance that leaves loopholes permitting the state to tax even the inherited means of production.

The tax reform bill is ideologically conceived to “de-structure and even modify the capitalist system,” says Ives Gandra da Silva Martins and António Carlos Rodrigues do Amaral, regarded as two of the nation’s foremost tax specialists.

They claim the real intention is to institute a new economic model in Brazil and destroy free enterprise:

“To Amaral, the intention is so clear as to dispense any interpretation. ‘This increased tax burden on inheritance, so that the State can distribute riches, is the already failed socialist model, but it seems that the government wants to resurrect it.’” …

“For this reason, Amaral believes that the report [presenting the tax reform bill] is “totally ideological” and contradictory with Lula’s promises up until now. ‘This was not the platform that won the election,’ the tax specialist recalled (Silvio Bressan, “Tributaristas temem desestruturação da economia,” O Estado de S. Paulo, 8/25/2003).

In an article in Jornal da Tarde titled “Uma reforma socialista” [“A Socialist Reform”], Ives Gandra da Silva Martins affirms that the government’s proposed bill displays “important Marxist bias” by transferring to the State resources legitimately held by citizens and by taking resources from the private sector to maintain the ‘untouchable and sclerotic machinery of the public administration in the three spheres of the State’:

“Since the government counts on the lack of organization in society to oppose this goal – which does not correspond to the platform presented by the candidate they elected – and is indisputably prejudiced against those who have resources to the point of wishing to further increase the tax burden – there is no doubt that we are on the way to a socialist state in which all riches will belong to the government, which will tolerate the private sector to hold on to a little something temporarily” (8/27/2003).

From the political opposition to the business community, there is growing displeasure with the government’s proposed legislation. PFL, the main opposition party, has launched a document declaring open war on tax reform.

Several congressmen of the Workers Party or government-allied parties, and even Minister Palocci himself, have attempted to refute the analyses pointing to an increase in the tax burden. They have been unable to convince the public.

Thus, the Lula government is crushing private property in pincer-like fashion: on the one hand, it increases taxes on urban and farm properties and on production, as a legal means to substantially affect such properties and gradually collectivize the means of production. And on the other hand, they resolutely temporize with and cover up illegal and violent attacks against the same properties, carried out by “social movements,” the majority of which are led by the PT itself.


That concludes this issue of LulaWatch. Until next time,

Sincerely yours,

C. Preston Noell III

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