I n the end, it was anticlimactic. The victory of Mr. Luiz Inacio Lula da Silva, Brazil’s first leftist president, was a foregone conclusion. Now, Mr. Silva, better known as “Lula,” must assemble a government that will calm foreign jitters about his economic policies and priorities as well as mend the ailing Brazilian economy. The first will be considerably easier than the second. Just as important is the impact Mr. Silva’s election could have on prospects for the left throughout Latin America. His victory challenges the reigning paradigm in the region. Eventual success in tackling the problems that Brazil faces could herald yet another transition in regional politics.
After leading the first round of voting earlier this month, Mr. Silva’s win in last weekend’s election was almost assured. The former labor leader claimed 61 percent of the vote, besting the government candidate, Mr. Jose Serra, who won only 39 percent. His win was the largest such margin in Brazilian history. The key issue in the election was the economy. Outgoing President Henrique Cardosa has been an ardent proponent of market forces, one of the wave of similarly inclined leaders who came to power after the collapse of the Soviet Union and the seeming ascendancy of liberal democratic ideas. His administration curbed inflation, but he could not deliver growth.
Brazil’s economy has been stagnant — estimates forecast 1 percent growth this year — while unemployment has topped 8 percent in the cities and continues to edge upward. The currency, the real, has plunged, losing more than 40 percent of its value against the dollar — an especially troubling development given the country’s $260 billion foreign debt. Interest rates have reached 21 percent. Public debt more than doubled during Cardosa’s term in office, jumping from 30 percent of GDP to more than 60 percent.
In a speech after the vote, Mr. Silva said his first priority would be stamping out hunger. About 50 million people — nearly one-third of the population — live in poverty. Ten percent live in “absolute misery,” and Mr. Silva intends to ensure that they are fed and housed. He promised to create a Cabinet-level Social Emergency panel to deal with issues facing the poor.
Those sentiments have alarmed markets and foreign investors who fear that Mr. Silva will lurch to the left in his economic policies. Cognizant of that danger, the president-elect has repeated that he will honor the country’s debt. “The government will honor the government’s contracts and will not loosen control of inflation,” he promised. The initial signs look good: His transition team is headed by a man with close ties to financial markets. And although Mr. Silva does not take office until Jan. 1, President Cardoso has been working with Mr. Silva to ensure the transition is as seamless as possible.
Brazil’s future is important. It is the second-largest economy in the Western Hemisphere, the ninth-largest economy in the world, and it accounts for about 30 percent of the Latin American market. Other left-leaning governments in the region will be rooting for the new president. Venezuela’s President Hugo Chavez said he envisaged his country, Brazil and Cuba working together to fight poverty. Leaders of the three countries oppose the U.S. military presence in the region and the U.S. embargo against Cuba. They also harbor suspicions against the proposed Free Trade Area of the Americas.
Fears that Mr. Silva will now shed his moderate inclinations are misguided. Even Mr. Chavez, who is not known for moderation, concedes that the glory days of “exporting revolution” are long gone. Mr. Silva can, however, offer a third way between the free market ethos of the “Washington Consensus” and the discredited state socialism of Fidel Castro. In his speech to the country, the president-elect called for state-private sector partnerships to jump-start the economy. At a minimum, Mr. Silva’s election is a shot in the arm for the left, a vote of confidence for opponents of market-led reform. If he gets the economy back on track, he could inspire similar-minded leaders elsewhere in the region.
The atmosphere may have changed, but success will be the ultimate determinant of Mr. Silva’s long-term prospects and that of the left in general. He faces considerable obstacles. The president-elect had short coattails. His Workers Party won just three of 27 gubernatorial races, and the opposition controls two of the richest and most powerful states. The party won only 91 seats out of 513 in the lower house of the Parliament. As a result, he will have to compromise and make deals.
Despite the challenges ahead, Mr. Silva’s election should be celebrated for the victory it is. This is the first time a leftist has been elected president in Brazil’s history. This vote was a victory for Mr. Silva, his party and Brazilian democracy.
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