In 2008, the Lula’s Government executed only 22.5% of the budget - Health care got only 7% of its allocation

The speech of President Luiz Inácio Lula da Silva relating the public investments to solve the economic crisis is in flagrant contradiction with the facts. Last year, the government has issued only 22.5% of the budgeted investments. At a total investment budget approved by Congress of BRL 47.6 billion (€ 15.5 billion), only BRL 10.7 billion (€ 3.5 billion) has actually been spent.

The investment budget includes all public works for infrastructure, housing and sanitation facilities for which the federal government is responsible, including the activities of the Programa de Aceleração do Crescimento (PAC = Program for the Acceleration of Growth).

The low level of investment extends even to the social sector. According to the Ministry of Health, only 7% of the investments were implemented. Of a total of BRL 3.9 billion (€ 1.3 billion) in the budget only BRL 276 million (€ 90 million) is spent. The program for hospital and outpatient care of the SUS (National Health Service) for example, for which a financing of BRL 1.7 billion (€ 0.55 billion) was approved, got paid BRL 163 million (€ 53 million = 9.5%). And a credit-line of BRL 324 million (€ 105 million) as a federal share in the construction of sanitation facilities in rural areas, transferred only BRL 3.9 million (€ 1.27 million = 1.3%).

The Ministry of Education realised actually 27.5% of the planned investment. From a budget of BRL 3.7 billion (€ 1.2 billion) BRL 1.03 billion (€ 0.33 billion) was spent.

In important parts of the infrastructure sector, such as the Ministries of Transport, Public Works and Municipalities, which are responsible for roads, housing and sanitation in the country, the executed investments made up only 18.4% and 14.7% respectively.

The Ministry of Urban Development, which is responsible for social housing had a budget of BRL 442 million (€ 143 million) in 2008, only to spend BRL 50.9 million (€ 16.5 million = 11.5%).

The Ministry of Social Development had available for investments BRL 196.5 million (€ 64 million), but used only BRL 101.4 million (€ 33 million), representing 51.6%. This amount represents about 1% of the total expenditure in this sector, which covers also the Program for Family Support (Bolsa Família), which consumes more than BRL 10 billion (€ 3.25 billion) per year.

For investments in tourism, traditional for all countries worldwide an important source of new jobs, the Lula government spent only 3.5% of the 2008 budget. Of the BRL 2.5 billion (€ 0.81 billion) budgeted, BRL 87 million (€ 28 million) was effectively spent.

In contrast to this tendency (or shall we say: intention, which obviously prevails in government circles) not to invest, the Ministry of Defence used 80.5% of the investment budget. Of BRL 4.1 billion (€ 1.33 billion), BRL 3.3 billion (€ 1.07 billion) has been spent.
The Ministry of Foreign Affairs even exceeded the original budget allocated for investment. Foreign Affairs actually invested BRL 40.4 million (€ 13.1 million), while the original budget allowed BRL 38.5 million (€ 12.5 million).

Result: The international financial crisis, the beautiful and sometimes lyrical words used by Lula in his speeches to obfuscate the economic crisis, coupled with the apparent intention of the federal government not to invest in this country, have led to a sharp decrease in the number of jobs in the last two months of last year, in the month of December alone, a loss of 600,000 jobs. This estimate comes from the Minister of Labour, Carlos Lupi, who does not exclude a further reduction of jobs in the first quarter of this year.

Figures are based on data of the Sistema Integrado Informações Financeiras (Siafi) - Integrated System of Financial Information.

cartoon: J. Bosco/O Liberal
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Brazil: The Country of the Future

With Lula 'highly commended' in the world, my last series of posts may have created the impression that I'm negative about Brazil and everything the government Lula does or fails to do. That certainly is not my intention. I am well disposed towards Brazil, where I live, and so it is with a bleeding heart when I see the (often unnecessary) injustice that goes around. What Lula is concerned, I can say that I am indeed very disappointed in what he has implemented during his six years of governing the country.

Almost everything that is achieved is not due to the Lula government, but despite the Lula government. It is the result of an independent continuation of the Plano Real, proposed by the then President Itamar Franco and implemented by his successor and former President Fernando Henrique Cardoso (FHC), and his social politics thereafter. Lula has not fulfilled his socialistic election promises. The economic policy is a continuation of the FHC policy. Social programmes, such as the Bolsa Familia, are based on the policy put in motion by FHC. The growing prosperity of the Brazilian is not due to Lula, but due to the explosive expansion of the private initiative, the discovery of large oil reserves and the (silently admitted) illegal logging of the Amazônia, allowing both livestock and soy and sugar cane production to explosively spread.

Health, Education, Public Safety, Infrastructure, Public Transport are treated like neglected children. Police and Justice fail by all means and the Judiciary is shamelessly 'powerless'. Corruption remains polluting the country unpunished. The with great pomp announced Aceleração do Programa de Crescimento (PAC = Program to Accelerate Growth) is still mainly on the drawing board. The North and Northeast of the country remain backward areas and it looks unlikely that any additional investments will be gained. Senate and Congress are still dominated by a large number of criminals, ah yes, elected by the people. But it can’t be otherwise, as long as the people are accustomed to nothing else than corrupt politicians.

Years ago, the ABN/AMRO bank described Brazil as "the country of the future, and so it will always remain." And it is still so, despite all the progress. The big turning point came during the administration of FHC and Lula has not used his socialistic streak to expand this during his administration. Without a great own vision, he has continued indolently, what was transferred to him by the previous government.
And that disappoints me. I had expected more. The Brazilian people, after so many years of suffering earned to expect more. Take a look at Lula's election promises:

In his inaugural speech in 2002, the word "mudança" (reform, change) took centre stage. "Reform is the key word. This is the main message the Brazilians sent with the elections in October. Because of this, the Brazilian people have elected me as President of the Republic."

And he claimed that all the attention will be given to social action, literally saying: "We should not lose sight that the ultimate goal should be human well-being." After 6 years of government we have unfortunately to observe that safety in the street (robbery and assaults) has reached rock bottom, that education, housing, health care apparently are activities without the necessary glamour, that Brazil can not meet its economic prospects for growth due to a lack of public investments in infra-structure in all corners of the country.

I wish to remain optimistic, and sincerely do not hope that Lula continues to just let Brazil run its course which consequently requires a fierce price to be paid afterwards.
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Lula and the Financial Crisis

Apart from other things, Lula is famous for his blundering utterances in public.

Since the financial crisis in the U.S. started to worsen, president Luiz Inácio Lula da Silva changed his tone.

March 30, 2008: "Bush, my son, solve your crisis."

September 17, 2008: "What crisis? Ask Bush."

September 22, 2008: "Until now, thank God, the crisis has not crossed the Atlantic."

September 29, 2008: "For Brazil, if it comes close, it will be very minimal."

One day later:
September 30, 2008: "The crisis is very serious and so intense that we do not yet know the magnitude of it."

October 4, 2008: "There [in the USA], the crisis is a tsunami. Here, if it reaches us, it will be a marolinha (high wave), not even good enough for surfing."

cartoon: J. Bosco in O Liberal

October 5, 2008: "We want this issue of the crisis presented to Congress."

November 8, 2008 opening the G20 meeting in São Paulo: ”Nobody is safe and all countries will be affected by the crisis.”

During the São Paulo G20-summit (one week before the summit of heads of state in New York), ministers of finance and presidents of the central banks, discussed measures against the financial crisis that began in the United States. The group intended to rally forces to get more influence over the direction of the global economy. In his openings speech, President Luiz Inácio Lula da Silva said that the crisis is serious, requires coordinated actions, and that no country in the world will be spared.
Lula also said that the G7 countries - the United States, France, Italy, Germany, UK, Canada and Japan - no longer are in a position to lead the direction of the world economy solely. He called for more participation by emerging countries arguing that in 2007 these countries accounted for 75% of the growth of the world economy.

’The crisis is global and requires global solutions also. It is time for a pact between governments for the creation of a new global financial architecture.” he said.

For the world press assembled in São Paulo the G20-summit was a nightmare. Due to a failure of the press service, journalists from around the world could not hear Lula’s speech.
While the president gave his speech at the Hilton Hotel, the journalists were confined in a room of the Hyat Hotel, at a short distance of the Hilton, where the meeting took place. All should be watching the speech by Lula via a tv-screen, but the screen did not work.
According to the Ministry of Finance, the transmission system of the NBR failed and the journalists were unable to follow Lula’s speech.
”It is a shame, it is a shame,” shouted the foreign journalists accompanying the meeting of the G20.
Nevertheless the summit was the perfect moment for all who, often only preaching to empty pews, resisted the "neo-liberal" free market economic model highflying in the past few decades. Politicians, economists and social activists want to take advantage of the current financial crisis to bury this model once and for all, together with all forms of speculation.

Since the beginning of the crisis, President Lula gradually changed the tone regarding the crisis in the global financial system and its consequences in Brazil. Apparently the crisis came unexpected, with a huge foreign capital outflow that took both the government and the private sector by surprise. It generated mistrust between banks which stopped lending money.
In a clear change of behaviour, the government and its economic team finally began to realise the seriousness of the problem, that Brazilian companies had with derivatives - bets on the recovery (over-valorisation) of the real - and the over-optimism of President Lula, who came to say that the crisis of Bush would not reach the country.

Some internal contradictions within governments, especially between Central Banks and Economy Ministries, are becoming more acute. In Brazil, the dominance of the monetary authority (the Central Bank) suffered a blow when emergency measures were needed to avoid a greater economic slowdown.

The G20 summit in São Paulo - Minister of Finance Guido Mantega and President Lula

The disagreement between Brazilian Minister of Finance Guido Mantega over the conservative policies of the Central Bank, which advocates high interest rates and an unrestricted floating exchange rate, was already common knowledge. But the crisis and the recommendations of the G20 strengthened Mantega's position. As chairman and spokesman of the meeting, he emphasised the need for anti-recession measures.
The president of the Central Bank, Henrique Meirelles, tried to soft-pedal this approach, underlining instead the concerns over inflation that were also expressed in the meeting’s final communiqué, and the special characteristics of each country.

The G20 summit in São Paulo - president Lula and the CB president Henrique Meirelles

Walking and talking between two fires Lula said that despite the financial crisis Brazil will maintain all works in progress of the Programa de Aceleração de Crescimento (PAC = Program for Accelerated Growth). The president said that the global financial crisis not caught Brazil unprepared and promised that the government will not allow that the country's economic growth will be hampered. "My government and the people have made sacrifices and are now beginning to reap the rewards ... with our expanded home market, which protects us partly of the international crisis," said Lula. "The government will not allow our growth compromised," added the president.

Former President Fernando Henrique Cardoso criticized the way Lula’s government was facing the economic crisis and was ironic, calling Lula a "great economist", in reference to the statements Lula made by calling the crisis a marolinha when coming to Brazil.

“No need to be aggressive with anyone personally, but we have to say that not everything the master is saying, is right, because it is not. We have to say the king is naked here, there, and yonder. Put your clothes on, Mr. President. Do not talk nonsense, Mr. President. Be more consistent with your history. Don’t be as fast in your judgments as the others. Note that a nation is made in the course of generations. Don’t be so pretentious. Be a little more humble,” completed Fernando Henrique Cardoso.

The former president said that people realize when things are not going well.
”I understand that the president have to animate the country. But the country is not silly. The country understands when things change. Things have changed in the world, changed for the worse. It is cyclical? It is momentary? Yeah, but we have to be able to view the future to leave the ruinous situation we are in and don’t continue saying that it is not ruinous. It is ruinous."

But after all nothing really changes. All governments in the world are implementing stimulus programs, not so in Brazil. Apparently the Lula’s statement that all-works-in-progress of the Programa de Aceleração de Crescimento (PAC = Program for Accelerated Growth) will continue is, in Lula’s opinion, sufficient enough alongside the high level interest rates and (disputable) interventions of the Central Bank in the exchange market, selling its stock of dollars to keep the real over-valorised, in favour of the banks, disgracing the products manufacturing segment.

President Lula planting an aroeira tree

sources: UltimoSegundo, O Globo, IPSNews, J. Bosco/O Liberal

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"Bush, meu filho, resolve tua crise" - "Bush, my son, solve your crisis”

During an encounter in Recife(PE) between Brazilian and Mexican businessmen, president Luiz Inácio Lula da Silva said, that an economic crisis in the USA and the preservation of the self-esteem of the Brazilian entrepreneurs are the only two matters of his concern in relation to the Brazilian economy.

Lula confirmed that he had called the president of North-America George W. Bush twice to tell him to get hold of the crisis, consequently his colleague, as Lula had learned, had been a bit irritated by the comments the Brazilian president made.
“I called him and said, Bush, my son, the problem is as follows, we have been 26 years without [economic] grow. Now as we start to grow, you disturb it. Solve your crisis.”

He continued to state that Brazil has the knowledge to solve the bank crisis, referring to Proer, a programme created to recuperate the financial institutions which faced bankruptcy in the nineties of the last century. “When they need it, we will send them [USA] this technology.” Lula said.

Lula concluded his speech speaking about the expansion of the Brazilian-Mexico trade with an explanation of the PAC (Programa de Aceleração do Crescimento = Program to Accelerate the Economic Grow), which stimulates the home market and compared the Bolsa Família (program for financial support to the poor) with the miraculous multiplication of bread, one of the miracles attributed to Jesus Christ.
“The multiplication of the breads, of which Christ spoke, is exactly that.” he confirmed.

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Picture Brazilian Exuberance – A Land of Contrasts

In a special supplement of 20 pages published on 14 March 2008 the British daily The Guardian draws up a balance of Brazil and Rory Carroll the writer of the article “Land of Contrasts” comes to the, as he calls it, “striking conclusion”, that “Brazil, best known for soccer, samba and sensuality, has become a serious economic player.”
Well, let’s start first of all to say, that in Brazil The Guardian is not seen as an estimable journal in regard to reporting about Brazil. So no one was surprised to see the political commentators and columnists rolling one over the other to make this article and his writer laughing stock. And I must say they have a point. Let’s have a look at some of the paragraphs of the article which I combine with the comments of Thomas Traumann, one of the most respected political bloggers in Brazil.

Let’s go back to Rory Carroll’s article in which his first paragraphs already are leading to his “striking conclusion”.
- quote -
Picture Brazilian exuberance and odds and you are not thinking economics. This, after all, is the land of carnival.
But picture this: a country where investment inflows are running at record levels, where exports of everything from soy to biofuels are surging and where the incomes of rich and poor alike are rising and driving a consumer boom.
Not quite as attention-grabbing as a beauty queen wearing just a smile and a feather, granted, but it adds up to a striking conclusion. Brazil, best known for soccer, samba and sensuality, has become a serious economic player.
- unquote – (italics by me, as the original text said: “are”, I corrected it into “and”)

It looks like as if Rory Carroll, The Guardian's Latin America correspondent, before he reported to the The Guardian arrived in Brazil for the first time in his life after just having given credentials to all the funny stories about Brazil which are obviously the only ones printed by the Western press. He is the typical prime example of the Western journalist trying to become popular with dulled stereo-types. Thomas Traumann has to say this about the first paragraphs:
The article begins with the typical “gringo” (bloody foreigner) surprise: The country “best known for soccer, samba and sensuality,” has turned into an economic potency. A fact the British Financial Times and The Economist concluded already more than a year ago. And Rory Carroll continues with another cliché when he reports: “As well as footballers and samba it is exporting cars and planes, notably the executive jets and passenger liners of Embraer.”

After some paragraphs of senseless gossip the article, as could be expected, hits the low life of so many Brazilians:
- quote –
Hike up into the favelas, the notoriously lawless hillside slums, and ........ Rory continues
Gang warfare and police brutality remain embedded here, as does extreme inequality. Some shantytowns, with their legions of street children and shacks of wood and plastic, could pass for the more impoverished parts of sub-Saharan Africa. Except that overhead there are helicopters ferrying the super-rich to shopping appointments with Gucci and Jimmy Choo.
- unquote –
With a little more journalistic digging The Guardian could have known that the shopping centre Daslu, which is the one Rory Carroll refers to, is close to bankruptcy, as Thomas Traumann writes in his column. And Rory Carroll is obviously not aware of the fact that the economy in the favelas is growing at a rhythm only seen in China and India and certainly he did not execute a little bit of research regarding the implementation of the PAC (Programa de Aceleração do Crescimento - A program to accelerate the economic grow) in Rio’s favelas, representing a R$ 1 billion (Euro 400 million) federal investment. The program has infra-structure investments planned in the three largest favelas. The works include broadening and paving the streets, recuperating and installing sanitation installations, building homes, schools, health care stations, and recreation areas. And it is not a farce; the works are in progress at this moment.

Another quote:
In the same vein some western diplomats credit Lula with raising Brazil's prestige but not its influence, partly because he lets Venezuela's Hugo Chavez shout as regional spokesman. A permanent seat on the UN security council is still a dream.
- unquote -
It is true that one of the wishes of Lula is to have seat on the UN Security Council, but not at any price, as he has been pointing out to Condoleeza Rice visiting him a few days ago. Lula is adamant, doesn’t like to pronounce himself as the Latin America leader. His is, and all other Latin American heads of state recognise him as such. But Lula knows that being the head of state of the most powerful nation of Latin America, and not only economically, an outspoken leadership of Brazil might cause turbulence with the neighbours. In the recent conflict between Ecuador and Columbia, it was after all the Brazilian Secretary of State Celso Amorim who brought parties together. Never in the past has a Brazilian president been travelling around so frequently as Lula. But he refuses to implement the Western political attitudes, which require condemnation of Fidel Castro and Hugo Chavez. Lula prefers the silent diplomacy, the leadership appointed by nature, the pragmatic way of confronting problems, the Latin American way, diplomacy with a smile, which the West is not ready to accept or to understand, which sees Brazil still as Charles de Gaulle typified it years ago: “This is not a serious country”.

Rory Carroll’s report for The Guardian is a collection of “gringo” clichés, statements and “old news”, never updated and never infused by local feeling. He might be The Guardian Latin America correspondent but he was never close to the Brazilian daily life.
Although published on March 14, 2008 it seems to have be written quite some time ago, as it states “Lula was enthusiastically voted back into power last year,...” , while the elections were in 2006 and not in 2007.

One statement, Rory Carroll makes at the end of his article, is true, although dulled:
“It used to be said that Brazil was a country with a great future condemned to its eternal contemplation. That future has not arrived, not quite yet, but it is closer now than it has been in generations.”

When you want to read the full article, click: “Land of Contrasts”

When you want to read the daily political blog (in Portuguese) of Thomas Traumann, click here

The Presidential Elections

In the USA an outburst of emotions is going on with a (mainly feminist) part of the populace thinking it about to be time the first female president of the USA enters the White House, whereby obviously qualifications are of minor importance as long as the next president is a woman, while at the other side roughly 50% of the voters are getting fed up with the idea of Hillary Clinton as candidate for president and they are unable to disguise their hatred and abhorrence of the possibility of a (in their opinion) corrupt, power-hungry, merciless and qualitative disastrous Hillary Clinton as first female president of the USA. In front of that in all quietness Brazil is preparing for its presidential elections in 2010, with the odds very high that there will not only be a female presidential candidate, but probably also will she be elected as the first female president of Brazil. A candidate who not only is worthy to hold the office, but with more than sufficient qualifications to make it a success.

Lula is setting his sight on Dilma Rousseff
March 7, visiting Rio de Janeiro President Luiz Inácio Lula da Silva announced the start of the full-scale improvement works in several favelas (shanty towns) of Rio de Janeiro, which works are a part of the PAC (Programa de Aceleração do Crescimento – A program to accelerate the economic grow).


Valdo Cruz, a reporter for the daily Folha de São Paulo states that, although Lula denies, the implementation of the full-scale scheme serves electoral means. Not even Valdo Cruz belittles the crucial importance of the works to be executed, but reminds us that never before the federal government have been projecting works of this size and with this impact.

“To say, that this program has nothing to do with the upcoming elections is not correct. It is evident, that if the program is successfully executed, this will be beneficial to the position of the government in the elections.”
According to the columnist, Lula spoke about Dilma Rousseff (Casa Civil) as the “Mother of the PAC” and exactly this, still according to Valdo Cruz, proves that Rousseff is the candidate for succession. Asked about a possible PT-candidacy for the Presidency of the Republic, Dilma answered that she only is the coordinator of the PAC.

But who is Dilma Rousseff?
Dilma Vana Rousseff Linhares, born 14 Dec 1947 in Belo Horizonte, is economist and politician, allied to the Partido dos Trabalhadores (Labour Party), and actually minister of the Casa Civil (Casa Civil is more and less the Ministry for Internal Affairs, you could say the Home Office, but the minister is also the First Minister, as it is called here: super-minister, second only to the president as in Brazil the president is the top-executive). She studied at the Federal University of Rio Grande do Sul, graduated in theoretical economy and with Unicamp she got her doctorate in monetary and financial economy.
In the 1960’s, during the military dictatorship, she was a member of leftist clandestine organisations and took part in armed actions. From 1970 to 1973 she was a prisoner and was tortured. In 2003 Dilma became Minister of Mining and Energy and since 21 June 2005 she is the Minister of the Casa Civil.
As minister of Mining and Energy she gained a lot of praise after implementing a new energy model. Her model basically concentrated on two goals: decreasing the energy bills for the consumer and securing the expansion of the energy system, to avoid a new energy crisis as seen in 2001.
The execution of the new model is seen as a classic example of her way the minister is functioning. According to professional outsiders Dilma has the quality to listen and to stimulate ideas, keeping the right of decision making to herself.
The recognition of her technical competence does not protect her from clinching with members of parliament, as she consistently refuses to appoint their (traditionally useless) friends in lucrative positions. Representatives as well as party leaders for the PT are irritated with the controlling influence Dilma and her fellow minister Tarso Genro (Justice) have on Lula.

Running off to the presidential elections
It is obvious that Lula is investigating the eligibility of Dilma as his successor in 2010. For Lula it is a thorn in his flesh that no viable and eligible candidate has arisen in a natural way from the party circles and it is unacceptable for him that the presidency might go to the opposition. Although Dilma denies to be seen as a candidate for president, her recent metamorphose is impressive. Generally very reserved and distant, she suddenly starts to be seen at parties, travelling with Lula and meeting the press frequently. She takes part in photo sessions and spends the best part of her time in political meetings.

The public appearance of the minister is the first strategic move of Lula in his battle against a paradox. After all Lula himself enjoys high popularity rates and commands a government which, in spite of numerous scandals, is well rated by the populace, but is lacking a “natural” successor. Without exception all opinion polls point to the candidates of the opposition as being the favourites (Brazil has a multi party system). The president expects, that his popularity if it remains that way till the elections in 2010, will guaranty the second round for any by him appointed or endorsed candidate.
In the most recent polls the name of Dilma Rousseff was included in the list of possible candidates. Dilma received 5,4% of the vote intention, in contrast with José Serra, the candidate for the opposition party PSDB (Serra was Lula’s opponent in the elections of 2002 and 2006 and belongs to the party of former president Fernando Henrique Cardoso). Lula however is convinced that he can catapult the results.

Just yet Dilma holds back. She thinks she is not sufficiently experienced, is not known well enough by the populace and feels she has not the talent to become a political leader. To improve her obscurity Lula decided that Dilma will accompany him on all his travels. Counter attacking the resistance of the party leaders, who refuse to see a legitimate candidate in Dilma, Lula stipulates that between all possible candidates for the PT, Dilma will be the most likely in the elections. And finally, he argues it is the global movement in politics where more and more female leaders step into the front.
That lefts Lula with the largest problem: How to make Dilma smile. Obscurity is something you can overcome by arranging to get visible, that’s easy. A smiling Dilma is a different cookie, as she has to do it herself, nobody can do it for her.
In the most optimistic projections, market researchers and politician agree that any presidential candidate endorsed by Lula will obtain some 25% to 30% of the popular vote, enough to continue the battle in the second round. But that’s not all. “Only Lula's support will not win the elections. The candidate not only needs a good curriculum but needs impressive political self-confidence to get elected.” says Ricardo Guedes, director of market researcher Sensus.