Time magazine has just named President Luiz Inacio Lula da Silva the world's most influential leader. Barack Obama is ranked fourth. Prime Minister Manmohan Singh is 19th (there are only four heads of state or government in the
Time magazine has just named President Luiz Inacio Lula da Silva the world's most influential leader. Barack Obama is ranked fourth. Prime Minister Manmohan Singh is 19th (there are only four heads of state or government in the list). This is an exercise somewhat different from the traditional “Person of the Year” selection Time engages in each December, but highly revealing nonetheless. It is defined as “not about the influence of power, but about the power of influence.” Time has never selected a Latin American leader as person of the year. In India, Mahatma Gandhi made it in 1930.
Brazil, once known as “the country of the future” that would always remain as such, has come a long way. That this should happen at the close of the eight-year presidency of the leader of the Brazilian Workers party (the PT, Partido dos Trabalhadores), whose very election prospects in 2002 led to a run on the real, the Brazilian currency, and BOVESPA, the Sao Paulo stock market, is striking.
What is the secret of Lula and Brazil's success? How come a country best known until 20 years ago for its runaway inflation and rollercoaster economy has made it its present condition an investors' darling, that applies highly effective social policies, and that has positioned itself as a veto player in international affairs, one without whose acquiescence no major global initiative is viable?
With a land mass of some 8.5 million square kilometres, the world's fifth largest, comparable to the continental United States, Brazil is more a continent than country. With a population of 190 million, and growing fast, it is not quite in the same league as China and India (which is why some people said there were “only two BRICs in the wall”), but is still the fifth most populated country. More than one out of three Latin Americans is Brazilian. With a GDP approaching $2 trillion, it is the eighth largest economy.
Yet, Brazil's size has been immense ever since its independence in the 19th century, whereas its rise to the frontlines of international affairs has taken place only in the past 20 years. Why?
The answer is simple: presidential leadership. Most would be hard-pressed to name a Brazilian president from the 1960s to the 1990s. For 20 years the country was run by obscure generals, and in 1985, with the return of democracy, by lacklustre civilians, who did little to combat the runaway inflation and the deep imbalances in one of the most unequal societies in the world.
Lula has done a remarkable job, but he stands on the shoulders of his predecessor, Fernando Henrique Cardoso (1994-2002). It was as the improbable Minister for Finance of President Itamar Franco in 1993 that Cardoso, a sociologist, made his mark. He was the author of the Plan Real that brought inflation under control, and launched him all the way to Planalto, the presidential palace in Brasilia. Much like 1991 was a turnaround year in India, when under Finance Minister Manmohan Singh the country started to liberalise and open up its economy, 1993 was such a year in Brazil, and it has never looked back.
Cardoso realised that Brazil needed not just to stabilise its currency but also to open up and deregulate its economy, stifled by decades of rampant protectionism. He privatised state enterprises, opened the doors for FDI and pushed business into export markets. Whereas in 1990 foreign trade reached 11 per cent of the GDP, it is now at 24 per cent. Whereas until 1990 Brazil attracted less than $1 billion a year in FDI, today it is, after China, the country in the developing world that attracts the most, reaching as much as $40 billion a year in recent times.
By stabilising the polity and the economy (Brazil had four presidents from 1985 to 1994), Cardoso in his eight years did much to clear the underbrush for Lula. And despite all the criticism Lula had voiced from the opposition against Cardoso's alleged “neoliberal” policies, once he took office in January 2003, he realised that only orthodox economic policies would keep the ghost of inflation away. Lula appointed a conservative banker, Henrique Meirelles, head of the Central Bank, and briefed him to keep his eye on the inflation ball. As The Economist has pointed out, for a country whose average yearly inflation in the early 1990s reached 700 per cent, to have in 2006 a growth rate that was, for the first time, higher than the inflation rate was quite a feat.
Lula, a former metal worker who lost one of his fingers on the factory floor, also came up with an imaginative social policy, the Bolsa de Familia. It transfers cash income to some 11 million families, who have to meet certain conditions (including school attendance of children, and monthly visits to government agencies), and has diminished Brazil's income inequality.
As a man who cut his political teeth in the trade union movement, Lula knows all about “win-win” negotiations. He has also a remarkable ab