Piling on the pressure (Financial Times)

["Walter Lippmann" <walterlx@xxxxxxxxxxxxx>]

(Lots of vital information placing
the Brazilian election campaign
in a broad inter-continent social,
economic and political context.
I urge you to read this through.

(No matter how much Lula does
moderate his rhetoric, the US
government and the rest of the
rich will not grant him much slack
unless he moves quickly to crush
the very forces which seem set to
bring him into office.

(The multinational banks and
others are already working
overtime to strip the country of
hard currency prior to Sunday's
election. It should be quite the
spectacle to see it played out.)
=========================

Piling on the pressure
By Richard Lapper

Published: October 4 2002 19:20
Last Updated: October 4 2002 19:20
FINANCIAL TIMES



Red flags are flying in a seedy corner of the small
Brazilian city of Itabuna. On a piece of rough ground a few
hundred yards from the Hotel Seduction, activists from
Brazil's militant Sem Terra (landless) movement are making
their own preparations for the increasingly likely prospect
of an election victory by Luiz Inácio Lula da Silva, the
Workers' party leader better known simply as Lula.

Hastily-erected tents made from bamboo and black polythene
sheeting will serve as a temporary home for 400 poor
families being recruited from the city's slums. The camp
will then serve as a base for a radical campaign of land
occupations designed to put pressure on the new government
and - if Lula wins - push him to the left.

Just in Bahia, the north-eastern state of which Itabuna
forms a part, the Sem Terra has this year organised more
than 3,000 families in similar camps, ready to invade idle
private land when the time comes. "We will support Lula but
we have to press him to meet our demands," says Joelson de
Oliveira, a Sem Terra radical who lives on a 900-hectare
cocoa estate seized by the movement nine years ago.

For the past few months, Lula, a charismatic former factory
worker who lost a finger in a work accident in his teens,
has been more preoccupied with winning the presidential
election than with the threat from the left. He has fought
and lost three elections already. Each time he has built up
and then lost an opinion poll lead. But this time the
majority is so big that he could even win in tomorrow's
first round.

José Serra, the government candidate backed by President
Henrique Cardoso, is trailing da Silva by more than 20
percentage points in the polls but still hopes to force a
second round run-off, which would take place at the end of
the month.

Lula retains a radical edge but has promised moderate
policies. Under his direction the Workers' party (PT),
formed 22 years ago by ex- guerrilla fighters, militant
trade unionists and radical Catholic activists, has been
shunted gently towards the centre in a bid to win the
support of many Brazilians fearful of a return to the
hyperinflation and mismanagement of the past.

The PT's leadership is committed to maintaining cautious
spending policies and upholding market-friendly reforms that
were introduced during the 1990s. It has been able to
reassure many local businesses and some international
companies about its intentions. But this moderation could
bring Lula into conflict with more radical supporters who
would like to break with what they call the "neo-liberal"
model. "The model that the elite have been advocating is in
decline," says de Oliveira. "The conjuncture is very
favourable for change."

A victory for Lula would bring radicals such as the Sem
Terra close to power in South America's biggest economy.
So it is significant in itself. But greater influence for
the
group would be part of a broader pattern in the region,
which has seen the growth of grass roots movements opposed
to globalisation and, at least in some cases, tied to the
hard left. Many of the most active protesters - like the
anti-globalisers of Europe and the US - are bitterly hostile
to free trade, international companies, the International
Monetary Fund and the US.

"The anti-globalisation movement has entered Latin America's
domestic politics," says Eduardo Gamarra, a political
science professor at Florida International University in
Miami. Already the continent has one President - Venezuela's
Hugo Chávez - who is sympathetic to the anti-globalisers. Mr
Chávez's political philosophy of Bolivarianism - Latin
American anti-US nationalism inspired by Simon Bolivar, the
19th century liberator of the continent - has inspired his
followers from the Caracas slums. In April they helped
defeat a military coup designed to topple their leader.

This has had something of a domino effect. In June Evo
Morales, a Bolivian coca growers' leader who leads violent
protests against US-backed drugs eradication, narrowly
missed winning the Bolivian presidency. In July violent
protests stopped privatisation plans in Peru and Paraguay.
And in the same month Mexican farmers waving machetes led
violent protests that defeated their government's plans to
build an airport in Mexico City. The campaign was so
successful that protesters now plan to turn their attention
to stopping liberalisation of the electricity industry.

But what explains the increasing influence of
anti-globalisers? And do they offer any alternatives? After
making apparently significant progress in the early to
mid-1990s, over the past five years or so the liberal
economic consensus has become questioned. Repeated financial
crises culminating last December in Argentina's debt default
and subsequent currency devaluation have damaged investor
confidence and cut flows of foreign investment to many
countries. Economies are stagnating. Argentina's gross
domestic product will decline this year by more than 13 per
cent, making its cumulative decline over the past five years
deeper than in the depression of the 1930s.

But even leaving this disaster to one side, Latin America's
GDP on average will grow by only 1 per cent this year, a
rate that is less than the birth rate. In a recent report,
the United Nations Economic Commission for Latin America
(Ecla) projected that by the end of this year Latin
Americans would on average be poorer than they were at the
beginning of 1998. Ecla, which coined the term "the lost
decade" to describe the effect on Latin America of the debt
crisis of the 1980s, says this recent period represents a
"lost half-decade".

Unemployment has been rising, making Latin Americans even
more dependent on the informal economy and criminal
activity. As many as one in two Latin Americans work in the
informal sector, in low productivity activities that are
particularly poorly paid and offer little security. In the
past, the lifestyle of these poorer groups, which often
settled in large shanty towns on the edge of cities,
differed sharply from that of urban workers and middle-class
professionals. But during the past 10 years, the gap between
those in the formal and informal economies has become
blurred. Sharp rises in unemployment have triggered crime
waves and security has deteriorated in many working class
areas to such an extent that some of these are now as
dangerous as the shanty towns. In a survey published last
year, Latinobarómetro, a polling organisation based in
Santiago in Chile, found that four out of five of the people
it interviewed believed crime had "increased a lot" in the
past three years.

Against this background, privatisation has been a bugbear
and it is here that the protests of anti-globalists have had
their greatest resonance. Since the late 1980s, Latin
American governments have raised billions of dollars by
selling state assets to international companies, in the
process modernising a rickety and inefficient industrial
infrastructure. But in the public mind privatisation is
associated with private monopoly and expensive service.
Sell-offs were often tainted by corruption and the new
private services were poorly regulated. A recent study in
Brazil shows that between 1995 and 2001 the prices of
electricity, telephone and water rose by more than double
the 78 per cent increase in general prices.

According to a poll published last month by Latinobarómetro,
only 28 per cent of Latin Americans believe privatisation
benefits society compared with 46 per cent in 1998.
Latinobarómetro says only about 16 per cent of Latin
Americans believe that globalisation is the main cause of
their problems. Yet radical anti-globalisers have found that
campaigns to stop privatisation and other private sector
developments have attracted widespread public support.

A successful campaign two years ago against water
privatisation in the Bolivian city of Cochabamba was so
successful that it has come to be regarded as a model by
anti-globalisation activists and has been widely studied in
their international forums. In Peru, Juan Manuel Guillen,
the local politician who led successful protests against
electricity privatisation in the southern city of Arequipa,
has leapt to national prominence as a result of his
campaign.

None of this has yet translated into a radical alternative
to current economic orthodoxies. Latin Americans may yearn
for a return to the stability of the 1950s and 1960s but the
populist policies of state intervention and protectionism
are widely discredited. In addition, there are few resources
available to expand employment in the government sector.
Much of the continent's postwar expansion was based on a
combination of high commodity prices, US economic support
related to the cold war and, at times at least, more readily
available international finance. Today, international
conditions are harsher. Technological change is depressing
commodity prices. Investors and banks have been burned by
repeated financial crises and the US administration is
preoccupied by its war on terror. Even in Venezuela, which
enjoys the benefit of high oil prices and revenues, Mr
Chávez has stopped short of implementing promised radical
land and other economic reforms, and has sought to maintain
monetary and fiscal stability.

Indeed, Latin America's new anti-globalisers admit that they
have no immediate alternative. Cuba's socialism has survived
the collapse of the Soviet Union. But many anti-globalists
are honest enough to realise that its technologically
backwards and depressed economy hardly offers a realistic
option for South America. At recent meetings of the World
Social Forum, a gathering of anti-globalists from the north
and south, held for the past two years in Porto Alegre in
southern Brazil, much of the emphasis has been on
small-scale solutions.

Porto Alegre has been successfully and efficiently managed
by the PT for more than a decade. Itabuna too is a PT town.
Small-scale agriculture offers some hope. Fifty miles south
of Itabuna, de Oliveira's "Land View" co-operative appears
an idyllic socialist village. With its school buildings
adorned with a mural of Che Guevara and its neat rows of
houses painted in Sem Terra colours of white, green and red,
Land View is home to about 100 families, who farm fish and
cultivate organic bananas, cocoa and coffee.

De Oliveira recognises, though, that it cannot exist in a
vacuum. He talks wistfully about more education spending,
the potential of trade links with China and Africa, and the
need to show that another kind of globalisation is possible.
In the end, of course, Latin American anti-globalisers are
by definition clearer about what they are against than what
they support.

Not surprisingly, their main effect on Latin America's
prospects could be negative. Their preparedness to take
direct - and sometimes violent - action is making many Latin
American countries more risky for foreign investors. In Peru
and Bolivia, activists have blown up foreign-owned gas
pipelines and blocked railways. Winston Moore, who advises
foreign companies, says that in these two countries and in
northern Chile opposition groups have a strong racial and
ethnic identity, stemming from centuries of marginalisation
and oppression of the rural Indian population. "I think
there is a risk in Bolivia of the left saying we are
self-sufficient; we don't want the rest of the world," says
Mr Moore.

In Brazil there seems little chance the Sem Terra and other
radical PT supporters would push that far. Even so, their
pressure could alter the climate for investment. Brazil has
already fallen down the list of the most attractive
destinations for foreign investors as a result of
instability, with the resulting pressures aggravating its
already difficult finances. A wave of land occupations,
strikes and other violent direct action would depress
interest further and increase pressure on any government.

Lula believes that if elected he can use his renowned trades
union negotiating skills to find a way through. But, if
activists like de Oliveira are any guide, he has some tough
opposition within his own ranks. Foreign investors were
warned very starkly of the risks they were running recently
by Joao Pedro Stedile, one of Sem Terra's main ideologues.
"Don't come to Brazil, because you are going to lose money.
Sooner or later we are going to recover national
sovereignty."







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