Brazil

I’ve been in Rio de Janeiro these last two days. The police presence in this city is impressive, as the city and state government prepare for the Pan American games in a couple of weeks. Police cars are spread throughout the city on all the major roadways and along the beaches. Nevertheless, just yesterday there was a gun fight between the police and the gangs, centered in the favelas located near the international airport. Let’s hope the city can pull off this international event without any real problems.

Last week Mayor Michael Bloomberg traveled to Mexico City, Tepoztlan, and Toluca to view their premier anti-poverty program, named Oportunidades. Bloomberg is launching a similar conditional cash-transfer system in New York, aimed at keeping lower income kids in school by providing aid to their families. In Mexico, this program began under the Zedillo administration in the mid 1990s as Progresa, and was continued and expanded under President Fox (renamed Oportunidades in 2002) and continues now under President Calderon. With proof of school attendance and regular doctor’s visits, families (specifically mothers) receive cash benefits, roughly US$18 a month. This program reaches some 5 million households and an estimated 25 million individuals. In fact, it is now the largest anti-poverty program in Mexico. It has achieved some success, as studies attribute a 5% decline in poverty rates to the program. This type of conditional cash transfer program is popular in other parts of Latin America as well. Brazil’s Bolsa Familia are prominent examples with similar formats. The goal of Oportunidades “ and presumably its offshoot in New York  is not just to alleviate immediate poverty but also to increase the education and health of today’s youngsters and tomorrow’s adults. In the words of development economists, it is to increase human capital, better enabling these individuals and Mexico in general to compete in a globalizing world. But this larger goal will depend on broader reforms to the economy and particularly to Mexico’s education system. While kids may stay in school due to Oportunidades, without educational reform their time will not be used effectively. And, these anti-poverty programs can not solve the underlying and severe economic inequality and limited domestic opportunities for the working and lower classes. This type of anti-poverty program is only a first step. The more important and harder step for Mexico will be to overhaul its education system and to open up its economy, providing real skills and greater opportunities to individuals within the working and lower classes.

CFR’s Jagdish Bhagwati says U.S. must alter its approach to developing nations.

Over the last eighteen months Presidential elections occurred in twelve Latin American countries. While Hugo Chavez and his anti-American tirades grab most of the headlines, these elections actually show the rise of a new Left in Latin America. In contrast to Chavez’s more socialist populism, these new leaders promise to balance market-friendly economics with broader social policies and protections. These new governments have already shown their commitment to free markets. In less than a year, Chile’s President Michelle Bachelet has signed free trade agreements with China, New Zealand, and Singapore, and is negotiating new accords with both Japan and Australia. Alan Garcia of Peru appointed a well-known private banker as Finance minister and vocally supports free trade agreements with the United States, Canada, and many Asian countries. Brazil’s Luiz Ignacio Lula da Silva was re-elected based on his conservative first term economic policies. Tabare Vazquez of Uruguay also continued the orthodox economic choices of the previous government, attracting both Finnish and Spanish foreign investment for Uruguay’s cellulose industry. Even the more rhetorically radical leaders are governing or likely to govern near a pragmatic center. During his first year in office, Bolivian President Evo Morales drew back from his more populist campaign appeals. He cancelled the nationalization of the mining industry, and is now negotiating gas contracts with foreign companies. While peppering campaign speeches with anti-American quips, Nicaragua’s Daniel Ortega left the Sandinista’s economic ideology behind. During his first weeks in office he has already started courting domestic and foreign investment, promising to uphold contracts and maintain open markets. Rafael Correa’s of Ecuador began moderating his promises in the final weeks of the presidential campaign, and even reached out to U.S. ambassador, Linda Jewel. In fact, only Venezuela’s Hugo Chavez, supported by oil revenues - represents a firm holdover from the political past. Yet while rejecting old-style socialism, Latin American voters did turn left. The winning candidates all reached out to the large portions of the population that have not benefited from economic reforms. They promised to improve the social welfare of ordinary citizens. Now in office, they are pushing forward to create jobs, eliminate hunger, and provide better access to education, social security and health care. This shift Left reflects the real needs of Latin America’s populations. While Latin America’s economies have grown in recent years, these benefits have not trickled down. Some 25% of the population still lives in poverty. The difference between the haves and have nots stubbornly remains one of the most pronounced in the world. More positively, this political turn reflects the spread of democracy. As more open and inclusive governments take root, politicians are responding to voter demands. The winning electoral campaigns focused not just on overall economic growth but also on increasing economic opportunities, particularly for the poor. These newly elected leaders now will try to soften the rough edges of globalization while continuing to compete in international markets. This is a difficult balancing act for any leader, and many will not meet the challenge. But as Leftists, they have an opportunity to build a social consensus behind the long-term investments necessary for real change in these countries. To that end, this new Left represents the best chance for strengthening the economies and the democracies of Latin America.

Primeiro Comando da Capital (PCC), a Brazilian prison gang, staged a series of attacks in May that paralyzed the city of Sao Paulo. Subsequent waves of violence have raised concerns about the organization’s expanding influence.

Brazilians go to the polls October 23 to vote in a referendum to ban the sale of guns and ammunition. The referendum—the first of its kind in the world—is aimed at curbing Brazil’s soaring murder and violent crime rates. John Lott, resident scholar at the American Enterprise Institute and author of the book More Guns, Less Crime, suggests a ban would do little to stem gun violence in Brazil. He points to inadequate law enforcement as a greater problem. “If the police aren’t able to go and protect people,” he says, “you might want to consider loosening the laws and making it easier for people to have guns to protect themselves.” Lott spoke with cfr.org’s Eben Kaplan on October 21, 2005.What is the impetus behind Brazil’s gun referendum?Well, Brazil’s been having, for the last couple decades, increasing murder rates and violent crime. It has some of the highest murder rates in the world, and I’m sure there’s a lot of frustration—people want to try to find something to do about it. The government’s been passing numerous gun-control laws over time: Between 1992 and 2002, it passed a total of eighteen gun-control regulations and laws. I think this is just a continuation of the trend. You’ve written that increased gun ownership can lower crime rates. With that in mind, how effective do you think a ban on guns inBrazilwould be?Prior to 2004, you only had about 3.5 percent of Brazilians legally owning guns because they had a registration-licensing system down there. They’ve had that since 1940. The type of people who are able to get guns now tend to be a relatively small and wealthy portion of the population—just to be able to pay the fees and go through the process. So you virtually banned gun ownership anyway—legal gun ownership inBrazil—so you’re going to go from banning it for 96.5 percent [of the population] to around 99 percent. I don’t imagine you’re going to see huge impacts on things like the crime rate. What measures could Brazil pursue to more effectively reduce crime rates?You look at things like the police-response times. For some of the wealthiest areas—urban areas in Brazil—you’re talking about a minimum of a fifteen-minute response time for police. For poor areas in most cities, you’re talking about an hour-plus response time for even the most serious crimes. Arrests and conviction rates are very low in Brazil. I think that has a lot to do with the crime problems there. [With] police response times over an hour for those poor areas, the solution isn’t trying to make sure that anybody in those areas who might still legally have a gun [will] get rid of it. If the police aren’t able to go and protect people, you might want to consider loosening the laws and making it easier for people to have guns to protect themselves. I think allowing those individuals to have guns legally does two things: One, it can deter criminals from attacking to begin with, and the second thing is it’s the safest course of action for people to take when they are confronted by a criminal. There’s research in Brazil that’s pointed to by gun-control advocates, but it’s pretty poorly done. The main thing they are trying to push is the notion that having a gun is more likely to result in a bad situation rather than a beneficial situation. But the data they use only involves crimes where you have a death occurring, and a large portion of gun use is to stop the crime before a bad outcome happens. People who use guns defensively rarely have to fire them. The numbers that are used by the anti-gun-control side there are only looking at part of the problem and missing out on the fact that when you brandish a gun and don’t fire it—which is in the vast majority of cases—the benefits from those actions stopping crimes are not included. Two months ago, polls showed 80 percent of Brazil’s population supporting a ban, now it looks as if it will be a very close vote. Why was there such a shift?I think the vote’s caused people to think a little bit more about the costs and benefits of these types of laws. The normal media discussion on these crimes involves just the bad things that happen with guns. This is true in Brazil; it’s true in theUnited States. I’ve gone through and looked at news coverage of guns on the television networks and newspapers, and in 2001, for example, if you look at all the television news broadcasts by ABC, CBS, and NBC, you’ll see that they had about 190,000-words worth of gun-crime stories that they broadcast during the year. By contrast, they did not have one single story, not one mention of someone using a gun defensively to protect themselves or protect somebody else. I think a lot of that can be explained by what’s newsworthy and what’s not. But it still gives people an impression about the costs and benefits of guns when they only hear about the cost and never hear about stories regarding the benefits. I think it has a big impact on people’s perception. [In Brazil,] the debate’s been joined more and people have at least begun to mention some of the other issues, and I think it’s had some impact on the polls. As you said, there’s been a fairly massive sea change. To be honest, though, I’m surprised that it’s competitive, given how incredibly small a percentage of the population is able to legally own guns. In order to get tight in the polls, a huge percentage of the population that isn’t even legally allowed to own guns [must not] want to take guns away from the tiny percent that still is able to have them. Is there a high level of illegal gun ownership in Brazil?Yes, I think that gets to part of the crux of the problem: Since 1941, even people who are legally registered and licensed to own guns are not allowed to take the gun outside of their residence unless they’re given specific approval by the government to do this. Obviously, a large percentage of gun crimes are taking place outside the residence of the person that owns the gun. They have a big drug-gang problem in Brazil, and one of the problems that’s become clear is when they go and ban guns, drug gangs—just like they’re able to go and bring drugs into the country illegally—are able to bring the weapons they need in order to protect their drug trafficking. They have something very valuable there, drugs that they’re transporting and selling, and there’s a lot at stake for them. [Brazilians] want to protect that, not only from the police, but they want to protect themselves from other gangs. How have international gun-ownership groups like the National Rifle Association responded to this referendum?I assume people at the NRA have had some conversation with their counterparts inBrazil , but I haven’t seen any direct involvement. I haven’t heard of anything like the NRA taking out ads down there. My guess is, on both sides of the issue, people from the United States are talking to people inBrazil. You see a lot of the types of arguments being put forward by both sides—both the gun-control side as well as people who want to emphasize self defense—mirroring a lot of the debate in the United States. Some of the studies by gun-control groups there look extremely similar, down to their flaws and everything else, to studies done by the Brady Campaign or other similar [gun-control] groups in the United States. I assume that’s not by accident.

Kenneth R. Maxwell, the Council on Foreign Relations’ Director of Latin America Studies, says that Luiz Inacio Lula da Silva, Brazil’s left-leaning president who is known as Lula, has surprised friends and foes alike by adopting a conservative economic policy. But opposition to Lula’s market-oriented approach, which he says is aimed at putting Brazil on the path to economic recovery, is growing in his Workers’ Party. Lula, elected in October 2002, is due to meet President Bush in Washington on June 20 to discuss a pending hemispheric free trade agreement. Maxwell says these talks will be crucial. Brazilians must decide, he says, “whether their interests are better served by deepening the relationships within their own neighborhood or going for a high-level deal with the United States.” Maxwell was interviewed by Bernard Gwertzman, consulting editor for cfr.org, on June 12, 2003. Other Interviews Can we first resolve the question of the president’s name? His formal name is Luiz Inacio Lula da Silva, but everyone seems to call him “Lula.” What should we call him? It was a childhood nickname that he later adopted formally. Just Lula? Yes. Since he’s become a public figure, he’s always been known as Lula. Even in government documents that I saw the other day, he was referred to as “President Lula.” Lula is a leftist and a former union leader, so there was concern on Wall Street and elsewhere when he was elected. What’s happened in the last few months? There’s been a remarkable shift in opinion. There was a lot of gloom and doom on Wall Street, and there was a lot of euphoric expectation among the anti-globalization forces. But there’s been a sort of reversal in the last five months. Wall Street is now as happy as it can be, and the anti-globalization people are in a state of shock, because Lula has been very tough, carrying out what people regard as very orthodox economic policies— high budget surpluses, following International Monetary Fund (IMF) guidelines, and so on. What caused the shift? I personally was not surprised, because he entered office facing a very fragile economic situation. Brazil was enormously dependent on the goodwill of external investors, and the outgoing government had left the economy vulnerable, because of the “dollarization” of a large amount of the debt, not only domestic debt but also foreign debt. There was very little room for mistakes. Lula and his party— it wasn’t just Lula who came into power, it was [Brazil’s] first accession to power of a modern labor party, the Workers’ Party, as it’s called in Latin America— realized this was their one chance to succeed. Therefore, they’ve been very cautious in [avoiding] the sort of disaster that many foresaw. I felt that, for the first six or seven months, they were going to follow policies whose content they had very little choice about. That indeed is what has happened. Has his party— which includes former revolutionaries and guerilla fighters— accepted this change, or opposed it? There are very strong voices being heard in opposition because the party has moved considerably toward the center. Tell me about Lula’s party. The Workers’ Party, known by the Portuguese initials, PT, was founded in 1980. It is a grassroots party and an important new factor in Latin America. It works within the political system and not outside it. It’s had a lot of experience in local and state government, but never at the federal level. Like the [United States], Brazil has a federal system in which state governors have a lot of power, and Lula’s party does not have majorities in either house of Congress, so it was inevitable that it would need to negotiate. But the more ideological hardliners on the left, of course, find that very difficult. So yes, there is a lot of unhappiness on the extreme left of his party, which represents about 20 percent of the party base. More serious opposition is likely in the next several months from within the bureaucracy, because one of the critical reforms the government is determined to push through over the next three months deals with the social security pension system, a major part of the enormous deficit that the government faces every year. Beneficiaries are mainly bureaucrats, so it’s going to be a difficult fight, because they also, of course, control the way the government functions. Do most workers in the country have pensions? No. There are millions who are outside the economy completely. The poor workers that are within the economy do get taxed, and have to pay, in effect, for the pensions of these privileged few. It’s going to be quite a battle. But it’s essential that the government get operating deficits under control, and it seems so far determined to do that. This is similar to what’s going on in Europe now, particularly in France, isn’t it? Very similar. If you think the French case is perverse, the Brazilian is even more perverse, so it’s going to be a tough fight. Have there been demonstrations? There was a very big demonstration in Brasilia, Brazil’s capital, on June 11, and Brasilia of course is stuffed full of civil servants. The people who live there have a very high per-capita income compared to the rest of Brazil. What is the quality of life like in Brazil? Is crime rampant in cities like Rio de Janeiro? Crime is a major problem. Many average people I spoke to when I was in Brazil a couple of weeks ago are most worried about crime. The risks of a government like Lula’s not succeeding are very great, because people fear what they call “Colombianization,” that is, the [effects] of narco-money [on the economy and politics], and gangs taking over large chunks of the city, especially the slums. Rio is the classic case of a situation where you have big areas of the city completely out of the government’s control. If a tourist wants to visit the beaches of Rio, does she or he do it at great risk? It’s one of those situations where you hope you’re not in the wrong place at the wrong time. There have been shootings, small grenades thrown at some of the larger tourist hotels, and it’s clearly a sort of warning. It’s not like Beirut in the ’80s, not that scale of violence, but it’s sufficient to give concern. For example, almost every night the main highway from the international airport to the city is closed down because of shoot-outs between the police and the narco-gangs. Some of the big American banks have advised their clients not to use the international airport as a result. It is having a very major economic effect on tourism, which is critical for Rio. Lula attended the early June Group of Eight (G-8) meeting in France, the only Latin leader there. Why was he invited? Lula was the only South American president there; President Vicente Fox of Mexico also attended. This was [French President and G-8 host Jacques] Chirac’s game to some degree, but it also is part of Lula’s game. Lula wants Brazil to be much more present in the debate about global inequalities, and also to be recognized as a major country in the discussion about what we used to call the north-south divide. The fascinating question about Lula is he seems to be playing the game according to the rules, and therefore in some senses he’s more of a challenge than somebody you could dismiss as a third-world lefty. He’s a more serious player than that, and that’s the message he’s taken to the G-8, and that’s the message he’ll bring to Washington when he visits President Bush on June 20. How did this meeting come about? Just before his inauguration on January 1, Lula came to Washington and there was a meeting with Bush. There was a promise that Bush would have a meeting in Brazil in June, a high-level meeting with Cabinet officials from both countries. The Iraq war and everything else put all that off. Even though Bush could not go to Brazil, there was a major item on the agenda that needed to be dealt with urgently: the FTAA [Free Trade Area of the Americas]. Since Brazil and the United States are co-chairmen of these negotiations, it was important for Lula to come to Washington. And it is important also for Bush because this remains his administration’s main policy for the region. Tell me about the free trade agreement Bush is proposing. It goes back to the early 1990s. The idea was to have a free trade area of the Americas similar to expanding the North American Free Trade Agreement (NAFTA) to Mexico. It didn’t go very far in the Clinton years, because President Clinton lost the fast-track negotiating authority [that allows Congress to accept or reject— but not amend— trade agreements negotiated by the White House]. But Bush got fast-track authority back, and the idea moved ahead again. All the leaders at the last Summit of the Americas in Canada [in April 2001] committed themselves to achieving the free trade area by 2005. Now, Brazil has always been very ambiguous about such a free-trade area. It is most competitive in those areas where Bush is most protectionist-minded, steel and agro-business. And Brazil is not sure that it sees huge benefits in opening its market to the United States and not getting any reciprocal benefits. It’s going to be a fairly tough discussion. But if Bush wants a free trade area for the Americas to be comprehensive, then he has to have Brazil, because Brazil is the big elephant…. That is what Lula is coming to find out: whether he thinks Bush is a serious negotiator. And Bush is going to see with Lula if Brazil’s going to come aboard or not. The stakes will be quite high for the free trade negotiations at the Washington meeting. I know Brazil is a self-sufficient country, it makes a lot of computers, for instance. Are the Brazilians competitive on the world market? Could they sell computers in the United States without a big tariff? Yes, and they’re also very competitive, for example, on aircraft. There’s just been a $3 billion deal with JetBlue for Brazilian aircraft. They’re extremely competitive in agro-business, which Bush is very protectionist about. They’re competitive in certain manufacturing sectors. So they have the capacity to be effective exporters and they want to see reciprocity there. Do American companies see Brazil as a big market? Are there high tariffs in Brazil right now? They’re high compared with, say, Chile. The dilemma for Brazil is whether it sees a free trade deal as more important than consolidating a customs union within South America. That’s the debate that’s going on in their mind, whether their interests are better served by deepening the relationships within their own neighborhood or going for a high-level deal with the United States. It’s very much up in the air. A lot of this will be crystallized over the next several weeks, and I think this meeting is actually quite important for that reason. U.S. Latin American policy, politically at least, is so heavily focused on Cuba that it seems to antagonize a lot of other countries in the region. What is Brazil’s reaction to Washington’s Cuba policy? That’s an interesting question, because U.S. policy is clearly completely the captive of its obsession with Cuba, regardless of what Castro does. The reaction to Castro’s recent [political] crackdowns has been extremely negative throughout Latin America and, left alone, I think that negative attitude would manifest itself. For example, in Brazil a very strong, vibrant, and healthy debate has begun within the left— for the first time— about Cuba’s lack of democracy. But when they see Washington so obsessed with that instead of its policy toward the hemisphere as a whole, many Brazilians despair, because they don’t see the United States government having a realistic view of where power lies and what is important to deal with in the region.