The One Country That Might Avoid Recession Is...

Brazil is no stranger to economic crises. In the 1970s and '80s, Latin America's economic giant turned financial mismanagement into an art form. The current global turmoil has not left Brazil unscathed: stock prices, exports and growth are all down. But something interesting is at work this time around, and the best place to see it is in one of Brazil's favelas, the vast urban slums that are desperate even in the best of times. Walk through São Paulo's sprawling Brasilândia, though, and you don't sense the relentless doom and gloom gripping other cities in the world. Take Efigênia Francisca da Silva, who exudes middle-class expectations and remains positive despite the tsunami of bad news. Thanks to a government scheme to encourage entrepreneurs, the once dirt-poor housewife has received some $8,000 in low-interest bank credits in recent years and now owns three shops that sell everything from shampoo to public-transit tickets. "I didn't have a bank account before," says Da Silva, 37, standing beneath graffiti-covered walls and pirated power lines. "I never had a car. I bought a Fiat Palio." Does she fear the global recession will quash her dreams? "I trust Lula. I don't think we'll be hit that hard."

"Lula" is President Luiz Inácio Lula da Silva (no relation to Efigênia), and most Brazilians believe he's the reason their country is surviving the current downturn better than other places. In past crises, Brazil was usually the nation in need of the largest life preserver. If it wasn't drowning under fiscal recklessness, it was being held under by draconian austerity plans. Brazil, the old joke goes, is the country of the future — and always will be. Now, in the middle of the worst global downturn for decades, Brazil could finally be the country of the moment. According to a recent study by the Paris-based Organization for Economic Cooperation & Development (OECD), Brazil may be the only one of 34 major economies that avoids recession in 2009. While the U.S. debates whether to nationalize its crippled banks, Brazil's remain comparatively sound. Oil companies worldwide are slashing investment, but Brazil's state-run Petrobras is going ahead with a four-year, $174 billion expansion plan. "Brazil," Lula boasted to TIME, "is riding the current crisis better than many developed countries."

To be sure, the boom — years of 5% growth and soaring exports — is over. Industrial production has plunged. Even Embraer, the aircraft maker whose jets sell to scores of airlines, and which has become a symbol of Brazil's newfound confidence, recently announced plans to lay off 4,000 employees, almost one-fifth of its workforce. Commodity exports — soybeans, steel — are weak. The main stock market is down 25% since September. But Lula, a former shoe-shine boy who heads the leftist Workers Party (PT), has so far kept the good times from becoming a hellish bust. In Brazil, that's nothing short of miraculous.

There may be another miracle in the making. Because unfettered capitalism is widely blamed for the global meltdown, economists and laborers alike say Brazil has become an example of what Lula likes to call "the financial strategy of the future." By that he means a postideological approach that is equal parts wealth creation for corporations such as Embraer and wealth redistribution for underdogs like Da Silva. All this under the kind of prudent financial regulation that seems to have gone missing in the developed world of late.

Brazil still faces huge challenges; its education system is dysfunctional, its political system squalid, corruption endemic. But consider: 53% of Brazil's 190 million people now occupy the middle class, up from 42% in 2002. This increased social mobility happened at the same time the country's main stock index soared some 480% before last fall's downturn. Lula seems to have cracked Latin America's chronic conundrum: how to expand underachieving economies while reducing epic inequality. In so doing, he's created a model that's "an insurance ticket, not a lottery ticket," says Marcelo Neri, head of the Center for Social Policies in Rio de Janeiro.

All Change

In an interview last fall at the Planalto presidential palace in Brasilia, Lula, 63, told TIME that he wants to "change the world's political and economic geography" before he leaves office in December 2010. It may be futile to stump for a permanent Brazilian seat on the United Nations Security Council, but the developed world's financial shambles has made Lula's campaign to challenge U.S. and European hegemony in global trade talks less quixotic — and enhanced Brazil's leadership role among developing nations. "Capitalism will be a different animal once the turbulence is over," Lula told TIME. "Developing countries will be responsible for a major percentage of world economic growth."

Twenty years ago, when Lula was a firebrand unionist, that sentiment might have been dismissed as dreamy rhetoric. Not today. However the crisis ends, there is widespread agreement that developing economies such as Brazil, China and India will be crucial to ensuring that demand remains buoyant. Lula, too, has changed. These days he's a pragmatist who is as popular inside corporate boardrooms as he is in the favelas. On March 17, he will meet new U.S. President Barack Obama — a fellow moderate liberal who shares Lula's passion for green-energy ventures — in the White House. He will be the first Latin American leader to meet Obama since he took office, a sign, perhaps, that the new U.S. Administration sees Brazil as a key partner in forging a new policy for the Americas.

That too would mark a change. Brazilian officials have long wanted to make a mark outside their neighborhood, but until recently, the world rarely noticed what went on there — unless it involved beaches, soccer or Carnaval. "Brazil always suffered externally because of its internal poverty," says Lula's foreign-policy adviser, Marco Aurelio Garcia. The nation's founding monarchy, which lasted until 1889, insulated the country from the region's 19th century upheavals but also spawned a quasi-feudal class system that led to the inequalities that persist today. In 2000, fewer than 3% of Brazilians still owned more than two-thirds of the arable land, and the divide between the rich southeast and destitute northeast, where Lula was born, was as stark as ever.

Lula's predecessor, Fernando Henrique Cardoso, was the first President to recognize that change was needed. He restored fiscal sanity by slaying hyperinflation, but his attempts at social reform were timid. Lula's victory in 2002 panicked Wall Street and the Brazilian élite. But instead of defaulting on Brazil's foreign debt or busting the budget, as they feared he would, Lula embraced one of the few positive legacies of Brazil's royalist roots: deliberate, negotiated consensus-building. It's a hallmark of Brazil's widely respected diplomatic corps — and it tempered Lula even when he was a metal-workers union boss in the 1970s. Unlike more radical Latin leftists, such as Venezuelan President Hugo Chávez, Lula "was always a negotiator," says union pal and former congressional Deputy Djalma Bom, who recalls Lula telling him to stop reading Lenin 30 years ago. Even rivals like Rubens Ricupero, a former finance minister and Cardoso ally, agree. "The danger with Lula is that he can be rather messianic," says Ricupero. "But he's one of the world's most intelligent politicians."

Read more:

Brazil reflects on Lula's last year.

In his last full year as Brazilian leader President Luiz Inacio Lula da Silva still commands the political stage here, his popularity at levels most other world leaders would envy.

Now a sympathetic portrayal of his early life is showing in cinemas across the country, although not without creating considerable controversy.

Lula, Son of Brazil, tells how the president was born into poverty in the north east of the country, and how like millions of Brazilians his family headed to the more prosperous south in search of a better life.

It ends as his political career begins as a union activist, arrested during the period of Brazil's military dictatorship and only able to attend his mother's funeral under police guard.

Read full story here

Brazilian president to cut deforestation

Luiz Inacio Lula da Silva, the president of Brazil, will offer to reduce the pace of deforestation in the Amazon rainforest by 80% at this year's climate talks in Copenhagen.

Mr Lula said he would make the pledge at the United Nations Climate Change Conference, which is due to take place this December in the Danish capital.

He told listeners of his Coffee with the President weekly radio programme that he foresees making this reduction by 2020 amounting to 4.8 billion fewer tonnes of carbon dioxide emissions.

However, Mr Lula added that with respect to global warming, the responsibility of rich countries is much greater than that of emerging ones.

"We have to draw a line between rich countries, which have a had an industrial policy in place for more than 150 years, and the poor ones which only now are beginning to develop," he said.

The Amazon rainforest is the largest in the world and is the source of one-fifth of all free-flowing fresh water on earth.

According to the WWF, if deforestation continues at its present rate 55 per cent of the Amazon will have disappeared by 2030.

http://www.sidewaysnews.com/environment-nature/brazilian-president-cut-deforestation

Brazil's Lula announces new Amazon protection

Brazilian President Luiz Inacio Lula da Silva, under pressure over his stewardship of the Amazon rainforest, unveiled plans on Thursday to create three protected reserves covering an area the size of the U.S. state of Vermont.

In a speech marking World Environment Day, Lula said the steps aimed at combating a spike in deforestation would take time to work, and foreigners did not have the moral authority to tell Brazil how to manage the world's largest forest.

"It's not easy to discuss the environment, thinking that the mere creation of a law or a decree will solve the problem," he said.

"Sometimes a thing that seems so consensual can take two or three years to materialize because we have to respect institutions."

At least 23 million hectares (89,000 sq miles) of the rainforest are already protected. The new reserves in Para and Amazonas state would expand the area by 2.6 million hectares (10,000 sq miles).

Lula's proposal has to be approved by Congress and could face challenges in the Supreme Court.

The resignation last month of renowned Amazon defender Marina Silva as environment minister raised worries among environmentalists that Lula is siding with farming and industrial interests that want to develop the forest.

The measures were welcomed by Denise Hamu, the head of the World Wildlife Fund in Brazil, who said it was a positive step. Others were more skeptical.

"Is it important? Yes. Is it sufficient? No," said Mario Menezes of Friends of the Earth, adding that the government lacked a systematic approach to protecting the forest.

TOO MUCH CHOPPING

Deforestation of the Amazon is on course to rise after three years of declines, with figures for April released this week showing a startling 1,123 sq km (434 sq miles) of trees lost in the month. The worst months for forest loss are usually in the dry "burning season" around June to September.

About 7,000 sq km (2,700 sq miles) were lost between August and December last year, a sharp annualized increase from a total of 11,224 sq km (4,333 sq miles) in the year from August 2006.

The spike in deforestation rates late last year prompted Lula's government to deploy troops to crack down on illegal logging. New Environment Minister Carlos Minc this week launched an operation to impound cattle grazing on illegally cleared pastures.

But environmentalists say such measures often fail to have much impact due to the sheer vastness of the Amazon agricultural frontier and the strong incentive that higher global food prices have on farmers to clear new land.

Silva's resignation prompted strong criticism of Brazil's environmental policy by foreign environment groups, and Lula has bristled at what he sees as foreign interference.

"We want to share this discussion with everyone because I don't know if this government owns the truth," he said. "But it is important that when someone comes into our house they ask permission to open our fridge."

The government's line is that conservation and development, which includes plans for several large hydroelectric power plants, can go hand in hand.

"Our problem is that we are very far behind in both the conservation initiatives and the development initiatives that we need to undertake," Roberto Mangabeira Unger, minister for strategic affairs, told Reuters.

"But we now have a remarkable opportunity. This is the very first time in Brazilian history that the Amazon lies at the center of national attention," added Unger, who is coordinating the government's strategy to sustainably develop the Amazon.

http://uk.reuters.com/article/environmentNews/idUKN0530387420080605

Amazon belongs to Brazilian people, President Lula says

Brazil's President Luiz Inacio Lula da Silva said on Monday in a national forum here that the Amazon belongs to the Brazilian people.

"The world must understand that the Brazilian Amazon has an owner, and that the owner is the Brazilian people," the president stressed, adding that Brazilians are aware of the need to reduce deforestation, as well as to develop the rainforest region.

These remarks appeared to be in response to some international sources who questioned the country's sovereignty over the region last week.

An article in The New York Times on May 18 expressed concern that the Brazilian government may not have the ability to take care of and preserve the rain forest. Several sectors of Brazilian society, including politicians and the media, slammed that viewpoint.

Also on Monday, Minister Gilmar Mendes, president of the country's Federal Supreme Court, said that Brazil has proven to beable to "manage" the Amazon region without interference from other countries.

"We have the world's tenth largest economy, which proves that we know how to manage Brazil. I think that (the developed countries) do not doubt that," Mendes told the press, following the meeting with the governor of Mato Grosso state, located in the Amazon region.

As to the rumors that foreign investors could acquire more land in the area, Mendes stressed that "the Brazilian government has mechanisms" which can control the acquisition of land by foreigners.

He also promised that the government would obverse the issue "in an appropriate way."

Local newspaper O Globo reported Monday that Swedish entrepreneur Johan Eliasch was under investigation by the Brazilian Intelligence Agency for lobbying other businessmen to buy the entire territory of the Amazon and proposing the land could be purchased for a total of 50 billion U.S. dollars.

The tycoon, who is also a consultant to UK Prime Minister Gordon Brown, also stirred up controversy in Brazil.

The Amazon rainforest, which borders several South American nations and is home to 27 million people out of Brazil's total population of 185 million, is facing the risk of excessive deforestation.

http://news.xinhuanet.com/english/2008-05/27/content_8261537.htm