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Brazil confronts chronic housing shortage

March 30th, 2009

A $15 billion social housing programme announced by President Luiz Inácio Lula da Silva last week could hardly have been timelier, given the worldwide economic crisis now biting in Brazil, but the plan faces huge challenges and its future may hinge on the political will of Congress and the next government.

Photo: kathiao, flickr

Photo: kathiao, flickr

The programme aims to build one million homes for families with combined incomes of up to ten times the minimum monthly wage R$465 ($203).

The plan has won praise for its focus on providing hefty subsidies to the poorest households, whose income only stretches as far as three times the monthly minimum and for the fact it gives title to the property to the woman of the household – something that is seen as protecting the family.

“This has become more important in this moment of crisis because it generates jobs and the capacity to provide homes for low income people,” says Dr Lílian Fessler Vaz from the Architecture and Urban Development Department at Rio de Janeiro Federal University.

Much of the money is being stumped up by Brazil’s Treasury with contributions from the FGTS social welfare fund paid by employers and the national development bank (BNDES).

Massive job

Brazil’s National Industry Confederation (CNI) welcomes the move as a step in the right direction but warns the programme will require massive coordination

“Judging by the experience of other projects it’s a very difficult task to fulfil,” CNI Executive Director Jose Augusto Coelho Fernandes says.

The scale of the undertaking was underlined in government figures reported in February, showing that only 11% of projects announced under the government’s growth acceleration programme (PAC) launched two years ago have been completed.

The programme’s aim is to enable Brazil to grow at least 5% a year.

Brazil’s economy grew 5.1% last year, but the government been under pressure to take action, after the economy shrank 3.6% in the last quarter of 2008 versus the previous three months.

Economists and industry organisations are forecasting anywhere from zero growth to a 1.5% contraction in Brazil this year.

The government calculates the programme will add to 2% to Brazil’s Gross Domestic Product (GDP), the sum of all goods and services a country produces.

Meanwhile, fears have been expressed that progress on the homes building programme could be hampered by environmental issues, the ability to synchronize projects with existing urban development plans, as well as complex issues such as subsidies, insurance, guarantees and land ownership.

Questions have also been raised whether construction companies actually can build homes put at R$40,000 ($17,500) for the lowest income groups.

Though not referring directly to the housing programme and writing in the Folha de São Paulo newspaper on Sunday, Roger Agnelli, President of Brazil’s, Vale the world’s biggest producer of iron ore used to make steel said the government has to cut down on bureaucracy to get the economy moving again.

Scrutiny

Brazil’s opposition parties question the timing and motives behind the announcement, insisting Lula is using the programme to try to ensure his preferred candidate and Chief of Staff Dilma Rousseff wins the presidential poll at the end of next year.

Photo: Agencia Brasil

Photo: Agencia Brasil

No deadline has been put on completion of the million houses and Lula (pictured right) concedes it will go beyond the second and final term of his presidency, which has another 21 months to run.

Given the size of the task, by announcing the move now the president must be banking on three things: That his candidate wins the election, the next government either has the political will to continue the programme or will be too afraid to drop it for fear of losing popularity.

Lula will also have to count on cooperation from 26 diverse state governments, municipalities, private companies in the construction sector and perhaps most crucially often self-serving politicians in the country’s capital Brasilia.

One media report suggested in a bid to overcome resistance in Congress, 63% of building work will take place in states where Lula has forged political alliances.

Though the programme has been praised by some in the construction sector as a bold first step,  Brazil still has a long way to go to plug its housing shortage of more than 7 million homes.

Almost 91% of that figure are said to be in the lowest income group.

Economy, News, Politics , ,

Speed dating Brown seeks Brazilian partner for trip abroad

March 26th, 2009

British Prime Minister Gordon Brown shouldn’t have to work too hard to convince Brazilian President Luiz Inácio Lula da Silva of his anti-protectionism message in talks in Brazil this week, ahead of April’s G20 summit.

Gordon Brown: Banging free trade drum Photo: 10 Downing Street, flickr

Gordon Brown: Banging free trade drum Photo: 10 Downing Street, flickr

Brown is investing much time, effort and political capital in hosting next’s month’s summit, and will be encouraged to hear Lula has already been out doing some of his work for him - at least in Washington.

Brazil has already voiced strong opposition to the ‘Buy American’ clause in the U.S. package of measures, aimed at reviving its ailing economy.

The prime minister will also be urging President Lula to back his calls for tighter regulation of the global financial sector to prevent the world getting into the same mess when things pick up.

Brazil hasn’t suffered from the banking crisis to the same extent as some of other the world’s major economies, but even so Brown will see Lula leader of the world’s tenth biggest economy as an important ally at the G20 summit.

But next month Lula may have to avoid getting caught in the crossfire between those in the United States who say the European Union member states are not doing enough to stimulate demand, while Europeans are worried at what they see as a U.S. reluctance to put in place measures to prevent the world sliding back into crisis.

Photo: 10 Downing Street, flickr

Photo: 10 Downing Street, flickr

Rallying cry

By Brown’s side in Brazil will be his Business Secretary Peter Mandelson who will be giving his view on how to solve the global economic crisis to industry leaders in São Paulo on Thursday.

Mandelson, a former EU trade commissioner is likely to echo the rallying cry of Pascal Lamy, Director General of the World Trade Organization  (WTO) for a strong commitment from global leaders to wrap up the stalled Doha round of world trade negotiations that have dragged on for eight years.

Doha aims to boost international commerce by lowering barriers to trade between countries, but despite several attempts to jump-start talks, differences on agricultural subsidies, industrial tariffs and non-tariff barriers, services, and trade remedies have derailed the process.

The biggest bones of contention are between the big beasts of world trade, the European Union and the United States, and major developing countries, such as Brazil, India, China and South Africa.

While Brazil and others want the United States and Europe to tackle the thorny issue of cutting subsidies paid to their farmers, to allow exports to compete on level playing field, wealthier nations want greater access to Brazilian and other countries’ goods and service markets.

It’s not clear who if anyone will give ground to break the deadlock, but the economic crisis has at least added to the sense of urgency to get talks moving again.

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Can ‘president’s woman’ negotiate crisis to snatch election win?

March 23rd, 2009

Lula hand Dilma the presidential seal of approval. Photo Agencia Brasil.

Lula hand Dilma the presidential seal of approval. Photo Agencia Brasil.

Space

If Dilma Rousseff wants to become Brazil’s first female president, she will have to win over her own party and a wary middle-class, whilst deciding when to step out of the shadows of current leader Luiz Inácio Lula da Silva, whose remarkable approval rating has begun to slip, with the effects of the global economic crisis now biting, political commentators say.

With almost two years to go before he steps down, it’s not as if the Brazilian public has given up on Lula, the former shoe-shine boy and union boss, who made it to the top job, after ditching some of his more radical left-wing ideas.

What would most first, never mind second-term leaders give for approval ratings of 65%, after six years in power?

But the question is; with his government’s rating having dropped 5% recently, according to pollster Datafolha, will the shine also start to wear off for those around him, should the crisis deepen?

Helped by a boom in commodities, Brazil posted 5.1% growth in 2008, but lately it seems with almost every bad news item economists have been trimming their growth forecasts.

Since figures were released showing Brazil’s economy shrank 3.6% in the final quarter of 2008 versus the June to September period, the talk has turned to whether there will be any growth at all or indeed a contraction this year.

Two weeks ago, Brazil’s independent central bank cut interest rates by 1.5% to 11.25%, in response to the crisis, with business leaders and opposition politicians urging more drastic action.

Last month’s employment figures in the formal sector look slightly brighter and the government insists 100,00 jobs will be created in March, but reported employment ministry figures show Brazil lost 797,500 jobs from November to January, while a separate CNI/Ibope poll shows 58% of Brazilians think unemployment will get worse in the next six months.

To deflect the blame from himself or his Workers Party (PT), Lula could continue to maintain Brazilians have become victims of a crisis that began outside their own borders, but such a strategy has its limitations, according to political analyst João Augusto Castro Neves at the CAC consultancy in Brasilia.

“When it starts to hit people in the pocket and they start losing jobs, they wont much care where the crisis started,” he says.

Runners & riders

Though there’s no starting pistol to get Brazil’s presidential race officially underway, campaigning will not be far from the news between January and October next year.

Dilma, Lula’s preferred candidate, lines up alongside the other two main early contenders: current frontrunner José Serra who lost to Lula in 2002 and Aécio Neves, both from the same Social Democratic (PSDB) party.

Press reports say all three have been doing their best to be seen, while denying public appearances have anything to do with campaigning.

Photo: Alexandre Silva (fotoca), flickr

Photo: Alexandre Silva (fotoca), flickr

Serra, 67,  (pictured right) a former health minister from 1998 to 2002, whose AIDS programme  offering  universal access to treatment and free condoms was lauded by the United Nations, has also held office as mayor of São Paulo, South America’s largest city with a population of 17 million people.

After two years, Serra stepped down in 2006 to successfully run for governor of São Paulo state, a motor for around half the country’s wealth.

An outspoken critic of the Central Bank’s interest rate policy, he argues rates should have been cut significantly at the outset of the crisis.

Photo: Henrique Ribas, flickr

Neves, 49, (pictured left) now  in his second term as Minas Gerais state governor, has built a reputation by revitalising his state’s finances, through cost-cutting measures and putting the emphasis on reorganisation and modernisation in his administration.

Serious illness struck down his grandfather Tancredo Neves, who died before he could be sworn-in as the first post-military regime president in 1985.

Dilma, 62, a former resistance member, tortured by the military government in the early seventies, helped found the Democratic Labour Party, before jumping ship to Lula’s party a decade ago. He appointed her as energy minister in 2003, before making her his chief-of-staff in 2005.

Most recently, she has managed 11% in national opinion polls, up from 3% a year ago, after being seen increasingly at the president’s side.

The trio may yet be joined by Ciro Gomes (pictured below right), who has stood twice before, in a French-style contest held over two rounds - unless one candidate can deliver a knockout blow by scoring more than 50% at the first attempt.

Photo: Wikimedia

Photo: Wikimedia

Dilma’s Dilemma

Ahead of trying to convince those in Brazil’s middle-classes, who shunned Lula in three previous elections, before finally putting their trust in him in 2002, Dilma has a more pressing target this year, political analyst João Augusto Castro Neves explains.

She must get the 25% of the electorate that would have automatically voted for Lula on her side. Even having Lula’s seal of approval, Dilma could stumble on a lack of recognition and competition from within her own party, he adds.

For Carlos Lopes, political analyst at Brasilia-based Santafé Idéias, the campaign is in its very early stages and the fact Lula’s approval rating is down should make little difference.

“There any many things to do before going out onto the street to shake hands with the public,” he says.

Not least, these include getting to know the quirks and demands of prominent leaders in Brazil’s 26 states , as well as negotiating often awkward political alliances, under the complex proportional representation system used to elect members to Congress and the Senate.

When campaigning does get eventually get serious, Dilma’s rivals will underscore their leadership experience in two of Brazil’s most influential states.

And having never been tested during times of economic adversity, the worse the crisis gets, the more Dilma will have to raise her public profile, political scientist Murillo de Aragão told Epoca magazine.

“Crisis brings doubt. Everyone is going to want to know what her answers are.  Without the crisis, she would already be in the second round,” Aragão says.

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