Latin America’s Leftist Quandary

As expected, though by a much smaller margin than foreseen, Fernando Henrique Cardoso was reelected president of Brazil on Sunday.

Also as expected, his country will receive a package of support in the vicinity of $30 billion from the international financial community, though the difficulties in assembling the package are also somewhat greater than forecast. Finally, also as expected, Cardoso will have to begin his second four-year term with a draconian austerity program, though resistance in the National Congress and states will doubtless be stronger than anticipated.

The austerity program will further worsen unemployment, recession, astronomical interest rates and inequality in a nation trapped in a self-induced economic downturn since last October. A moderate devaluation of the currency is probably also in store.

So what lessons can be drawn from these predicted results?

First, and perhaps most important, Cardoso’s reelection entailed a heavy cost for Brazil, although one that it might have been forced to pay anyway. More than $30 billion of reserves were spent during the past two months in order to prevent a devaluation that would have in all likelihood doomed Cardoso’s bid for another term. Millions of Brazilians were laid off when the onset of the Asian crisis forced the government to cut spending, raise interest rates and cool down the economy in order to bolster the currency. Interest rates have remained at stratospheric levels since last October, held there lest Brazil lose the tens of billions of dollars it sought to bolster its exchange rate. The two most important costs incurred by Brazil, then, might have been avoided had a change of government occurred. A different administration might have given up the frozen exchange rate once inflation had been brought under control and discouraged speculative capital from entering the country through controls and taxes. A new regime might also have committed itself to a much greater effort to reduce inequality, attain high growth rates and create millions of stable, decent paying jobs--the heart of an alternative to Cardoso’s reelection.

Which points directly to the second lesson: The Brazilian left, led for the third time in 10 years by former metalworker Luis Inacio “Lula” da Silva, must answer a number of tough questions that it has avoided for more than a decade.

The key question in Brazil--as in Mexico, Chile, El Salvador and Argentina, all countries where a strong left will be contending for the presidency between now and 2000--is whether the left should contend alone, without compromising its positions, even if that would mean defeat, or should support centrist candidates and programs able to win but which are inevitably less committed to social change?

In Brazil, the left wing of Lula’s Workers’ Party almost forced him the be the party’s standard bearer for the third time in order to ensure that it would not have to support a more centrist (and more publicly appealing) candidate, Ciro Gomes, a former governor and finance minister. In the end, the Workers’ Party machinery refused to risk a reduced presence in the National Congress and state houses of Brazil in exchange for a real chance at the presidency and forced Lula to run, largely against his will. The result was the reelection of an incumbent who could have been beaten, though Lula actually did substantially better than last-minute polls suggested.

There is a case to be made for standing on principle and losing. But in a region where the left has been banned from power for years, while at the same time remaining on target in so many of its analyses and criticisms of the status quo, there is probably a better case to made for compromise and victory. The Argentine and Chilean left seem to have reached this conclusion; the Salvadoran and Mexican left, not quite yet. The Brazilian precedent could serve as an example to them all.