President Fernando Henrique Cardoso of Brazil has demanded that the US administration offer an apology to Brazil over the remarks made by Treasury Secretary Paul O’Neill, who called Brazilians corrupt.
The remark made at the weekend was that the US would not back any further loans to Brazil because these funds would “end up in Swiss bank accounts”. While it is clear that widespread corruption indeed exists in the Brazilian political class, which stubbornly closes ranks trying to keep out the only politician who will address Brazil’s serious social problems (Lula), it is also true that in the financial and political manoeuvring undertaken to keep Lula out of the Presidential Palace are the roots of Brazil’s current economic crisis.
The financial markets are kept at panic point by investors who believe anything they read in a press which is not interested in printing the whole truth and this is, in Lula’s words, that he will do everything he can not to antagonise the national and international financial markets, promising instead to treat matters in a statesmanlike and responsible manner.
The hysteria, based on the false assumption that there will be a revolution in Brazil should Lula win the October election) nothing could be further from the truth) has seen the Real devalue by 5.39% on Monday and a further 4% on Tuesday, reaching a new low of 3.3 Reais to the USD, the lowest point since the Real was created in 1994.
Investors fear that if the IMF does not concede new loans to Brazil, there could be a default in the payment of its debt servicing, to the amount of 3 thousand million USD. Since January, the Real has devalued by some 50% against the USD and the Euro.
With the government candidate, Jose Serra, falling below the 10% mark in the poll and the second-placed Ciro Gomes making noises about placing difficulties on operations with foreign currency and the current financial crisis the country is in, it would be well for people to remember that Lula is one of the few who is manifestly not responsible for the current situation and maybe one of the few who can put matters right, as he addresses Brazil’s serious structural problems, a policy which can only bring long-term benefits to foreign investors.
Marcia MIRANDA PRAVDA.Ru BRAZIL