BRAZIL: Lula Names Businessmen, Veteran Int’l Banker to Cabinet

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Dec 14 2002 (IPS) - The team of Brazil’s president-elect Luiz Inacio Lula da Silva will include a former chief executive of a U.S. bank as the head of the Central Bank, and prominent businessmen in two key cabinet posts.

Lula, who takes office Jan 1, announced Friday that his minister of development, industry and trade will be Luiz Fernando Furlán, chief executive of Brazil’s leading food company, Sadía.

He also reported that the agriculture ministry will be in the hands of Roberto Rodrigues, the president of the Brazilian Agribusiness Association.

Furlán and Rodrigues are business executives who have no ties to Lula’s leftist Workers’ Party (PT) or the trade unions and other groups that backed his candidacy and helped carry the former steelworker to a landslide victory in October.

Both cabinet appointments were welcomed by the business community, which in the past few years has criticised President Fernando Henrique Cardoso for putting priority on the financial sector, and now hopes Lula will emphasise support for production.

But the big surprise was Lula’s announcement Thursday that the new president of Brazil’s Central Bank would be Henrique Meirelles, the former president of global banking at the FleetBoston Financial Corp — a U.S. institution known as BankBoston in Latin America.

Sectors on the left expressed perplexity or indignation over Meirelles’ appointment, which will put Brazil’s monetary policy in the hands of a banker who “has been at the service of financial capital” throughout his career, in the words of PT Senator Heloisa Helena.

After he retired from FleetBoston in August, Meirelles was elected to the lower house of Congress in October as a candidate for Cardoso’s Brazilian Social Democracy Party (PSDB).

Meirelles will have to give up his seat in Congress and quit the PSDB, which announced that it would be in the opposition as of Jan 1.

Although investors have been anxiously waiting since October to find out who would help steer Latin America’s biggest economy, the local currency, the real, initially weakened against the dollar after the announcement, before rallying slightly Friday, and closing at 3.73 to the dollar.

International market analysts say that while Meirelles was an outstanding retail bank executive, he lacks experience in capital markets. They also point out that he is an engineer with a graduate degree in business administration, and lacks training in economics.

He will have his work cut out for him, with the challenge of helping to pull Brazil out of a severe financial crisis in which the real has lost nearly 40 percent of its value this year.

After his appointment is approved by the Senate next week, he will have to set up a solid team of experienced technocrats to help run the Central Bank, in order to finally calm the market jitters, say analysts.

But Meirelles could transform and expand the role of the Central Bank, said Luis Nassif, a columnist with the Folha de Sao Paulo daily newspaper.

While the incoming Central Bank president is neither a technocrat nor an expert in macroeconomy, he is a strategist, and his international prestige will be vital to shoring up confidence and ensuring continued access to credit from the international lending institutions, said Nassif.

His designation will put an end to the succession of technocrats and economists with graduate degrees from leading U.S. universities who have run the Central Bank in the past few years. From that point of view, Lula’s pledge to name someone with “social sensibility” to the post will be partly fulfilled, according to some local political analysts.

Meirelles’ experience in FleetBoston, which has given him strong contacts with the world’s top bankers, will make him a vital negotiator with foreign creditors and sources of potential new loans.

The lack of experience in international negotiations of the incoming finance minister, Antonio Palocci, a moderate PT leader, will likely expand Meirelles’ role on that front.

Palocci, a doctor and former mayor of Ribeirao Preto, a large, wealthy city in the state of Sao Paulo, has coordinated Lula’s proposed government programme.

The names of other future ministers announced by Lula brought no surprises. José Dirceu de Oliveira y Silva, a parliamentarian who has presided over the PT since 1995, will be the head of the civil cabinet — the government’s political coordinator, who is responsible for relations with parliament.

Marina Silva, the future environment minister, was a “natural choice, as she enjoys the consensus support of all of the environmentalists in the PT,” Carlos Minc, a PT state deputy in Rio de Janeiro who is active in ecological questions, told IPS.

The foreign minister will be Celso Amorim, a prominent career diplomat known for his “progressive” ideas who already held the post in 1993 and 1994, after which he served as Brazilian ambassador to the World Trade Organisation in Geneva. He is currently ambassador to the United Kingdom.

Lula has yet to provide the names of nearly 20 future ministers, but it is already clear that his pragmatic approach has led him to set up a heterogeneous team, in which long-time leftist militants will work together with prestigious members of the business community.

BRAZIL: Lula Names Businessmen, Veteran Int’l Banker to Cabinet

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Dec 13 2002 (IPS) - The team of Brazil’s president-elect Luiz Inacio Lula da Silva will include a former chief executive of a U.S. bank as the head of the Central Bank, and prominent businessmen in two key cabinet posts.
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