O Brasil decola

Revista vê agora risco da arrogância

Patrícia Campos Mello, WASHINGTON – O Estado SP

“O Brasil decola – agora, o risco para a grande história de sucesso da América Latina é a arrogância”. Esse é o título da reportagem especial publicada ontem pela revista The Economist, que traz na capa uma foto do Cristo Redentor impulsionado por um foguete.

Na edição especial com oito reportagens sobre negócios e finanças no País e mais um editorial, a Economist afirma que o Brasil “entrou em cena no palco mundial” e vai se tornar a quinta maior economia do mundo até 2014. E, depois de ser subestimado por anos, o País hoje supera os outros Brics em vários quesitos.

“O País está passando por seu melhor momento desde que um grupo de navegadores portugueses chegou às costas brasileiras, em 1500″, diz outro artigo sobre o Brasil, na revista. “O Brasil já havia sido democrático antes, havia tido crescimento econômico e baixa inflação, mas nunca essas três coisas ao mesmo tempo.”

Mas a publicação inglesa alerta para as armadilhas à frente. “Da mesma maneira que seria um erro subestimar o Brasil, também é um erro ignorar suas fraquezas”, adverte. “Muito dinheiro do contribuinte está sendo gasto nas coisas erradas” e há pouco investimento público e privado.

Para a Economist, Lula está certo ao dizer que seu país merece respeito e “ele também merece muito da bajulação que recebe”. “Mas Lula também tem sido um presidente de muita sorte, colhendo os frutos de um boom de commodities e trabalhando a partir da plataforma sólida construída por seu antecessor, Fernando Henrique Cardoso”.

A revista volta a chamar Lula de “sortudo” em outro artigo. Para manter o bom desempenho do Brasil em um mundo com condições mais difíceis, o sucessor de Lula vai ter de lidar com alguns dos problemas que o presidente achou que podia ignorar, adverte a revista.

A reportagem lembra que, em 2003, quando economistas da Goldman Sachs cunharam o termo Brics, muita gente torceu o nariz para a inclusão do Brasil no time de economias vencedoras. “Brasil? Um país com taxas de crescimento tão minúsculas quanto seus biquínis, vítima de qualquer crise financeira que estiver à espreita, um lugar com instabilidade política crônica, onde a capacidade infinita de desperdiçar seu óbvio potencial é tão lendária quanto seu talento para futebol e carnavais”, diz. “Agora, esse ceticismo parece equivocado.”

Em artigo (opinião), a Economist diz que o Brasil costumava ser uma promessa, mas agora começa a se tornar realidade. O País não passou incólume pela recessão, mas está entre os últimos a entrar e os primeiros a sair. A revista ainda diz que o Brasil deve crescer 5% em 2010, mas a taxa deve se acelerar à medida que os campos de petróleo comecem a produzir e os países asiáticos continuem consumindo alimentos e minerais do Brasil. “E algum momento antes de 2014, o Brasil vai se tornar a quinta maior economia do mundo.”

Presidential politics in Brazil

Her master’s voice

Nov 12th 2009 | SÃO PAULO

From The Economist print edition

Dilma Rousseff, Lula’s preferred successor, is a more interesting politician than she appears to be. But would she be different from her boss?

WHEN Brazil’s president, Luiz Inácio Lula da Silva, identified Dilma Rousseff, his chief-of-staff, as his preferred successor in the top job, the collective response of people who follow such things was a puzzled frown, as if perhaps there had been a misprint in the newspaper. Ms Rousseff had proved herself an able administrator. But if she had the natural political gifts required for electoral success in the world’s fourth-largest democracy they had been well hidden. Her campaigns for local office in Rio Grande do Sul, her political home, were unsuccessful. Her sentences go on for a long time and contain lots of subclauses. But she has one thing that nobody else in Brazilian politics has got: Lula’s unqualified backing. Given that the president’s approval ratings are still north of 80% as he enters the final year of his second term, this is worth a lot.

Despite their difference in manner, Ms Rousseff has become Lula’s political shadow. Her duties include the government’s “Growth Acceleration Programme”, which aims to mobilise investment of $301 billion in infrastructure between 2007 and 2010. So the two constantly traverse the country opening roads and the like, or even just announcing that they might be built.

Their views are impossible to tell apart. Her answers to questions about Brazil’s future tend to begin with the words, “President Lula’s government has…” before going on to list recent achievements. Her concern with keeping inflation low, her faith in the government’s wisdom to plan and “induce” economic activity, and her refusal to criticise undemocratic actions by other governments in the region, especially that of Venezuela’s Hugo Chávez, are identical to the president’s. So it is slightly surprising that she only switched her political allegiance to the Workers’ Party, a vehicle built around Lula, nearly two decades after it was founded.

Though it has been smothered recently, Ms Rousseff in fact has an interesting political identity of her own. Born to a Bulgarian immigrant father and a teacher in Belo Horizonte, the capital of Minas Gerais, her childhood was much more comfortable than Lula’s. But she became a middle-class radical, involving herself in the far-left resistance to the military governments that ruled Brazil for two decades from 1964. Quite what she did is the subject of some mythmaking. But it seems that she helped to plan a celebrated robbery in which a gang stole $2.4m from the safe of Adhemar de Barros, a former governor of São Paulo (who rejoiced in the tag “he steals but gets things done”).

Her punishment was real enough. She suffered torture by electric shock for 22 days and was jailed for almost three years. Ms Rousseff does not talk about this much, and her language when discussing the military government is surprisingly detached. She talks about how “possibilities shrink” and “life becomes impoverished for everyone” under a dictatorship.

With democracy restored, Ms Rousseff (who has been married and separated twice) settled down to a career in public administration. Her success as state energy secretary in Rio Grande do Sul at a time of electricity shortages brought her to Lula’s attention. As his first energy minister, she gained a reputation with businessmen as a tough, but fair, negotiator. She was promoted to chief-of-staff when the incumbent was felled by a vote-buying scandal, in 2005. Lula appears to credit Ms Rousseff with getting his government back on its feet again after it nearly fell apart.

Like Lula, Ms Rousseff’s political views have mellowed. “You can’t be fundamentalist about anything,” she says while discussing the government’s wish that equipment used to extract oil from new offshore fields should be made in Brazil. “We respect contracts—we are part of the West,” she adds, explaining that she would honour the terms on which foreign oil firms currently operate in Brazil. She describes herself now as a “Brazilian democratic socialist”. She wants to reform the state to make it more effective but not smaller.

Asked whether a technocrat like her can be elected president, she replies “I think so.” Her task before the election next October is contradictory. She needs to stick close enough to Lula to benefit from the heat he radiates, while distancing herself enough to convince voters that she is her own woman. The opinion polls have Ms Rousseff lagging the opposition’s José Serra by between 15 and 20 points. Neither of them has officially declared their candidacy yet, and the campaign will start in earnest only in April. The question that Ms Rousseff will have to ponder is whether seamless continuity is indeed the path to the presidency.

Brazil takes off

Nov 12th 2009

From The Economist print edition

Now the risk for Latin America’s big success story is hubris

Rex Features

WHEN, back in 2003, economists at Goldman Sachs bracketed Brazil with Russia, India and China as the economies that would come to dominate the world, there was much sniping about the B in the BRIC acronym. Brazil? A country with a growth rate as skimpy as its swimsuits, prey to any financial crisis that was around, a place of chronic political instability, whose infinite capacity to squander its obvious potential was as legendary as its talent for football and carnivals, did not seem to belong with those emerging titans.

Now that scepticism looks misplaced. China may be leading the world economy out of recession but Brazil is also on a roll. It did not avoid the downturn, but was among the last in and the first out. Its economy is growing again at an annualised rate of 5%. It should pick up more speed over the next few years as big new deep-sea oilfields come on stream, and as Asian countries still hunger for food and minerals from Brazil’s vast and bountiful land. Forecasts vary, but sometime in the decade after 2014—rather sooner than Goldman Sachs envisaged—Brazil is likely to become the world’s fifth-largest economy, overtaking Britain and France. By 2025 São Paulo will be its fifth-wealthiest city, according to PwC, a consultancy.

And, in some ways, Brazil outclasses the other BRICs. Unlike China, it is a democracy. Unlike India, it has no insurgents, no ethnic and religious conflicts nor hostile neighbours. Unlike Russia, it exports more than oil and arms, and treats foreign investors with respect. Under the presidency of Luiz Inácio Lula da Silva, a former trade-union leader born in poverty, its government has moved to reduce the searing inequalities that have long disfigured it. Indeed, when it comes to smart social policy and boosting consumption at home, the developing world has much more to learn from Brazil than from China. In short, Brazil suddenly seems to have made an entrance onto the world stage. Its arrival was symbolically marked last month by the award of the 2016 Olympics to Rio de Janeiro; two years earlier, Brazil will host football’s World Cup.

At last, economic sense

In fact, Brazil’s emergence has been steady, not sudden. The first steps were taken in the 1990s when, having exhausted all other options, it settled on a sensible set of economic policies. Inflation was tamed, and spendthrift local and federal governments were required by law to rein in their debts. The Central Bank was granted autonomy, charged with keeping inflation low and ensuring that banks eschew the adventurism that has damaged Britain and America. The economy was thrown open to foreign trade and investment, and many state industries were privatised.

All this helped spawn a troupe of new and ambitious Brazilian multinationals (see our special report). Some are formerly state-owned companies that are flourishing as a result of being allowed to operate at arm’s length from the government. That goes for the national oil company, Petrobras, for Vale, a mining giant, and Embraer, an aircraft-maker. Others are private firms, like Gerdau, a steelmaker, or JBS, soon to be the world’s biggest meat producer. Below them stands a new cohort of nimble entrepreneurs, battle-hardened by that bad old past. Foreign investment is pouring in, attracted by a market boosted by falling poverty and a swelling lower-middle class. The country has established some strong political institutions. A free and vigorous press uncovers corruption—though there is plenty of it, and it mostly goes unpunished.

Just as it would be a mistake to underestimate the new Brazil, so it would be to gloss over its weaknesses. Some of these are depressingly familiar. Government spending is growing faster than the economy as a whole, but both private and public sectors still invest too little, planting a question-mark over those rosy growth forecasts. Too much public money is going on the wrong things. The federal government’s payroll has increased by 13% since September 2008. Social-security and pension spending rose by 7% over the same period although the population is relatively young. Despite recent improvements, education and infrastructure still lag behind China’s or South Korea’s (as a big power cut this week reminded Brazilians). In some parts of Brazil, violent crime is still rampant.

National champions and national handicaps

There are new problems on the horizon, just beyond those oil platforms offshore. The real has gained almost 50% against the dollar since early December. That boosts Brazilians’ living standards by making imports cheaper. But it makes life hard for exporters. The government last month imposed a tax on short-term capital inflows. But that is unlikely to stop the currency’s appreciation, especially once the oil starts pumping.

Lula’s instinctive response to this dilemma is industrial policy. The government will require oil-industry supplies—from pipes to ships—to be produced locally. It is bossing Vale into building a big new steelworks. It is true that public policy helped to create Brazil’s industrial base. But privatisation and openness whipped this into shape. Meanwhile, the government is doing nothing to dismantle many of the obstacles to doing business—notably the baroque rules on everything from paying taxes to employing people. Dilma Rousseff, Lula’s candidate in next October’s presidential election, insists that no reform of the archaic labour law is needed (see article).

And perhaps that is the biggest danger facing Brazil: hubris. Lula is right to say that his country deserves respect, just as he deserves much of the adulation he enjoys. But he has also been a lucky president, reaping the rewards of the commodity boom and operating from the solid platform for growth erected by his predecessor, Fernando Henrique Cardoso. Maintaining Brazil’s improved performance in a world suffering harder times means that Lula’s successor will have to tackle some of the problems that he has felt able to ignore. So the outcome of the election may determine the speed with which Brazil advances in the post-Lula era. Nevertheless, the country’s course seems to be set. Its take-off is all the more admirable because it has been achieved through reform and democratic consensus-building. If only China could say the same.

VINICIUS TORRES FREIRE – FOLHA SP

EIU elogia o “grande feito” na crise, a política antipobreza “eficaz”, o mercado interno grande e até bancos estatais

O BRASIL vai crescer apenas 3,8% em 2010, segundo a “Economist Intelligence Unit” (EIU) em seu relatório bimestral “Perspectiva Global”. A EIU é a unidade de pesquisa econômica do grupo que edita a revista “The Economist”. Em março, a estimativa era de 1%. Economistas dos maiores bancos e consultorias brasileiros estimam alta do PIB de uns 5% em 2010. Mas a EIU se rende aos “feitos” do país na crise e muito mais. A EIU diz que a recuperação brasileira se deveu em parte às exportações para os mercados asiáticos e à ressurreição da demanda chinesa por matérias-primas. A China, por sua vez, recuperou-se devido aos gastos em infraestrutura do pacote fiscal anticrise de 8% do PIB e do crescimento de 34% do crédito (até setembro). O risco para a economia chinesa seria o de investimentos malfeitos devido ao excesso de dinheiro à disposição e o de criação de excesso de capacidade produtiva, diz a EIU e quase todo mundo. Em março, a EIU previa que a China cresceria 6% neste ano e 7% em 2010 (agora, prevê respectivamente 8,2% e 8,6%. A China cresceu 11% ao ano de 2004 a 2007). A EIU diz que o Brasil foi um dos mais resistentes da América do Sul devido à baixa abertura comercial e a seu grande mercado interno (a EIU ainda vai elogiar a Cepal?). “A economia se recupera do choque externo auxiliada pela força do sistema financeiro doméstico (e sua dependência de bancos estatais), inflação baixa e programas antipobreza eficazes”, recuperação rápida que é um “grande feito”. Isto é, a EIU-Economist se rende a Lula, digamos apenas um pouco ironicamente. “O governo adotou algumas medidas de estímulo à economia, mas a deterioração das finanças públicas continua limitada. A eleição presidencial de outubro de 2010 provavelmente não deve ocasionar instabilidade financeira, pois os dois maiores partidos são comprometidos com o rigor fiscal”. O Banco Central deve começar a elevar os juros a partir de meados de 2010, com a Selic chegando a 12% no final de 2011, “mas essa taxa ainda será baixa”, dada a história recente”. A EIU acredita que a taxa “básica” de juros nos EUA começa a subir no terceiro trimestre de 2010. Não passaria de 1% no final do ano, e o Fed ficaria imóvel durante 2011. Qual a base do prognóstico? A EIU revisou sua projeção para o crescimento do PIB americano em 2010 para 2,4%. Estimava 1,7% em setembro deste ano. Em março, 0,7%. A média do crescimento dos EUA de 2004 a 2007 foi de 2,8%. Dada a volta do crescimento em 2010, os americanos não precisariam mais de taxas de juros tão baixas. Mas os Estados Unidos levariam novo tombo em 2011, segundo a EIU. O PIB cresceria apenas 1,1%, pois o efeito dos gastos do governo na atividade produtiva estaria se desvanecendo. Portanto, o Fed deixaria os juros ainda muito baixos. Na verdade, segundo a projeção de inflação da EIU para 2011, a taxa seria negativa, em termos reais. Assim, os juros estariam mais baixos do que agora. Portanto, a previsão da EIU não faz lá grande diferença. De resto, nem Deus sabe ainda o que vai fazer em 2011, muito menos os economistas da EIU ou quaisquer outros, aliás. vinit@uol.com.br

da Folha Online

A exploração das reservas pré-sal será um teste crucial para o Brasil, um país que tradicionalmente “investe pouco e poupa ainda menos”, afirma reportagem da revista “The Economist” nesta quinta-feira.

“Dependendo de como for utilizada, essa nova riqueza pode ajudar o país a superar a pobreza e o subdesenvolvimento, ou exacerbar seu ímpeto ‘gastador’”, diz a revista.

A “Economist” cita também o fundo a ser criado pelo governo para receber os recursos do pré-sal e diz que a preocupação é que o dinheiro seja gasto agora, ao invés de ser poupado ou investido, “inflando ainda mais um Estado cuja receita já é equivalente a 36% do PIB, contra 20% no México”.

A reportagem comenta o lançamento do novo marco regulatório do pré-sal nesta semana e detalha os projetos enviados ao Congresso pelo governo. Além disso, cita os riscos geológicos da exploração. “Os campos do pré-sal são tecnologicamente complexos e caros de desenvolver. Dois deles, um perfurado pela BG e outro pela Exxon Mobil, estavam secos”, diz.

A “Economist” afirma ainda que, mesmo que o Congresso atenda ao pedido de urgência de Lula, não será possível aprovar os projetos de lei antes de dezembro. “Na prática, elas podem ficar paralisadas por impasses”, alerta, citando a questão da redução dos royalties para Estados e municípios produtores.

“Mas é claro que esses são bons problemas para se ter. E o Brasil está melhor localizado para lidar com eles do que muitos outros países. Apesar disso, como disse Lula, o que parece um bilhete premiado pode facilmente se tornar uma maldição. Qualquer um que esteja acompanhando os recentes escândalos de corrupção no Congresso brasileiro sabe que um desastre como esse está dentro dos poderes dos parlamentares do país”, conclui a revista.

Brazil’s oil policy

Preparing to spend a “millionaire ticket” from offshore

Sep 3rd 2009 | SÃO PAULO
From The Economist print edition

The government has unveiled plans to give the state the lion’s share of the money from vast new oil discoveries. Will this wealth be invested or squandered?

Illustration by S. Kambayashi

BY TRADITION Brazil invests little and saves less. Brazilians like to borrow and spend, and ao inferno with the future. This may be a legacy of stubbornly high inflation for most of the second half of the 20th century. It may also be an inheritance from further back. Eduardo Giannetti, an economist and philosopher, thinks that the Brazilian ethnic mixture of indigenous nomads, Portuguese settlers seeking a quick fortune and Africans brought to the country in chains bequeathed an entrenched habit of spending now and saving some other time. Whatever the cause, the discovery in 2007 of potentially vast new offshore oil deposits deep beneath the Atlantic seabed will be a crucial test of Brazil’s moral fibre: depending on how it is used, this new wealth could help the country overcome poverty and underdevelopment, or exaggerate its spendthrift ways.

After almost two years in which his government has pondered the question, on August 31st President Luiz Inácio Lula da Silva unveiled four new bills setting out how the windfall should be gathered and spent. His rhetoric on what he called “independence day” was triumphalist. The oil deposits were “a gift from God,”“a millionaire ticket” and “a passport to the future.” But he also pointed to the problems that oil has caused some economies, and explained how Brazil plans to avoid them. The bills, which have to be approved by Congress, will not affect existing exploration and development contracts held by Petrobras, the state-controlled oil company, and five foreign oil companies. These contracts govern parts of the Tupi field, which contains between 5 billion and 8 billion barrels of oil. But plenty of oil and gas would fall under the new laws. Officials believe that in all, there may be up to 50 billion barrels of oil and gas offshore—enough to turn Brazil into an oil giant.

One bill declares the oil in the new fields—dubbed pré-sal because they lie beneath a shifting layer of salt—the property of the state, rather than of the companies that buy concessions. In each block, half of any oil produced would go to the state. The remaining half would be subject to a production-sharing agreement between Petrobras and any companies that partnered it, in proportion to their costs. Another bill creates a new state oil company called Petrosal to represent the state’s interests in each block. In theory this will be a small entity, staffed by technicians. In practice it may swell, particularly if it is controlled by politicians, as they may stuff it with supporters. The state will also inject the monetary equivalent of 5 billion barrels of oil into Petrobras, with the aim of ensuring it has the financial muscle to remain the dominant operator. Since 60% of Petrobras’s shares are traded on the market, this capital boost will dilute existing shareholders. The company’s share price fell sharply on the day of the announcement, wiping $7 billion from its market value. In addition, the government plans to set up a social fund to spend Petrosal’s billions.

Officials have argued that the discovery of so much oil in the Tupi field has eliminated geological risk. That, they say, merits guaranteeing the state a fatter slice of the revenues. But this could have been done by tweaking the existing arrangements, for example to impose a higher royalty. The pré-sal fields are technologically complex and expensive to develop. Two recent wells, one drilled by Britain’s BG Group and the other by America’s Exxon Mobil, proved dry. Some industry experts question the decision to scrap the current rules in which concessions are overseen by the National Petroleum Agency (ANP). “You have a system that has worked well for ten years and is transparent, in a country that often has problems with corruption in public works projects,” says Marilda Rosado, a former director of both the ANP and Petrobras and currently a partner in a Rio law firm, “and you decide to scrap it?”

The reason for doing so, according to Mauricio Tolmasquim, head of the state-run Energy Research Company (EPE), is to give the government more control over the oil business. EPE looked at the regulatory regimes in the 20 countries with the biggest oil reserves. Only three—the United States, Canada and Brazil—operate a pure concession system with minimal state involvement, it found. The new set-up, says Mr Tolmasquim, would allow the government to take things such as the exchange rate into account when it takes decisions on exploration.

Even if Congress heeds Lula’s plea to act speedily, it cannot approve the bills until December. In practice, they may become bogged down by wrangling. One of the new measures reduces the share of oil revenues that go to the states and municipalities closest to the fields, aiming to spread the wealth more widely. That is reasonable but will face political resistance. José Serra, the governor of São Paulo and the man opinion polls tip to succeed Lula in a presidential election next year, has urged Congress not to rush. The government spent 22 months coming up with its proposals, so congress and society should also be given time to debate them, he says. It would certainly suit his campaign if they did. Conversely, the electoral chances of Dilma Rousseff, Lula’s chosen candidate, might be boosted by speedy approval.

There are still many details to be sorted out. The proposed social fund was originally conceived as being earmarked for education and infrastructure spending. It was supposed to be inspired by Norway’s oil fund, most of which is saved. Now its mandate has spread to the environment, culture and even the financing of new industries. The worry is that the money will be spent today rather than saved or invested, further bloating a state whose revenue is already equivalent to 36% of GDP, compared to 20% in Mexico.

Of course, these are nice problems to have. And Brazil is better placed to deal with them than many other countries. Still, as Lula pointed out, what looks like a winning lottery ticket can all too easily become a curse. Anyone who has been following the recent corruption scandals in Brazil’s Congress will know that such a disaster is well within the powers of the country’s lawmakers.

Publicação britânica ressuscita a tese do ‘descolamento’, mas diz que agora ele será mais limitado.

- Um artigo na edição mais recente da revista britânica The Economist afirma que as grandes economias emergentes, principalmente Brasil, China e Índia, podem se recuperar mais rapidamente da crise econômica do que os Estados Unidos.

A revista defende uma nova tese do “descolamento”, teoria defendida no ano passado por alguns analistas (entre eles a própria Economist) que afirmavam que os emergentes estariam mais resistentes a uma recessão nos EUA.

Admitindo que esta tese não se mostrou correta durante a crise, a Economist apresenta agora a tese do “descolamento 2.0″ (”Decoupling 2.0″, que dá nome ao artigo), que, segundo a publicação, seria “um fenômeno mais limitado, restrito a algumas das maiores e menos endividadas economias emergentes”.

“Mesmo se a economia americana continuar fraca, há sinais de que as algumas das maiores economias emergentes podem ter uma recuperação razoável”, diz a publicação.

A revista argumenta que esta nova teoria é baseada em dois fatores subestimados: que as grandes economias emergentes seriam menos dependentes dos gastos americanos do que se acredita e por elas terem se provado mais capazes e desejosas de responder à fragilidade econômica.

Como prova desse “novo descolamento”, a revista cita o exemplo da China, cuja economia começou a se acelerar novamente nos primeiros quatro meses deste ano.

“Apesar dos debates sobre a precisão dos dados do PIB da China (…) o crescimento este ano pode ser perto de 8%. Este otimismo abasteceu os preços das commodities, o que, por sua vez, melhorou as previsões para o Brasil e outros exportadores de commodities”.

Novo descolamento

Segundo a revista, durante a crise, países como o Brasil e a China não foram atingidos apenas pela queda na demanda dos EUA. O que talvez tenha afetado mais essas economias foi o quase colapso dos mercados de crédito globais e os cortes de estoques de companhias “traumatizadas”.

Além disso, muitos dos emergentes apertaram sua política monetária para combater a inflação antes da crise, o que fez a demanda doméstica cair ao mesmo tempo em que as exportações entravam em declínio.”Mas os choques globais estão se acalmando agora. Empresas não podem reduzir estoques para sempre. O pânico dos investidores está recuando, o que faz os mercados de crédito começarem a funcionar. Isto pode não ser o suficiente para estimular uma recuperação vibrante nos EUA (…) mas remove um obstáculo para as grande economias emergentes, que soltaram as rédeas ficais e monetárias”, diz a revista, citando os pacotes de estímulo da China e os cortes na taxa de juros do Brasil.

Para a Economist, ações como essas por parte dos governos podem fazer as economias se recuperarem mais rapidamente, mas não criam uma resistência de longo prazo.

A publicação afirma que, para ter uma recuperação sustentável, a China deve substituir mais investimentos estatais por consumo privado e outros países, como a Índia, devem administrar melhor as finanças do governo.

“A ideia do descolamento continua viva, mas isso não significa que a prosperidade sustentável nas grandes economias emergentes seja uma conclusão necessária”, diz a publicação.

Emerging economies

Decoupling 2.0

May 21st 2009
From The Economist print edition

The biggest emerging economies will recover faster than America

Bloomberg

REMEMBER the debate about decoupling? A year ago, many commentators—including this newspaper—argued that emerging economies had become more resilient to an American recession, thanks to their strong domestic markets and prudent macroeconomic policies. Naysayers claimed America’s weakness would fell the emerging world. Over the past six months the global slump seemed to prove the sceptics right. Emerging economies reeled and decoupling was ridiculed.

Yet perhaps the idea was dismissed too soon. Even if America’s output remains weak, there are signs that some of the larger emerging economies could see a decent rebound. China is exhibit A of this new decoupling: its economy began to accelerate again in the first four months of this year. Fixed investment is growing at its fastest pace since 2006 and consumption is holding up well. Despite debate over the accuracy of China’s GDP figures (see article), most economists agree that output will grow faster than seemed plausible only a few months ago. Growth this year could be close to 8%. Such optimism has fuelled commodity prices which have, in turn, brightened the outlook for Brazil and other commodity exporters.

That said, even the best performing countries will grow more slowly than they did between 2004 and 2007. Nor will the resilience be universal: eastern Europe’s indebted economies will suffer as global banks cut back, and emerging economies intertwined with America, such as Mexico, will continue to be hit hard. So will smaller, more trade-dependent countries. Decoupling 2.0 is a narrower phenomenon, confined to a few of the biggest, and least indebted, emerging economies.

It is based on two under-appreciated facts: the biggest emerging economies are less dependent on American spending than commonly believed; and they have proven more able and willing to respond to economic weakness than many feared. Economies such as China or Brazil were walloped late last year not only, or even mainly, because American demand plunged. (Over half of China’s exports go to other emerging economies, and China recently overtook the United States as Brazil’s biggest export market.) They were hit hard by the near-collapse of global credit markets and the dramatic destocking by shell-shocked firms. In addition, many emerging countries had been aggressively tightening monetary policy to fight inflation just before these shocks hit. The result was that domestic demand slumped even as exports fell.

Not such a bad idea after all

But the global shocks are now abating. Firms cannot slash stocks for ever. And as investors’ panic recedes, so credit markets are beginning to function. This will not be enough to spur a vibrant recovery in America, where households must painfully rebuild their balance-sheets. But it removes a drag on big emerging economies—all the more so because their governments have dramatically loosened the fiscal and monetary reins. China’s stimulus is the most spectacular, but Brazil has also been able to cut interest rates and boost spending.

Government activism helps explain why the creditworthy big emerging economies can recover more quickly. But it cannot create long-term resilience. China’s rebound will only be sustained if the economy shifts further from state-sponsored investment to private consumption. That will require tough structural changes, from forcing state-owned firms to pay fatter dividends to a stronger social safety net. Other countries, notably India, must calibrate their government finances even more carefully (see article). The idea of decoupling lives on, but that does not mean sustained prosperity in the big emerging economies is a foregone conclusion.

The Americas

Latin drift

Nov 19th 2008
From The World in 2009 print edition
By Michael Reid

Sorting Latin America’s pragmatists from its populists

Alamy 

After five years in which Latin America’s economies have averaged 5% annual growth with generally low inflation, they face a severe test of their new-found resilience in 2009. Subdued consumption in the rich world will squeeze exports and commodity prices, and finance will be harder to find. Countries with diversified exports and sound policies will be better placed to ride out the storm than those, such as Venezuela and Argentina, that have squandered their commodity windfalls and spurned private enterprise. Politically, tougher times will coincide with, and contribute to, the start of a tentative shift away from the left.

Of the region’s two big economies, Brazil will continue to do better than Mexico, but neither will do well. Softening commodity prices will erode Brazil’s trade surplus (and cause further depreciation of the real), but the diversity of its export markets and the vigour of domestic consumption will keep growth below 3% (down by more than two percentage points from 2008). With a presidential election due in 2010, Brazilian politics will be dominated by preliminary jockeying over candidacies, with President Luiz Inácio Lula da Silva, the social-democratic president, seeking to transfer his own popularity to his chosen successor, probably Dilma Rousseff, his chief of staff.

The intertwining of Mexico’s economy with United States’ manufacturing will cut growth to under 1%. That will bring an increase in social tension: tighter border controls mean it has become harder to cross into the United States, and jobs are harder to find there, so the traditional safety valve of emigration will become blocked. The slowdown comes at an awkward moment for Felipe Calderón, Mexico’s president. In a mid-term congressional election in July, Mr Calderón’s conservative National Action Party is unlikely to win the majority it desperately needs to sweep away the vestiges of corporatism that still hobble the country’s economy. The centrist Institutional Revolutionary Party, which ruled Mexico for seven decades until 2000, will make gains at the expense of the divided left. Whatever happens in the election, Mr Calderón will hope to make headway against powerful drug gangs.

Argentina’s vigorous recovery from its financial collapse of 2001-02 will peter out in 2009, as commodity prices soften. Cristina Fernández de Kirchner, the populist president, will pay a political price for her failure—and that of her husband and predecessor, Néstor Kirchner—to persuade investors that Argentina is a safe place to do business. Despite the government’s manipulation of the inflation index, Argentines know they are getting poorer. The Kirchners’ hold over the Congress and the ruling Peronist party will vanish in a legislative election in October. Rather than the divided opposition parties, Peronist barons of the centre-right may be the big winners. Ms Fernández will govern at their pleasure for the rest of her term until 2012—if she lasts that long.

In Venezuela the cost of Hugo Chávez’s rule will become clearer. Hitherto, a high and rising oil price has paid for ballooning imports and public spending, concealing the growing inefficiencies of the state-dominated economy. Unless oil, improbably, rises above $100 per barrel again, economic growth will slow to a crawl. Mr Chávez still has some room for manoeuvre: he has stashed away perhaps $15 billion in various development funds, and the central bank’s reserves stand at some $30 billion. But as oil dollars become less abundant, the government will tighten import controls and a devaluation may be unavoidable. That will mean a downward spiral of inflation, stagnation and poverty.

Facing the unravelling of his regime, Mr Chávez may become more radical: expect him to unearth more fictitious coup plots and to curtail political freedoms.

Divided they fall

The most closely watched Latin American election in 2009 will be in Chile, where the Concertación, the moderate centre-left coalition that has governed the country since the end of General Augusto Pinochet’s dictatorship in 1990, may lose power. For the first time, the Concertación will probably run two candidates. One would be from the Socialist Party—either Ricardo Lagos, a successful former president, or José Miguel Insulza, the secretary-general of the Organisation of American States. The Christian Democrats may run their own candidate, probably Eduardo Frei, another former president. That division would help Sebastián Piñera, a moderate conservative and successful businessman. He is likely to win the presidency narrowly in a run-off ballot.

Four smaller countries will also choose a new president in 2009. In Uruguay, the ruling centre-left Broad Front will win a second term, provided it unites around the candidacy of Danilo Astori, a moderate former finance minister. Similarly, in Panama the ruling centre-left Party of the Democratic Revolution should retain power. In El Salvador, the left-wing FMLN’s attempts to dislodge the conservative Arena party may founder. In both El Salvador and Honduras the elections may be dominated by attempts by Venezuela’s Mr Chávez to influence the result with money and offers of aid.

In Bolivia Evo Morales, the left-wing president, is likely to win a referendum to ratify a new constitution that “refounds” the country as an Amerindian socialist republic. But he will face continuing unrest in the more capitalist eastern provinces. Another of Latin America’s radical socialists, Ecuador’s Rafael Correa, will organise and win a fresh presidential election under a new constitution. In Colombia, the era of Álvaro Uribe will draw towards a close—assuming that he opts not to change the constitution to allow him to stand for a third consecutive term in 2010. The fastest growing of the larger economies in Latin America will once again be Peru, not least because its government will keep faith in free trade, rather than the socialism fashionable elsewhere.

Michael Reid: Americas editor, The Economist; author of “Forgotten Continent: The Battle for Latin America’s Soul” (Yale)

Toda Mídia

NELSON DE SÁ – nelsondesa@folhasp.com.br

O Brasil em 2009

Saiu a edição anual da “Economist” com sua “coleção de previsões” para 2009. Para Brasil e a América Latina, o editor de Américas, Michael Reid, antecipa “um teste difícil de sua resistência recém-encontrada”, com a queda no consumo global. “Das duas grandes economias, o Brasil vai continuar a se dar melhor que o México, mas nenhum vai se dar muito bem.” O primeiro cresce “menos que 3%”, pela queda no preço das commodities, e o segundo, “menos que 1%”, pela vinculação com a indústria americana.
Com chamada na capa, “Lula da Silva” escreve sobre “Bric-building”, construindo com tijolos ou os Brics. O brasileiro vê “um papel mundial crescente para os grandes emergentes” -e questiona, sem eles, “a relevância do G8 e do Conselho de Segurança não-reformado, para não falar” de FMI e Banco Mundial.

“ZERO HUNGER”

economist.com

No artigo para a edição “The World in 2009″ da “Economist”, Lula começa saudando o crescimento da classe média, agora majoritária, e defende os programas sociais “sob a bandeira Fome Zero”, de meio ambiente e biocombustíveis como caminho global para as Metas do Milênio

MUDANÇA…
A revista abre anunciando, em editorial, um ano de “ajuste para um mundo mudado”, na economia. Ressalta que “a mudança de poder para lugares como Brasil, Rússia, Índia e China vai se acelerar e esses países vão esperar maior voz na forma como o mundo é gerido”. O crescimento “será menos especular, mas em muitos emergentes vai se manter robusto”.

DE PODER
Escrevendo sob o título “Uma nova ordem econômica mundial” para a edição da “Economist”, o indiano presidente da gigante ArcelorMittal, Lakshmi Mittal, diz que “a mudança de poder para os emergentes está num ponto crítico”. Que “a globalização começou e o mundo desenvolvido deve agradecer pela tendência”, que amplia o mercado consumidor.

ESSENCIAL, INDISPENSÁVEL
Em seu artigo de previsão na “Economist”, Henry Kissinger, o secretário de Estado que aproximou EUA e China, aposta que “a América será menos poderosa, mas ainda a nação essencial para criar a nova ordem mundial”. Avalia que “o G8 vai precisar de um novo papel, abraçando China, Índia, Brasil e talvez a África do Sul” e que “outros países, embora insistindo em seus papéis crescentes, provavelmente vão concluir que uma América menos poderosa ainda continua indispensável”.

RECOMEÇAR

economist.com

A capa de “O Mundo em 2009″ vai para Barack Obama, com o texto do editor John Micklethwait abrindo com a pergunta: “E então, Mr. President, o que exatamente você vai fazer?”. Sugere que ele se torne o “caixeiro-viajante do capitalismo ocidental da América”, hoje “modelo velho, defeituoso”

Leia a integra da coluna de Nelson de Sá na Folha de São Paulo

Revista afirma que democrata elaborou retrato mais convicente e detalhado para o futuro americano

Apoio foi declarado na capa da última edição

WASHINGTON - A revista The Economist, um bastião da economia de livre mercado, declarou nesta sexta-feira, 31, seu apoio ao candidato democrata Barack Obama na corrida presidencial norte-americana. Estampando em sua capa uma imagem de Obama pensativo debaixo do título “Chegou a hora,” a publicação britânica de 165 anos de existência afirmou que endossa com sinceridade a candidatura do democrata.”Quanto a apresentar um futuro mais luminoso para os EUA e o mundo, o senhor Obama elaborou um retrato mais convincente e mais detalhado. Ele vem fazendo campanha com mais estilo, inteligência e disciplina que seu adversário”, disse a publicação. “O senhor Obama merece a Presidência”, afirmou a revista semanal, que possui um grande público leitor nos EUA.

A Economist havia dado apoio ao hoje presidente norte-americano, George W. Bush, nas eleições de 2000 e ao democrata que tentou sem sucesso impedi-lo de reeleger-se em 2004, John Kerry. Em 2000, os EUA eram sem sombra de dúvida uma superpotência, disse a revista. A questão central então era decidir o que fazer com o imenso superávit orçamentário do governo. “Quando os norte-americanos forem às urnas na próxima semana, o clima será bem diferente. Os EUA estão infelizes, divididos e com problemas tanto internamente quanto no cenário internacional. Sua autoconfiança e seus valores encontram-se sob ataque.”

Apesar de a escolha por Obama envolver algum risco por causa da inexperiência dele, o candidato demonstrou claramente que é a melhor opção para restabelecer a autoconfiança dos EUA, disse a Economist.Observando ainda que o democrata seria o primeiro presidente negro dos EUA caso derrote o republicano John McCain nas eleições da próxima terça-feira, a revista afirmou: “Ele aliviaria, ou talvez curasse, a ignóbil ferida racial legada pela história norte-americana e minoraria a tendência dos negros norte-americanos de responsabilizar o racismo por seus problemas.”

The presidential election

It’s time

Oct 30th 2008
From The Economist print edition

America should take a chance and make Barack Obama the next leader of the free world

AP

IT IS impossible to forecast how important any presidency will be. Back in 2000 America stood tall as the undisputed superpower, at peace with a generally admiring world. The main argument was over what to do with the federal government’s huge budget surplus. Nobody foresaw the seismic events of the next eight years. When Americans go to the polls next week the mood will be very different. The United States is unhappy, divided and foundering both at home and abroad. Its self-belief and values are under attack.

For all the shortcomings of the campaign, both John McCain and Barack Obama offer hope of national redemption. Now America has to choose between them. The Economist does not have a vote, but if it did, it would cast it for Mr Obama. We do so wholeheartedly: the Democratic candidate has clearly shown that he offers the better chance of restoring America’s self-confidence. But we acknowledge it is a gamble. Given Mr Obama’s inexperience, the lack of clarity about some of his beliefs and the prospect of a stridently Democratic Congress, voting for him is a risk. Yet it is one America should take, given the steep road ahead.
Thinking about 2009 and 2017
The immediate focus, which has dominated the campaign, looks daunting enough: repairing America’s economy and its international reputation. The financial crisis is far from finished. The United States is at the start of a painful recession. Some form of further fiscal stimulus is needed, though estimates of the budget deficit next year already spiral above $1 trillion. Some 50m Americans have negligible health-care cover. Abroad, even though troops are dying in two countries, the cack-handed way in which George Bush has prosecuted his war on terror has left America less feared by its enemies and less admired by its friends than it once was.

Yet there are also longer-term challenges, worth stressing if only because they have been so ignored on the campaign. Jump forward to 2017, when the next president will hope to relinquish office. A combination of demography and the rising costs of America’s huge entitlement programmes—Social Security, Medicare and Medicaid—will be starting to bankrupt the country. Abroad a greater task is already evident: welding the new emerging powers to the West. That is not just a matter of handling the rise of India and China, drawing them into global efforts, such as curbs on climate change; it means reselling economic and political freedom to a world that too quickly associates American capitalism with Lehman Brothers and American justice with Guantánamo Bay. This will take patience, fortitude, salesmanship and strategy.

At the beginning of this election year, there were strong arguments against putting another Republican in the White House. A spell in opposition seemed apt punishment for the incompetence, cronyism and extremism of the Bush presidency. Conservative America also needs to recover its vim. Somehow Ronald Reagan’s party of western individualism and limited government has ended up not just increasing the size of the state but turning it into a tool of southern-fried moralism.

The selection of Mr McCain as the Republicans’ candidate was a powerful reason to reconsider. Mr McCain has his faults: he is an instinctive politician, quick to judge and with a sharp temper. And his age has long been a concern (how many global companies in distress would bring in a new 72-year-old boss?). Yet he has bravely taken unpopular positions—for free trade, immigration reform, the surge in Iraq, tackling climate change and campaign-finance reform. A western Republican in the Reagan mould, he has a long record of working with both Democrats and America’s allies.
If only the real John McCain had been running
That, however, was Senator McCain; the Candidate McCain of the past six months has too often seemed the victim of political sorcery, his good features magically inverted, his bad ones exaggerated. The fiscal conservative who once tackled Mr Bush over his unaffordable tax cuts now proposes not just to keep the cuts, but to deepen them. The man who denounced the religious right as “agents of intolerance” now embraces theocratic culture warriors. The campaigner against ethanol subsidies (who had a better record on global warming than most Democrats) came out in favour of a petrol-tax holiday. It has not all disappeared: his support for free trade has never wavered. Yet rather than heading towards the centre after he won the nomination, Mr McCain moved to the right.

Meanwhile his temperament, always perhaps his weak spot, has been found wanting. Sometimes the seat-of-the-pants method still works: his gut reaction over Georgia—to warn Russia off immediately—was the right one. Yet on the great issue of the campaign, the financial crisis, he has seemed all at sea, emitting panic and indecision. Mr McCain has never been particularly interested in economics, but, unlike Mr Obama, he has made little effort to catch up or to bring in good advisers (Doug Holtz-Eakin being the impressive exception).

The choice of Sarah Palin epitomised the sloppiness. It is not just that she is an unconvincing stand-in, nor even that she seems to have been chosen partly for her views on divisive social issues, notably abortion. Mr McCain made his most important appointment having met her just twice.

Ironically, given that he first won over so many independents by speaking his mind, the case for Mr McCain comes down to a piece of artifice: vote for him on the assumption that he does not believe a word of what he has been saying. Once he reaches the White House, runs this argument, he will put Mrs Palin back in her box, throw away his unrealistic tax plan and begin negotiations with the Democratic Congress. That is plausible; but it is a long way from the convincing case that Mr McCain could have made. Had he become president in 2000 instead of Mr Bush, the world might have had fewer problems. But this time it is beset by problems, and Mr McCain has not proved that he knows how to deal with them.

Is Mr Obama any better? Most of the hoopla about him has been about what he is, rather than what he would do. His identity is not as irrelevant as it sounds. Merely by becoming president, he would dispel many of the myths built up about America: it would be far harder for the spreaders of hate in the Islamic world to denounce the Great Satan if it were led by a black man whose middle name is Hussein; and far harder for autocrats around the world to claim that American democracy is a sham. America’s allies would rally to him: the global electoral college on our website shows a landslide in his favour. At home he would salve, if not close, the ugly racial wound left by America’s history and lessen the tendency of American blacks to blame all their problems on racism.

So Mr Obama’s star quality will be useful to him as president. But that alone is not enough to earn him the job. Charisma will not fix Medicare nor deal with Iran. Can he govern well? Two doubts present themselves: his lack of executive experience; and the suspicion that he is too far to the left.

There is no getting around the fact that Mr Obama’s résumé is thin for the world’s biggest job. But the exceptionally assured way in which he has run his campaign is a considerable comfort. It is not just that he has more than held his own against Mr McCain in the debates. A man who started with no money and few supporters has out-thought, out-organised and outfought the two mightiest machines in American politics—the Clintons and the conservative right.

Political fire, far from rattling Mr Obama, seems to bring out the best in him: the furore about his (admittedly ghastly) preacher prompted one of the most thoughtful speeches of the campaign. On the financial crisis his performance has been as assured as Mr McCain’s has been febrile. He seems a quick learner and has built up an impressive team of advisers, drawing in seasoned hands like Paul Volcker, Robert Rubin and Larry Summers. Of course, Mr Obama will make mistakes; but this is a man who listens, learns and manages well.

It is hard too nowadays to depict him as soft when it comes to dealing with America’s enemies. Part of Mr Obama’s original appeal to the Democratic left was his keenness to get American troops out of Iraq; but since the primaries he has moved to the centre, pragmatically saying the troops will leave only when the conditions are right. His determination to focus American power on Afghanistan, Pakistan and proliferation was prescient. He is keener to talk to Iran than Mr McCain is— but that makes sense, providing certain conditions are met.

Our main doubts about Mr Obama have to do with the damage a muddle-headed Democratic Congress might try to do to the economy. Despite the protectionist rhetoric that still sometimes seeps into his speeches, Mr Obama would not sponsor a China-bashing bill. But what happens if one appears out of Congress? Worryingly, he has a poor record of defying his party’s baronies, especially the unions. His advisers insist that Mr Obama is too clever to usher in a new age of over-regulation, that he will stop such nonsense getting out of Congress, that he is a political chameleon who would move to the centre in Washington. But the risk remains that on economic matters the centre that Mr Obama moves to would be that of his party, not that of the country as a whole.
He has earned it
So Mr Obama in that respect is a gamble. But the same goes for Mr McCain on at least as many counts, not least the possibility of President Palin. And this cannot be another election where the choice is based merely on fear. In terms of painting a brighter future for America and the world, Mr Obama has produced the more compelling and detailed portrait. He has campaigned with more style, intelligence and discipline than his opponent. Whether he can fulfil his immense potential remains to be seen. But Mr Obama deserves the presidency.

Mending an icon

How Rio’s first good governor in decades is starting to renew Brazil’s most famous city

From The Economist print edition

IT IS not hard to discover what is wrong with Rio de Janeiro. Walk along the main shopping street of the Complexo de Alemão, a large shanty town that has been surrounded by police gunmen for months, and after about 20 metres the stalls selling fruit, vegetables and pirated DVDs give way to one selling wraps of cocaine and marijuana. It is run by boys with machineguns slung over their shoulders. Other shoppers try hard to pretend that this is normal, but they avoid looking the gunmen and their hangers-on in the eye, just in case. From time to time more machineguns pass by on motorbikes, their riders off to collect drugs, kill a rival or enforce their own version of the law.

When Sérgio Cabral was elected governor of Rio state at the end of 2006, hopes were high that he might curb corruption among politicians and the police, and pull the city of Rio (for which he is also responsible) out of a 25-year slump. He hired a team of reformers, broke a local taboo by appealing to the federal government for help, and seemed almost too eager to try new things. Inspired by the work of Steven Levitt, an American economist, he at one point suggested legalising abortion as a way of reducing the future supply of potential criminals.

A year and a half into his term, how is Mr Cabral doing? According to his finance minister, Joaquim Levy, the new government’s plan was first to get the state’s finances in order and then to fund improvements in health care and public security. An unspoken assumption was that Mr Cabral’s administration would also practise a cleaner brand of politics.

The first part has gone well. Despite the oil money that Rio gets from the wells off its coastline, the state has often been in the red. That has changed under the new administration. Tax receipts are up: the courts that rule on tax disputes, which can go on for many years—some cases from the early 1990s are still not settled—are being streamlined with the aim of cutting the time spent wrangling to no more than two years. And spending is more controlled. As a result, the state’s finances have gone from a deficit of 100m reais ($63m) to a surplus last year of 790m reais.

Mr Cabral has also been busily soliciting foreign investment to add to the deal that his predecessor signed with ThyssenKrupp, a German industrial group, to build a steel mill that is due to be the biggest foreign investment in Latin America. The time taken to register a business is falling. The state’s pension fund has been under something like normal financial management and is now accumulating cash for the first time in ten years.

However, government in Rio is mainly judged by the level of violence, and here its record is less good. After a promising start, Mr Cabral’s administration fell out with reformers in the police. Brazil’s murder rate has been falling, but in the city of Rio killings by the police have risen sharply—up from 300 in 1998 to 900 last year. Earlier this month two policemen opened fire on a car they thought belonged to a drug dealer, killing a three-year-old boy. The army, where it has been deployed against crime, has proved equally slapdash. Last month soldiers handed three young men from one shanty town to a gang in a neighbouring area. All were promptly murdered.

Part of Rio’s problem is that voters have long shown a preference for charm over administrative skills when it comes to choosing their politicians. Anthony Garotinho, a football commentator turned tele-evangelist, and his wife Rosinha, who between them governed the state with a startling incompetence from 1999 until 2006, are the most recent examples. According to André Urani, author of a forthcoming book on the city, the explanation lies in an abdication by Rio’s elite which, he argues, has regarded local politics as insufficiently important to merit its attention.

Yet even as Mr Cabral’s administration seems to be breaking this pattern, there are signs of it resurfacing elsewhere. The front-runner in the mayoral race in Rio, to be held in October, is Marcelo Crivella. He is the nephew of Edir Macedo, who runs the Universal Church of the Kingdom of God, a large network of Pentecostal churches. His uncle also co-owns the Rede Record group, which includes one of Brazil’s biggest news channels. Mr Crivella is a bishop in the church (he also has a career as a singer). Though this ought not to count against him in his bid to be mayor, his willingness to over-promise should. He recently got in trouble for suggesting in campaign leaflets that he could single-handedly remodel one of Rio’s largest shanty towns to resemble a picturesque hillside village in Italy.

Set against this tradition, Mr Cabral’s government, which is clean, competent and takes institutions seriously, is a huge improvement. Yet it is too early to declare Rio’s renaissance to be under way. As the machineguns in the shopping streets attest, there is still a huge amount to do.

Sob pretexto de manifestar uma preocupação legitima com os problemas da preservação da Amazônia, o artigo embaixo conclui com uma ameaça a soberania do Brasil. A proclamação forte do presidente Lula sobre a soberania brasileira tem endereço certo, como prova este artigo da revista inglesa The Economist.

Brazil and the Amazon

Welcome to our shrinking jungle

Jun 5th 2008 | BRASÍLIA
From The Economist print edition

A political storm over environmental policy has coincided with a rise in deforestation

AFP

FROM the Amazon last month, Brazil’s Indian agency released aerial pictures of painted men with bows and arrows who have had little or no contact with modern civilisation. To judge from their hostile stance, they want to keep things that way. But the Amazon is the responsibility of Carlos Minc, Brazil’s hyperactive new environment minister. In his first few days on the job he flew to Germany to talk about the Amazon, from there to the northern city of Belém to meet the governors of the states that contain the forest, and then on to Brasília where on June 3rd he explained to a crowd of journalists why the rate of deforestation is increasing again. “I haven’t changed my shirt in three days,” he complained.

Since taking office in 2003, President Luiz Inácio Lula da Silva has balanced the wishes of those who would like the Amazon to be a giant park and Indian reserve against those who want to turn it into a giant farm. He appointed an icon of the conservationists, Marina Silva, as his first environment minister. He has sometimes been willing to enforce the law against loggers: in February he sent troops to Tailândia, a town in Pará state where illegal logging is the main industry, after inspectors from the environment ministry were thrown out by sawmill workers.

But Lula has also encouraged infrastructure projects in the Amazon that trouble conservationists, including two new hydroelectric dams. Instead of giving the job to Ms Silva, he asked Roberto Mangabeira Unger, a Harvard philosopher turned minister, to produce a development plan for the Amazon. And he is touchy when he feels Brazil is being lectured by foreigners: Europeans, Lula said recently, should take a look at a map of their own continent and see how much forest is left before telling Brazil what it should do with the Amazon.

All this was too much for Ms Silva. She grew up in the forest, learned to read only when a teenager, worked with Chico Mendes, an activist who was killed by ranchers in 1988, and later became a senator. She tired of lending her credibility to the government only to lose battles with other ministries. She resigned last month. Her replacement, Mr Minc, says that he accepted the job on a number of conditions (ten in all), which amount to a refusal to be pushed around. “I am not a masochist,” he says, before admitting that it remains to be seen if the deal he thinks he got will hold.

It needs to if Brazil is to halt a recent rise in deforestation. On June 2nd the National Institute for Space Research, which monitors deforestation (see article), announced that the forest retreated substantially in April compared with the month before. The change may be explained in part by the fact that April was less cloudy than March, so a greater area was visible to satellites. But the trend is clear. The environment ministry began to get alarmed in January: in the previous two, usually wet, months nearly 2,000 square kms (770 square miles) of forest were cut down. There may be worse to come, as the next four months—the dry season—are normally peak ones for deforestation.

This increase has several causes, and picking out one or two tends to distort the picture. However it does seem that there is a link between high commodity prices and deforestation, with a lag of about a year (see chart). Brazil became the world’s largest exporter of beef in 2004. Meat from the Amazon is eaten in Brazil but not exported because the cattle there have not been declared free of foot-and-mouth disease. So the link between a hamburger eaten in Paris and a tree felled in Brazil is indirect.

As for soya, the relationship is even more indirect. The vast majority of the crop is grown nowhere near the Amazon. But its expansion has pushed cattle ranches further into the jungle, and started itself to encroach on the forest. Big trading houses have imposed a ban on buying soya from recently deforested parts of the Amazon. It is too soon to judge the effects of this. Even so, Mr Minc has already picked a fight with Blairo Maggi, the governor of Mato Grosso and one of the world’s largest soya farmers. Mr Maggi in turn has cast doubt on the reliability of the numbers on deforestation.

Yet high commodity prices are only part of the story. Illegal deforestation happens when ranchers and loggers conspire to clear swathes of land. A rancher typically claims a part of forest and then sells the timber rights to a logger. This helps to finance the next stage of the rancher’s operation. The logger then takes what he wants and afterwards clears the area. The rancher tidies it up with the help of a bulldozer, burns what is left, sows grass and raises cattle. When the land is exhausted, as it quickly is, the ranchers move on.

That is the most common way to stake a claim to ownership of land in the Amazon. Of the 36% of the forest that is supposedly privately owned, only 4% is covered by a solid title deed, according to Imazon, an NGO. Since the government does not know who owns what, enforcing any rules is impossible.

As of July, says the new minister, ranchers and other farmers who fail to present any kind of documents backing up their claims to ownership of land will have lines of subsidised credit suspended. If they have not co-operated after four years, their land will be confiscated. But in practice it is close to impossible for the government to impose its will on the edges of its empire, even if it wanted to. Members of that newly photographed tribe are not the only people who do not recognise Brazil’s sovereignty in the Amazon.

A revista inglesa The Economist publica um artigo sobre o “Bolsa-Família”. O artigo notícia que o programa esta sendo imitado em outros países o que mostra que a globalização das idéias também existe. A revista destaca que o programa permite no Brasil não só combater a miséria, mas quebra a dependência cultural levando as crianças para a educação. Ele tem contribuído, disse o artigo, para um crescimento econômico no nordeste do Brasil com taxas semelhante as da China. A seguir o artigo em inglês.

Brazil

Happy families

From The Economist print edition

An anti-poverty scheme invented in Latin America is winning converts worldwide

Panos

(mais…)

From The Economist print edition

Why Brazil is better placed than it used to be to cope with a world slowdown

Agencia Estado

BRAZILIANS know about economic and financial crises. The squalls afflicting America and threatening Europe look like a gentle breeze when compared with the frequent and violent blow-ups that litter Brazil’s economic history. Much of the problem has been Brazil’s vulnerability to shocks imported from around the rest of the globe. So what might happen if the economies in the rich world stumble again this year?

(mais…)

A economia brasileira está mais preparada do que nunca para enfrentar sem grandes sobressaltos as turbulências que afligem o mercado americano, sustenta a revista The Economist, em reportagem publicada na edição desta semana. “A rajada de vento que aflige os Estados Unidos e ameaça a Europa parece como uma leve brisa se comparada aos freqüentes e violentos golpes que sujaram a história econômica do Brasil.”

Citando os últimos eventos que inibiram o crescimento do País – crise asiática em 1998, moratória argentina em 2001 e alta inflacionária em 2005 -, a revista observa que, apesar de esses fatos aconselharem cautela, “há razões para acreditar que a economia agora deve lidar melhor com qualquer coisa que o mundo atire nela”.

A revista argumenta que a economia está mais robusta por três razões: em primeiro lugar, um crescimento impulsionado por uma demanda interna vigorosa; em segundo, a integração do País aos mercados mundiais – “Não é superdependente dos EUA, destino de um quinto das exportações”; em terceiro, uma menor vulnerabilidade a crises financeiras, em grande parte graças a uma combinação de Banco Central independente e transparente e câmbio flutuante.
(mais…)

A revista inglesa The Economist analisa a renuncia de Renan Calheiros ao Senado, a luz das discussões para a aprovação da CPMF. Segundo a revista, a CPMF permite combater a sonegação, mas a resistência dos senadores a sua aprovação estaría influenciada pelo fato de 2008 ser ano de eleição municipal. O pretexto do crescimento da arrecadação serviría simplesmente para criar obstaculos ao governo. A saida de Renan, insinua a revista, visava a facilitar o acordo para aprovar o imposto e tería sido negociada pelo governo com o senador. Muitas interpretações e alguns fatos, para alimentar a polemica. A seguir a integra do artigo.

Dec 6th 2007 | BRASÍLIA
From The Economist print edition

What the loss of a key ally means for the Lula government

Illustration by Satoshi Kambayashi

AS THE president of the Senate, Renan Calheiros was perhaps the most powerful ally of President Luiz Inácio Lula da Silva in Brazil’s legislature. Seven months ago, the media, acting on tip-offs from the federal police, accused him of getting a lobbyist for a construction firm to make regular child-maintenance payments to his former mistress. On December 4th Mr Calheiros finally resigned his post.

Thus ended a tenacious rearguard action. As well as the link with the lobbyist, Mr Calheiros was alleged to have used shell companies to buy two radio stations and a newspaper in his home state, and to have paid for a dossier digging up dirt on his enemies in the Senate. He protested his innocence. Then his mistress was photographed for Playboy (in the same pose as Christine Keeler, a big-eyed brunette who ended the career of a British minister in 1963). Mrs Calheiros stood by her man. But on December 4th, moments before a crucial vote in the Senate ethics committee that would probably have ended his career, Mr Calheiros gave in.

By resigning his presidency before the vote, Mr Calheiros holds on to his seat in the Senate. (Had he been censured, he would have been barred for eight years from running for office.) That outcome suits the government. Indeed, Mr Calheiros’s resignation was probably negotiated with Lula’s men. That is because government support for Mr Calheiros was seen as necessary to get through the Senate the renewal of the CPMF, a tax on financial transactions worth 30 billion-40 billion reais ($17 billion-22 billion) a year.

The twists of the Calheiros affair have nonetheless slowed the government down. Getting the CPMF approved has now become a matter of urgency. It is meant to be a provisional tax (and is therefore subject to periodic renewal). But it is also a constitutional measure, requiring a 60% majority. It always generates a tussle. This year the fight is particularly intense—so much so that Lula has cancelled his foreign trips next week so that he can stay in Brasília and twist arms.

The president has formidable political instincts: one of his staffers, who also worked for Brazil’s previous president, says that Lula “can just smell politics”. But he does not expend much energy on managing his unwieldy coalition in the legislature. It does not help him that next year there will be municipal elections. Not all of the opposition parties, who have half the Senate seats, want to help swell government coffers before an election year.

The main cause of the government’s difficulties, though, springs from Brazil’s recent success. Last month the country recorded a small current-account deficit, but overall the economic picture is rosy. In fact, tax revenues are so buoyant that the government is finding it hard to convince congressmen that it needs more money.

One reason for this abundance is that the CPMF makes tax evasion harder, by giving the revenue service information on money moving between accounts. Nuno Camara of Dresdner Kleinwort, an investment bank, has calculated that the government’s tax take has already surpassed its own estimates for 2008 by more than 30 billion reais, roughly equivalent to what it might expect to get from the CPMF. “If you compare the situation now with when we introduced this tax, things are completely different,” says Paulo Renato Souza, a congressman for the opposition PSDB party and former education minister.

For its part, the government is trying every legal method it can think of to get the tax renewed—including cutting its rate from 0.38% to 0.3% over the next five years, and exempting low earners. The government has also revived a proposal to limit increases in government salaries to inflation plus 2.5%. “Brazil does need to lower its tax burden,” says Aloizio Mercadante, a senator for the ruling PT, “but suddenly depriving the government of a main source of its revenue is not the way to do it.”

A smoother way to lower the government’s future appetite for tax revenue would be to use money from the CPMF to reduce debt faster. Public debt, net of government assets, still stands at 43.5% of GDP. That figure is higher than the average for countries which enjoy the investment-grade credit rating to which Brazil aspires. Though less so than in the past, this debt is still expensive: the government pays a real interest rate of 7%. It is also relatively short-term: some 30% matures every year. Mr Calheiros’s continued presence in the Senate, where he still has a great deal of influence, will probably make the passage of the CPMF easier. For the government, some good may yet come from his less than glorious career.

God may indeed be Brazilian after all

Illustration by Claudio Munoz

From The Economist print edition

WHEN Francisco Suares, a Portuguese explorer, wrote home to his brother in Lisbon about Brazil’s natural bounty in 1596, he declared himself “ashamed to write it, fearing that I shall not be believed.” And so it remains today. Brazil’s forests are bigger than anywhere else’s. Its soil is so fertile that some trees grow to full maturity quicker than people do. Beneath the soil lie huge mineral deposits that are raw material for China’s double-digit growth. Brazil is already on its way to becoming an alternative-energy superpower. And as if to prove a popular saying that “God is Brazilian”, it now seems that there are billions more barrels of oil than previously thought lying beneath deep waters off the country’s coastline.

Just how many billions is unclear, but Petrobras, Brazil’s state-controlled oil company, announced earlier this month that it reckons the Tupi oilfield contains between 5 billion and 8 billion barrels. That may not quite yet put Brazil in the same league as Venezuela and Saudi Arabia, as Dilma Rousseff, President Luiz Inácio Lula da Silva’s chief of staff who also chairs Petrobras’s board, excitedly proclaimed. But the higher estimate would make the Tupi field alone equal to all of Norway’s reserves. It contains light crude, which is less expensive to refine and therefore worth more. And there may be other big deposits to be found nearby.

José Sergio Gabrielli, Petrobras’s chief executive, refuses to speculate about how big an oil power Brazil might become. But he does concede that there is the potential for many more discoveries on the scale of Tupi—which itself is the world’s second-biggest strike in 20 years, after Kazakhstan’s 12 billion-barrel Kashagan field, discovered in 2000.

Most of Brazil’s oil comes from the Campos basin, in the waters off Rio de Janeiro. It is typically found at depths of 1,000-2,000 metres below the seabed. Below that lies a huge layer of salt, at some points more than a mile thick. This stretches both north and south to the hitherto less prolific basins of Espirito Santo and Santos. It is below the salt, in the Santos basin, that Petrobras discovered Tupi. The company has also found “sub-salt” oil in Espirito Santo, although it has not yet assessed the scale of this. Mr Gabrielli believes that the two basins have yielded relatively little oil to date not because it is not there, but because it lies deeper underground, below the salt.

Tupi’s oil will be hard to extract. Petrobras is a world leader in deep-water oil production, but Tupi is farther down than any of its existing fields. Drilling through the salt layer and the hard rock beneath brings further technical difficulties. The first test-well alone cost $240m. Moreover, there is a shortage of skilled labour and equipment throughout the oil industry at the moment—although Mr Gabrielli says Petrobras can transfer staff and resources from other projects if necessary.

Despite these caveats, it is reasonable to assume that Brazil’s economy and currency will get a boost when the oil starts flowing, it is hoped, in 2010. The discovery might also tip the balance of power in South America further in Brazil’s favour. Already self-sufficient in oil, Brazil is now likely to become a significant exporter. That may reduce the clout of Venezuela’s oil-rich president, Hugo Chávez, in the region. As if to underline this, Petrobras announced on November 13th that it was pulling out of a joint venture in Venezuela.

Brazil’s drive towards oil self-sufficiency follows the opening up of the industry to foreign investment in the 1990s, when the government also floated some 40% of Petrobras’s shares on the stockmarket. Britain’s BG Group has a 25% stake in the Tupi field, and Portugal’s Galp Energia holds 10%.

The government followed up the announcement of the Tupi field by withdrawing neighbouring blocks from an auction of exploration rights due later this month. That might signal rising petro-nationalism. But it also looked prudent, since those blocks may be worth much more as more becomes known about Tupi.

Amid the euphoria, which included an instant leap of 26% in Petrobras’s share price, came suspicion about the timing of the announcement. Less than a week after it was made, the company announced a poor set of results, with operating profit down 22% compared with the same quarter last year.

Petrobras has also faced mounting difficulties in supplying natural gas to thermal power plants, especially since its fields in Bolivia were quasi-nationalised last year. Some see the Tupi announcement as an attempt to distract attention from this. “It is like throwing a second ball onto a football pitch when the game is going against you,” says Alexandre Marinis of Mosaico, a political consultancy.

Electricity rationing under the previous government in 2001-2 helped Lula to win office. One solution now would be to raise the price of gas, but officials are worried that this would feed into inflation, and jeopardise the scope for further cuts in interest rates. Mario Pereira, an energy consultant, reckons that the risk of electricity shortages should wane after 2008, if Petrobras completes a planned liquefied natural-gas terminal on time.

That may be a big if. Lula and Ms Rousseff, a former Trotskyist who is sometimes touted as a potential presidential candidate for the ruling Workers’ Party, were keen to associate the government with Petrobras’s strike. But the oil may not start flowing until after the next presidential election in 2010. Energy may be an electoral headache rather than a boon for the government, if not for the country.

From The Economist print edition

Why Brazil looks in better shape than many other emerging markets

RIGHT now it is hard to walk around swanky parts of São Paulo without running into someone who has an uncle, a cousin or a brother involved in a company float. As many as 27 firms made their debut on the São Paulo exchange, known as Bovespa, in the first half of the year, surpassing the total number of floats in the whole of 2006. And they keep coming.

IPO-fever is such that shares in the exchange itself were due to start trading on October 26th, as The Economist went to press. It should be a coming-of-age party for a market that has broadened, deepened and bounded ahead recently (see chart).

This is quite a turnaround. Five years ago interest rates were so high that investing in equities was an esoteric pastime. Trading volumes were languishing and companies were rushing to delist.

Since then, three things have happened. First, interest rates have come down. Second, steps have been taken to improve corporate governance. And third, Brazil’s public finances have been tidied up by a combination of good housekeeping and the commodities boom. Even Warren Buffett, a shrewd American investor, has been buying the Brazilian currency.

The flirtation with equities is still in its infancy. Years of high interest rates have given Brazil a fixed-income culture, says Eduardo Mufarej of Tarpon Investment Group. Only a tiny proportion of Brazilians own shares. As interest rates continue to head down, Brazilian pension funds should increase their exposure to equities, which now lies at just 16%, excluding those of state-owned Banco de Brasil. Itaú, a Brazilian bank, reckons this will add up to an annual flow to the Bovespa worth between 18.5 and 24.5 billion reais ($10.2 billion and $13.6 billion) until 2010, which is more than foreign investors have put into the market during the past decade.

The same forces that have benefited equities have brought all sorts of snazzy new debt products to Brazil in the past couple of years. Mortgage and credit-card debts, which did not exist when interest rates hovered somewhere above the Corcovado mountain, are now being bundled together into securities and sold. The adventurous are even getting excited about more exotic products, such as precatórios, which bundle local-government debts.

How sustainable is all this? On the one hand, the IPO activity has been good for corporate governance. In order to attract interest, the recent IPOs have had to sign up to so-called novo mercado guidelines, which do away with the dual share classes, over-friendly board members and non-existent protection for minority shareholders that made life hazardous for outside investors. A further boost to confidence should come when Brazil’s sovereign debt is upgraded to investment grade, which most people expect will happen within the next 18 months.

Familiar dangers lurk, though. Lots of good companies have taken advantage of favourable conditions to come to the market, but some pretty dreadful ones have too, according to Paulo Bilyk of Rio Bravo Investments. Brazil is more open than many other emerging markets and so more vulnerable to hot money. Some 70% of the money for the IPOs has come from foreign investors. That money would probably be the first to head for the exits in any wobble. And some of the new stocks are illiquid. Still, for the moment things are looking good. If you don’t believe us, say São Paulo’s financiers, ask Mr Buffett.

From The Economist print edition

The president’s wife seems certain to succeed him, but will she cool an overheating economy?

Reuters

ABROAD she is sometimes compared to Hillary Clinton. At home she likes to invoke Eva Perón. Either way, Cristina Fernández de Kirchner seems certain to win Argentina’s presidential election on October 28th, and thus to succeed her husband, Néstor Kirchner. If the polls are to be believed, she will win by a large enough margin to avoid the need for a run-off ballot (see chart 1).

If so, she will become the first woman to be elected as Argentina’s president. (Isabelita, Juan Perón’s third wife and his vice-president, briefly succeeded her husband before being ousted by a military coup in 1976.) She likes to point out that she has been a senator since 1995 and so was a national political figure when her husband was a mere provincial governor. But assuming she wins, she will owe her victory to his—or their—decision that he would not seek a second consecutive term and that she would run in his stead.

Mr Kirchner has presided over Argentina’s vigorous recovery from a horrendous economic, financial and political collapse in 2001-02. Thanks to four years of annual economic growth of over 8%, poverty and unemployment have halved since he took office in 2003 (see chart 2). For that, the president can take only some of the credit. He inherited a capable economy minister in Roberto Lavagna, who had put in place some coherent policies. Idle factories whirred back into action while world prices climbed for Argentina’s farm exports.

But Mr Kirchner’s brutal treatment of holders of some $81 billion in bonds on which Argentina defaulted in 2001 ensured that debt payments did not become a drag on growth. He quelled a riotous movement of unemployed protesters with a mixture of handouts and diatribes against the IMF, big business and the privatisations conducted by Carlos Menem, a right-wing Peronist, in the 1990s.

After winning control of Congress in a mid-term election in 2005, Mr Kirchner dumped the prudent Mr Lavagna. Since then, he has deliberately allowed the economy to overheat. Interest rates are negative in real terms, while the government has opened the fiscal tap (so far this year central-government current spending has risen by an eyepopping 48% in nominal terms). As a result, inflation is rising fast.

The government has responded with price “agreements” (ie, controls) and blatant manipulation of the official inflation index. The real figure, suggested by the numbers published by two provinces, may be up to twice the official one (see chart 3). Similarly, Mr Kirchner’s populist approach to energy—energy prices in Argentina are only 60% of those of its neighbours—has led to occasional shortages. Meanwhile, his government has been hit by several corruption scandals this year.

Nevertheless, Mr Kirchner is still popular—more so than his wife. So why did he decline to stand for re-election himself and impose his wife as the Peronist candidate? He has never fully explained. Some opponents reckon that his intention is to return in four years’ time, thus prolonging the family hold on power. Insiders say that he believes that Ms Fernández’s skills are better suited than his own to the tasks now facing the country. “She can sit down and bargain without having been the person who screwed over anyone,” says an official who is close to her.

Ms Fernández has given little away about her intentions. She has maintained a big lead in the opinion polls while doing little campaigning. Like Mr Kirchner, she does not submit to press conferences or interviews by Argentine journalists. She has spent much of the past few months travelling abroad—something her husband has done very little. She has unveiled few policy plans and held few rallies.

But she is a better public speaker than Mr Kirchner, feisty and articulate where he is awkward and uncommunicative. “I identify with the Eva Perón who clenched her fist at the microphone, not with the…good fairy who arrived with Perón to hand out work and [women's] right to vote,” she told El País, a Spanish newspaper. But some Argentines say she lacks the common touch of the always-remembered Evita. Of middle-class background, Ms Fernández and Mr Kirchner met at university, and worked as property lawyers in Santa Cruz, the Patagonian province of which he became governor. Nowadays Ms Fernández sports designer handbags, trademark white suits and, it is said snidely, collagen-enhanced lips.

That she has not been pressed harder in the campaign says much about the hapless opposition. The Radical party, the traditional opposition to the dominant Peronists, had the misfortune to hold (and lose) power during the economic collapse of 2001. Even though they were implementing Mr Menem’s policies, Argentines blamed the Radicals rather than the Peronists for the debacle. The party has shrunk and splintered: Julio Cobos, a Radical who is governor of Mendoza province, is Ms Fernández’s running mate.

Her main rivals are Mr Lavagna, who presents himself as an “alternative” to (rather than an opponent of) the Kirchners, and Elisa Carrió, a former Radical who offers little except a campaign against corruption. Several others have struggled to break into double figures in the polls.

Ms Fernández not only basks in her husband’s popularity. She enjoys some of the advantages of incumbency. She has use of the presidential jet and friendly coverage on state television. Her opponents say they have had trouble raising money because some would-be donors have held back for fear of a punitive tax audit. The opposition’s divisions also help her: she can avoid a run-off provided she gets 40% of the valid votes and leads her closest rival by ten points.

Assuming she wins, will Ms Fernández’s policies differ from those of her husband? Her political views, like Mr Kirchner’s, were forged in the Peronist left of the 1970s: nationalism, a sizeable state role in the economy and hostility to the armed forces. But aides point to differences of emphasis and experience. Ms Fernández has been her husband’s de facto floor leader in Congress over the past four years. Unlike him, she is a negotiator, they say.

While Mr Kirchner’s opponents accuse him of autocratic tendencies, Ms Fernández’s defenders present her as a champion of democratic institutions. On that, however, there are disagreements. She championed bills to give the presidency control over judicial appointments, and to reallocate congressionally-mandated spending at will. Yet she also supported moves to reform the Supreme Court that have the backing of NGOs.

The clearest difference is in foreign policy. Mr Kirchner showed no interest in it, beyond an alliance with Venezuela’s Hugo Chávez, whose government has bought some $5 billion in Argentine bonds and has swapped diesel fuel for farm machinery and other products. On her trips abroad, Ms Fernández has courted businessmen. She is likely to seek better relations with the United States and Europe, but without breaking with Mr Chávez. She has said she plans to renegotiate the $7 billion that Argentina owes the Paris Club of rich-country lenders—but rejects the club’s requirement that the IMF be involved. It is not clear whether she would seek to ease Argentina’s access to world financial markets by reaching a deal with the holders of bonds (worth $20 billion at face value) who did not accept the debt restructuring.

One big doubt is whether she will take the steps, eschewed by Mr Kirchner, needed to engineer a soft landing for the economy. Once inflation exceeds 20% and energy rationing reaches homes, Argentines will surely demand solutions to these problems. But these involve unpopular measures for which the public has not been prepared. If inflation is to be curbed, rather than covered-up, interest rates will have to rise, the growth of public spending will need to be checked, and the peso be allowed to appreciate. Energy tariffs will have to rise, some of them steeply.

A second doubt concerns Mr Kirchner’s role—assuming it is his wife to whom he passes the presidential sash on December 10th. He has vowed to remain in politics; although Peronism is a mosaic of warring factions, he controls its most powerful political machine. So Argentines will be in little doubt that if they vote for Ms Fernández they will be getting two Kirchners for the price of one—a somewhat inflated price, opponents would doubtless say.