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Driven by a surge in exports, the Brazilian economy is stable and growing again, but there is now evidence of dissonance at the highest levels in Brasília over how to handle everything from monetary policy to genetically modified soybeans, reports Newsweek's Special Correspondent Mac Margolis.
In its October 18 issue, Newsweek International says that disputes over economic policy have stalled many coalition governments, and Brazil may be running the same risk.
While the market-driven economic policies have worked for the country, some top government officials still favor state intervention, writes the American weekly magazine.
According to the article, Brazil's economy is stable and growing again, at a rate of 4 percent. These numbers were rewarded in the October 3, municipal elections, with the government party, the PT doubling its number of mayors.
Margolis notes, however that "to some of his oldest supporters, the new Lula is a turncoat. After all, tight money and deference to free enterprise were the hallmarks of the previous President, Fernando Henrique Cardoso, whom the PT fought tooth and nail."
According to the author, there is little agreement in Brasília. Lula's allies are having several disputes from what monetary policy to adopt to doubts whether genetically modified soybeans are the answer.
The magazine also talks about "the powerful chief of staff, José Dirceu" and vice president José Alencar frequently grumbling about the Brazilian central bank's high interest rates.
Newsweek cites São Paulo's economist Eduardo Giannetti: "Part of the Lula government is market oriented and the other part is for state intervention.It's like two halves of a brain that aren't connected with one another."
Brazil used to attract $20 billion to $30 billion in foreign investment annually in the 90's. This year it won't draw $12 billion, half the amount industrialists say are necessary to modernize equipment and repair a deteriorating infrastructure.
Lula himself is being pressured to stop sending out conflicting signals to investors and creating a climate of uncertainty, says Newsweek.
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