Lula’s Second Term: Not Time for Panic but for Mutual Trust

Belo Horizonte - The Brazilian elections are over. We have the old new president Lula, a couple of new female governors (in Rio Grande do Sul in the south and in Pará in the north, each representing a different political party), and what would seem to be a leftist northeast and a conservative south and southeast.

Four years ago the business community panicked when Lula won the election. Now business is happy about his reelection. That’s not because of Lula’s economic achievements. Let’s be frank: business people understand how the Lula administration operates. Even the Lula administration will not advance on the hoped for and necessary fiscal, health and pension reforms. (The chances for political reform are better because Lula needs it to maintain the balance of power.) Yet everybody in the business world understands how this administration runs its fiscal and monetary policies. And business people hate nothing more than unpredictable change. Lula’s opponent Geraldo Alckmim would have meant unpredictable change with the return of people who ran things during the Cardoso administration.

Now is the time to help the Lula administration become more efficient and to add a business-friendly agenda to social agenda. Why? To promote economic growth, which in Brazil has lagged behind the global rate. Brazilians need not only social assistance, which Lula used to help attain reelection, but also jobs. And jobs are not only created by adding bureaucrats in the public sector but also by promoting private investment. Brazil best chance during Lula’s second term is via cooperation between the business and social spheres.

Brazilian democracy has been in place for over two decades, and “institutional crisis” is no longer part of the political vocabulary. National economic development can be achieved if mutual trust is established. Business has to trust the government, and the political parties of Lula’s coalition have to trust business as a reliable partner in development. Now is time for each side to trust the other and down to the hard work. Not just profits and not just social assistance. This election brought the dawn of a new approach.

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