Opinion – Bernardo Guimarães: The Letter to the Brazilian People did not foresee ‘Lula 1’

A big question is whether the new government (“Lula 3”) will be more like Lula’s first term (“Lula 1”), his second term or the Dilma era.

If information is lacking in this debate, certainties remain. In comparison with Lula 1, the “Letter to the Brazilian People”, of June 2002, always comes to the fore. I often read that the Letter anticipated what would be Lula’s first term.

I don’t believe in this madness.

The document was read by Lula on June 22, 2002, a Saturday, and published in Sheet on Monday, the 24th, as “Lula’s letter to calm the financial market”.

Calmed down, it wasn’t much. That day, the dollar closed up 1%. At the end of the week, the real was worth even less and would not stop falling.

On the eve of the second round of the election, when Lula’s victory was practically guaranteed, but nobody knew what the new government would be like, the dollar was worth about 40% more than in the pre-letter moment.

In the first half of 2003, this increase would be completely reversed. It was discovered what Lula 1 would be when the government started, not when the Charter came out.

In fact, the content of the Letter did not anticipate what Antonio Palocci’s Ministry of Economy would be like.

It is said that the Charter indicated that the Lula government in the economic area would bring more continuity than a rupture with the previous government.

The Letter, however, began by saying that “the current model has run out”, “the country cannot insist on this path”. He spoke of “changing for real” and of “refusing any form of continuity, whether assumed or masked”.

The Charter bore some signs of moderation. Phrases such as “the premise of this transition will be respect for the country’s contracts and obligations” and “I want to reaffirm the commitment to fighting inflation”.

At the time, that was moderation. The PT needed to explain that it intended to honor the public debt, without resorting to inflation, and understood that this required balancing the public accounts.

However, fiscal austerity was not the point of the Charter. She blamed the FHC government for “replacing exchange rate populism with the vulnerability of the fiscal anchor”, and continued: “The path to overcoming the fragility of public finances is to increase and improve the quality of exports and promote a competitive substitution of imports in the short term”. .

Nothing in the Letter anticipated that the president of the Central Bank would be a deputy banker elected by the PSDB. Nor that monetary policy would be criticized by liberal academic economists (like me) for excessively high interest rates —and applauded by the financial market.

Nothing in the Letter anticipated that most of the main secretariats of the Ministry of Economy would be occupied by economists outside the PT, such as Marcos Lisboa, Joaquim Levy and Otaviano Canuto.

Nothing in the Letter foretold that Lula, after voicing for years against FHC’s pension reform proposals, would submit a reform proposal to Congress with everything he had criticized, four months after being elected.

Because nothing in a Charter could anticipate such a major policy shift.

At the same time, Guido Mantega was the Minister of Planning. Developmentalist Carlos Lessa ran the BNDES. The government harbored many contradictions.

Lula 3 will also have its contradictions. Anyone who wants to see their prediction about what Lula 3 will be confirmed will have several opportunities in the coming weeks — whatever their prediction.

As it was 20 years ago, Lula 3’s directions are not written in letters or declarations. Accepting this uncertainty is the first step in trying to understand the paths that await us.