Brazil, the IMF, and Regional Integration Models
Jon Kofas writes: On 28 March 2005 Brazilian finance minister Antonio Palocci, announced that the country would not be drawing IMF funds, as many had expected. Under the leadership of progressive president Luiz Inacio Lula da Silva, Brazil has done rather well economically, and it is concerned that the IMF constrictive conditions, which are an integral part of drawing funds, would bring an end to the country's steady progress, and alienate the Lula's labor and lower middle class popular base. The "real" (currency) has been rising against the dollar, at a time that the economy has been experiencing rapid growth (5.2%), with relatively low inflation for Brazil. Like most Latin American countries, Brazil blames the IMF for Argentina's economic problems of the early 1990s, and even supporters of IMF fiscal orthodoxy are reluctant to go along with the Fund at a time that the economy is doing well in comparison with others around the world. Brazil is the largest Latin American country, and its recent deals with China, India, and EU have some U.S. administration officials raising questions about the type of integration Lula is seeking outside the hemisphere. The question is whether medium-sized countries like Venezuela with its non-aligned president Chavez, or Colombia with a pro-U.S. regime, Mexico which is part of NAFTA, and the smaller Central American and Caribbean countries which are part of the U.S. integration model, may look to Brazil as a model. IMF apologists, of course, claim that the reason Brazil has done so well under Lula is because it has followed fiscal discipline that so many criticize as harmful to labor and middle classes.
RH: What should be stressed is Brazil's alignment with China. Lula visited Beijing, and trade with China has grown sharply. He seems to with to emulate the Chinese success story. China may become a major player in Latin America-