To get an inkling of just how diverse the political pressures on global policymakers are these days, consider these strange bedfellows: U2 rock star Bono standing at George W. Bush’s elbow as the conservative president unveiled a big bump in U.S. foreign aid in March.
By David Schutt
September 2002
Institutional Investor Magazine
Brazil, applauded six months ago for avoiding the worst of neighbor Argentina’s problems, may offer the best indication of how sentiment is changing. Brazilian voters must soon decide whether to cast their lot with the centrist economic policies espoused by the party of outgoing President Fernando Henrique Cardoso. Although foreign investors have lauded Brazil for reducing budget deficits and controlling inflation, Brazilians are not as pleased with Cardoso’s policies: growth is weak, interest rates high, unemployment rising, crime up and public debt dangerously high.
As Contributing Editor Lucy Conger relates, Brazilians seem to want a change (“Stalling for Time,” page 53). Recent polls show Cardoso’s chosen successor, former minister of Health José Serra, running well behind two center-left candidates, onetime union leader Luiz Inácio (Lula) da Silva and former Finance minister Ciro Gomes, whose antifree market rhetoric has unnerved investors.
But, as Conger notes, whoever wins the election is going to face huge problems that a mere change in leadership won’t undo.
Working amid far more favorable circumstances, British policymakers and their constituents are also mulling important shifts. Chancellor of the Exchequer Gordon Brown has been praised for slicing British debt levels, reducing inflation and generating growth. With its house seemingly in order, the Labour Party government, under Prime Minister Tony Blair, is embarking on the biggest spending increases in 30 years, to make the country’s health services, education system and transportation network more competitive. At the same time, Blair and Brown must decide whether or not -- and if yes, how forcefully -- to push a reluctant British public toward adoption of the euro. In an exclusive interview with European Editor Tom Buerkle, the man often mentioned as Blair’s successor discusses the recent policy shifts under way and the potentially historic decisions still to come (“Sound Sterling?” page 116).
And what of Bush and Bono? The Republican U.S. administration that won the rocker’s approval for its new aid package has had less success winning over World Bank chief James Wolfensohn (“Poor Choices,” page 81). Are the world’s preeminent supranational lender and its biggest shareholder approaching a decisive turn? Read on.
