Steve and all-- Fascinating article about Brazilian politics in the NY Times (which may be too liberal for some and corrupt their sensitivities).
November 12, 1998
Dry Bread for Brazil, but Jam for Its Lawmakers
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By DIANA JEAN SCHEMO
RASILIA -- In late August, as South America panicked at the possibility that Brazil's economy would follow
Russia's into default, the government here scrambled for ways to protect the country's shrinking foreign reserves.
The government announced billions of dollars of spending cuts and tax increases, and started discussing a bailout with the
International Monetary Fund. Communications Minister Luiz Carlos Mendonca de Barros went to Madrid, where he
persuaded Telefonica SA to advance Brazil the next $3 billion payment toward the company's purchase of a Brazilian
state-owned telephone system.
But back home, Mendonca de Barros took delivery of four Persian kilims to decorate his office, billing the government
$4,000. That was a modest sum compared with the $38,000 that the Supreme Court, which will probably have to rule on a
number of sacrifices Brazilians are called on to make in the name of austerity, forked over for Persian rugs a few months
before.
In Pernambuco, the capital of Brazil's poverty-stricken northeast, the Federal District Court bought $6,500 in top-of-the-line
decorative accent pieces, including wooden vases and fruit bowls costing $500 each. Here in Brasilia, Congress is spending $1
million to build a moat around itself.
And the presidents of the House and Senate agreed to shower maximum benefits on the 594 lawmakers who will attend a
special session to debate government cutbacks and tax increases, paying them $47,000 for three months -- a sum that the
majority of Brazilian workers, making less than $330 a month, would need at least 11 years to earn.
As the Brazilian government hoists the banner of austerity and finishes negotiations for an IMF-led standby loan, the gap
between the government's calls for sacrifice and its spending practices appears striking.
Brazil is not the only country whose leaders spend lavishly on furnishings or perks, but some leading economists, like Paulo
Rabello de Castro of the Rio de Janeiro-based Atlantic Institute, say that systematic government overspending is so serious
here that it lies at the heart of Brazil's financial crisis. An undisciplined government soaks up credit, they say, choking
growth of the private sector.
A review of purchase orders from every branch of government, obtained by The New York Times from a member of the
Brazilian Congress concerned about excessive spending, along with official budget figures and spending regulations, suggest
that the government has taken minimal steps to control spending, despite the crisis that has been rolling toward this nation
since last autumn, when the Central Bank doubled interest rates in reaction to the crisis in Thailand.
In category after category, government spending has gone up this year. The executive branch spent $221.8 million on travel
between January and August this year, compared with last year's $206.6 million. Salaries and benefits in the federal judiciary
were up 42.8 percent by this August over last, rising to $4.7 billion from $3.2 billion. Federal legislative branch salaries rose
10.6 percent, while those for the military jumped 20.3 percent.
At a time of tax increases and pension cutbacks, press reports of loose spending are drawing angry criticism.
"Investments are being cut," Sylka dos Santos Carneiro, a reader outraged at a report of government spending on travel,
wrote to the Rio daily Jornal do Brasil. "Spending on health, education and other 'unimportant things' is being cut. The
country has lost its reason!"
Augusto Carvalho, an opposition congressman and longtime watchdog of government waste, said senior officials should set
an example of restraint for junior workers. The Congress itself, he noted, was appealing a recent court ruling against the
$47,000 special payment.
"If we're going to the IMF for $30 billion, it's the Brazilian people who are co-signing that loan," Carvalho said. "The
government shouldn't spend for anything that's not absolutely necessary."
Claudia Costim, the minister of administration and state reform, said the government needed to cut expenses and "moralize"
them. President Fernando Henrique Cardoso sharply curtailed first-class travel by government officials recently.
"It doesn't represent a great savings," Ms. Costim said in an interview here. "But at a time when we're asking people to make
sacrifices, we have to make the effort."
While the gesture may be praiseworthy, the problem runs deeper. Brazilian civil servants who travel, unlike their U.S.
counterparts, are not reimbursed mainly for receipts but given a generous allowance for each day away, a system common in
many countries.
A senior Brazilian official visiting Washington, for example, collects $280 a day whether he stays at a five-star hotel or at the
ambassador's residence. An American official on the same trip would collect no more than $168 a day. The Brazilian
stipends, keyed to seniority levels, can add up to a kind of supplemental salary.
Ms. Costim said Brazil did not have the personnel to monitor travel receipts. The executive branch, though, is reviewing
major government contracts and has ordered each agency to come up with ways to trim spending, she said.
David Fleischer, a professor at the Federal University of Brasilia and the president of the Brazilian chapter of Transparency
International, said that after October's national elections, the government cut the budget for auditing and tax collection, citing
the need for austerity. He said such cuts were often a way of thanking major campaign donors, but Brazil could not afford
such largesse now.
"It's not even shooting yourself in the foot," he said. "It's shooting yourself in the head."
Others have pointed out that the $7 billion in budget cuts, announced as part of a $23.5 billion austerity package recently,
are not all based on actual savings, but on cuts to a pre-election budget for 1999. That budget counted on 4 percent economic
growth, instead of the 1 percent shrinkage the government now forecasts for 1999.
In that vein, Supreme Court President Jose Celso de Mello Filho boasted of slashing 20 percent from the court's 1999
budget. But that was after initially raising it by 23 percent, he acknowledged.
Mello also said the $38,000 in Persian carpets the court bought for its salon were necessary because visiting dignitaries
frequently dropped in. Before the court bought the carpets, visitors would go to the courtroom itself because there was no
suitable reception area, and the justices ended up giving cocktail parties for the visitors. "Now, we just give them coffee,
maybe a glass of juice," he said. "It's in, out."
Cesar Borges, a spokesman for Mendonca de Barros, also said Persian carpets were justified at the Communications
Ministry, since foreign visitors dropped in there.
Supreme Court justices have also been lobbying for higher salaries, which could reach $18,000 a month. The new salary
would apply to the 24 sitting and retired justices. At $9,150 a month, the justices already earn more than the president of
Brazil, who collects $7,200 a month.
Saying it was "a very difficult time" for Brazil, Mello said he might argue against an increase at a coming meeting. But
Fleischer and other analysts suggested the justices would probably get their increases later.
"It's more smoke and mirrors for the World Bank, the IMF and the others, to show the impulse of austerity," Fleischer said.
"After the IMF signs off on the loan, it will go back to normal and they'll probably pass the increase."
A number of government officials, questioned about the wisdom of expensive purchases, argued that the Federal Accounts
Tribunal oversaw all spending.
But the tribunal itself has also come under fire. So far this year, seven of its eight ministers, who are political appointees,
have spent $640,000 on foreign travel, collecting $358,000 in cash.
Erivan Carvalho, a spokesman for the Accounts Court, defended the travel, saying that Brazil belonged to a number of
international auditors' groups. "The tribunal already assumed those commitments," he said. "It has to fulfill them."
fred |
