Sunday, May 13, 2012

Brazil's Lula slams rich countries and IMF


Brazil's Lula slams rich countries and IMF

04 May 2012, 10:48 CET

— filed under: Brazil, finance, IMF, US, economy

(RIO DE JANEIRO) - Former Brazilian president Luiz Inacio Lula da Silva on Thursday slammed rich nations for managing the world crisis by calling for belt-tightening by the poor while benefiting themselves from the financial system.

In his first public address after seven months of treatment for larynx cancer, Lula, looking weak and walking with a cane, attended a seminar on investment in Africa sponsored by the state Brazilian Development Bank (BNDES).

He used the occasion to take European countries to task for tackling the crisis with austerity measures and by injecting an enormous amount of money into the financial system.

"They are calling for austerity by the poor, the workers and governments of the most economically fragile countries. But at the same time, they accepted packages and packages of financial resources injected in the financial system which precisely benefit sectors responsible for the speculation that trigger the crisis we are currently experiencing," he added.

"They are punishing victims of the crisis and awarding prizes to those who are responsible for it. This is a big mistake," Lula said.

He noted that rich countries were dealing with the crisis by "slashing public investment, cutting salaries and workers' benefits, increasing unemployment and raising the minimum retirement age."

"The logic could be summarized in this way: the financial system enjoys all the necessary support so as not to suffer from the crisis. But workers, retirees, the most fragile and the poorest, are helped by no one," Lula noted.

Lula's successor, President Dilma Roussef, has also repeatedly criticized what she called the "monetary tsunami" unleashed by the monetary expansion of the eurozone.

Brazil, Latin America's dominant power and the world's sixth largest economy, has been blaming the appreciation of its currency, the real, on a "currency war" waged by developed countries, which are flooding the market with dollars through cheap credit.

The foreign currency influx into countries such as Brazil, which offers high interest rates, leads to a stronger real and increased imports, and makes Brazil's exports more expensive.

Lula, who ruled from 2003 to 2010 and pulled 28 million Brazilians out of poverty, also indirectly took aim at the International Monetary Fund, an institution in which Brazil and fellow emerging powers seek a greater voice.

"It seems that multilateral institutions lack the authority and the governance to assert their decisions," the former president added.

He recalled that in 2009 the world's top 20 rich and emerging powers had agreed on tighter regulation of financial markets and voiced regret that there was no follow through.

Copyright 2012 AFP.

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