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Extended Interview: Brazilian President Luiz Inacio Lula da Silva at the G-20

September 24, 2009 at 7:38 PM EDT
In an interview with Paul Solman from the G-20 meeting in Pittsburgh, Brazilian President Luiz Inacio Lula da Silva clarifies his infamous remarks on 'blue-eyed' bankers and weighs in on where emerging markets like Brazil fit in the global economy. Read the full version of their conversation here.

PAUL SOLMAN: President Lula da Silva, thank you very much for joining us. How did the deposed Honduran President Manuel Zelaya end up in the Brazilian Embassy in Honduras and did you have anything to do with it?

PRESIDENT LUIZ INACIO LULA DA SILVA (in Portuguese via translator): Well, he had to stop in some embassy. I believe that our concern is not to know which embassy he is in or how he got to the embassy, because I received information already in New York City. That’s when I found out.

The fact of the matter is that you have someone that overthrew the president in power now; someone threw the coup d’etat. The democratically-elected president was overthrown and it’s fair that the elected president wants to go back to his post. And those that participated in the coup d’etat, if they want to be president, they should run for the next elections and we can not accept or allow any coup d’etat experience in Latin America, or civilian, because we had already many of these coup d’etat in the ’60s.

So I believe that there’s the OAS decision and the U.N. Security Council will gather to make a decision to give some guidelines. And I hope, I expect, that those that participated in the coup d’etat leave power and President Zelaya comes back to power, calls general elections and then we go back to a normal situation in Honduras.

PAUL SOLMAN: So you don’t think there’s any argument that he was doing extra-constitutional things, abrogating the constitution by trying to extend his term — no point to that at all, no justification?

PRES. LULA DA SILVA: Well, I don’t see anything that justifies a coup d’etat because even if he made a request to call for a referendum, it was the national congress that would have to pass that call. If the national congress didn’t want that referendum, there’d be no referendum.

PAUL SOLMAN: Are you doing anything to get him out?

PRES. LULA DA SILVA: Well, what we want, is that Honduras should go back to a normal situation. The Brazilian government expects that there should be no violation against the Brazilian Embassy, of our territory. It’s not the first time in the world’s history that people, that are being persecuted and want to refuge in foreign embassies – they’re refugees. The abnormal fact in Honduras is to be in the presidency people that would not elected for the presidency – that’s the abnormal fact.

PAUL SOLMAN: What do you want the U.S. to do?

PRES. LULA DA SILVA: Well, I believe that the U.S. made the correct decisions. I believe together, with the OAS, everybody condemned the coup d’etat and everybody is demanding that President Zelaya should go back to the presidency and they should call for general elections and realize an election. That’s what we want. And I believe that President Obama made the right decisions condemning the coup d’etat.

PAUL SOLMAN: Brazil hasn’t been badly hurt by the economic crisis. Is that because you so heavily regulated your banking sector after your last economic crisis of the 1990s, and would you have other countries do what you did? Should the U.S. do what you’ve done?

PRES. LULA DA SILVA: Well, that’s why, too, it’s true. We have a financial system that is highly regulated, that the present financial system cannot leverage more than 10 times its net worth. And here in the U.S., they reached a 35 times their leverage of the net worth in the banks here.

But the problem is that we have very strong work in development and investment and infrastructure from January 2007. We really have launched a celebrated growth program – PAC is the acronym in Portuguese – and we invested $254 billion in infrastructure projects and public work. And when the crisis came, Brazil was already in a good stage. And we put another $100 billion to help building our infrastructure, and we handed over another $150 billion for our national development bank.

And the Bank of Brazil, which is a state-owned bank, bought some stakes and bought some private banks – took over some private banks so that they could have more money to finance the car industry so that people could buy used cars, because credit crunched – credit vanished all around the world. There was a credit crunch in Brazil and in the rest of the world.

Since we have sound and solid state-owned banks – we have Bank of Brazil, which is the largest bank in Brazil; the federal savings bank, which incentives and finances low-income housing projects; we have the national development bank that finances development projects. So we’re much more in a comfortable situation.

And when the crisis came, we still announced a program that will construct one million houses for low-income brackets of the population. And we gave tax breaks for electrical prices, cars, computers, refrigerators. And so the economy, because of these tax breaks that have suffered three or four months with the crisis, in March, last March, started to recoup, and now it’s going very well.

PAUL SOLMAN: But you didn’t have as a big a stimulus relative to your economy as many other countries, and I gather that’s because you didn’t need to.

PRES. LULA DA SILVA: No, we didn’t need them – the stimulus packages – because we had $210 billion in our foreign currency reserves. We were comfortable that the economy was stabilized, inflation under control. So this gave us the guarantee that the crisis would come late to us and leave first.

PAUL SOLMAN: You told the BBC recently, ‘the rich were responsible for this crisis, the blue-eyed bankers.’ You weren’t going to allow them to blame the poor of the world. What did you mean? Doesn’t everyone blame the bankers no matter what their eye color?

PRES. LULA DA SILVA: I am married with a woman that has blonde hair and blue eyes. The problem is that when I gave this interview, I was with Gordon Brown. He was in Brazil. And there was a persecution going on to the immigrants, especially in Europe – the blacks in Europe, the Latinos – and I said very clearly, the crisis was caused not by blacks or by Latinos, the crisis was caused by the bankers that have blue eyes.

PAUL SOLMAN: So you wanted to make sure there wasn’t a conflation, or mistake that people say, ‘Hey, let’s keep out the immigrants because we’re having economic trouble,’ because it wasn’t their fault. That was your point?

PRES. LULA DA SILVA: Yes, that was my point because it’s a false idea or concept that when there’s a crisis pop up, you put the blame on the immigrants and you play the immigrants against the people of that country where they are. The reply that I gave in Brazil was to legalize all the foreign undocumented living in Brazil to prove that it was not the immigrants’ fault; they were not the ones to be responsible for the crisis.

PAUL SOLMAN: You are a big supporter of freer world trade, which is, I think, surprising given people thought you were going to be this leftist demagogue or something. But especially free trade of agriculture because of the huge and fertile land mass of brazil. The U.S. has tariffs against ethanol. The U.S. now has been ruled [to have] illegal cotton subsidies — the World Trade Organization says illegal cotton subsidies in the U.S. Are you going to retaliate against the U.S. and, if so, how

PRES. LULA DA SILVA: Well, we won a case against the U.S. with – at the WTO. We don’t want to retaliate at the U.S. and any other country; what Brazil wants, concretely speaking, is that all countries that in the last 30 years talked about free trade, talked a lot about – now they turn out to become protectionists. What we want is free trade.

Brazil was a country that made many endeavors so that we could develop the negotiations for the Doha round. Unfortunately, due to the elections in the U.S. and due to the elections in India, we did not manage to conclude the Doha round. And now I have the expectation that President Obama will go back to the discussions around the Doha round because we would help the poorest countries in the world to have market access to the agriculture-rich country markets.

PAUL SOLMAN: One thing that people have talked about is that you would retaliate by breaking the patent the U.S. has on its products in Brazil. There was a lot of talk about that. Are you thinking about that at the moment?

PRES. LULA DA SILVA: It’s a lot of conversation, just conversation. I learned during my term and in the presidency that we should not discuss about assumptions or insinuations. If one day I have to do something against the U.S., the first one to get to know what I was going to do would be the president of the U.S.

PAUL SOLMAN: Given the importance of the Amazon in taking the carbon out of the atmosphere, are you willing to compromise more on global warming, as China’s President Hu now seems to be, instead of just, as you have in the past, largely blamed the developing – the developed – world or at least said, we have to take action first.

PRES. LULA DA SILVA: This year we had the lowest deforestation rate in the last 20 years. And so we’re now taking the responsibility and the commitment to 2020 to diminish the deforestation in 80 percent. Now, we will go to Copenhagen will a willingness – I’m not putting the blame on anybody; what we want is to find a solution for the future because what is at stake is not my life anymore or for my generation but for my grandson and for the life of my sons and daughters and grandsons.

So what happens is that the rich countries should have a fund, should create a fund to offset the poor countries, to compensate those countries that still have forests to conserve. But each one of us, we have to assume responsibilities, either for the amount of greenhouse gas emissions effect that we are all liable – and each country has their own responsibility – and also for carbon sequestration, those that have the competency to keep their forests, to have a strong agriculture system.

For example, when we produce sugar cane to produce ethanol, in the moment that the sugar cane plant is growing, we are having sequestration of carbon. So, besides, it’s a clean fuel; it is less polluting when it is used. And we are challenging the world – that is to say, the world should use more green fuel and with less pollution.

PAUL SOLMAN: Have you changed your attitude toward global warming at all?

PRES. LULA DA SILVA: No. I continue with the same attitude, that is to say. And I believe that we only need to make each country should be liable for the gas that they emit.

PAUL SOLMAN: When you were elected, the world was afraid you were a left-wing demagogue. What happened?

PRES. LULA DA SILVA: Well, I believe that there was a lot of bad faith and a lot of prejudice against my figure. There was a cast of Brazilian politicians that imagined that a lathe operator coming out from a plant would not have the competency to govern, rule Brazil.

And I had to prove – and I have to prove every day at every minute that I have more competency than them to rule Brazil because I have much more commitment with the country, because I know better my country, because I know more of the people. And for another reason: because any other president of the republic in Brazil, when he leaves the presidency, he’ll come to New York City; he’ll go to Paris, to London and stay 2 or 3 years studying and then, after 4 years, he goes back again to Brazil. If it goes wrong, he’ll do the same thing.

In my case, when my presidency ends, I will go back to my hometown, 800 meters from my local trade union that projected me my political life. And if I fail, when I go back to my hometown, it’s going to take another century for another worker, another member of the working class to reach the presidency because they’re going to say that the workers do not have the competency to run a country. So I have the obligation to work every day hard to do the best that is possible. And now the people are getting to know me better and now people know that I have only one defect – and that I love my country, I love my people, and I want things to happen in the best way possible for Brazil.

PAUL SOLMAN: And therefore you’ve had to make political compromises to affect things and make them happen?

PRES. LULA DA SILVA: Not only political compromises. In politics, when you are in the opposition, you say I believe in this, I think, I believe this and that. Now when you reach the presidency, you have all the raw material in your hands. You do something or you don’t do anything and I decided to do things.

PAUL SOLMAN: And that meant compromise some of the time?

PRES. LULA DA SILVA: It means that I have a commitment with the Brazilian society and I have to make agreements with the business class, with the working class, I have to make a deal with the national congress because i represent the Brazilian people as a whole. And I was a labor leader in the past and I know important it is in a negotiating table, in a bargaining table for you to solve the conflicts instead of fighting in the streets or going to the courts.

PAUL SOLMAN: Does the prominence of this G-20 meeting mean that emerging economies like Brazil are finally getting their due?

PRES. LULA DA SILVA: Well, I believe that it is very difficult it the world of today for you to continue with G-8 only without taking into account the importance of Brazil, China, India mainly in the world economy. Because we are great consumers, large consumers and we are becoming great producers. And also because we were better prepared than the rich countries for this crisis. This is the first global crisis when it doesn’t start in the poor countries and it was caused by the rich countries.

And the institutions like IMF, World Bank that knew supposedly everything when the crisis happened in Brazil, now they don’t know nothing when the crisis happens in the U.S. And it’s necessary for us to take advantage of this crisis and do things the right way. The financial system has to be regulated, we have to end with the tax havens, and it’s necessary that the central banks in the world should control a little bit the banks’ financing because they cannot bypass a certain range of leverage. And so I believe that today, if you want me to be sincere, I believe that there is no other reason for G-8 group or any other “G.” I believe that we should guarantee that the G-20 should be now an important forum to discuss the major economic issues of the world.

PAUL SOLMAN: A couple of economists said to us recently, just last week, that they were afraid India and China in particular would use the crisis and the fact they had regulated their banks heavily to resist further reform — reforms that are necessary if you going to become a modern economy. Is that a reasonable fear?

PRES. LULA DA SILVA: No, I don’t believe in that. Today the world economy is so interdependent. One country relies on the other. And everybody knows that if we detach ourselves from the right decision, it would cause loss, damage. And I trust the maturity of the leaders, the political leaders, and I believe the globalization allows that we would have to build more and more common policies among us.