Brazil will lead a road show in
More than 2,000 business and political leaders from
around the globe are arriving in the Swiss mountain resort Davos for the annual
World Economic Forum.
Luiz Inácio Lula da Silva, Brazil's
left-leaning president, will try to sweet-talk many government and business
leaders that he once considered his worst enemies at this week's World Economic
The former union leader, who abandoned his fiery, anti-capitalist
rhetoric to win the presidency at his fourth attempt in 2002, has good reason to
woo the high priests of capitalism.
He will lead a road show in Davos
inviting foreign investors to help modernise Brazil's transport system, seen as
grossly inadequate for an aspiring global trade power. “Bottlenecks are already
penalising our exports, Brazil risks losing international competitiveness,” says
the National Industry Confederation.
According to one private sector
estimate, average transport costs are twice those in Russia and China. The
National Transportation Confederation (CNT) says roughly a third of Brazil's
roads are in a bad or critical condition.
This year the government is
investing R$6bn ($2.23bn, €1.7bn, £.2bn) in transport infrastructure, twice last
year's budget but far short of the R$50bn the CNT says is needed immediately.
Mr Lula da Silva's main selling point, in addition to the strongest economic
growth in a decade last year, will be recent legislation for public-private
partnerships (PPPs). Under the law, the government offers investors financial
and legal guarantees including R$6bn in government bonds in case public
contractors renege on their obligations.
The PPPs have generated a lot of
interest, with law firms, construction companies and pension funds in São Paulo,
New York and London setting up special task forces to identify investment
opportunities. Multilateral lenders, including the World Bank and the
Inter-American Development Bank, have also pledged assistance.
point to a series of potential pitfalls, including possible delays in writing
the bylaws to the PPPs. The government is uncertain the first project will be
ready this year and presidential elections next year could put many decisions on
Other concerns include government attempts to limit the power of
industry watchdogs by squeezing their budgets, and undermining them with new
legislation and political appointments. “This law would look good in the UK or
Germany but there are some serious political issues here,” said Isabel Franco,
legal council of the American chamber of commerce in São Paulo.
said that PPPs could be challenged in the notoriously slow judiciary: “Pioneers
will face the risk of an untested law.”
Paulo Sergio Oliveira Passos, deputy
transport minister, insisted that the PPP was “an agile legal instrument” and
that “numerous investors” were waiting in line.
Yet judging by the reaction
of one US chief executive, Mr Lula da Silva will have to be persuasive in Davos.
“We are very interested in the PPPs but we won't be the first to test them,” the
Marie-Christine LACOSTE, CNRS, Information Scientifique
Coordinadora de "RUMBOS"
Lista de Informacion y Red de
Investigadores sobre y de America Latina
(Ciencias Sociales, Politicas,