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Remarks: Luiz Inácio Lula da Silva

September 22, 2008

Remarks Delivered to the Americas Society/Council of the Americas
by President of Brazil Luiz Inácio Lula da Silva
September 22, 2008

It is a great honor to receive from the Americas Society/Council of the Americas the Insigne, an entity that has been promoting indispensible dialogue, the truth of the matter is that before I continue with my speech I would like to say that this Insigne, I will not share it, of course, because there is not enough gold to hand for those who helped me to take Brazil to reach the moment that it has reached. But, anyway, it is not an award just for me—it is an award for a lot of people that I have to share with. People that are known, well-known, or unknown people that contributed so that Brazil could experience the good moment that it is experiencing today. So I would like to share the Insigne with these people.

Very well, I am going to start again…It is a great honor to be decorated by the Americas Society/Council of the Americas, entities that have been promoting indispensible dialogue, getting closer to the public and private sector seeking answers for the challenges of the world that’s quickly being transformed, and in this moment of uncertainty about the future of the world’s economy, this debate is very timely. Although we have seen pessimism in the last days, I would like to bring you a different message, a word of optimism, a message of trust in Brazil, a country for which we would like to arouse even more your attention.

Brazil is not anymore the country of the future as in the past was said. The most recent socio-economic indicators show a very broad and deep change in my country. We managed to achieve democratic stability with sound institutions and respecting civil liberties, also overcoming the major challenges, reduce poverty, and social inequalities.

My dear friends, ladies and gentlemen, monetary and fiscal policies that were taken seriously in controlling inflation, investment grades, and reserves of $207 billion make us have a sustainable economic growth. We opened in Brazil now a new investment cycle by the private sector in one hand and by the government in the other hand with productivity gains. A celebrated growth program, the PAC (acronym in Portuguese) stimulating all the production segments and eliminating logistic bottlenecks, to the year 2010 we will reach more than $280 billion in investments only in infrastructure projects covering from housing and sanitation, to transportation, energy, and water resources.

That’s without including the enormous investments demanded for the nest years for new oil and gas discoveries in the pre-salt layer. sub-sea level. Petrobras alone, the Brazilian Oil State enterprise, would invest more than $112 billion between the year 2008 and 2012. Some experts calculate that the minimum investments to explore these oil and gas reserves at the pre-salt level will go beyond $600 billion. If that happens Sergio would become a new Brazilian shiekh, Sergio is the CEO for Petrobras. For the next year we will build four new refineries and just one of them would produce 600,000 barrels per day, which will demand investments around $19 billion. It is very important to remember that the last refinery that was built in Brazil was in 1980.

Amongst investments that were already made from the year 2004 to 2007, of those that are forecasted for the year 2008 to 2011 we should reach more than $2.3 trillion in investments in our country.

I would like to give you some examples of these investments in some sectors or industries. $73 billion in distribution, transmission, and generation of energy; $70 billion in housing projects; $55.8 billion in mineral extraction; $50 billion in the ship building industry; $48.3 billion in the steel industry; $34 billion in the sugar-alcohol sector; $25.8 in the pulp and paper industry; $20.5 billion in the automobile industry; $13.4 in the petrochemical industry; $11.7 billion in the food and beverage industries. All that I mentioned is in dollars, not in reais.

Well, besides that bullet train or high-speed train that would from São Paulo to Rio is already underway. The project should be open for public tenders in March 2009, and it would demand investments of $11 billion to build this bullet train that would link São Paulo to Rio and the city of Campinhas in São Paulo. And we intend to prepare this bullet train for the World Soccer Cup that Brazil will host in the year 2014.

We need more investors as you can see; nothing would be possible without having a macroeconomic responsible policy. Today, Brazil is a net creditor and our economy is less vulnerable. Since 2004 our exports have grown more than 20 percent a year and should reach $200 billion this year. Our response to globalization has been to diversify our economy, making Brazil a global player. The country grew for 26 consecutive quarters, creating jobs and income. The serene response of Brazil to the moment of international turbulence that we see today confirms the new threshold in terms of security and robust level that we reached.

In this trail, the partnership between government, business community, and the workers is indispensable. The efficiency and the trust in the production sector always willing to invest in Brazil is our main insurance against crisis. The result of this effort is the fast transformation of the Brazilian economic panorama, more jobs, and only this year we will create two million new jobs and better salaries. Salaries’ growth of domestic demand and a record level of reserves, and the strengthening of the capital and credit markets.

Ladies and gentlemen, these numbers don’t mean much if we would not be able to translate a sensitive improvement in the quality of life of the Brazilian people. The stability environment, the increase of the purchasing power and income transfer thru the welfare program Bolsa Familia, the family’s stipend has leveraged the consumption level of the Brazilian families. This social dynamic makes our growth sustainable.

In the last two years, more than 20 million people moved out of poverty and became true Brazilian citizens. The middle class has become the majority class in Brazil. 86 million Brazilians belong to the middle class. Thanks to all that, we built a major guarantee that a country can have against global crisis, which is the strength of the domestic market that expands every day. Social and economic development in the balance means a healthy environment, with a sustainable Amazon rainforest plan we will assure living conditions and decent work for the 24 million Brazilians that live in the region. This is the best guarantee that decline of 59 percent in the deforestation of the Amazon in the last four years will be kept.

The necessary energy for the development cycle that we see today in Brazil comes from one of the cleanest matrix of the world: 46 percent of renewable source of energy, in contrast with the world average that doesn’t go beyond 14 percent. Biofuels are an important ally in this strategy, as they reduce the greenhouse effect and emissions and can generate jobs in poor countries and more energy security for all. The fact that we bet in investing on biofuels would not affect food production. We have available more than 100 million hectares of arable land, that is to say that adding France and Spain’s territory together of these hectares of arable lands. Less than 2 percent are destined to the growing raw materials for biofuels. But for the promise of biofuels to be fulfilled, it is necessary to eliminate barriers and treat ethanol as what it represents: It is the green oil.

The energy options of Brazil, they don’t stop short. Recent discoveries of gigantic oil and gas reserves on our coastal areas will double our oil production for the next 10 years, this will generate new opportunities for Brazilian and foreign companies. We’ll guarantee that the future resources will be used in a responsible way for priority projects that lead the country to development, fighting poverty, and investing in education.

My dear friends, ladies and gentlemen, Brazil has all the proper condition to help respond of the many challenges that the world confronts itself in the twenty-first century. Together, with our neighbors in South America, we have important mineral and energy resources, biodiversity and great food production. besides a consumer market that is under expansion. The Brazilian companies are now throughout the region in projects such as telecom, energy, sanitation, housing, and transportation.

But we will never reach our aspiration to live in a continent with peace and tolerance if we do not respond to the expectations of social inclusion and social fairness. In a sovereign and democratic way, each country has chosen to confront these challenges and Brazil respects the choices of our neighbors.

So we count with the Americas Society/Council of the Americas so that our friends of these neighboring countries understand and value this rich diversity of the region. We are committed with regional integration united with cohesion, and we multiply our complements while we find our own answers to our issues. And that is what we were doing when we created UNASUR, the South American Union of Nations, and reinforcing our ties with other countries in the Caribbean and in the Latin American region. These are decisive steps that we are taking, so the direction of hemisphere is peace, prosperity, and justice.

We trust and rely that the United States can follow us in this trail with the spirit of engagement and cooperation. We see in this great nation an indispensable partner. For the strength of our bilateral trade that is getting close to $50 billion, by the advances that we’ve had in technical and technological cooperation and the dynamism of the reciprocal investment of the two countries. Our dialogue agenda with the North American government has been enhanced and has been deepened. It goes from the concern of the feeble result of the Doha rounds, to the UN reform, and the Middle East issues. And it has as its driving force mutual respect.

Ladies and gentlemen, I know that the attention in the U.S. today is linked to the presidential election in November—that’s the main focus. In the past, during these periods traditionally we would ask ourselves which party or candidate Brazil should make an option for. Today, we don’t have to ask our question in which candidate to support. What matters is to know how our country would potentially… even more our ties and relations. What is at stake is not only the benefits of our trade and economic partnership but the future and well being of the Americas.

I would like to conclude, dedicating the Insigne and the award that I just received, not only to my friends but also to the Brazilians and to say to all of you that I am experiencing a very important moment with the Brazilian people. I want to share this award with the Brazilian people. Brazil has improved and intends to improve even more. What’s going to happen is that Brazil finally has found its destiny and intends to transform itself into a great nation. I would like thank the trust that all of you, partners and investors, have given to Brazil and I hope that we can continue to rely with you partnership. There is still a lot to be done and many opportunities that are waiting for us.

My dear friends, ladies and gentlemen, I want only to conclude and say to all of you that Brazil is determined, definitely is determined, to transform itself into a great nation. Brazil, during the twentieth century, wasted many opportunities, there were certain exceptional moments that we experienced, but I have to say that practically we threw them out, we missed those opportunities. We will not miss this new opportunity, this moment that we are experiencing; we will not waste and spend more money than we need because now we have found a lot of oil and so it is exactly in the moment that now we are experiencing, the moment of growth and development, and generating and creating wealth. But it increases our responsibility to think in the future of our country.

I was always afraid of the second term because I always thought that the second term will lead the president to an idle position, he would become and idle and would just enjoy the glory of his first term. And I had experiences in Brazil already, they were experiencing at the local government level, and when we decided on January 22, 2007 to release the celebrated growth program, the PAC, we thought in September of the previous year 2006 to list a range of public works that Brazil needed for public investment. And it should occupy the time of the government of the second term, and to make the government busy in the second term. So I can say you that my generation, and I was an important labor leader in the 80s, and from 1980 to the year 2000 very few were the moments that Brazil had some chance, some opportunity. Many violent things that we see today going on in Brazil, many youngsters of 24 years of age that appear on TV being arrested and involved in drug dealings and gangs, are the victims for the lack of responsibility of economic policies that field in the past, and the lack of definition of a development model that we lacked in the past.

So I believe that we learned the lesson. Brazil has learned a lot from its mistakes in the same way that I learned a lot in three defeats in running for president. And I prepared myself to reach the presidency in my fourth race. I would say that any president can make a mistake but I cannot afford to make a mistake during my presidency because if I make a mistake during my presidency it would very difficult in the future for any steelworker or automobile worker would win the presidency of Brazil again. I come to say this to all of you because not people did not always believe that we could do the right thing in Brazil. But it is thanks to the sacrifice that we’ve made in the year 2003 in my first year when I was recently elected president of Brazil that we increased the primary surplus and was the largest fiscal adjustment in the history of our country. I was spending my political capital for the possibility to guarantee an opportunity for Brazil for tightening the credit and fiscal surplus. Now that we are harvesting what we grew in 2003, I would like to say that there’s no way back in our country.

I don’t want to be arrogant. I am humble and I’d like to say I am following the U.S. crisis everyday; I never studied so much the crises of Brazil as I studied the U.S. crisis, because I am also building a wall to avoid that the crisis could cross the Atlantic Ocean and reach Brazil. I believe that Brazil would not throw away this extraordinary opportunity. I’ve seen in positive way that the American government makes the intervention that it did last week and now they’re discussing if it was a late intervention or not. It is important when you’re in government to make a decision when you can due to the circumstances and when the political circumstances allow you to do so. Anyway, for the U.S. government position to put $700 billion for the bailout, I believe it is a measurement that contributed in a decisive way to improving the situation in the United States.

We are working and paying close attention and will do everything that we can so that this crisis would not reach Brazil. When the United States cannot buy anymore from Brazil, we are going to sell to Colombia, to Argentina, to the Chinese, and buy a little bit from the United States because we want countries to develop themselves. I would like to say to all of you that today I am a happy man because getting what we went through in Brazil and to reach the moment that we are experiencing today is the work of millions and millions of people that I believe are mainly in the recovery of the self-esteem of Brazilian people. And we don’t have the right to have any backward situation for Brazil.

So I have the certainty that I have another two years and two months to go of my mandate, and I will dedicate these two years to working 24 hours a day so that we can advance more. Even on the oil issue we want to advance more. This resource has to serve for four fundamentals things. This oil is renewing strength in Petrobras, the state oil enterprise of Brazil. We should make a shipbuilding industry in Brazil strong as we did in the 70s, and it should serve to strengthen our petrochemical industry in Brazil, but everybody in Brazil knows that part of this money from these new oil reserves we are going to use it in a massive way in education and fighting poverty in our country. Only through that can we ransform ourselves in great nation.

Thank you very much, ladies and gentlemen.