18 November 2012

South Africa: Cosatu Is Wrong On Lula

press release

Cosatu General Secretary Zwelinzima Vavi is misreading the true nature of former Brazilian President Luiz 'Lula' da Silva's leadership.

Although Lula hailed originally from a trade union background, he was a reformist president who liberalised Brazil's markets by cutting spending, paying down debt, trimming the bureaucracy, rationalising inefficient state-owned enterprises and reforming business laws to incentivise investment.

Yesterday Lula addressed COSATU's central executive committee and the union federation is now claiming that his record should be motivation for President Zuma to take a more state-interventionist path.

This misreads Lula's vision that low inflation and concessional finance would allow a reduction in interest rates for entrepreneurs, helping the economy to create more jobs for workers and therefore generate more tax revenue for social spending.

We agree with Mr Vavi that South Africa urgently needs some decisive political leadership to fill the obvious vacuum at the top of government. We also support moves to eradicate the political conflicts of interests associated with senior governing party members doing business with the State.

But Lula's plans were focused on long-term growth and not simply appeasing the unions with quick-fix statist solutions. Lulu took tough decisions to implement deep reforms and Brazil reaped the reward with higher growth rates.

Tim Harris, DA Spokesperson on Finance

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