The following is part of the proceedings of a June 11, 2002 conference sponsored by the Alumni Association of the Superior War College (ADESG) and Executive Intelligence Review, and held in the auditorium of the Latin American Parliament in São Paulo, Brazil. Lyndon LaRouche was the featured speaker. For an overview of Mr. LaRouche's visit to Brazil, see "Brazil Finds the Best Message to Send to the United States: LaRouche."
Commentaries: Latin American Parliament
Auditorium, June 11, 2002
After LaRouche spoke, the chairman of the conference, Adauto Rocchetto, who is president of the São Paulo chapter of the Alumni Association of the Superior War College (ADESG), invited Gen. Oswaldo Muniz Oliva and Deputy Marcos Cintra to comment. General Oliva is the former director of the Superior War College. Deputy Cintra is the head of the Brazilian Congressional committee monitoring Brazil's negotiations on the Free Trade Agreement of the Americas (FTAA). Their remarks have been translated from Portuguese by EIR, and subheads and bracketed clarifications added by the editors.
Gen. Oswaldo Muniz Oliva
To start, I'd like to congratulate the gentleman for his kindness in coming here, laying out his opinions, his concerns, in global terms, in North American terms, and, even, to offer a commentary on his concerns about "Ibero-America," as he calls it. We prefer "Latin America," because we aren't only Iberians; there are also French in Central America and, thus, we extend ourselves a bit. But we agree with him that it is more Iberian, since the bulk is Spanish and Portuguese in its roots. And, from that comes a fact which is fundamental for us to understand each other. Since we have roots in Ibero-America, in the Iberian Peninsula, we are Latinos. We do not have an Anglo-Saxon makeup, as much as we admire them; rather, our origins lie in that which the Portuguese Lusitanians gave us before the United States came into beingbecause at that time, the United States still belonged to Great Britain. Who it will be tomorrow, only the future will tell. The world renews, grows, and replaces itself.
The Legacy of FDR and Bretton Woods
And, from this perspective, it is interesting that the gentleman offered a time-frame in which he goes from the postwar Bretton Woods until 1965; and we come to today. It is good for us all to remember that, as he says, after the war, 80% of the world's gold was in Fort Knox, in the hands of the United States. The world handed over its gold, which was the world standard of reference, since the pound sterling imploded with the war. It was gold, because the dollar still didn't play that role. So, this is very important for us to understand; they had the bulk of the world's money, the world's wealth, the bulk of the currency which represented the world's wealth.
And, in what he said about 1965, when he thinks the regression began, it is important that we, who listened carefully, who accepted what he said, remember that Brazil always gets there a bit later. It was in 1964 that we began. While the gentleman said that anything good was ended in 1965, I would say that what we began what was good in 1964, since in that year, there was a movement here, a military movement.
It's not just a matter of remembering; rather, I am honored by it, since I participated, I believed and I decided that it must be done, in that year, because Brazil was the world's 48th economy. Our budget was smaller than that of the Ford Motor Company, and our population was approximately 60 million inhabitants, of whom 90% lived in rural areas, eating well because they planted, living reasonably, but without access to technology, without access to improvements of any kind, because Brazil did not have access to transport infrastructure, or communications, or energy infrastructure.
Energy, transportation and communications only existed in some cities, such as Rio, São Paulo and the state capitals. I recall that, in 1942, the energy of Fortalezatoday a lovely citywas at that time less than Santos, but today is five times bigger than Santos. Fortaleza, which is in the semi-arid and dry Northeast region, got its energy from a generator powered by firewood. The trees of Ceará generated energy. But that's the Brazil of the past.
But, from 1965, like the gentleman saidwe accept 1965; the President was Castelo Brancountil 1983, Brazilian urban population grew by more than 40 million inhabitants. That means that from 1965 to 1983, twenty-odd years, we had to create conditions in the cities for a population larger than France's at the time, greater than Italy's, greater than that of any European country except Germany. We did that, we generated and built infrastructure. Even becauseand in this I agree with what the gentleman said, and it is important, and this is why I am speakingin Bretton Woods, rules were established which bore an element of the American character, from the American peoplenot from the politicianswhich is the generosity with which they decided that they could help the world; this was our interpretation at the time. And we were helped, not because they were good or bad. They were generous, and we were competent to expel Marxism from Brazil by ourselves, without foreign support; we did it ourselves out of our conviction, and from that point, we built infrastructure for which we received financing from the World Bank.
But, [this was] only for the statenever for the private sector, because, as the gentleman noted, when you start from the standpoint of free trade, the more powerful defeat the less powerful, and the wealthier dominate the weaker. And we, in order to defend our society, which is our greatest goaland the gentleman says it is in their Constitution, and it is in ours; it is in all of oursit is to defend the general welfare. But, to defend the general welfare, the other principle which the gentleman mentioned is also in our Constitution, which is to guarantee sovereignty. And sovereignty means making sure the national will prevail.
And, in terms of the historical aspect, the gentleman cited Roosevelt. In my view, and forgive me for delving into your history, Roosevelt's New Deal was the great transition factor, which changed the United States. When he created the Tennessee Valley Authority, he created SUDENE [Brazil's Development Superintendency for the Northeast]. And SUDENE was symbolized by a film which became historic, which contrasted the reactions of backward Tennessee residents to the Federal government's intelligent and progressive vision. Brazil also remembers this well.
International Crises Hit Brazil
Moreover, I find in our country a parallel to the journey the gentleman presented. We had three crises, in the 1960s and 1970s. First, the oil crisis, in 1967, which was in my field, the National Petroleum Council, with [President] Costa e Silva, oil cost $1.20 a barrel. But the oil price suddenly increased in that year to $28 a barrel by that aggression, that crisis which hit Brazil from the flankthe gentleman said that in military strategy, the attack on the flank is always better than the frontal one. Oil went up, the dollar stabilized. The oil crisis was unleashed by OPECthe producers' organization founded by Venezuela; it wasn't created by the Arabs. OPEC was created by Venezuela to defend its interestsI don't disagree. [The price] immediately rose to $28 a barrel.
The dollar had always been convenient for us, because we exported more than we imported. We had a surplus and we paid our debts. Oil had represented less than 10% of our foreign currency balance, but suddenly we were faced with a situation where the increase for each barrel of oil disrupted all our plans. Despite that, we kept the situation under control.
This was followed, three or four years later, by the dollar crisis. The dollar crisis was an internal problem of the United States, because the world abandoned gold and adopted the dollar as the unit of monetary reference. Faced with difficulties, the American government legitimately raised interest rates. We saw that here. With the increase of domestic interest rates, world interest rates increased, and our debt increased. We overcame that crisis.
And, then the second oil crisis erupted. It hit the administration of [President João Baptista] Figueiredo on both flanks and in the head. The attack was in three directions, not only on the flanks, but bilateral and aerial. Then, oil shot up to $42 a barrel. Nobody talks about that, because it's not in their interests. The truth isn't good for those who manipulate data. But I want the gentleman to know that $42 per barrel makes any nation which is dependent upon oil, unviable; and we have no need to be, we aren't, and we shouldn't be. Oil is a fuel which is becoming extinct in the world. And, Brazil has two fuels which are not going to run out. If either does, Brazil is finished: Hydroelectric energy, water generating electricity, is cheap, is free, and will continue. Water isn't wasted; it just passes through. The other we have is alcohol. Alcohol is a renewable resource, which doesn't cause the pollution that petroleum causes. Thus, we have good future prospects, which will overcome the crises, which, as the gentlemen pointed out ... are a threat now facing us, in 2003. But we are positioned to overcome themand, in that I agree with your final partif we have good leaders. That's a sine qua non.
Also, in his presentation, the gentleman cited two figures whom I admire: Roosevelt and Alexander Hamilton, America's first Treasury Secretary. And, in a publication which you distribute, which [EIR correspondent Lorenzo] Carrasco sent me, I read some pieces by Hamiliton. And now I'm going to take a commercial break: I just wrote a book, which I'm going to distribute through Gilberto Huber publishing company. The book is expensiveit's 3 reals each. Not $3, but 3 reales. It's only 350 pages, and will be sold so the ideas in it can be discussed. Ideas aren't to be hoarded, nor imposed; they are to be put forward, to undergo divergences, so that, through dialogue and contradiction, better ideas emerge. Thus, I have no fear of saying that I accept discussing opposing arguments. So, we aren't in differing positions from a philosophical point of view.
The Military Dimension
Since the gentleman also discussed defense, I'm going to have to enter onto military terrain, if he permits.... Not long ago, I read something by a Brazilian officer, long retired, since those who went to Italy [in World War II] are either deceased or very old.... My Academy class went to Italy, but the war had ended three months before. We were prepared to go to war, like the two previous Academy classes, but ours didn't. Hence, this fellow went to Europe and was in a German city, in a restaurant, conversing with a group of Brazilians and a group of foreigners speaking English. An elderly, short German with a shaved head, a typical soldier, overheard the conversation. He couldn't resist going to the Brazilians and asking, "Are you Brazilians? Do you celebrate as a national holiday, I think it was the 2nd or 3rd of July?" The Brazilians asked the German, "What's July 3rd?" The German replied, "The day you captured my division."
[German] General [Otto Freiter] Pico commanded a division with 23,000 men; and the Brazilian Expeditionary Force managed to stop him with a maneuver. That's what I think the gentleman means by "strategic defense." Our cavalry squadron was commanded by General Plínio Pitaluga, now retired. And Plínio Pitaluga, with his soldiers and armored cars, overtook the German troops, reached the Po River valley and prevented them from using the only available bridge, then trapped them from the rear with the squadron. The Germans were in no shape to fight and surrendered. And our unit, which didn't even have 5,000 men there, ended up capturing the 23,000 Germans. They had only one day of food and rations and one day of ammunition. When the gentleman spoke of logistics winning wars, it does win wars, if intelligently used. And our logistics, intelligence capability with Pitaluga and his boys' maneuvers and audacity, isolated the Germans.
Thus, when the gentleman speaks of strategic defenseand now I come to Brazil. Brazil does not think along the same lines, because those are not our problems. But we have a national strategy in the area of defense, to use his expression, which for me is "security," despite the current administration having condemned the expression. "Security" is a more complete term than "defense," because security is a condition in which you feel secure. This is a condition. It is not physical, not solid, but psychological. It is mental. I feel secure, in the street or in my house. Defense is an action taken to guarantee that security. Within this security, Brazil has a strategy, called "the strategy of deterrence," which is coherent with its words, but not with the names the gentleman used.
What is deterrence? It is our having sufficient force, where necessary, to act at any point in our territory, to discourage anyone who wants to attack us; and we have had this for a long time. The truth is that the last war we participated in in South America ended in 1870. We have cultivated friendship with our neighboring countries.
On the Financial Crisis
I repeat to the gentleman: We share the same concerns you have about the international monetary system. It worries us because, to the degree that we change our situationI'll talk about events of some time ago, so as not to touch on anything of the present; it's easier that way. When in 1983 the political system changed, ... we had a very large foreign debt in dollars. The debt was the government's. The loans were to businesses. The profits were for the businessmen to reinvest. Many could do this, others not so much. At that time, we had high inflation and a gigantic patrimony. To the degree that we trusted the IMF's rulesI agree with the gentlemantoday we have an absence of inflation, but a gigantic debt, and we have lost our patrimony.
That's what I want to put to the gentleman, so that he, with his view of the world, to which I paid close attention and with which I agree almost entirely. It wouldn't be appropriate here even to disagree with something. It would be the wrong time and impolite. I want to say that I agree with his analysis on the world financial situation. We Brazilians are soon going to face the solution of this new equation of reduced national public and private patrimony, and high international patrimony, which bought the national patrimony up cheap. [We have] a marvellously controlled inflation, but an IMF setting up unworkable rules.
Thank you very much.
Deputy Marcos Cintra
First of all, I would like to compliment ADESG for having invited Dr. Lyndon LaRouche, and for the opportunity to hear such stimulating, polemical, and intelligent words as those we heard here. I very much admire people who have Dr. Lyndon LaRouche's kind of vision, who have a courageous, all-embracing vision, who have the ability to see, not the individual trees, but the forest as a whole. And I think that he taught us that we can't stick only to small, transitory, immediate, day-to-day questions. Rather we must have a more inclusive analysis, a long-term, strategic analysis, as he said. I think that's lacking in our thinking and our tradition.
And I think, Adauto, that the opportunity ADESG gave us to hear Dr. Lyndon LaRouche, Jr. present his thinking, enriches all of us who were wise enough to be here. I regret that this auditorium isn't much more full than it is now. But, I'm sure that we learned a lot and am certain that his words are going to make us think and reflect a great deal. In other words, we will leave here today different from what we were when we entered.
That obviously doesn't mean that I agree with everything. It doesn't mean that I agree with his line of reasoning, or with what he often presented as the causality. Perhaps this is due to the limits of my reasoning power, or the observations I often like to make about causal principles. It is very tempting to derive great principles and great movements in historical analyses. But these principles and movements often lose some of their causal value, if we don't analyze the details. We know that the devil is in the details. The devil is not in the whole; it's in the details where we need to begin to test theories which seem logical, rational, sensible, but often lose some of their logic, their causality, with analysis of causal principles which theoretically should be governing these principles.
We are here today to hear the lessons Dr. Lyndon LaRouche gives us. So, I want to refer to his words ... and, on the basis of the notes I took, offer some questions which might help us understand a bit better what he is really trying to transmit to each of us.
A 'Liberal' Perspective
For example, he gave us a vision which I would call almost catastrophic, that we are on the verge of a great international disasterwho knows, within weeks, months, years, or even decades. That history is changing direction, turning around completely, and thus throwing us back again into economic, social, and cultural barbarity. That's not my vision. I agree, in principle with many of the phenomena, the isolated facts which perhaps are happening in Brazil and in the world today. But I see the world's evolution somewhat differently.
I am a liberal. I don't know what the term "neoliberal" means; I never understood well what it meant to be a neoliberal. "Neoliberal" seems to be a term [used] by those who don't like liberals and accuse them of being neoliberals. I am a liberal. I believe in human capability. I believe in people's freedom. I believe that when they are free, they manage to produce more and better, they manage to advance, on the basis of debating ideas, on the basis of proposals presented.
And, from this liberal perspective,which I think is today taking social, economic and cultural policy more and more into accountI see the world evolving positively.
If we analyze world history of the last 200 or 300 years, I find it very difficult today to believe that you could deny, that the living conditions of most of the population improved significantly, in terms of the quality of life of the mass of the population 200 years ago, in terms of any index, any coefficient you wanted to adopt todaymortality, health, longevity, transport capacity.
It is lawful that there are differences today. Today, the big problem is not that the world has regressed in quality of life. The big problem today is that there is unequal distribution. That's another problem, that, today, the distribution of what society manages to produce is incorrect, unjust. That could be the great challenge to modern society: not the process of generating wealth; we are generating well, we are generating enough, we are generating ever more. The bigger problem is how to better distribute the larger quantities of goods, services, and wealth produced. I would agree with that, and would even go so far as to say that some sectors could be big losers in an historical evolution. But, I would say that most of the world's population today does not find itself under significantly worse living conditions than 100 years ago, 250 years ago. Thus, I see a positive evolution in the history of mankind, and not such a negative, catastrophic one as that which Dr. Lyndon LaRouche offered us today.
He told us, for example, that the world system rewarded, or stopped rewardingat least the economic system from the standpoint of the world's greatest power, the American economy, repeating the Roman imperial patternhas stopped producing and instead enslaves other peoples, becoming merely the great consumer of wealth generated by other countries. In a certain way, that's right, when it comes to goods, services, merchandise, tangibles, physical [products]; but this is not true when the world's production level is analyzed as being essentially tertiary. The modern world today is a world of services. Today, we already are almost reverting the production process to concentrate largely on producing intangible goods, and these continue to be primarily produced by the [major] powers.
What's happening is a redistribution in terms of the characteristics of world production. But, in fact, the U.S.A. is a net importer of goods and services (clothing, autos, motors, raw materials), but is a net exporter of services, ideas, engineering, technology generation, which, today, in the modern world, has the same role which tangible goods had in the old days. Thus, I don't really see it as an attempt to decimate the U.S. economy's production process by enslaving other countries and importing everything they produce into the United States, but rather basically as an evolution toward a tertiary society, a society of services, and no longer a primary or secondary society, which produces agricultural goods and industrialized goods.
The U.S. Trade Deficit
Dr. LaRouche tells us that the United States is today experiencing an economic crisis similar to Brazil's. And he shows us a fact which I find interesting and truthful, which is that the United States today has an extremely high foreign trade deficitthat good old trade deficit. Were this not the case, other countries would have trouble maintaining their export levels to the United States. It is precisely that U.S. trade deficit which, in a certain way, lubricates a bit the world economy by means of the economic potential of the U.S. economy.
Now, the trade deficit which generates the U.S. foreign debt, is of an entirely different character than our debt. I mean, U.S. debt, relative to the rest of the world, is merely a bookkeeping concept. It has no significance in terms of the solvency of the American economy, for one very simple reason: It is the only country in the world able to issue a currency by which its debt is stabilized. Whenever a country issues the currency in which its own debt is denominated, that debt ceases to exist.
Thus, the United States can accumulate debt, and the debt accumulation really ends up becoming a way by which other countries can survive, through their export and import processes. Despite its enoromous and brutal debtit is clearly the biggest debtorwe say here that Brazil is in crisis, because its net public sector debt is equal to 53% or 54% [of GDP], while the U.S. debt is much higher than that. But they finance their debt by printing money, backed by their own money; and thus, this should not result in the breakdown of the U.S. economy, or its lacking solidity, shall we say.
I don't want to go into detail on the other items discussed. I continue to emphasize the provocative quality of Dr. Lyndon LaRouche's observations to us. That's exactly why I began to pose these challenges, motivated by that questioning vision which great leaders must have, and therein lies the great merit of Dr. Lyndon LaRouche's contributions. But, I would like to conclude my observationsdespite having other issues here which could take a bit more timebut I will make two final observations.
Paradoxes of the Current System
First, and this is really more of a question than a dispute, this global system, which is bringing the world to this crisis, and to this view of debacle, financial crisis, impoverishment, was simultaneously able to transform, for example, the European countries today, into a counterpoint to the U.S. economythis same system. And I recall that in the 1960s, a French journalist [Jean-Jacques Servan-Schreiber], whose name I now forget, wrote a book on The American Challenge. He showed that Europe was totally bankrupt, and would never be able to sustain the growth rate of the Japanese economy, which was then growing very fast, or, basically, of the U.S. economy. Yet today, 30 years later, we see the European Union counterposing itself in GDP terms, in growth, in terms of quality of life, and of economic presence in the world, to the United States itself. Thus, the same system which generated such big crises in countries such as Argentina and the Soviet Union ended up generating healthy, sustainable growth in the European economy, placing even countries that were in positions of relative backwardness, like Portugal and Spain, among those which are rapidly approaching the standards of developed economies.
I ask, then, how you reconcile these two facets of this world crisis, of this global system, which can be so harmful to humanity, at the same time that it has shown itself to be so productive, at least from the standpoint of the European experience? And the same is true of the Asian countries, which had a phase of growth, though they are now entering a crisis period. But they shifted to the fantastic growth which is now taking place today in China. I don't know to what degree this same system will make China into a new example of dynamism, of sustained growth.
Protectionism vs. Free Trade
And, finally, so that we can make a bit of linkage to the WTO [World Trade Organization] question, the FTAA [Free Trade Area of the Americas] question, I completely agree with Dr. Lyndon LaRouche's diagnosis of the protectionist question. The Americans always were protectionists; the English always were protectionists. In our history, we need only look at the Methuen Treaty  between England and Portugual, to see what happened, what kind of economic imperialism the countries which dominated the world in that era imposed on Portugal and, consequently, on Brazil. Anyone who knows Brazilian history knows that that treaty between Portugal and England brought about the complete destruction of the textile industry which had begun, mostly in Minas Gerais [state]. Around 1780 or 1790, it was literally destroyed. Portuguese soldiers came in and destroyed, tore down, and smashed the textile industries, felt industries, industries of a number of products which had begun production in Brazil, principally in Minas Gerais, where a reasonably dynamic economy had been created, by a middle class with a potential, with a large purchasing power.... This was not income concentration as occurred in the Northeast, in sugar cane, as in some other periods of Brazilian history. No, there [in Minas], a period of industrialization had been created, and it was simply decapitated, starting with that treaty.
We have here, then, a really obvious, clear, experience. We have experienced that American protection, English protectionism. And we have not the slightest doubt that this is, and was, always the dominant policy historically in terms of international trade among nations. My question is whether the WTO and FTAA processes are not a first attempt to change that. Until them, we had free-trade language, while the strongest didn't practice free trade, but imposed free trade upon the weaker. It seems to me that what's happening today with the FTAA and the WTO, is that we are discussing free trade at a multilateral forum. I think that for the first time, we are beginning to really talk about cutting tariffs, liberalizing trade, globally, not just part of it. I think this is the big difference between the free-trade discourse of 200 years ago and today's. Today, there is a forum for discussion. Today, free trade will no longer be imposed on Brazil.
When the President was in Quebec last year, I think President Fernando Henrique Cardoso was extremely clear, when he set conditions, which if satisfied, would bring Brazil into participation in FTAA. If they weren't satisfiedas for example access to the U.S. market for our agricultural goodswe wouldn't participate in that process. I think this is a new change; before, free trade was imposed; today it is a free trade negotiated multilaterally. I think this changes the perspective somewhat, though I completely agree with [LaRouche's] prognosis, in the sense that historical experience finds that theoretical free-trade language has, in practice, brought a lot of protectionism and little free trade.
I wanted to make these observations just to encourage debate. I think that today we have here one of the most provocative presentations, I repeat, that I ever had the opportunity to attend. I like these challenges. I think that that is what has often enabled us to overcome our own limits, and the often parochial vision which we have of the economic process. I think that people like Dr. Lyndon LaRouche are the ones who give us the opportunity to bring in some fresh air for our thinking and our vision, for each of us to question ourselves on our own beliefs. And, in this regard, I would like to congratulate him for his brilliant exposition. I think that much of what he said has significant parcels of truth. I merely question, in my brief words, those causal factors, these small links which I, as the logical person I try to be, often question: Where's the link? Where's the logic? Once these links are found, I start to believe in certain models which I would have problems with, were these connections not made.
Therefore, I would like Dr. Lyndon LaRouche to respond to my commentaries, only as small threads in an all-encompassing, important, courageous, and above all, well thought-out, model, which he evidently has and is presenting to us today. It's just in that way ... that I pose these questions, not without first congratulating him for his presentation and especially, for nourishing our thinking and our curiosity, nourishing our reflection on Brazil's reality within a globalized world. The world in which we are living is a different reality, difficult to understand, but something which we must really begin to understand. And in this respect, Dr. Lyndon LaRouche is one of our guides, one the great inspirers of responsible, courageous, and, above all, provocative, reflections. My congratulations. And I thank ADESG, congratulate ADESG for this initiative of inviting Dr. Lyndon LaRouche to be with us here today.
(See LaRouche Response)
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