Not a single mile of important new federally funded road or railroad has been constructed during President Lula’s administration. It is still under analysis whether a link exists between plantation areas in the central Brazilian agricultural area and the ports on the northern shore of the country that could potentially contribute to less costly exports. The recovery of the country’s roads network has been treated as short-term task, regardless of its importance to Brazil’s businesses and its effect on people’s lives.

Meanwhile, the oil and gas sector has achieved extraordinary results, reaching self-sufficiency in levels of fossil fuel for Brazil. Since the last military governments in the 1980s, the oil and gas sector has improved, supported by international financial consortia. Brazil today produces more petroleum than some countries of the OPEC oil cartel by drilling with cutting-edge technology in the deep Atlantic Ocean waters. There has been no further deregulation of the oil and gas sector by the present administration. Large public banks like BNDES, the national development bank, finance producers expanding bio-diesel and green ethanol production. New Brazilian cars can use oil or sugarcane alcohol in a versatile motor called FLEX. As an example of the hunger of the national treasury, the taxes at the gas stations on oil prices represent half of what consumers pay.

Advocacy of Bolivian sovereignty goes against Brazil’s energy interests. Bolivia is an adjunct partner of the MERCOSUL (a trading alliance consisting of Argentina, Brazil, Paraguay, and Uruguay). Newly elected Bolivian President Evo Morales nationalized the country’s oil and gas reserves. Brazilian SOE Petrobras, the largest investing corporation in Bolivia, owns a large part of the reserves. During the previous administrations, political turmoil forced the Bolivian Congress to take a more nationalist stance against foreign corporations. La Paz still bears “Brazilians go home” graffiti dating back to those days. The same movement focuses on continental integration projects, including those of the countries of MERCOSUL, Peru, Chile, and Venezuela. The Lula administration also supports the Brazilian expansion of the Venezuelan SOE oil company Petroleo de Venezuela Sociedad Anonima (PDVSA), a stronghold of supporters of President Hugo Chavez. Poor internal infrastructure results do not discount government promises of external investments during the next few years.

Although the private sector has made all the investments in telecommunications, SOE companies made investments in the renewal of airports. Joint ventures of public and private firms are investing in hydro-electrical plants. Nevertheless, analysis suggests that the present investment necessary in infrastructure is underestimated. The failure of investment in sectors such as ports, roads, railroads, and sanitation is also an issue. The long-term decision-making momentum for reform as a whole is lost. Investors in the private sector are already waiting for the possible changes that this November’s elections will bring. President Lula’s main opponent in November will likely be São Paulo’s Governor Geraldo Alkmin, who, like former President Cardoso, is a social democrat and may reform infrastructure.

President Lula’s administration frustrated the hope of new and significant infrastructure investments, leaving the impression that its accomplishments were primarily to sustain economic stability which was already attained by the previous government. President Lula’s administration showed progressiveness in its 2002 campaign by proposing to enhance public sector intervention in the Brazilian economy. The economic results are very good in commodities like oil and gas, areas in which business is conducted by private rules—even with a strong SOE participation—but a disaster in logistics, sanitation, and other state-related areas. President Lula’s administration started with the promise of constant economic growth and creating ten million jobs. Global growth has made these economic targets attainable. There has been stability in economic regulations, but the reforms have stopped midway. There are new private jobs as a result of increased commodities exports, but the unemployment rate is still high. Brazil grew less than its neighbors and there is a sense of an opportunity for prosperity lost. The former administration’s hope for a real and substantial change is the main element missing from candidates in this electoral year. In the area of new investments, uncertainty is the word today.