Legitimising Brazil’s freeze of research funds

Brazilian president Luiz Inácio ‘Lula’ da Silva’s administration can be accused of not being any different from past governments for a number of reasons. But one in particular should concern those who care about the future of the Latin American country: Lula is revealing himself as yet another president prepared to freeze Brazilian research funds to avoid jeopardising the country’s reputation on Wall Street.

The government has not even begun to fulfil a promise made in the 2002 electoral campaign that it would unfreeze what then amounted to about US$300 million of ‘contingency’ reserves, set aside to be used to maintain a stable economy, for instance by honouring debts.

The money was from the National Fund for Science and Technology Development and was initially intended to be spent only on research.

Since then, treasury minister Antonio Palocci has ensured that research funding agencies cannot touch a total of three billion reais (US$1.3 billion) that have accumulated in the fund in the past four years.

The money is the equivalent of about two-thirds of the Ministry of Science and Technology’s budget for 2005.

What is more, the government is contravening the Budget Guidelines Acts of 2004 and 2005, according to which funds for public health, education, and science and technology should not be retained for contingencies.

Bad for science

Although the money cannot be diverted to other expenses, it cannot be invested by the Ministry of Science and Technology either. This means the funds remain in a sort of financial limbo. Having these reserves in the treasury is good for Brazil’s economy, but bad for its science sector, which owns the money but is not allowed to spend it.

And worse, after 30 months of waiting for Lula to fulfil his electoral promise, the research community is already being worn down.

Pragmatically, its leaders in the Brazilian Academy of Sciences and the Brazilian Society for the Advancement of Science accepted the prospect of waving goodbye to least part of the money in exchange for yet another promise: a timetable for reducing the amount of research money set aside for contingencies.

Many researchers think, however, that going down this road of compromise will derail a very innovative funding idea: the ‘sectoral funds’.

In 1999, science minister Ronaldo Sardenberg proposed funding research by taxing revenues of technology-intensive and natural resource-exploiting sectors such as drilling for oil and natural gas, agribusiness, computers and biotechnology.

The intention was to guarantee a stable flow of money into the National Fund for Science and Technology Development.

When the funds were introduced in 1999, the research community, usually critical of the government in place at the time, acclaimed them as a clever idea.

Until then, doing science in Brazil was a daily exercise in uncertainty and improvisation. Would you start a multi-week experiment without being sure that you can buy next month’s batch of reagents?

Groundbreaking provision

The first sectoral funds, drawn from sectors that included mining, biotechnology, energy and agriculture, were supposed to raise US$500 million in total each year to boost Brazilian research.

That money — and this was the truly groundbreaking provision in the authorising bill — could only be used to fund research and development related to the contributing sectors. Politicians could never lay hands on it — supposedly.

For a while, sectoral funds were seen as a cure-all for Brazilian science. Parliamentarians rushed to extend the model to other sectors, from aeronautics to health care. There are now 15 such research funds, expected to collect between US$650-750 million in total this year.

In fact, in 2005 only US$320 million were allotted to the National Fund for Science and Technology Development. More than half of the money it should have received was held back in the government’s ‘contingency’ budget.

Indeed, this is a very creative way of cutting costs and keeping international bankers convinced that Brazil can still honour the interest payments tied to the country’s foreign debt.

Researchers’ organisations such as the Brazilian Academy of Sciences (ABC) and the Brazilian Society for the Advancement of Science (SBPC) have struggled for the last two and a half years to unfreeze the contingency money, to no avail.

Legitimising the freeze

Last month, Lula asked Eduardo Campos to step down from his post as science minister and reoccupy his seat in the House of Representatives. Campos was replaced by one of his aides, the well-regarded engineer and physicist Sérgio Rezende (see ‘Business as usual’ says Brazil’s new science minister).

Before stepping down, however, Campos sent a bill to Congress intended to disentangle the sectoral funds conundrum and release part of the frozen funds. According to the bill, which has already received the support of ABC and SBPC, the practice of reserving research funds for contingencies would be history by 2009.

But there is a catch: if Congress approves it, the bill would not only set out a timetable for ending the practice, it would also legitimise freezing the research funds in the first place.

On the positive side, the bill would gradually reduce to zero the amount of money the government can freeze each year. In 2006, the government would be able to set aside a maximum of 30 per cent of the sectoral funds for contingency purposes, instead of the current 50 per cent or more.

In 2007, when the next presidential term begins, the portion available to the government would be down to 20 per cent, and in 2008 ten per cent, then nothing in 2009.

But the bill refers only to future money coming in from the sectoral funds. It makes no mention of the US$1.3 billion that have already been frozen.

Some observers argue that the ABC and the SBPC should not have accepted the deal.

If Lula is not re-elected in 2006, any agreement he makes might not be honoured by the next president. And by supporting Campos’s bill, the ABC and SBPC appear to be recognising that sectoral funds were too good an idea to be taken seriously.

There is an old saying in Brazil: once you open the gate, you cannot stop the herd.

Marcelo Leite is a Brazilian science journalist.