The green and yellow phoenix

Arthur Ituassu
28 September 2006

On Sunday 1 October 2006, more than 120 million Brazilians will head to an electronic ballot box, push some buttons and decide the fate of the country for at least the next four years. They will be choosing their president and vice-president, twenty-seven governors, senators and state assemblies, as well as 513 federal deputies. What should be a party for one of the biggest democracies in the world, ruled by a military regime until 1985, will instead be tinged with sadness.

On the last winds of President Luis Inácio Lula de Silva's first term in office, voices have been raised against the law that obliges Brazilians to vote. More than a few complain about the three-reais ($1.35) charge for not voting. Many citizens still ask who is running for office. Another corruption scandal - this one in Brazil's largest city, São Paulo - is yet one more cloud covering the big blue sky.

Three polls conducted in the past week confirm that Lula is leading the race. On 22 September, the polling institute Datafolha (linked to the newspaper Folha de São Paulo) gave the president 49% of voting intentions, against 31% for Geraldo Alckmin of the Partido da Social Democracia Brasileira (PSDB - ex-president Fernando Henrique Cardoso's party), and 7% for Heloísa Helena (the dissentient leftist who was expelled from Lula's Partido dos Trabalhadores [Workers' Party/PT]. On the same day, a poll from the Ibope institute (linked to the powerful Globo media organisations) found Lula on 47%, Alckmin 33% and Heloísa Helena 8%.

Arthur Ituassu is professor of international relations at the Pontifícia Universidade Católica, Rio de Janeiro. His website is here

Also by Arthur Ituassu on Brazil in openDemocracy:

"Lula and Brazil: new beginning or dead end? "
(May 2005)

"A big mess in Brazil"
(June 2005)

"Lula: the dream is over"
(August 2005)

"Brazil: never the same again"
(October 2005)

"Farewell José, farewell 2005"
(December 2005)

"Lula’s flame still burns"
(January 2006)

"Lula in London"
(March 2006)

"Brazil’s next winning team"
(March 2006)

"The sum of all fears in Latin America"
(May 2006)

"Violence in Brazil: all are targets, all are guilty"
(May 2006)

"Brazil at the crossroads"
(August 2006)

"Lula’s second wind" (September 2006)

A third poll, by Instituto Sensus on 24 September, had 51.1% going to Lula, 27.5% to Geraldo Alckmin, and 5.7% to Heloísa Helena (who is standing for the Partido Socialismo e Liberdade [Party of Socialism and Freedom / P-SOL]).

The winning candidate needs over 50% of the (valid) votes cast to win outright in the first round. The poll figures suggest that Lula might achieve that figure, though it is not inconceivable that a tightening of the race in the last few days could ensure a second round on 29 October.

In January 2003, when the former factory worker whom everyone knows as "Lula" reached Brazil's Palácio do Planalto (presidential residence) - three months after his October 2002 election victory - the country was full of hope. After three failed attempts (1989, 1994 and 1998), Brazil had finally given Lula a chance. The poor nordestino who fought for a decent living and against the dictatorship was at last in power.

At that time, the debt crisis and the rocketing inflation (1,764.8% in 1989) already belonged to the distant past. The real currency plan and the years of Fernando Henrique Cardoso as finance minister (1993) and president (1994-2002) had inaugurated a new era of economic stability in the country. Cardoso's second period in office, however, was very difficult; by the end it was clear that Brazil needed new blood. Although there was some turbulence during the transition, the result of doubts raised by the markets about how well the leftwing Lula and his PT could manage the economy, this did not disturb the efficient, even friendly political change of guard in 2002.

Lula's balance-sheet

In the event, the market proved itself wrong in trying to bet against Lula's economic credentials. The new president both preserved stability and diminished poverty. A study by Fundação Getúlio Vargas (a respected economics institute) using data collected by the Instituto Brasileiro de Geografia e Estatística (IBGE, the official Brazilian statistics agency) in 2005 reveals the numbers that are fuelling the president's re-election.

Almost 6 million people were removed from poverty in Brazil in 2005 alone, representing 18.47% of the total (poverty being defined as an income of fewer than 121 reais a month, the amount necessary to buy food containing 2,288 calories). In 2003-05, the rate of decline was 19.18% (8.6 million people) - the best figure since 1992, although it still leaves 22.7% of Brazilians living in poverty. In addition, the leading measure of income inequality fell by 3.49% from 2003-05, a much better performance than the 1.1% fall in 1993-98.

All of this was achieved without putting macroeconomic stability at risk. It also cost huge amounts of money, paid for by high taxes (now 38% of GDP per year) and interest rates (the world's highest), with the result that growth rates have been low. The problem is that Lula's government did not allocate targeted pre-existing funds for its welfare programmes (such as Bolsa Família), increasing public-sector salaries, and raising the minimum wage (which has had a huge impact on the public-pension system).

The result is clear: public finances in Brazil are on the edge, and do not create any real public benefit for Brazilian society - neither basic education, basic healthcare, equal access to justice nor public security. Violence has exploded in all urban centres - as it did in São Paulo in May 2006 - and education has got worse. In fact, the number of young people not attending school has grown since 2003.

In short, Lula has managed the economy better than expected but disappointed on the social front. The focus of his spending policies has been direct transfers which, though important in themselves, do not have a transformative nature, as do (for example) investments in equal opportunities and in the provision of universal and efficient public goods.

In addition, the corruption scandals were wholly unexpected. Lula and the PT always presented themselves as a different, clean option in a world of dirty politics and politicians. I've been writing about corruption scandals for openDemocracy since June 2005 and the problems do not seem to cease; indeed, fresh ones have appeared during the election campaign itself.

On 20 September, Lula's campaign manager Ricardo Berzoini was forced to resign after evidence of his involvement in the payment of 1.75 million reais ($833,000) for an illegal dossier was exposed. The fact that the dossier targeted alleged impropriety by José Serra - the PSDB candidate for the governorship of São Paulo state, a close political ally of Geraldo Alckmin, and Lula's main rival in the 2002 presidential contest - only increased speculation about the payment's provenance.

The scandal will also do nothing to help the PT's Aloizio Mercadante, already far behind in the polls, win the São Paulo contest. But its deeper significance is that it reinforces the lesson that many Brazilians had already drawn: after four years in power, the PT has shown itself no different from "the others".

This may not damage the president, who has shown a remarkable facility to distance himself personally from the taint of corruption (despite the serial resignation of his chief aides - José Dirceu, Antonio Palocci, and now Berzoini). But the scandals will probably have consequences for his party in the 1 October elections, especially in the races for congress and the state governorships.

Lula's life will not be easy in a second term, and neither will Brazil's. However, this is a people who have a history of overcoming difficulties - through their creativity, their faith and their strength. Brazil has grown its economy and passed through the time of dictatorships and hyperinflation. After a bitter past of military regime and economic instability, and after Lula's turbulent first term, it is time for the country to remake itself as a political community.

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