Lula da Silva and Dilma Rousseff in 2010. Ricardo Stuckert/Flickr. Some rights reserved.
When Marcelo Odebrecht, president of Brazil’s largest construction company and one of the 25 largest in the world, was arrested on June 19 as part of the investigations into corruption at the national oil company Petrobras, all alarms went off in Dilma Rousseff’s the government, while the Workers Party (PT) and the whole of the Brazilian left found itself in a state of paralysis. The message was clear: the next one to go down could be Lula. The former president was quick to understand the implications and recognize that his proximity to Odebrecht, whose company financed his campaign and travel, inevitably placed him in the investigators line of sight.
A week earlier, on June 13, at the fifth party congress, Lula was harsh in his criticisms of the PT. He contrasted the militant spirit of the party’s founding period three decades ago, with the prevailing style of the present era. “Today it’s all about the post, the job, getting elected, no one is a militant now.” He added that “an internal revolution” would be needed if the party was to attract youth.
Three days after Odebercht was arrested, the polling firm Datafolha showed that in a possible election, the social democrat Senator Aécio Neves, the PT’s main rival, would have a ten point advantage over Lula (35 to 25 percent). Something like this has never happened before, and the gap was larger than the PT leaders’ most pessimistic estimates.
But what is happening in Brazil is much more than an economic crisis exploited by the right as a way to get the left out of government. In reality what we are witnessing is the dismantling of the political project developed by Lula and his entourage that produced four electoral triumphs. The plan was based on an alliance with a sector of big business, branches of the federal administration (including the leadership of the armed forces), trade unions and the PT. To make it work the essential element was the continued expansion of the economy: the export of primary products and, most notably, the economic integration of the poorest half of the country by increasing its capacity to consume (i.e. ‘poverty reduction’).
Now both the material base and the alliance on which ‘Lulismo’ rested have deteriorated to the point that its collapse appears imminent. A type of slow strangulation of government is apparent: a breakdown of the Petrobras supply chain and a legal siege of a PT in the midst of a difficult economic situation that has obliged the government to impose severe fiscal restraint and that has consequently reduced its legitimacy. The popularity of President Dilma Rousseff, which has fallen continuously since she took office for the second time on the 1st of January of this year, has now dropped to 10 percent according to the latest polls.
The problems facing the fourth PT government cannot simply be attributed to attacks by the Right and the mainstream media. The scenario is are hardly novel; but what is new is that the attacks have found a strong echo in the population, including in the party’s own grassroots. Joaquim Palhares, director of digital publication Carta Maior, said in an editorial that Brazil is “is witnessing the demolition of its democratically elected government”. The director of a magazine defined as “a space for reflection by the Brazilian intelligentsia”, explained the current situation as a result of “golpismo” (an environment of perceived threat of a coup), in which the US together with the regional extreme right, the media and the local right have combined to exploit what he considers to be the PT’s major error: having left “the hegemony of communication in the hands of the right” (Carta Maior, Sunday 28th June).
It seems odd, however, that in Palhares’ long editorial he makes no reference to the June 2013 demonstrations that marked the beginning of this radical shift in Brazilian politics, and the silencing of Lulismo’s grassroots. The intellectual voice of the PT, Emir Sader, also blames the crisis on “the combined offensive of the media, parts of the judiciary and opposition parties” (Alai, 15-VI-15).
Besides being one of the largest companies in Latin America, the Odebrecht construction company has close ties with the PT and Lula. Not only is it responsible for many of the infrastructure projects that form part of the South American Integration Initiative (IIRSA), but also has primary responsibility for most of the 2016 Olympic Games infrastructure in Rio de Janeiro: the Villa, the Olympic Park and the emblematic Puerto Maravilla in Guanabara Bay.
When Lula signed the National Defense Strategy in 2007, which proposed the creation of a powerful military-industrial complex, Odebrecht became part the initiative through ‘Odebrecht Defense and Security’, created two years later. Along with the aircraft manufacturer Embraer this so called “translatina” plays a key role in defense, in 2011 purchasing Mectron, a leading manufacturer of missiles and high-tech products for the aerospace market.
However, the key step was the May 2010 signing of an agreement for the manufacture of submarines with the European Aeronautic Defense and Space Company (EADS), an EU company now part of Airbus. EADS is the second largest defense corporation in the world, and together with Odebrecht created the Itaguaí Shipbuilding company. Itaguái later built a shipyard and a submarine base and is currently constructing three conventional submarines (of the four planned) as well as the country’s first nuclear submarine.
The agreement with EADS covers a broad transfer of technology, and as a consequence Odebrecht has been able to position itself at the heart of the biggest defense program in Brazil. In fact, the Submarine Development Program (Prosub) is responsible for the protection of the Brazilian marine shelf where the biggest oil reserves discovered in the world in the last decade are located. If someone wanted to detonate the defense strategy of one of the world’s major emerging powers, it would have Odebrecht in its sights. And perhaps something like that is already happening.
Odebrecht is the largest private company the PT integrated into the project, but it is not the only one. Most of the construction companies (Camargo Correa, Andrade Gutierrez, Oas, etc.) play a prominent role in the project initiated by Lula; the four companies employ 523 000 people worldwide, and Odebrecht’s sales alone amount to twice the GDP of Uruguay.
In other words: without the support of the construction companies (to which we should add Petrobras, the mining company Vale, and the meat and steel producers), the project to develop Brazil as an independent nation is simply not viable. Or to put it a another way: if to curb the rise of China the White House concocted the “pivot to Asia”, moving large numbers of its armed forces to the region, and to the rise of Russia by provoking instabilities such as the coup in Ukraine, in Brazil’s case the US, taking into account the quality and variety of allies that the superpower has in that country, appears to have opted for a strategy of implosion.
But from there to conclude that any social mobilization is playing into the hands of the Right, as many of the leaders of the PT have claimed, is absurd. The ruling party’s biggest problem is precisely is its inability to correctly read the demands of June 2013, which can be summed up as a better quality of life (and services); that is, the need to go beyond inclusion via consumption, to the winning of full rights. This, unfortunately, cannot be achieved without affecting privileges, a fact that has never entered Lula or his party’s calculations.
The crisis of Lulismo
There is a fundamental contradiction running through the Lula project. After a positive decade, marked by global economic growth, high commodity prices, and strong growth in the emerging countries, (factors that were the heart of a development model based on a consensus between capital and labor) Brazil witnessed major demonstrations by the country’s youth, who demanded more. Now that the most dramatic aspects of poverty and hunger have been overcome, there are new demands “on the left”.
Unfortunately, as soon as Dilma began her second term she started to placate business interests by means of tough fiscal restraint that undermined many of the previous decade’s gains.
That contradiction is now allowing the right (from the media to the evangelists) to capitalize on the discontent; fiscal restraint is putting at risk the PT’s laboriously constructed social base, which had remained faithful to the party during two decades of defeats and repressions. Neither Lula’s three electoral failures as a presidential candidate, nor the repressions of the neoliberal period managed to weaken its support as successfully as Dilma’s economic adjustment. “It’s not a failure, it’s fatigue,” says Felipe Filomeno Amin, economist and sociologist at Johns Hopkins University, “Lulismo has offered real gains to most Brazilians for more than a decade.” (IHUOnline, 25-VI-15 ).
The problem is that when something starts to run out of steam, (nothing less than a development model) it is not easy to keep it going simply by trying to patch it up. The fact is that an entire period is coming to an end. And while according to Filomeno what could save the day would be a new round of reforms (principally tax and land) and a wave of global growth, in the short term neither seems very likely.
The political reality of the home front only makes matters worse. Governance for Lula and his allies was based on a broad agreement among parties; called “coalition presidentialism”, it included more than a dozen parties, most of them, as with the PMDB, on the center-right. But that coalition is now in tatters and it appears unlikely that in the future any major government initiatives will make it through the most right-wing parliament in decades.
If the honeymoon with the parties that formed the backbone of government support is now over, the understanding with the employers is broken beyond repair, and not simply due to the corruption scandals. Paul Singer, Secretary of the Solidarity Economy at the Ministry of Labour, notes: “There is a very important part of the ruling class, which was never PT or left, with which we have common interests. For us, the Workers Party, having a growing industrial sector is important. However, industrial production is shrinking “(Carta Maior, 26-VI-15).
The reality is that Chinese competition is shrinking what was the fifth largest industry in the world. That fact alone will cause problems between the PT problems and the workers, a key sector of its grassroots, and also with its industrial partners. Successive Brazilian governments have failed to react to the fact of Chinese competition: they should have taxed Chinese imports, even at the risk of weakening one of Brazil’s major geopolitical alliances.
In short: problems with allied parties and the PT’s popular and corporate social base, together with unsatisfied demands of the new middle class the party does not know how to deal with, have created the conditions for a right wing and media offensive that find Lula (as a symbol of power) unable to respond.
Lula’s magic is not enough
The hopes of those who dream of a third term for Lula revolve around the creation of a type of “popular unity”, a formula similar to the one proposed by the Spanish movement , Podemos, that would not be associated with discredited political parties. According to Singer, “a front should be created in which the key element would not be parliamentarians but social movements. It would be a way for the PT and its allies to introduce the policies people are asking for. ”
The undoing of ties between Lula and the PT suggests that this is the path he has chosen. Juan Arias, analyst of the Brazilian edition of El Pais, has said that ” a new opposition is being born, one that is not the institutional opposition of political parties, but of society and of the streets” (El País, 25-VI-15) . It seems clear that the social experience that led to the creation of Podemos and Syriza in Greece is a basic interpretation even in the mainstream media. According to this explanation, Lula could return at the head of an opposition based on social unrest, “to take charge of the new social protest, to metabolize it, and present himself as its leader.”
But it is not that simple. The millions of Brazilians that took to the streets of 355 cities in June 2013 suffered police brutality at first hand, and their presence on the streets exposed the naked reality of power. In a word, they became politicized. This politicization could be channeled in different ways and, in truth, a part of the “new middle class” could follow in the footsteps of the most reactionary evangelical pastors. Another part, as became clear, is still on the street and willing to take advantage of any opportunity to resume the demonstrations.
They know that corruption cuts across all parties, those that stole between U.S.$2,000 and 3,000 million from the coffers of the state oil company Petrobras.
These crowds, even those who went home and never took to the streets, are not simply clay in the hands of skilled illusionists or politicians. Not even Lula’s magic can make them forget what they learned in June 2013: that to improve the situation they need to fight to reduce inequality, in one of the most unequal countries in the world.
This article was first published in Lalineadefuego on 17 July 2015.