Welcome to politics, Brazil

Arthur Ituassu
1 November 2006

Sunday 29 October, 22.55 in Brasília: Luiz Inácio Lula da Silva is re-elected president of Brazil. Lula has defeated Geraldo Alckmin with 58.2 million votes (60.82%), against 37.5 million (39.18%) for his adversary: a second term is assured in a second round of voting. The same day, the governors of Brazil's twenty-seven states are also elected.

In this concluding article of a mini-series about the Brazilian election, I would like to do three things:

  • search for the causes of Lula's victory, especially in respect to the corruption scandals that dominated his first term
  • assess what is at stake in the second term, especially the main issues, forces and names likely to dominate the next four years
  • argue that the current political situation in the country is marked by a mixture of old problems and new politics.

Charisma retained

Lula's political life entered troubled waters in June 2005, when a rightwing congressman, Roberto Jefferson, accused the president's Partido dos Trabalhadores [Workers' Party/PT] of buying votes in the Brasília parliament. The scheme operated via undeclared payments made each month (thus mensalão) to congressmen and some small parties in exchange for political support. The money was laundered through a publicity agency owned by a businessman called Marcos Valério (thus valerioduto).

From June 2005 to 29 October 2006, politics in Brazil became an almost one-word song: corruption. In the event, the scandal drew little blood among the political elite, but those it did fell were among the most powerful: those felled included the president's chief aide José Dirceu and the finance minister Antonio Palocci.

Dirceu and Palocci were the two vertices of a triangle of power running Brazil, with Lula at the top. Dirceu was the president's political CEO, while Palocci kept the economy stable, controlling inflation and public spending - with the unfortunate but necessary by-product of high interest rates.

The waterfall of scandal and revelation continued until the very eve of the election's first round, when some PT officials close to the president - including his campaign manager Ricardo Berzoini - were caught attempting to buy documents that contained (false) allegations against two of Lula's leading rivals: Geraldo Alckmin, his main challenger for the presidency, and José Serra, the former mayor of São Paulo. Serra had lost to Lula in the 2002 presidential race, and was standing (successfully, as it turned out) for the governorship of São Paulo.

Both Alckmin and José Serra belong to the Partido da Social Democracia Brasileira (PSDB). The party of the former president Fernando Henrique Cardoso is the main adversary today for Lula's PT in Brazilian politics.

The political fallout of the last pre-election scandal was that Lula was forced to contest a second round. What had long seemed unbelievable came true: Alckmin had won himself another month of campaigning - and a couple of TV debates with Lula (who had absented himself from all of them until then, and been bitterly criticised for it).

During the debates, the PSDB candidate tried to press the president into answering questions about the origin of the money used to buy the illegal documents supposedly incriminating him. But Alckmin's campaign was compromised by serious errors, including his alliance with Anthony and Rosângela Garotinho, the religious populists who control Rio de Janeiro state. He also failed to defend himself and his party properly against Lula's attacks on the PSDB's privatisation programme (an inheritance of the Cardoso years).

The result was that Lula won on 29 October by a margin of more than twenty percentage points. There are at least three ways to explain Lula's powerful victory, even after the series of corruption scandals that marked his first term in Brasília:

  • he proved capable of distancing himself from the scandals, and allowing responsibility for them to be assumed by José Dirceu and the PT (and more widely by parliament and the institutions, with the familiar argument that "it has always been like that")
  • he was successful in keeping inflation low and under control, enabling him to fund government programmes of direct assistance to the poor (resulting in a reduction in the numbers of poor people in Brazil by around 8 million during his first term)
  • Lula retained his personal image as the charismatic standard-bearer of the left in Brazil, and proved that it still had potent appeal.
All three elements may be part of the explanation, but the significance of the third should not be underestimated. Lula is a historic figure in Brazilian politics, associated with the struggle against the military regime (1964-85), the "re-democratisation" process that followed, and the fight for the workers and the poor. This profile continued to serve him well when contrasted with Alckmin's Catholic-conservative image, especially in a country where the income of more than half of families is below even minimum-wage levels.

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)

"The Green and yellow phoenix"
(September 2006)

"Brazil, let's talk" (October 2006)

The economics of power

"It is the end of the Palocci era," said PT leader and Lula's minister Tarso Genro, winning headlines in all major newspapers in Brazil the day after the re-election. The former mayor of Porto Alegre (and my fellow openDemocracy contributor) is now one of the PT's strongest figures, and among the current favourites to be the party's nominee for the 2010 presidential elections. His barbed reference to the chief architect of Brazil's economic policy in Lula's first term carries a firm message: "There is no need to focus neurotically on the control of inflation."

Lula himself quickly disowned this view. But Genro has staked out a clear position in the emerging debate over public spending in Brazil. For amid the intense, often sensationalist coverage of the corruption issue, a key outcome of the election is to have consolidated two distinct arguments about how best to run Brazil's public finances. Each argument is represented by leading figures in the PT and the PSDB respectively, though there is no doubt where the political momentum lies.

Tarso Genro believes that there is no need to cut public spending: what is needed is to reduce interest rates and let the economy steam ahead, producing growth (and thus, in time, increased tax revenues). This will solve two current economic problems: high daily state spending (perhaps more than 20% of Brazil's GDP) on salaries, costs and benefits, not least on the famous Bolsa Família programme, where 11 million poor families receive money from the government; and very low levels of investment (1.8% of GDP) in health, education and infrastructure.

The problem here is that 8% of Brazil's GDP is spent on paying interest rates on the public debt (and a further 4.5% on savings). This puts added pressure on revenues raised by tax, which amount to around 38% of GDP - yet which do not produce a single public benefit to the Brazilian society, neither basic free education nor equal access to justice, health or security.

Dilma Rousseff, Dirceu's successor as Lula's chief-of-staff, shares Genro's view. She opposes cuts in public spending and supports weaker inflation controls. But it is possible to read Genro's emphatic post-election statement as an early claim that he - rather than Roussef - should be the president's chosen candidate in 2010.

Genro's and Rousseff's view is that of the PT in general. It also had wide support in the Partido do Movimento Democrático Brasileiro (PMDB), which controls seven governorates (out of twenty-seven) and eighty-six seats in the lower chamber of the Brazilian congress (out of 513).

The alternative argument is in favour of reductions in taxes and in public spending. It is strongly held inside the PSDB, especially by Alckmin; but it also allies in the government, such as the current president of the Brazilian central bank, Henrique Meirelles (whom Genro and Rousseff have recently criticised).

At the same time, there are others who seek to take a middle path, albeit with different degrees of emphasis; they include finance minister Guido Mantega, the probable new health minister Ciro Gomes and São Paulo's PSDB governor José Serra.

Old problems, new politics

The outcome of the contest over economic policy will help to shape Lula's second term and thus his place in history. But even more fundamentally, the president will over the next four years have to adjudicate the defining political contest in Brazil: the one between nationalists and liberals.

Brazil's 2006 election has clarified this double-sided polarisation. Its first aspect is the party system itself, where the political environment is shaping itself around the PT-PSDB opposition. Its second aspect is a deeper political and intellectual division centring on the question of what the state should do and how should it do it. (The "nationalist" and "liberal" answers to this question are reflected in several fields, such as foreign policy: should Brazil pursue a "third-world" strategy or one close to the major powers?)

There are variants of these respective currents. The PT and the PMDB tend to be nationalist, but the former's adheres to a more "progressive" variety while the latter is more conservative. The PSDB and the Partido da Força Liberal (PFL) are more liberal, but with contrasting leanings to left and right.

But the larger picture here is as significant as the detail. After all the events of the last thirty years in Brazil - the military regime, the process of re-democratisation, the problems of political and economic instability, the Real plan and the victory over hyperinflation - the country is experiencing stable politics again, with clear and different positions being consolidated across the spectrum.

It is useful to remember that Lula's first four years marked the first time since the 1964 military coup when an elected president started and ended his term according to constitutional propriety. Besides, there was in practice no effective constitution during the twenty years of the dictatorship; the first president elected after the dictatorship (Tancredo Neves) died before being able to govern; the second (Fernando Collor de Mello) was impeached; and the third (Fernando Henrique Cardoso) changed the law to permit his re-election. Even José Sarney (1985-90), who was not elected but inherited the presidency after the death of Tancredo Neves, changed the constitution to have one more year in the job.

The polarisation between the PT and the PSDB, and around nationalists and liberals concerning the role of the state, is the great achievement of Brazil's 2006 elections. But every answer raises a fresh question. In the case of Brazil today it is: if politics is an expression of society, how can politics change society?

Political science offers many answers to this question. A persuasive one is "consensus-building": the careful, patient, political gathering of social consensus around common issues. The evidence of the failure to provide real public benefits to Brazilian citizens is everywhere. This is the shared, tragic predicament of the Brazilian people (as well as of millions of South Americans). Whether these are to be provided by a small or a very large state does not matter. Welcome to politics, Brazil.

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