The Official James Petras website

President Lula Da Silva announces the purchase of $4.4 billion dollars in new warplanes the same day that mudslides in Rio de Janeiro bury over 230 people living in precarious shanty slums neglected by the government housing authorities .While there is a total absence of a drainage system in the favelas, Lula spent billions on roads and ports for exporters but nothing for resident slum safety. Brazil is widely included as a newly emerging world power, along with China, Russia and India, the so called BRIC countries, and yet nearly forty percent of its population, lives on or below the poverty line, at or below the minimum wage of $200 dollars a month for a family of four.

Brazil’s attraction for many of its financial promoters is found in the size of its population of 210 million, the effective consumer market of over 100 million, and its agro-mineral resources: Brazil is one of the world’s biggest exporters of chickens, beef, soya, iron ore, cotton and ethanol.

Two other factors have recommended the Lula regime to both the right and left.The Right is pleased with Brazil’s stock market, financial sector and foreign owned banks (over 50%)which have gained and transferred over 150 billion in profits to overseas investors over the past 8 years of Lula’s rule. The ‘Left’ is enthusiastic about Lula’s independent foreign policy: his opposition to the US boycott of Cuba and exclusion from the Organization of American States; his economic relations with Iran despite pressure from Washington; his refusal to condemn Venezuelan President Chavez;and the fact that China has replaced the US as Brazil’s foremost trading partner as of 2010. Moreover, many defenders and apologists for Lula cite his “poverty program” which provides a $40 a month subsidy to 10 million destitute families , which has reduced poverty.The Lula Left forget the fact that the regime has failed to provide meaningful employment with adequate pay for the poverty subsidy recipients and has broken promises to carry out an agrarian reform for the 20 million landless rural workers. In other words, Lula’s supporters cite the regime’s policy of diversifying markets for Brazilian agro-mineral exporters and his multi-billion dollar electoral patronage subsidies to the poor as evidence of Lula’s “progressive” credentials.

Two other elements enter into the positive image of Lula: his working class, trade union origins and his continued high popularity ratings (according to recent polls over 60%). The “working class” background is over 20 years past: Lula has not worked in a factory for over 25 years.He has been a middle class political functionary of his party since the mid 1980’s. Moreover, Lula’s working class origins have no relevance to his current political and social commitments and appointments, which are tied to big business strategists and neo-liberal central bankers and economic ministers. What needs to be acknowledged is that Lula is a master at the politics of conservative populism: Lula excels in creating an emotional bond with the poor, through his face to face encounters and mass media imagery as “a man of the people”, even as he upholds a social hierarchy with the greatest inequalities in South America. No conservative neo-liberal leader in the US or EU can combine the façade of “populism” and the content of neo-liberal orthodoxy with the same success.

Myths and Reality of a Brazil as an “Emerging World Power”

Given the enduring mass poverty and social inequalities in land and wealth no perceptive observer can claim that Brazil’s new status as an emerging world power is due to Lula’s social policies. The entire bases for projecting Brazil onto the world stage is based on its economic performance. A brief but close examination of the empirical realties, raises profound doubts about Brazil’s performance and Lula’s claims of achieving the status of a world power. Between 2003-2009 Brazil’s GDP grew by a mere 3.4% and only 2% percapita, below the average for Latin America by at least 1%. If we compare Brazil’s performance in relation to the other BRIC countries, especially China and India, Brazil’s GDP grew at less than 40% of their rate of growth. Locating Brazil in the same league as China and India seems to be highly misleading. Moreover, while most of the growth of the other newly emerging powers is based on diversified industrial exports (China) and high tech information services (India), Brazil still depends on the dynamic expansion of agro-mineral exports.

Growth and stagnation characterized Lula’s eight years in office, depending on prices and demand for agro-mineral commodities. During the years of the commodity boom (2004 – 2008) Brazil grew by 4.5%; during the downturn in commodity prices (2003 and 2009) Brazil stagnated at less than 1%. In other words, Lula’s “free market policies” had less to do with Brazils’ economic performance than world market demand for commodities. Despite Lula’s claims that Brazil would avoid the impact of the world crises of 2008 -2010 because it was “delinked” from the imperial centers, in fact beginning in October 2008 and continuing through to January of 2010 Brazil entered into a recession with zero growth in 2009.Its recovery in 2010 is largely the result of the revival and explosion in commodity demand, led by China ,and the sharp rise in prices of key export commodities such as iron ore which has doubled in price since the beginning of 2010.

Brazil’s economic performance under Lula appears favorable only in comparison to the disastrous results achieved under the previous ultra neo-liberal Cardoso regime which grew at a snail’s pace of less than 3%. What is most significant, however, is the strategic socio-economic and political continuities between the Cardoso and Lula regimes. Cardoso devastated the public sector, by privatizing and denationalizing, at ridiculously low prices, the most lucrative enterprises. The most glaring example was the sell off of one of the richest iron mines in the world Vale del Doce for less than a billion dollars, a firm which is now valued at over $20 billion dollars and with yearly profits exceeding $3 billion dollars. Lula has retained and even expanded Cardoso’s most dubious privatizations – including the banks, mines, oil and telecommunication companies which were acquired at below market prices.

Even before his first election victory in 2002 Lula signed an orthodox International Monetary Fund Agreement to retain a 4% budget surplus, to pursue an orthodox fiscal policy restraining social spending reducing public pensions and holding down wages. Lula was more successful than Cardoso in enforcing these orthodox monetary policies because of his influence over the major trade union confederation (CUT) leaders, who he co-opted via appointments to the Labor Ministry. In other words, Lula harnessed populist rhetoric to fiscal conservatism, symbolic labor appointments with economic policy czars with long-standing ties to major financial centers.

Lula received the enthusiastic endorsement of all the major financial newspapers for his switch from advocate of working class social reforms to staunch ally of the BOVESPA (Brazilian stock exchange). His policies of accumulating over $200 billion in foreign reserves, of prioritizing the paying down foreign debts instead of increasing social spending for education health and housing affecting 100 million Brazilians, won lasting praise among all orthodox economic experts. The “stability” of the economy was bought at the expense of the instability in the lives of the working class and the rural poor. Unemployment under Lula never went below 10%; the ‘informal sector’ remained at over 30%; four million rural families remained landless; the Amazon rain forest annually lost over 2 million hectareas per year, encouraged by Lula’s push to promote agro-business exports. Indian territorial reserves were violated., land was occupied, scores were killed, while federal and state agencies focused on prosecuting rural movements occupying uncultivated latifundios owned by business speculators. Lula’s policy of financing agro-business exporters was successful – cultivated lands expanded, revenues increased geometrically and wealth grew – for the owners, investors and stock owners. But at a tremendous cost: over 2 million rural workers were forced to migrate to slums and marginal employment, becoming easy recruits for the drug gangs which control the favelas of Rio and Sao Paolo. Millions of family farmers were forced to borrow at high interest rates and to compete with subsidized food imports, driving hundreds of thousands into bankruptcy and making Brazil a food deficit country.

Lula, during and immediately after his election, solemnly promised the powerful 350,000 member Landless Rural Workers Movement (MST) that he would carry out an agrarian reform settling 100,000 families a year with housing, credits and technical assistance. During his eight years in office, Lula broke his pledge every year, settling less than 40,000 families while under-financing the new and established co-operatives driving over one-third to bankruptcy. The MST in turn because of its “critical support” of Lula, lost the political initiative even as it continued its policy of occupying farms to secure land reform. After a brief period of tolerance, the government turned the military police against the Movement, arresting its leaders and criminalizing its activities. After a major corruption scandal affecting Lula’s top advisers and leaders in Parliament (2005 – 2006), he turned to the traditional rightist parties and established politicians including ex President Sarney to promote his neo-liberal economic agenda. Lula’s new coalition with the traditional right was based on a common program of promoting big agricultural interests and guaranteeing their security against the land occupation strategy of the agrarian reformers in the MST. The result was an increasing concentration of landownership (1% of landholders own over 50% of the fertile lands) and an increasing number of movement leaders and activists awaiting trials and serving time in jail.

Lula’s legacy is essentially an “economically sound and stable market for investors” according to all orthodox economic experts. Brazil was rewarded by being awarded the site for the forthcoming Olympics. But given the severity of poverty and the dynamic growth of drug trafficking and armed organized gangs, Lula’s projections of nearly 50,000 soldiers to protect the spectators reveals the underside of his dream of an emerging world power.

Lula’s Political Legacy

Lula’s political legacy is on display in this year’s presidential elections, in which he must step down after two terms in office. In contrast to the past, there is now in place a modified two party system in which a variety of smaller groups coalesce around Lula’s Workers Party (PT) and Jose Serra’s Brazilian Social Democratic Party (PSDB). Neither party is what its label proclaims: over 80% of the delegates at the PT nominating convention were professionals, lawyers, functionaries and business people with a sprinkling of trade union bureaucrats and co-opted “movement” officials. There is nothing “socialist” about the party of Cardoso which privatized the jewels of the economy. The competition of the two parties is over who best represents the agro-mineral, banking and industrial elite of Sao Paolo and as a corollary who will receive the bulk of their financial contributions. Lula was eminently successful in securing tens of millions of dollars in contributions from the economic elite for his services on their behalf .In fact most of the really wealthy contribute to both major parties. Lula’s legacy is that he has de-radicalized Brazilian politics, leading to a consensus over the centrality of free markets, free trade and state promoted big business as the bases of economic policy. Beyond that Lula has enshrined the principle of poverty subsidies in place of social structural changes as the centerpiece of social policy.

Brazil: The Presidential Election 2010

The best analysis of the forthcoming Brazilian presidential elections (October 3) is found in the response of the stock market, credit agencies and investors: they envision no major changes on the horizon, continued support for orthodox fiscal policies, greater state promotion of private national and foreign investment and most important, social stability. The so-called “Workers” Party under Lula’s unchallenged authoritarian control, nominated Dilma Rousseff, his former ‘chief of staff’ as their candidate. The opposition rightwing PSDB nominated Sao Paulo State Governor Jose Serra, a former leftist who once contributed an essay to a book I edited back in 1972, titled “Dependence or Revolution”. One of the political ironies is that over the past two decades former Marxists, trade union leaders, even guerrilla activists have played a leadership and vanguard role in steering Brazil toward deeper integration into the world market, replacing socialist internationalism by embracing capitalist globalization.

To the extent that differences exist between Rousseff and Serra they revolve around issues of foreign policy, the role of public-private enterprise associations and the size and scope of public sector spending. Rousseff, promises to continue Lula’s promotion of billion dollar trade and investment agreements with all countries including Iran, Venezuela and Bolivia, regardless of US opposition. Serra, who is more ideologically closer to Washington’s agenda, may reduce or limit these economic ties to accommodate the Obama regime. In other words, the Workers Party is a party with a greater commitment to independent market based global expansion than Serra’s more dogmatic ideologically influenced foreign economic policy. Officials in Washington have informed me that, the Obama regime will adopt a public posture of ‘neutrality’, since both candidates have affirmed friendly ties with Washington. Unofficially, I was told (off the record) that the Obama Administration prefers Serra because he is likely to side with Washington’s policy against Iran and be more outspokenly critical of President Chavez. However given the large scale engagement of Sao Paolo business interests in both countries, it remains to be seen how far Serra (if he is elected) would actually go in prejudicing Brazilian investors to satisfy US military driven empire building. Rousseff is likely to promote large scale public-private joint ventures to exploit multi-billion dollar off-shore oil and gas exploitation; Serra is more likely to promote exclusively private-foreign capital ownership and exploitation. Rousseff’s election campaign will receive big financial contributions from a long list of agro-mineral corporations, traders and national industrial manufacturers and construction contractors who received lucrative government contracts and subsidies and credit. Serra will be financially favored by the multi-national banks, rightwing landowners association and the leaders of the Sao Paolo industrial elite. The trade union confederations and social movements will back Rousseff, either because of recent favorable wage agreements or because the PT is seen as the “lesser evil”. The Chamber of Commerce and some leading business associations and middle class “civic groups” will back Serra especially in the greater Sao Paolo region. While on the surface these political and social differences between the candidates appear to give some credibility to the idea of a ‘left-right polarization’ in reality the differences disappear when we examine closely the make-up of the political parties within the coalition backing the Rousseff. Four of the five major parties are on the conservative end of the political spectrum: the Brazilian Democratic Movement Party (PMDB), the Brazilian Republican Party (PRB), the Democratic Labour Party (PDT) and the Republic Party(RP). If Rousseff should be elected these four rightwing coalition partners will obtain the majority of ministries, leadership position in the Congress and ensure that the Rousseff regime does not trespass the boundries of orthodox neo-liberal fiscal policies. What remains of the Left, is a fragmented assortment of micro parties with a strong presence in public sector trade unions (teachers, health workers) and some influence among the social movements. If the various groups united they might gather a respectable vote, but because of sectarian and opportunistic practices that is unlikely. Ciro Gomes, a former member of Lula’s cabinet is a likely candidate for the Socialist Party. But that is likely a mere a pretext to negotiate electoral support in the second round in exchange for a cabinet post if Rousseff is elected. Marina Silva, Lula’s former Environment Minister is a candidate for the Green Party, a party allied with the rightwing. PSDB, PMDB as well as the PT whenever it is opportune: Silva will likely trade her voters to whichever party offers her a post. The two other explicitly “Marxist” parties, the United Socialist Workers Party (PSTU) and the Socialism and Freedom Party (PSOL), which tentatively agreed to present a common candidate have yet to resolve differences about acceptable coalition partners: the PSOL looks to the Green Party, the PSTU threatens to abandon the alliance.

Conclusion

Brazilian politics have moved a long way to the right over the past decade: the PT is now an openly pro-business party, whose fiscal policies are a mirror image of the IMF recipes. The once militant trade confederation, the CUT, is now little more than an adjunct of the Ministry of Labor, well rewarded with economic subsidies but incapable of putting workers in the streets. Even the mass based rural landless workers (MST) which still retains its organizational autonomy feels weakened and isolated in the face of the PTs right turn. On the other hand, agro-export elites are thriving, investment bankers and overseas multi-nationals are pouring over $30 billion a year into Brazil; one of the worlds “safest emerging world powers”. Leftist leaders like Fidel Castro and Hugo Chavez praise Brazil’s “progressive” foreign policy even as Lula signs defense pacts with Obama for joint training and military exercises.No doubt Lula has gained greater international recognition for Brazil and will finish office with the greatest popularity ratings of any President in recent history. Yet with a cost of living comparable to that of Barcelona, over 30%, of Brazilian wage workers still receive a minimum wage of $200 dollars a month; the public school teachers in Sao Paolo receive between $436 - $505 dollars a month. One has only to visit the millions dwelling in the slums surrounding Sao Paolo, Rio and the other major cities to realize that there are two Brazils: the mass media publicized Brazil of the BRIC, the banker’s ‘emerging world power’, the Brazil of free elections and free markets .Then there is the “other Brazil” of forty million impoverished slum dwellers, twenty million landless rural workers, tens of thousands of dispossessed (Amazon) Indians, thousands of unpaid ‘slave laborers’ living in debt peonage, the millions of public school teachers, working two, three or more shifts up to 13 hours a day to earn a decent pay. Lula’s presidency may have raised Brazil’s international stature and gained him the status of a ‘global statesman’ but most workers, peasants and Afro-Brazilians still work and live under Third World conditions.