June 25, 2013
The rise in power of the Workers Party and its President Louis Ignacio Da Silva (well-known as “Lula”) in 2003 has engendered hopes for millions of Brazilians for the launching of an alternative economic model that would compete the neoliberal economic doctrine and the financial monopoly exerted by the United States. The first visit of President Lula in the Global Social Forum of Porto Alegre in 2003 and his statements regarding a total shift of Brazil’s economic and social policy in favor of the people and the workers were endorsed and embraced by the majority of the Latin American people who were seeing Lula’s face the new leader of the continent. What has finally happened 10 years after his rise in power, and what is behind the massive and persistent manifestations of the Brazilians these last weeks?
Lula’s economic program was centered around the social development and equality, encompassing a series of reforms in the public sector and the bureaucracy. Brazil was at that period in an extremely difficult position against its lenders, being almost completely dependent from external funding. The International Monetary Fund and the World Bank were designated Brazil’s monetary and fiscal policy, and there were wide concerns that Lula was coming to sweep away the colonial imposition of these two institutions. Nonetheless, foreign lenders of Brazil were immediately appeased in the first weeks when Lula clearly stated in Washington and Wall Street watchdogs that he was not intending to default or push away foreign lenders of the country, in contrary with what was the case in Argentina.
In practice, the first move of Lula was to position key-figures of the previous pro-IMF administration in the head of Brazil’s Central Bank and National Bank. Henrique de Campos Meirelles and Casio Casseb Lima were both neoliberal bankers having proved their credentials in investment bank Boston Fleet and Citigroup. These two businessmen were not all accidentally selected: both Boston Fleet and Citigroup are the two biggest lenders Brazil, and it was therefore expected from Lula that by appointing them in such delicate yet powerful positions, foreign lenders would be rather satisfied. As a matter of fact, Brazil’s monetary and fiscal policy was composed upon four fundamental pillars: tough currency; austerity; high interest rates; deregulated foreign exchange system.
Brazil’s complex image
It goes without doubt that Lula was a charismatic leader who achieved to change Brazil’s image abroad within a decade. Mainly, he achieved to combine in an orchestral manner the demands of a suffocating urban class with the demands of the neoliberal lobby. In addition to that, he achieved to exploit the natural resources of the country -i.e. oil, mines, agriculture- and establish Brazil as one of the biggest export-oriented countries worldwide. Before his rise in power, Brazil was led by a group of economic elite that was leaving no space for reforms and alternative economic models. From the very first moment Lula gave the keys of the country’s monetary and fiscal policy to the foreign lenders and kept for himself the right to define the economic policy by bringing affluent investments in the agricultural and industrial sector, generating jobs, and increasing the country’s geopolitical leverage. But the biggest achievement of Lula was that he swelled the middle-class of Brazil, which increased tremendously consumption rates within only a decade. This middle-class was the one that helped him get re-elected.
Overall, the economic policy of Lula had boosted growth, but as we all know -or at least many of us- growth is an empty shell if it is not accompanied by a relevant social growth and human capital growth. In other words, the economic miracle of Lula did not essentially assist the combat against poverty, illiteracy, poor education quality, and poor health services, and lead to lowering taxes. The outcome of such a development is doomed to be unveiled sooner or later.
The deepest causes of massive manifestations
During te previous weeks and the ongoing one Brazil is faced with massive manifestations that were initially started as small-scale gatherings and ended up in this chaotic situation. At the top of outrage was found an additional increase in transport fares. If someone isolates this event, there is no justified reason for this string of events. Nonetheless, structural problems were kept for years under the carpet and behind the big bubble of growth and partial prosperity.
Brazil was and it is still suffering from a series of complicated social and economic issues. Infrastructures remain in awful condition, the transport network is obsolete, dnagerous, problematic, and yet expensive, poverty is thriving -i.e. despite the official reports of the World Bank that tend to prettify the phenomenon- illiteracy rates are booming and thousands of kids drop out in order to work, violence is uncontrollable, the health system is falling apart and, despite the aggregate wealth of these years, taxation is increased and prosperity is not diffused to each corner of the society.
In this respect, the cost of Olympic Games has been already blasted off, and almost 60% of the no longer want their country to host the Games in the fear of additional costs and burdens for the society, but also in the fear of not being profited from this huge event.
The President of Brazil, and successor of Lula, Dilma Roussef is faced with a global and dramatic phenomenon: either to consent with the protesters heading for some temporary reforms and controlling the increase of transport fares or pull the cord until the end. My assessment is that, as in Rome, Madrid, Athens, Lisbon, and in Turkey, as everywhere in the world, whatever the solution will be will have no direct and deep impact in the society. And why is that? Because we lack of charismatic, global leadership that can combine the profits of economic growth and draw them into the society. Brazil has been entered a serious trap and chain of events that is quite inevitable to exceed and avoid. Especially in the aftermath of the Olympics in 2016, social tensions are expected to be even deeper, wider, and harsher.Dimitris Rapidis