The economic and environmental achievements of Lula’s Government are cause for celebration

By Julia Felmanas, PT Londres

Lula came into government, after four years of Bolsonaro, with huge devastation of the Amazon forest and one of the highest deaths rates due to covid, there was almost euphoria over his victory in Brazil and abroad. Lula won the election by the smallest of margins – 50.9%.

The election aftermath brought with it riots in Brasília and Bolsonaro’s supporters camped outside military barracks in all parts of the country. Despite this, Lula’s inauguration ran peacefully. However, a week later, on 8th January, Brazil had its equivalent of the “storming of the Capitol” with mobs attacking Brasília’s Praça dos Três Poderes. Protesters entered and looted all three State buildings: the Presidential Palace, Congress and the Supreme Court.

Furthermore, ongoing investigations by the Brazilian judiciary are revealing that a variety of forms of vote rigging were used by Bolsonaro and his supporters before and during the election period. I highlight the fact that the highway police blocked the roads in some areas of the country, turning back or stopping Lula’s voters. It is also becoming increasingly clear that a substantial part of the military were willing to back a coup in favour of Bolsonaro.

Despite the fact Lula won the presidency, Congress is a different territory, Bolsonaro’s Liberal Party (PL) holds 99 of the 513 seats and the so-called BBB caucus – Bullet, Beef and Bible – is very large and just the agribusiness lobby in made up of 300 federal deputies. All in all, at the start of the new government, Lula could be sure, at most, of 25% of votes in not too controversial matters, when the left could unite.

Until Bolsonaro’s election, in Brazil’s eclectic party system (currently 19 parties in Parliament), presidents had governed relying on the so-called ‘Centrão’ – a group of politicians belonging to non-ideological parties that always propped up the government in power. But the new cohort of elected Federal Deputies and Senators are more ideological and less likely to vote with the new government. In order to gain greater support Lula accepted to keep in place both the speakers of the Deputy Chamber and Senate.

Nevertheless, during the first few months, Congress brought Lula a series of defeats, including rejecting ministerial structures which he had put in place as soon as he became President. Most notoriously, Congress took power away from the Ministry of the Environment, under Marina Silva – a linchpin of Lula’s third term – and from the newly created Ministry for Indigenous Peoples, under indigenous leader Sonia Guajajara.

To make things worse, during Bolsonaro’s term in office, the Central Bank was made independent and its incumbent president, Campos Neto, is unwilling to support the new government’s economic policy, maintaining interest rates unnecessarily high (13.75%).

Despite these initial teething problems, the economy has started to improve: one of Lula’s first acts was to boost and expand his famous “Bolsa Família” programme and promote the first real increase in the minimum salary (8.9% from December 2023), thus ensuring that people had money in their pockets, at least at the lower end of society.

The government also restarted all infrastructure works stopped during Bolsonaro’s tenure, including investment in housing and school building. The unemployment rate went down and so did inflation, currently at 3.19%, because of a deflation of food items and fuel. The Economy Minister, Fernando Haddad, managed to pass the first major overhaul of the tax system for a number of years and set up a programme for cancelling very small debts, as well as giving people opportunity to re-negotiate larger debts to a total amount of R$75 billion (£12 billion). This will benefit a population of up to 70 million who earn less than R$ 20,000 (£3,000) a month.

Finally, by the end of July, 43 million people (around 18 million families) have been raised above the poverty line – a feat that is visible to anyone who has visited the large Brazilian cities such as Rio and São Paulo both before and after the start of the new government. These two movements – a lower inflation with actual deflation of essential items and more money in people’s pockets, meant that July ended with an increase in confidence in the economy and a higher growth projection (2.1%).

The Importance of the environment for both Lula’s international and internal strategies

Knowing the political difficulties of working with a largely un-supporting Congress, media, agri-business and financial markets, Lula’s strategy has been to capitalise on his green policies and credentials abroad, as well bringing foreign investment to the country.

He went on a world tour, appearing at all relevant international summits such as the G7, the EU-Celac meeting and visiting three continents: Europe, the Americas and Asia. Various countries, including the UK, France, Spain and the USA have pledged resources to the Amazon Fund and Germany and Norway, which had stopped investing in the Fund during Bolsonaro’s tenure, returned. Whilst investment deals signed with China are to the tune of R$50bn reais (£8bn), among a number of agreements with other countries. A more favourable renegotiation of the Mercosur-EU agreement is also on the agenda.

Lula’s efforts are already reaping rewards. Despite the de-staffing of environmental agencies by Bolsonaro, deforestation in the Amazon in July 2023 was reduced by 66% (Greenpeace). And next week (8th and 9th August) we see the launch of the Amazon Summit in Belém (PA), where all the countries in the Amazon Basin, together with Indonesia and DRC, will discuss the future of forest regions. Just before, the so-called Amazon Dialogues were held, where the region’s social movements, indigenous peoples, academics, research bodies and government agencies discussed their contributions.

The Economy Minister is launching the ‘Green Transition’ – a plan of around 100 wide-ranging actions to be implemented in four years, focusing on the economic opportunities provided by the green economy, including employment in new markets such as green energy, the use of the tax system to incentivise the green economy and curtail non-environmental practices, the introduction of a new legal framework to cut red tape for green investment, as well as research, development and promotion of innovative green industries. 

Furthermore, the Minister for the Environment, Marina Silva, launched the comeback of the “Bolsa Verde”, a grant for those living in protected areas in recognition of the work they do in protecting the environment which should provide support for the poorest families in the Amazon region.

The new government is managing to win the confidence of those who at first had been quite sceptical or even outright opposed to it. That is not to say that the next few years will easy, as demonstrated by the media’s overreaction to the appointment of Márcio Pochmann, an economist professor linked to the Workers’ Party (PT), as head of the National Statistics Office (IBGE). Major media outlets spent a week undermining his nomination in order to influence Lula’ choice for an office that has no decision-making power.

Bolsonaro himself is unlikely to be re-elected. However, the far-right has not disappeared, rather it has become entrenched and is looking for a new leader. Former Bolsonaro Minister, Tarcisio de Freitas, now Governor of the State of São Paulo, is likely to be one a potential candidate. Although touted by the media as a ‘moderate’, he said he is ‘extremely satisfied’ with an operation that took place on 28th July by the Military Police under his command that led to the killing of at least 16 in revenge for the death of one of its soldiers.

Nevertheless, as an observer of the Lula government, I will still tighten my seatbelt for the bumpy ride ahead. However I am not expecting a crash.

Featured image: Governor of Bahia, Jerônimo Rodrigues, President of the Republic, Luiz Inácio Lula da Silva, during the Dois de Julho walk. Largo da Soledade, Salvador – BA. Photo credit: Palácio do Planalto/Ricardo Stuckert under Attribution 2.0 Generic (CC BY 2.0)

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