A few months ago, Luiz Inácio Lula da Silva stepped onto a brightly lit stage on a Sunday. It was early September, the elections in Brazil had not yet taken place and the left-wing politician had not yet been elected his country’s new president. Here, in the headquarters of the metalworkers’ union of São Bernardo, deep in the industrial belt of the Brazilian metropolis São Paulo, he stopped on his election campaign tour. It was a home game. His name or likeness was printed on the T-shirts of many visitors. There was frenetic applause as he entered the stage. “Thank you, comrades,” shouted Lula da Silva, “I feel at home!” And everyone knew: That wasn’t just an empty phrase.
On January 1, Lula da Silva was sworn in as his country’s head of state. It is his third term in office and he has decades of experience in Brazilian politics. Nevertheless, Lula da Silva is also a skilled metal worker who has become one of the most influential trade unionists in his country’s history. If you want to know where South America’s largest democracy will probably head economically in the next few years, it helps to first take a look at history.
It is Lula da Silva’s third term. The economic situation is even more difficult than it was 20 years ago when he first became President of Brazil.
(Photo: Eraldo Peres/AP)
It is exactly 20 years since Lula da Silva began his first term as President in January 2003. Brazil was in an economic crisis at the time, and bank and corporate executives feared that things could only get worse with the left in government. The fear went so far that before the elections, Lula even had one had to write an open letterin which he promised to respect international treaties and not to radically restructure the economy.
In fact, his first years in office were characterized by a comparatively conservative economic policy: budgetary discipline, debt reduction, promotion of entrepreneurs. Lula was confirmed in office in 2006, the economy grew thanks to a global boom in raw materials, money poured into the public coffers, a lot was put into social programs, but a lot also disappeared into the pockets of corrupt politicians.
Dilma Rousseff in front of a polling station in Rio Grande do Sul state in October 2016. She had been removed from office a few weeks earlier. She herself spoke of a putsch.
(Photo: Gustavo Roth/AFP)
In 2010, Lula da Silva resigned as one of the most popular presidents in his country’s history. But the first problems had already begun: more and more bribery scandals came to light, and Brazil was also caught up in the global economic crisis of 2008. The left-wing Labor Party remained in power, but Lula da Silva’s successor, Dilma Rousseff, was less strict about fiscal discipline. To stimulate the economy, credit was cheap and public spending increased. Brazil lurched into its worst recession in the country’s history, mass protests erupted, followed by impeachment trials and a highly controversial corruption trial that jailed Lula da Silva for a year and a half before a court overturned all sentences.
No sooner was it clear that Lula da Silva would run for the presidency again in October’s elections than all the old fears that had been plaguing the economy 20 years earlier returned Driving up a wall, Lula again had to write an open letter in which he once again promised responsible economic policies. History seemed to repeat itself, but it’s not that simple.
The pandemic hit the country hard
If the economic situation was precarious when the left-wing Labor Party first took power 20 years ago, it is now disastrous by comparison. The pandemic has hit Brazil hard, the country is heavily in debt, and inflation has eaten up the savings of the lower middle classes in particular. Lula has already said that tackling hunger and poverty will be his new administration’s main focus.
In order to somehow get the tensions and aspirations in his country under control, Lula da Silva has appointed more than three dozen ministers, including Sonia Guajajara: the minister for the indigenous peoples of Brazil wears blue feather headdresses.
(Photo: Santiago Mazzarovich/dpa)
However, the scope for design is small. The income from the sale of raw materials is increasing, but there can be no talk of a boom like in the noughties. Lula da Silva therefore needs the support of business, just as he has to come to terms with the conservative parties, which won an enormous number of seats in parliament in the elections. And so his economic policy in the coming years will be one thing above all: a tightrope walk. He must be a father to the poor and at the same time a friend to entrepreneurs.
All of this can be seen in the new cabinet: Lula da Silva has appointed more than three dozen ministers in order to somehow manage the tensions and desires. Included are politicians like Geraldo Alckmin, actually a former political rival of Lula da Silva, who is now Vice President and Minister for Development, Industry and Trade. Alckmin stands for a conservative economic policy. At the same time, since January 1, the Treasury Department has not had a man with a background in the trade, but Fernando Haddad, a close confidante of the new president. This caused anger and concern among companies and the economy.
After all: With Lula da Silva, Brazil will probably gain weight again abroad. His right-wing predecessor, Jair Bolsonaro, isolated the country with his disastrous environmental policies and verbal abuse. The new left-wing government will now want to revive the once good relations with Europe, also with regard to the treaty between the European Union and the Mercosur states, which also include Brazil. At the same time, there is also China: The People’s Republic has long been by far the most important economic partner. Under Jair Bolsonaro, business was good, but verbal attacks had also led to a deterioration in the binational climate. With Lula, the cooperation could now extend beyond trade and industry to include technology and research.
Ex-President Jair Bolsonaro poses for a selfie with a supporter during the campaign. Internationally, he had isolated the country.
(Photo: Eraldo Peres/AP)
Brazil, that’s clear, will change in the next few years. The new left-wing government will not lead the country into socialism, Lula da Silva is too much of a trade unionist for that, who doesn’t want to overthrow the system but improve it, albeit in the interests of the workers. More than 30 years ago, Brazil’s new president quoted Henry Ford: “You have to pay the employees good wages so that they can buy the cars that they have made themselves”.
Many car companies have left the country
If you stay with this picture, the basic problem of today’s Brazil also becomes apparent: Because many car companies have closed their factories in the country in recent years, especially in and around São Bernardo, where Lula da Silva’s former union headquarters was located. Many people here are now unemployed, and outside the gates of the union headquarters, whole families are sitting on the sidewalk begging for food.