Image source: Thayse Ribeiro / Mídia NINJA

Luiz Inacio Lula da Silva was elected for his third term as president over Jair Bolsonaro,  a change signifying a drastically different policy regime for Brazil as compared to Bolsonaro’s deleterious free-market model of governance.

By Pranav Mittal

On Oct. 30, Luiz Inacio Lula da Silva narrowly defeated his opponent, incumbent populist Jair Bolsonaro, securing 50.9% of the total votes against Bolsonaro’s 49.1%. The results are a referendum against Bolsonaro’s right-leaning and suggest a shift towards a socially progressive administration. 

Jair Bolsonaro was elected in 2018 out of Brazilians’ frustration with the political and economic state of the country. Michael Temer, Bolsonaro’s predecessor, oversaw the country during a time of political and economic turmoil. Arrested for corruption in 2019, Temer was at the forefront of a corrupt and broken political system. He accepted a bribe of over $1m and was involved in multiple crimes such as money laundering and cartel formation, catalyzing the increase in Brazil’s crime rate, which reached 30.8 murders per 100,000 in 2018 from 29.9 in 2016. Brazilians’ dissatisfaction was further exacerbated by the Brazilian Economic Crisis of 2014, which saw the GDP fall by 8% and employment skyrocket by 76%, leaving 12.9 million people unemployed. Bolsonaro capitalized on Brazilians’ disillusionment with their government, drawing in voters with the promise of social order.

A puritanical believer in the free-market model, Bolsonaro appointed former businessman Paulo Guedes as his economic minister and implemented a policy framework that eroded the public welfare system and privatized the economy. To purportedly reduce the fiscal deficit, the Bolsonaro government reduced fiscal allocations to the Bolsa Familia Programme, which reduced poverty from 28% in 2002 to 12% in 2012, and Brazil’s pension system. However, such policies contrasted with the country’s increase in military expenditure, as evidenced by the 2019 defense budget of $109.9 billion, which allocated $1.43 billion more to the military than the original forecast. Throughout Bolsonaro’s regime, the defense ministry continued to receive the highest discretionary funds while public revenue sources were continuously undermined via tax cuts and privatization of public firms – Petrobras, Electrobras, Banco do Brasil – raising public debt to 78% of the GDP by his presidency’s end. 

Bolsonaro was also ardently critical of Brazil’s environmental policy framework, regarding it as one of the roots of Brazil’s social and economic crisis. Thus, from its onset, his regime was characterized by a policy of “environmental dismantling” that delegitimized environmental institutions and limited their jurisdiction. Overall, there were a total of 600 changes in environmental regulations during the four years of his presidency. This included the implementation of measures that increased the scope of corporate activities concerning the environment, such as the suspension of the environmental fines program, which reallocated fine payments to combat climate change, and the subversion of policies pertaining to indigenous reserved lands. Furthermore, this was supplanted with the defunding of environmental institutions such as the Brazilian Institute of Environment and Chico Mendes Institute for Biodiversity Conservation, which reduced their managerial powers over the environment. The implementation of such policies ruptured the sociopolitical and ecological landscape of Brazil. Indigenous lands increasingly experienced violent threats from miners and land-grabbers; the invasion of indigenous lands increased by 135% in 2019 alone, while the conviction rate for illegal mining reached its lowest in 11 years. Such attacks invigorated the racist rhetoric surrounding the indigenous community, as evidenced by the 355 cases of violence against them registered in 2021, the highest since 2013. Most of all, the deforestation rate of the Amazon rainforest rose by 52.9%, decimating 3,890 kilometers of rainforest land in five years.

The unrestrained deforestation of the Amazon forest caused a 10% rise in Brazil’s greenhouse gas emissions. An average temperature increase ranging from 1 to 5 degrees Celsius has been found to reduce crop production by 0.22% to 1.16% respectively, and per capita welfare by 0.02% to 0.08% respectively. As Brazil heavily relies on soybean, sugar and beef exports, such increased concentrations of greenhouse gasses can immensely threaten the country’s economy and projected growth for the future. 

The economic consequences of deforestation in Brazil are not just limited to mere hypotheses. Increased destruction of forests for commercial expansion under Bolsonaro’s policy regime  linked Brazilian supply chains to deforestation, undermining the country’s position at the international market that increasingly advocates for “zero-deforestation supply chains.” Historically, Brazil has been at the forefront in pursuing policies conforming to internationally agreed sustainable development goals, allowing it to foster bilateral relationships with countries such as Norway and Germany. However, Bolsonaro’s ideological regime strained such relations, evidenced by the boycotting and exclusion of Brazilian products in recent years such as that by Swedish company Paradiset, which launched the #BoycottBrazilianFood campaign, and investors such as Finland-based Nordea and UK’s Legal and General Investment Management, which threatened disinvestment in 2019. 

The peak of the Bolsonaro administration’s affronts to the Brazilian people was Brazil’s negligent coronavirus pandemic response, which resulted in the second-highest global death toll. From the pandemic’s onset, Bolsonaro actively promoted misinformation through his support of pseudoscience remedies, such as hydroxychloroquine and ivermectin over vaccines. His downplaying of the pandemic, refusal to implement social distancing rules, and lack of providing the necessary health infrastructure turned the pandemic into a humanitarian crisis, particularly affecting indigenous and Black Brazilian populations, contracting the Brazilian GDP by 4.3% by the end of 2020. In the end, Bolsonaro, elected in hopes of economic growth and prosperity, failed to deliver on the very same promises he campaigned with. Brazil’s poor population increased to 33 million, inequality soared, and the currency lost 35% of its value during his presidency.

Lula, having served as the president of Brazil previously for two terms from 2003 to 2011, presents a different record. With an average growth rate of 4.5% across his two terms, Lula presided over Brazil’s economic boom, successfully stoking the economy and allocating new resources equitably. Lula’s strong commitment to social justice was reflected in his policies as well. He instituted the Bolsa Familia programme, an anti-poverty conditional cash transfer program that helped reduce poverty in Brazil by 40%, increased education in primary schools and electrification of Brazilian households, all the while allocating public resources efficiently, which helped bring the debt to GDP ratio down from 60% to 40%. 

However, Brazil’s current socio-political landscape drastically differs from his time, presenting diverse challenges for Lula. The Bolsonaro administration was characterized by a policy of fiscal excess: increased police funding, military activities expansion, extensive private subsidies and corporate tax reduction, done all without any proportional increase in government revenue, which ultimately resulted in the sky-high debt-to-GDP ratio of 78%. Lula is inheriting an economy suffering through stagflation; in May 2022, Brazil’s inflation rate rose to 11.73% in comparison to 8.06% at the same time last year, and its GDP growth fell by 0.9% in the first quarter from 1.6% in 2021. To address these economic challenges set by the previous administration, Lula has put forward a multifaceted policy framework, starting with the reduction of extraneous federal expenditure. Noting the state of the working population, he further plans to increase the minimum wage, expand the public welfare system and restore workers’ rights as a means to supplement their income. These measures will be supplanted with a potential increase in short-term borrowing, corporate and possibly, wealth taxes, all in line with Lula’s political ideology as exhibited in his previous two terms. Altogether, this worker-centered restructuring of resources by Lula is expected to help Brazil diverge from the privatized development path instituted under Bolsonaro. 

However, the actualization of such changes is not so easy. As witnessed by the election results and their aftermath, wherein Bolsonarista truck drivers blockaded highways across the country and set tires on fire, Lula is inheriting a deeply polarized society. This is in part due to the rampant corruption that has pervaded Brazil for the past two decades. During his first two terms, Lula presided over the system of Mensalao, which allocated stipends to politicians in support of his programs. While Lula claims to have no knowledge regarding the existence of this bribery system, it was a significant component of the rising systemic corruption in Brazil. As Dilma Rousseff, Lula’s handpicked successor, and later Lula himself were found guilty of being involved in Operation Car Wash, Brazil’s biggest corruption scandal, significant sections of the population lost trust in the Workers’ Party and turned to alternative leaders such as Bolsonaro. Lula was sentenced to 12 years in prison in 2017 while he continually denied all charges and claimed to be the victim of a strategic political conspiracy. And even though he was later vindicated in 2019, as all the charges against him were dropped, it appears that the judicial decision hasn’t completely swayed people’s perception of him, many of whom are still not convinced of his innocence. A survey by The Economist has shown that 22% of the PT voters who were surveyed believed Lula was guilty. Thus, even though Lula has won, it appears that he still has a significant ideological divide to reckon with to create meaningful social change and bifurcate Brazil from its past.