Six months of President Lula's government

Clara Figueiredo, series_ Brasília_ fungi and simulacra, national congress, 2018.
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By JEAN MARC VON DER WEID*

How the government dealt with the problems, restrictions and threats in those 180 days

With 180 days of government, we can already have an idea of ​​how the problems, restrictions and threats that I called a “trap” for the Lula government, in a series of articles and discussions, are manifesting themselves and how they are being faced.

As I emphasized in several of the articles, we cannot assess the clashes experienced by the government with very high expectations about the possibilities of breaking the many knots that bind it. But I continue to think that it is necessary to find a floor of essential accomplishments that guarantees to avoid a right-wing turn in the 2026 elections, even with the stalwart ineligible by decision of the STE. I agree with the government's bet on focusing on the effort to promote a resumption of economic development as the core of the strategy to isolate the right and break, even partially, the Bolsonarist bubble of the extreme right. It remains to be seen what this development proposal would be and how to take it forward.

We can start by assessing how far Lula and his government have managed to advance this economic agenda. Apparently the economy is reheating, with GDP expectations for this year rising to 2 to 3%, more to two, according to the market, and more to three, according to the government. Inflation is falling towards the target and expectations are in the direction of a rate approaching the center of the target this year. Employment is growing, although at a slower pace than last year, when the country emerged from the pandemic crisis.

The fact that just over a third of the workforce has a formal contract remains worrying. On the other hand, although all economic sectors have started a recovery movement, it is still in the primary sector (agribusiness and mining) and in services that the growth rates are more significant, while the industrial sector is going at a very slow pace, walking sideways. The stock exchange is experiencing euphoria, with an increase in the BOVESPA indices not seen since 2016, but investment in the real economy does not follow the movement and throws sand in the medium-term perspectives.

According to the government, the major obstacle holding back this recovery is the very high Selic rate, imposing a real interest rate of close to 10% per year, which devours a huge part of the annual budget, approaching the trillion reais spent on rent. The assessment is correct, although the obstacles are not just from financial bleeding. The indebtedness of both economic agents and consumers is very high and this puts a brake on investments and family spending. This would be mitigated by the drop in interest rates, already expected in the market's expectations, but it would still not be a solution.

There is a shadow zone over the government's capacity to finance its project to stimulate development, subject to an expenditure control model that, partially, loosened the infamous expenditure ceiling. The control of public debt is not yet equated and “priced” by the market, generating apprehensions in Faria Lima.

Finally, the government had to sacrifice a significant part of its budget to please the empowered Congress and the arm wrestling (which we will discuss later) between this and the executive points to a continuous process of concessions that may dilute the induction power of the government in the recovery of the economy.

More conservative or more pessimistic observers are talking about a “chicken flight” in the economy and fearful about the near future. But there are other worrying elements in the analysis of this economic recovery.

The most important of these elements is the apparent disconnection of the measures taken by the government combined with the lack of a clear vision of which project and which paths to be adopted to promote an inclusive and sustainable development, within the limited framework of our Tupiniquim capitalism, is Of course.

The tax reform approved these days focused on tax simplification. This is an important measure, but whose effect mainly benefits the productive sector. It is not expected that this reform will reach the consumer's pocket in any significant way, nor that it will increase collection, at least in the short term. On the other hand, the government accepted the imposition of viceroy Artur Lira, postponing the discussion of other fundamental points in the tax reform, such as the increase in income tax rates for the upper floor and the reduction of the same for the lower floor. low.

Also left for an indefinite future the taxation of financial profits and great fortunes as well as a profound review of the immense tax subsidies distributed in a casuistic way over years of lobbies from different economic sectors. All of this will be debated by Congress, if Lira wants it and if the government agrees to take a risk in this direction. In any case, even if these points are approved by Congress, the effect on revenues will not occur before a year or two of transition. If this much-needed and difficult reform is approved, the extra resources will start to appear around the last year of the Lula government.

Lastly, one cannot bet on a drop or stability in the prices of foodstuffs in the short, medium or long term. The relief of recent months has more to do with the drop in the exchange rate and the harvest of the 2022/2023 crop, which has just ended. We are entering the off-season and prices naturally tend to rise. On the other hand, the indexation of our agriculture to the indicators of international commodity exchanges works in favor of exporting agribusiness and against domestic food supply, either due to production costs or high prices of imported food, even assuming that the dollar does not rise .

This is due to the fact that our national production, exported or consumed nationally, depends on inputs that are imported, such as phosphate or potassium fertilizers and pesticides. The prices of these inputs are on a permanent upward trajectory, even without taking into account the upward jump caused by the war in Ukraine.

Every rise in food prices erodes the value of Bolsa Família aid, as we have seen happen in recent years. And the social and political effect will be worrying.

This very brief and superficial assessment of the current and prospective economic situation does not give us room for great celebrations.

As already mentioned, the government still does not seem to have a defined investment plan. Decisions so far have focused on spending to resume social programs that were important in popular governments between 2004 and 2016.

The most significant measure adopted in the sense of stimulating a specific economic sector, subsidies to facilitate the purchase of cars, is met with bitter criticism for two reasons: (i) choosing to spend close to 1,5 billion to benefit social sectors that are relatively well off in the place to direct scarce resources to the most impoverished sectors; (ii) favor an industry that has always received favors and incentives without guaranteeing employment and which has a strong impact on the emission of greenhouse gases. This 1,5 billion could have been used to encourage States and Municipalities to improve urban mobility for the poorest, which would bring well-targeted social benefits and alleviate the problem of greenhouse gas (GHG) generation.

The lack of a clear economic development project makes it more difficult to mobilize social and public opinion to support the government in its relations with a hostile and blackmailing congress. Until now, the government has faced this hostility with two tactics: (a) negotiating proposals with leaders of parties attracted to the government's base with ministries and positions; (b) attract retail votes by approving parliamentary amendments. These tactics were not enough to avoid several defeats in congressional votes and to avoid the transformation of other proposals into shadows of the executive's initial intentions.

This negotiation effort is causing a negative effect for the government, beyond the political defeats in themselves. To avoid further beatings in Congress, the administration is increasingly narrowing the scope of its ambitions. His proposals are already so diluted that criticisms arise, both from the left, which demands more coherence and relevance, and from the ruling class, which demands the same thing, but with mixed signals.

I always hear from my PT friends that there is no possibility of proposing something more radical, increasing the income tax for the richest, on capital income, on inheritances and on large fortunes. Or withdrawing subsidies that benefit the most varied sectors of the economy, in an unequal way and full of casuistic imbalances. The argument is correct, but the tactic is not. The government should propose and defend what it thinks is most fair, as it would be the only way to make the debate more attractive to the population as a whole.

Mobilizing public opinion to debate VAT has no popular appeal. By choosing the possible proposal, the government distances itself from its own bases and from the broad mass that would benefit from an income tax reduction for the bottom floor and an increase for the top floor. It is more than likely that a more radical proposal for tax reform would be defeated in Congress and everything would be reduced to what is being negotiated today, that is, the interests of the most powerful economic agents. But the big difference is that the wider public would know which side the government is on and which side the Congress is on, and this could have an effect on future elections.

Another element of the “trap” is the contradiction between the environmental discourse adopted by Lula and the broad concessions he is willing to make in order to try to neutralize agribusiness and its political agent, the ruralist caucus. There is no mention of reducing the amount of subsidies that agribusiness receives, the volume of resources in this year's Crop Plan is expanded, with subsidized interest, exports from deforested areas are defended in the negotiation of the agreement with the European Union, continues the use of new agrochemicals is rapidly released and the exploitation of potassium in indigenous lands is discussed.

It seems that Lula did not realize, even with the experience of his previous governments and those of Dilma Rousseff, that agribusiness demands a lot and, even with many concessions, does not fail to sabotage the government at every opportunity. Dilma Rousseff approved the Forestry Code, which wiped out tens of millions of hectares of land taken over by agribusiness and, even so, and despite having a representative in the Ministry of Agriculture, they stopped campaigning and voting for her impeachment.

Lula continues to assert, as in his previous governments, that there is room for everyone in Brazilian agriculture: agribusiness, family farming, chemical production and organic production, production for export and production for the domestic market. As I tired of demonstrating in several previous articles, these things are not reconcilable, they are in flagrant contradiction and the winner in their governments was agribusiness. He lost family farming, lost food production for the domestic market and lost agroecology.

Another concern, not so immediate, but which will be reflected in a short time, is the government's lack of understanding with the imminent energy crisis on the planet. It seems that we are in the heroic times of the “Petróleo é Nosso” campaign, seventy years ago. The government's energy policy is to expand the supply of fossil fuels in the country, with Petrobras' investment proposal on the coast of Amapá. In addition, as has already been pointed out, individual transport is stimulated, a consumer of gasoline that tends to become more expensive inexorably, with the drop in the supply of oil in the world.

And the government does everything to lower gasoline and diesel prices, which encourages our dependence on oil to grow. From January to May alone, fuel consumption grew by almost 5%. This will increase our liability in the emission of greenhouse gases and our contribution to global warming.

The government should be taking urgent measures to reduce oil consumption, especially for use as fuel. This would allow us to stretch our reserves for industrial use, allowing time for a less brutal transition in the replacement of this input. Not only is it not doing it, it's acting against it.

Thinking about the future with the rarefaction of oil supply, announced by Greeks and Trojans around the world, would imply (among other things) reorienting the direction of our food production, reducing the use of oil, phosphate and potash and expanding production agroecological. This option would also imply greater emphasis on supporting the agro-ecological transition of family farming, which is easier to provoke than the reorientation of agribusiness. Without these changes, in the near future, we will be even more heavily dependent on imports of basic foodstuffs, with prices rising at a vertiginous scale.

The Lula government's environmental program suffers from radicalism. The Ministry of the Environment was dehydrated with an undisguised collaboration from the PT bench in Congress. Deforestation in the Amazon fell 33%, from the peaks it reached during the Jair Bolsonaro government, but remains high, increasing especially in the Cerrado. The relative drop in deforestation in the Amazon has more to do with the expectation generated by the operation in Yanomami lands than with a lasting effect. Ibama and ICMBIO remain unstructured and with little operational capacity to combat illicit acts that the satellites do not fail to register. And, if the shallow cuts became less numerous, the removal of wood continues unabated. And the fire season hasn't started yet.

The operation against the illegal economy of loggers, land grabbers, fishermen and gold miners, started with the Yanomami operation, is still skating in Rondônia and non-existent in dozens of other indigenous or federal lands. Confronting this scourge, supported by the forces of drug trafficking gangs, is not even equated. The operations that took place are punctual and a drop of water in the ocean. The Federal Police, after years in a row in which it was dismantled to fulfill its role in the Amazon, does not have enough strength to handle the job.

The mobilization of the Armed Forces as support, something that the energetic man who presided over us until last December pretended to do under the command of General Braga Neto, is not even being discussed and planned. It seems that we will have to wait for another national and international scandal like the “Domingo de Fogo” of years ago for measures to be taken, always drowning and more mediatically than effectively. The government appears to be at the mercy of events rather than preparing to prevent them.

The good news in these months is coming mainly from the judiciary. The STF and TSE inquiries are under way and the coup right is still on the defensive. However, this time reprieve it will not last forever and there are many questions about the depth of cleaning required. Two things are worrisome: (1) the principals and sponsors of the acts of subversion have not yet been indicted and, in most cases, not even identified; (2) military officials remain (many of them) at their posts and there are no investigations either at the Attorney General's Office or at the STM, except against a crazed colonel who cursed and threatened the generals of the Army High Command.

Will the generals and colonels who committed themselves to coup acts be held accountable? Are we going to see Augusto Heleno, Braga Neto, and others more condemned? What about the colonels who commanded the barracks surrounded by insane coup plotters with their consent and, many times, with their explicit support? The government is watching the soap opera staged by the heartthrob Alexandre de Morais, but without even taking the most obvious attitude to do its part, which would be to change the Minister of Defense, whose role during the January crisis was to defend the military committed to the coup.

This passivity and sluggishness does not leave us calm in relation to the threats of coup d'état in the FFAA. Of course, the military ultra-right is on the defensive, but it has not been hit directly. Passing the curtain will not disarm them, just as increasing spending on the three forces will not attract them. As in the case of agribusiness, these people have coup d'état in their DNA, or in the education they received throughout their careers, valuing the dictatorship and attacking the ghost of “communism”.

Speaking of communism, we have to note that 52% of the electorate consider that Brazil is at risk of being dominated by this ideology and political system. And they redefine the meaning of the word. After all, for the Bolsonarist bubble and many others, communists are not only Lula and the PT, but Geraldo Alkmin, Rodrigo Maia, Sérgio Moro, Joe Biden and anyone and everyone who has opposed the “myth " at any moment.

A “Communist”, for this audience, is someone who is in favor of the right of women to have an abortion, of men and women choosing their sexual identity, that there may be families different from the hetero male/female couple, that questions of sexuality be the object of debate. study in schools, that native peoples and quilombolas have the right to their traditional territories, that racism is a crime and that women have equal rights to men.

For another, slightly smaller portion, the penal age should be reduced, bandits should be summarily liquidated and “good citizens” should be able to arm themselves without restrictions. They are also those who defend the “school without a party” while supporting schools with military (party) orientation. In politics, the “anti-communists” are against the parties, against the legislative power, in favor of a “cleanliness” in the judiciary and in favor of a military dictatorship, while condemning the “leftist” dictatorships, Cuba, Venezuela and Nicaragua .

This hallucinatory ideology is fed in Bolsonarist “bubbles” on social networks and in the universe of Pentecostal churches. Both in one group and in the other, individual initiative is valued, today called by the expletive “entrepreneurship”, which encompasses both micro-entrepreneurs and delivery people. Ifood or the cookie cutter. This public, with the precariousness of employment that we have seen especially since Temer's labor reform (but which was already progressing before him), represents almost half of the workforce. They are those who see the State as a sucker of resources that do not return in the form of benefits and who believe that God helps those who work hard.

This is the breeding ground where the right and the extreme right flourish. Gaining this audience is crucial for us to avoid further setbacks in future elections. And the government is not going to gain this base by giving more concessions to the churches. The “market” pastors are as cynical as the military and the ruralists, the more advantages they get the more advantages they demand and, even so, they do not vote for progressive candidates. I don't have a recipe for working with this category, but something can be learned from progressive pastors who know how to speak the language they understand and know their way of thinking.

Nor does Lula's odd position in defense of “friendly dictatorships” help much. Relativity of democracy? When applied to the aforementioned cases, in particular Maduro and Ortega, this sentence by the president is a disaster. Yes, there are no pure democracies and the concept is relative, but Venezuela, Nicaragua and Cuba are outside this concept, regardless of the social successes of the Cuban regime despite the difficulties caused by the American siege.

To conclude this evaluation, it is necessary to state that we do not have significant instruments of political and social organization influenced by the left. The PT is no longer the party that expressed the positions of social movements organized in the countryside and in the city, rooted in the masses since the days of resistance to the military regime, in trade union opposition and in the base ecclesial communities. It became a parliamentary party, with little grassroots work and with a logic that is more about government than about social mobilization.

The more leftist parties grew a lot in the identity movements that gained a strong dynamic in the last decades and are the only ones, or almost, with mass convening power. This poses a major limitation for a mobilization of society to oppose the hegemony of the right and extreme right in Congress.

In this fragile framework of unfavorable balance of forces, the government will play a crucial role in allowing the expression of a social political movement that rebalances the balance. And Lula, more than the entire government combined, will play a central role in this process. It is clear that the president cannot act as if he were a union leader, but he can and must do two things: (i) define a very clear, simple government investment plan that is strongly based on responding to the main demands of the majority of the population (employment, income, education, health, housing, food, transportation, sanitation); (ii) adopt a posture of direct and permanent communication of the proposals of this plan to make them known by the broad masses. The progressive parties and movements will be responsible for appropriating these messages and discussing them with the grassroots, with a view to creating organicity in today's dispersed public.

Although the “return to the streets” is a mantra of the progressive forces, and it must happen, this is not the only form of political manifestation. Opinion movements today happen a lot on social networks and progressives are still very shy about appropriating these mechanisms and using them to express political positions. Training “informatic activists” will be a revolutionary task, albeit far from the experience of the generation of leaders on the left (my generation and the next). We have cloth for sleeves.

*Jean Marc von der Weid is a former president of the UNE (1969-71). Founder of the non-governmental organization Family Agriculture and Agroecology (ASTA).

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