Domestic product

Books Six years ago, Luiz Inácio Lula da Silva won the Brazilian presidency by promising radical reform for the country's structural problems. But since then, Gabriel Paquette writes, he's opted for business as usual.

Lula in Geneva earlier this summer, pitching Rio de Janeiro as the ideal host for the 2016 Olympics. The city could host "the most beautiful Games," he said, if Olympic officials were ready to give poShow more

Six years ago, Luiz Inácio Lula da Silva won the Brazilian presidency by promising radical reform for the country's structural problems. But since then, Gabriel Paquette writes, he's opted for business as usual. Brazil Under Lula: Economy, Politics, and Society Under the Worker-President Edited by Joseph L Love and Werner Baer Palgrave Macmillan Dh242 Brazilian democracy is, in practice, relatively young. Between 1930 and 1985, only four of the country's presidents were elected by direct voting and only two completed their terms. One of these men, Juscelino Kubitschek, who oversaw the construction of Brasília, governed under constant threat of a military coup. Only in the last 15 years has stable democracy been implemented: two presidents from rival parties have served full, consecutive terms without military meddling. The second of these presidents, Luiz Inácio Lula da Silva, was elected in 2002 and handily won re-election four years later. The Brazil over which "Lula" - as he is universally and affectionately known - presides is relatively prosperous (at least as measured by GDP), more democratic than many of its neighbours, and committed to an ambitious set of international policy objectives.

But Lula has been a disappointment to those on the left who expected he would tackle the structural problems that have shackled Brazil for decades, if not centuries: stark economic inequality, abysmal educational standards, social stratification along racial lines, rampant urban violence, political corruption and environmental degradation. This disappointment results in part from outsize expectations fostered by Lula's political platform and biography. The president grew up in an impoverished family in the northeast of Brazil, never went to secondary school, and worked as a union leader under the military dictatorship that lasted from 1964 until 1985. On the campaign trail he was a fiery, cogent critic of the "Washington Consensus": the combination of austere monetary-fiscal policies and commitment to unbridled free trade that the IMF, World Bank and US State Department have long colluded to foist on Latin American governments. Brazil's less privileged citizens - the vast majority of the population - felt they had found their champion.

In an unforeseen reversal, President Lula ultimately opted to assuage the interests of capital by redoubling the government's commitment to a stable economic environment at the expense of public sector spending - all to the chagrin of the more radical elements in Brazil's Workers Party and their fellow travellers around the globe. In his second inaugural address, Lula insisted that Brazil had changed for the better "in monetary stability; fiscal consistency; the quality of its debt; the access to new markets and technologies; and in diminished vulnerability" - hardly the sentiments of the crusader many thought had been elected.

The justified consensus of Lula's critics is that the constraints under which the president has agreed to govern have hamstrung his capacity to fix Brazil. Mildly redistributive welfare programs may have helped him enjoy high approval ratings, but they amount to little more than tentative fiddling around the edges of massive core problems, or a tabling of the hard questions for another day. This line of criticism is advanced in a perceptive new book edited by Joseph Love and Werner Bauer. Brazil Under Lula features 16 essays, most of them by economists and political scientists, that analyze the first six years of Lula's presidency based on available statistics. In short, the preponderance of evidence suggests that this would-be reformer has left Brazil's most entrenched problems in much the same state as he found them.

The essays focus primarily on Lula's short-term policy missteps. In doing so, they overlook the extent to which his failure is attributable in large part to his inability to transcend the substantial political and economic barriers he inherited. As Marx noted, "the tradition of all dead generations weighs like a nightmare on the brains of the living". The 1964 coup and the two decades of military dictatorship that followed were hardly alien to Brazil's political culture. The monarchy was toppled in 1889 by army officers who established a republic. But during the Getúlio Vargas presidency (1930-1945), the country drifted steadily away from democracy. This tendency culminated in the creation of the Estado Novo (New State) in 1937, which saw the elimination of the existing political parties and the abandonment of parliamentary government in every practical sense. Democracy's cautious return following the Second World War was short-lived, lasting less than two decades.

Thus the military dictatorship was merely an extreme version of politics past. It installed military courts to deal with so-called political crimes, closed congress, suspended civil rights, and imposed strict censorship, stifling artistic expression and pushing many dissidents into exile. But all regimes need collaborators, and military rule was not entirely anathema to all Brazilians, not least because it coincided with impressive economic growth rates, a rising standard of living for the growing middle class, and the entry of vast swathes of the population into the formal labour market. It might not be accidental, therefore, that Brazil's recent democratic governments have practised conservative economic stewardship orientated around immediate growth at the expense of reform; political legitimacy and economic performance have been inextricably linked in recent Brazilian history.

Under Lula's predecessor, Fernando Cardoso, an urbane development economist who was among those forced into exile during the dictatorship, the Brazilian government's role in the productive sector of the economy was severely curtailed. It became a regulatory state that largely deferred to the private sector's whims. This change was accompanied by increasing financial stability: expanded exports, burgeoning foreign and domestic investment, and rising consumer demand. Under such circumstances, it is difficult to imagine what alternative policies Lula could have enacted. To propose structural change just as the economy was finally meeting benchmarks set by powerful international banks and institutions would have been to swim against the current, isolating Brazil at a great cost, one demonstrated by just a casual glance at Venezuela's "Bolivarian" socialist experiment.

It is undeniable that Brazil's economy, the ninth largest in the world, has grown steadily under Lula. According to the World Bank, its GDP grew 2.42 per cent a year between 2002 and 2005. This figure lags behind the other "BRIC" countries - Russia (6.41), India (7.24) and China (9.77) - but it is respectable, particularly as first-world economies stagnate and natural-resource-bubbles burst elsewhere. The recent discovery of major offshore deposits of oil and natural gas could accelerate this growth in upcoming years.

Rapid development, however, has exacted an environmental toll. The Amazon continues to be cleared at an alarming rate to make way not only for agribusiness, loggers and wildcat miners, but also for thousands of landless peasants in search of parcels of land for subsistence farming. Although 90 per cent of Brazil's electric power comes from hydroelectric and ethanol energy sources, the burning of the rainforest by ranchers and agribusiness makes Brazil the fourth-largest producer of greenhouse gases in the world. Lula's government has done little to address this pressing issue. On the contrary, his administration bristles when international NGOs suggest changes to its environmental policy, reacting as if national sovereignty or honour were under attack. This is most ironic in light of Lula's steadfast desire to court and accommodate international investors and creditors. Foreign advice on making money is welcome; foreign suggestions on protecting globally-important natural resources are dismissed as neo-imperialism.

In fact, Lula's leftism and combativeness are today visible only in foreign policy gestures that have little direct impact on the Brazilian people. He has lobbied for Brazil to have a seat on the UN Security Council, and sought to strengthen Mercosul, the South American regional trade agreement, as an alternative to the Free Trade Agreement of the Americas championed by the Bush administration. At a press conference this spring, with the British prime minister Gordon Brown standing behind him, he remarked that the current financial crisis was "caused by no black man or woman or by no indigenous person or by no poor person. This crisis was fostered and boosted by irrational behaviour of some people that are white, blue-eyed."

While Brazil's economy grows and its leader entertains on the international stage, its most pressing problem - the gap between the rich and the poor - remains as present and pressing as ever. This inequality is traceable to the country's colonial heritage, specifically its African slave-driven, plantation-based sugar economy in the northeast. This established a system of landholding that favoured the creation of large estates, which concentrated both wealth and political power. In the 19th century, the advent of coffee production gave rise to similar dynamics in the southern states. The end of slavery in 1888, one year before the fall of the monarchy, did not fundamentally alter this arrangement. Newly freed men who did not migrate to uncertain futures in the cities soon found themselves accepting low wages or sharecropping contracts on the same estates where they had toiled as slaves.

In 1960, Brazil's Gini coefficient - a scale for income inequality where 1.0 means one person has all of the country's income and zero means everyone has an equal share - was 0.57. In 1983, it stood at 0.60. In 2005, it had returned to 0.57. Neither dictators nor democrats have made a difference, and failure to confront the issue has generated serious social problems, particularly in the country's rapidly growing cities, where material plenty and abject poverty butt up against each other with frequently violent consequences. The homicide rate in 2002 was 27.2 deaths per 100,000 people, whereas the world average is 8.7. There are some specks of light: extreme poverty (defined as living on less than one Real a day) fell from 17 per cent in 1999 to eight per cent in 2004, and Lula's government deserves some credit for this. The most important programme is a consolidation of four old social security programs called Bolsa Família. Since 2003, it has doled out cash to parents as rewards for keeping their children in school and ensuring that they undergo regular medical checkups. Today it reaches 11.1 million families. But critics charge (quite accurately) that Bolsa Família has been expanded in lieu of systematic and large-scale investment in education and other primary causes of stratification. Cynics might add that such programs also create a client group beholden to Lula and thus more inclined to vote for PT, perpetuating and strengthening the status quo.

Brazil Under Lula documents the conversion of a once-radical leader into a middle-of-the-road politician, constantly putting aside systemic issues for the next election cycle. Reading these essays, one is struck again and again not only by how little has changed, but by how little Lula's government seem to have tried. But could it have been otherwise? Has neoliberalism triumphed so completely on the global stage that any statesman who departs from its tenets is condemned to fail? Is state-led social change - as opposed to private sector or NGO-led change, both in Latin America and the rest of the developing world - a thing of the past?

Today neoliberalism's victory seems most secure in precisely those countries which would benefit most from shaking off its stultifying lessons. When its star wanes, we may judge Lula more kindly, less as a radical reformer turned power-conscious politician, and more as a trailblazer who opened up Brazilian politics to the demographic groups who for centuries have been actively excluded from participation in it. But such a moment is at least decades away; in the meantime, mounting disillusion with the apparent limits of electoral politics may make this breakthrough irrelevant. For this generation of Brazilians, Lula's presidency will beremembered as a time of opportunites squandered and ideals forsaken.

Gabriel Paquette is Research Fellow in History at Trinity College, University of Cambridge.