Brazil: Third Time’s (Not) a Charm

With less than a year into his second term, there are rumors that Lula may be considering another run in 2010. Permanent re-elections are the rage in Latin America, with leaders from the entire ideological spectrum trying to remain in power. Like his Amazonic neighbor, Alvaro Uribe, Lula weakly rejects the re-election idea. Nevertheless, a cadre of Lula supporters is furiously working on the initiative. The possibility that Lula could be considered for a third term reflects the demise of the Brazilian political party system and the favorable external conditions. The latter is creating an economic boom that was not seen in decades, making Lula extremely popular. Nevertheless, a third term for Lula would be devastating for Brazil’s democratic system. Ironically, it would also return the country to the authoritarian rule that he helped dismantle during the 1970s and 1980s.

Brazil’s political parties are in bad shape. After an endless spate of scandals and infighting, the PT is in tatters. The PMDB remains an amorphous body, without any ideology or direction. PFL, once the antidote to Lula and the Left, is trying to reinvent itself. Last of all, PSDB remains a regional party, unable to fully capitalize on the successes of President Fernando Henrique Cardoso. Likewise, Lula is taking full advantage of the economic boom, to further his political power. There have been no meaningful economic reforms. On the contrary, the business and financial sectors are thrilled that he did nothing. They are happy to see that he preserved Cardoso’s legacy through status quo. While there have been cosmetic changes, Brazil’s infrastructure remains in shambles. Indeed, the national infrastructure is falling apart, given the economic boom. Roads are clogged. The air transportation system is in chaos, and the national gas grid is stretched to the limit. At the end of October, Petrobras was forced to reduce gas output by 17% in order to safeguard supplies for the thermoelectric generating plants. The reduction in gas was a grim reminder that Brazil is living beyond its limits. The media-orchestrated announcement last week of the new Tupi oilfield was an attempt to deflect some of the concerns about Brazil’s energy bottlenecks. At the same time, government spending continues to rise, redistributing wealth through social assistance programs and minor employment schemes. This is fueling the consumer boom that is sweeping the nation. However, it is also sowing the seeds of its demise.

Benefiting from the commodity boom, Brazil is an exporting powerhouse. It is one of the main producers of iron ore, pulp, sugar, soybeans, wood and meat. However, the consumption boom will soon convert Brazil’s current account surplus into deficit. Consumption may be Brazil’s main engine of growth, but it quickly becoming a credit-fueled economy. Consumer credit is proliferating, providing fixed rate mortgages and generous cars loans. Credit cards are ubiquitous. Indeed, retailers are gearing up for the best Christmas in 13 years. Given the heady pace of consumerism and the availability of credit, there is no reason why Lula is not extremely popular. However, a third term would be devastating for the country’s democracy. Now that Brazil demonstrated to itself and the world that it could be successful, regardless of the ideology of the national leadership, it would be a shame to see it return to authoritarian rule. Lula may be a populist rather than an authoritarian, but it is a dark fact that populists eventually decay into authoritarians if given sufficient time in office. It would also be a sad twist of events to see the person who led the campaign to end Brazil’s authoritarianism, return it to where he began almost 40 years ago.

4 Responses to "Brazil: Third Time’s (Not) a Charm"

  1. Jermaine   November 15, 2007 at 11:25 am

    Your breathless article is stunningly irrelevant to anyone who knows anything about the Brazilian political system beyond the propaganda that is feed by the right-wing anti-Lula Brazilian media. Lula rejects a third term, which you mentioned, but even if he didn’t, the National Congress would never consent to changing the constitution to allow such a thing. Furthermore, your cynicism and defeatism, typical of many Brazilian observers and the Brazilian elite, obscures the fact that Brazil is better off now than at any point in its history, and Lula is the country’s most successful democratically elected president since Kubitschek. I won’t bore you with the statistics, because they would seem to upset you. Typical of the right-wing in Brazil you blame the Lula administration for everything that’s negative while giving him no credit for the positive progress. Your biased diatribe unsurprisingly left out all the actions that have been undertaken to deal with the litany of problems that you mentioned. Relatedly, the Lula administration will send a tax reform proposal to Congress by the end of the month which seeks to greatly simplify the byzantine tax code. By the end of next year, Brazil would have passed legislation that both simplified taxes and reduced them, which will be yet another major accomplishment for the supposedly do-nothing Lula.

  2. ewulf   November 15, 2007 at 4:08 pm

    The key achievment of President Lula, has been to realize the potential of stability in economic policy,specially good economic policies.Is it feasible the third term?:Latin America is different to Europe or the United States .Constitutions changes apply, the way President like to do so. It has been the case in Argentina,and Chile,besides it is currently the case in Ecuator,Venezuela and Bolivia. Who might expect that Brazil would eventually be different?.Latin America politics history, is full of autoritarian regimes,and worst of all, it has been the rule rather than the exception to have autoritarian regimes.Democracy, is a luxury good for Latin America standards .It is up to President Lula integrity with his own legacy ,to stick to the democracy which allow him to be elected.-

  3. Lellis   November 16, 2007 at 10:27 am

    A very straightfoward and non ideological analysis.As an agribusiness businessman and a thirty years experienced executive I would just add that the spectacular export performance of Brazil in recent years is set to end. Not to mention the effects to the country of Nouriel’s credible scenario that only the silly believe will not affect Brazil, we by ourselves are digging deep our future hole. The meat sector is ready to drastically reduce its exports, the international commodities prices will not keep this absurdely high level for much longer, our judicial system is not prepared to deal with the defaults on this large credit boom that we are seeing. In summary, believing that this scenario will be kept for long is foolish. And when all this happens, as always has happened in economic cycles, Lula and the PT will do anything to cover it up, just like Sarney did, Delfim Neto did, FHC did, Getulio did, regardless of ideology. The only hope for Brazil not to fall into authoritarianism is for this to happen fast and Lula don’t have time to do the cover up.