September 25, 2018

The plan was the following: Deny the legitimacy of Dilma Rousseff’s 2014 election victory. Push for impeachment on a trumped-up charge (creative accounting to disguise a budget deficit). Organize mass protests against the Workers’ Party (PT) and in support of the Lava Jato (Car Wash) anti-corruption attorneys who aimed to prosecute Luiz Inácio Lula da Silva, Brazil’s popular former president and longtime PT leader, for corruption and money laundering. Encourage big corporate media outlets, namely the all-powerful Globo network, to identify the PT as the root cause of Brazil’s institutional corruption. Drum up international support as awards piled up in the Harvard-trained Lava Jato judges’ offices in Curitiba and as The Economist glibly headlined “Dilma, time to go.”

Then, once Rousseff was removed, implement a neoliberal shock plan—euphemistically labeled by new president Michel Temer as the “bridge to the future”—with fast-track privatizations, a fire sale of Brazilian assets to international investors, draconian austerity, and labor-market deregulation. Markets would respond, and confidence would flood back. A private-sector-led economic recovery would lay the foundation for a successful presidential run by the pro-business, center-right Brazilian Social Democratic Party (PSDB), supported by all sensible commentators in São Paulo, Wall Street, and Washington. Lula, always a threat due to that damned charisma, would, meantime, have been marched off to prison. A PSDB government, led by São Paulo State Governor Geraldo Alckmin, would set Brazil back on the neoliberal path as the Latin American pink tide of the previous decade receded. In 2014, that sounded like a plan.

Last week, as a new set of opinion polls pointed to a second-round run-off between far-right Jair Bolsonaro and former São Paulo mayor Fernando Haddad, candidate for the presumed-dead PT, the plan was definitively in tatters. (The first round of elections will be held on October 7; if no candidate receives more than 50 percent, a second round is scheduled for October 28. Voters will elect not only a new president and vice president, but also federal and local governors and legislators.) Alckmin is nowhere to be seen. He trails Bolsonaro by 10 points and, in an electorate that still cleaves between right and left, it is highly unlikely both can progress to the second round. The PSDB senator Tasso Jereissati publicly announced on September 12, “We made some monumental mistakes: Not accepting the 2014 election result was one (we have always been a party that defends institutions and respects democracy); supporting impeachment [of Rousseff] was another, and entering the Temer government, a third.”

A quick survey of the election campaign less than three weeks before the first vote shows just how accurate Jereissati’s explosive mea culpa may prove to be. The establishment’s strategy has backfired magnificently. Lula’s support has grown from 15 percent to 40 percent since 2016 and appears to have been buoyed by his five months in prison. The rejection rate of Judge Sérgio Moro, a superhero in the media portrayal, is now higher than that of Lula, the man he placed in prison. Rousseff’s impeachment is now considered retrospectively by a large section of the electorate to have been a coup d’état. It has also propelled Bolsonaro’s rise, set in motion by mass right-wing rallies, choreographed by the Globo media and the São Paulo Federation of Industries (FIESP), whose giant inflatable duck led the way down the Avenida Paulista.

As far as international support goes, Lula has garnered most of it recently, helped recently by his op-ed in The New York Times and an appeal by the UN Human Rights Committee that he be allowed to run as a candidate. The right-wing plan for economic recovery is dead in the water. A short-lived blip, as markets welcomed Rousseff’s demise, was followed by stagnation, with unemployment now at record levels and poverty on the rise again. GDP fell by 7 percent between 2014 and 2017, and average household income by 14 percent.

Private investment has not recovered, as the establishment plan predicted, but has in fact been clobbered by the austerity-driven collapse in public investment. Consumer spending has plummeted, as the fragile new middle class that arose during Lula’s presidency stares poverty in the face once again. Austerity—predictably, given Europe’s experience—has simply entrenched the recession while rolling back Brazil’s progress in fighting poverty. Child mortality rose 5 percent in 2016, and Brazil lags Venezuela in meeting human-development goals.

Temer’s finance minister, Henrique Meirelles, proved audacious enough to decide to run in the elections, but is showing only a 3 percent support rate. His electoral ads have switched recently, flashing back to his stint as central-bank governor during the Lula administration of 2005. It is comical to watch. “What has happened is that a large part of the electorate thought the PT was the party to blame for the recession. Lula’s popularity hit bottom in the recession, but as the economy has stagnated, people are remembering the bonanza years with Lula, and his support has grown,” says Josué Medeiros, a political scientist at the federal university of Rio.

Lula’s Gramsci-like prison strategy, coordinating from his cell the impossible task of rebuilding support for the PT, contrasts with the establishment plan, devised in boardrooms and luxury restaurants. As Lula forecast, the transfer of votes to Haddad now seems well underway. In the latest Ibope poll, Haddad’s support has more than doubled in less than a week, to 19 percent, second behind Bolsonaro’s 28 percent. In a letter read out loud at the vigil outside the Curitiba prison where Lula is being held, the historic leader of the Brazilian left stated, “Lula is now Haddad.”

“I considered Lula to be a political genius; after what he’s done from prison, I think he is a magician,” said Aldo Zaiden, a psychologist from São Paulo.

In a run-off with Bolsonaro, Haddad, Lula’s former education minister, would be the favorite, since Bolsonaro’s rejection rate is huge (over 40 percent). But in Brazil, it would mean the prospect, horrifying to the right, of another PT government only three years after the banks and corporate leaders warned ominously of a Bolivarian path in Brazil. Only one other candidate, Ciro Gomes, appears to have any chance of beating Haddad and thus joining Bolsonaro in the second round. But Gomes can provide little comfort to the establishment. He is a left-leaning nationalist who fiercely opposes austerity and privatization and has even pledged to block the announced sale of Brazilian aircraft manufacturer Embraer to Boeing.

Marina da Silva, a possible last resort for the Brazilian elite and international investors, thanks to her original blend of neoliberal economic policy and environmental protection, is losing support once again, in her third attempt at the presidency

The catastrophic failure of the São Paulo establishment’s plan to erase the PT from the face of Brazilian politics raises an intriguing question: With Meirelles an also-ran and Alckmin close to joining him, will the establishment and the global emerging-markets funds switch their support to the extremely unsavory figure of Jair Bolsonaro? While warnings of imminent fascism may be exaggerated in the United States and Europe, in Brazil, Bolsonaro is worryingly close to the real thing. He has defended openly the need for military intervention and appointed recently retired Gen. Hamilton Mourão as candidate for vice president. In reference to corruption, Mourão has defended publicly the intervention of the armed forces to “solve the political question” now facing Brazil.

Bolsonaro’s pet phrase on Brazil’s complex crime problem is “the best bandido is a dead bandido.” After his near-lethal stabbing in early September, Bolsonaro was photographed making a pistol gesture with two fingers from his hospital bed. He is also viciously homophobic and misogynistic; he told a PT deputy during the impeachment hearings, “You are too ugly to be raped.” Despite this, he may be the only option left for the neoliberals. “We’re now in a new phase of fascistic neoliberalism,” argued French sociologist Christian Laval last Friday at an electoral meeting held by the Socialism and Liberty Party (PSOL), Guilherme Boulos’s left alternative to the PT. This struck a deep chord with the Rio de Janeiro audience, still reeling from the loss of left-wing City Councilor Marielle Franco, who was gunned down last March. While the Lava Jato judges moved with unusual haste against Lula, Franco’s murderers are still at large.

The taming of Bolsonaro may already be under way. Paulo Guedes, his University of Chicago–trained economic adviser, has persuaded the candidate to dispense with his nationalistic support for state-owned companies such as Petrobras. Bolsonaro is now a dyed-in-the-wool privatizer. Wall Street and the establishment US think tanks are lending a hand. Guedes, one of the “Chicago Boys” who worked in Chile under the Pinochet dictatorship, has helped Bolsonaro engage with emerging-market investors and analysts in the United States. Bolsonaro visited New York last fall, where he was enthusiastically received by Shannon O’Neil at the Council on Foreign Relations. O’Neil had no qualms about discussing policy with a Brazilian neofascist, but, as John Ackerman noted in an article in The Nation, she was quick to warn of the supposed danger to US interests of Andrés Manuel López Obrador, who will soon be sworn in as Mexico’s new president.

The financial markets seem to be coming around to the idea of a Bolsonaro presidency as the only alternative to the PT. They have risen as Bolsonaro’s poll ratings improved, though the emergence of Haddad in the past week has set off alarms. Of course, Alckmin is the real favorite of global investors, which may explain the jump in stock prices and the Brazilian currency when news broke of Bolsonaro’s stabbing—the markets perhaps expected the attack would prove to be lethal. But now that he is not only recovering but his ratings are strengthening, there are signs he is gaining elite support. “Bolsonaro’s strength seems to please investors,” said Alvaro Bandeira, chief economist with the brokerage firm Modalmais. Meanwhile, Rede Globo’s interviewers were noticeably less aggressive with Bolsonaro in their campaign TV interview than they were with Haddad.

Curiously, Haddad, an academic at the elite business school Insper, is actually a moderate, and, like Lula in 2003, would be quite open to seeking a modus vivendi with the financial markets. This is likely the reason Lula chose him as his successor. “Haddad would reform the pension system (considered essential for fiscal stability by investors),” said Marcelo Mitterhof at BNDES, the Brazilian Development Bank. “At Insper he has had an opportunity to meet the São Paulo elite.” Lula, after all, cohabited extremely well with Brazil’s mega-corporations and the emerging-markets fund managers for the eight years of his presidency. He boasted in the boom years that he was the favorite in both the favelas and the investment community.

But massive redistribution of income to Brazil’s untouchables—40 million were extracted from extreme poverty, and millions more were upgraded, albeit briefly, to the lower middle class—sent shock waves through the system of permanent privilege in Brazil. That cannot be easily forgiven by either the elite or the traditional middle class, whose incomes did not rise at the rate of the poor during the PT governments of Lula and his successor, Rousseff. Haddad’s radical education reforms between 2005 and 2012 brought millions of working-class youth into the universities. He increased investment in education from 4 percent of GDP to 6 percent, focusing on low-income families. This raised the possibility of a social revolution in Brazil, which the privileged are loath to accept.

The dilemma for those who have wielded power for so long in Brazil is real, says the political scientist Medeiros. Haddad represents the PT, however reasonable he may appear to be. The left’s organizational base might be reinvigorated by a Haddad victory and maybe even by a Gomes triumph, too. “There is a scenario in which the left could mobilize to stop the reforms the markets want,” says Medeiros. That would not be a happy prospect for the suited men on Avenida Paulista, nor for those in the underground committee rooms of Brasília’s corrupt Congress. But supporting Bolsonaro would lay bare the true nature of Brazil’s elite, whose hegemony since the military junta left power three decades ago has depended on its apparent commitment to liberal democracy and a social contract. When Bolsonaro noted during his Globo interview that Globo had supported the military junta (1964–85), the network had to broadcast a clarification that it no longer does. Drawing up the next plan for the establishment will require a genius. But Lula is in prison.

 

The Nation