Lula wins in Brazil: How he managed to lift millions of Brazilians out of poverty (and what are his chances of doing it again)

“Brazil experienced the greatest social transformation we’ve seen so far,” says Mónica de Bolle, a senior fellow at the Peterson Institute for International Economics (PIIE) in Washington, DC, referring to the social mobility the country experienced at the time.

According to the World Bank, between 2001 and 2011, Brazil’s GDP per capita (the sum of the total wealth produced in the country, divided by the population) increased by 32%, while inequality decreased by 9.4%, and the percentage of people living in poverty and extreme poverty is halved.

Although experts attribute some of these achievements to the economic policies initiated by the government of Fernando Henrique Cardoso, Lula’s predecessor, the president-elect is recognized for his ability to implement his social agenda with openness to markets and accountability. fiscally, taking advantage of the commodity boom and allaying the fears of investors when they saw that a socialist had come to power.

Criticized for the increase in violence and drug trafficking while he was in power, and disgraced after the revelation of the Lava Jato corruption scandal, for which he spent 19 months in prison and for which he still has unsolved cases, Lula ended his term with an approval rating of 82%.

Beyond its borders, analysts believe that the former president was adept at managing relations with such antagonistic countries as Venezuela or the United States, and within

G20 (the group that brings together the world’s largest economies), despite the harsh criticism it has received for its ties to Iran.

However, twelve years after his departure, the world has changed dramatically, and the international context he will have to navigate is very different from that of the early 2000s, as is the Brazil he will rule when he arrives at Planalto again in January 2023.

When the former union leader and one of the founders of the Workers’ Party (PT) came to power in 2003, the fiscal situation was complex.

With the boost of strong economic growth that the country experienced hand in hand with the boom goodsLula’s government had at its disposal the necessary means to finance and expand social programs such as the emblematic Bolsa Familia or Hambre Cero.

“Bolsa Familia was almost a social revolution in Brazil”explains Fundação Getúlio Vargas (DAPP-FGV) associate researcher of the Council for Public Policy Analysis and journalist Thomas Traumann.

The families received financial assistance, he says, delivered directly to the women, a formula also used in other housing or land allocation programs that were registered in women’s names, something the analyst sees as key to the success of these initiatives.

The success of the social programs that other analysts, such as Bruna Santos, senior adviser at the Brazil Institute of the Wilson Center for Studies, see as a continuation of the policies created by former President Fernando Henrique Cardoso.

A program like Bolsa Familia “doesn’t happen overnight,” he argues, but rather the result of “incremental innovations” that took place before he came to power.

In previous years, he explains, a social welfare network was already created with economic support programs for family farms, retirement of the rural population, gas subsidies, food distribution and other initiatives that were the origin of policies that would later be implemented by Lula. .

What has changed, Santos says, is that many of these programs have been consolidated into one: Bolsa Familia. And this happened at a time of great capital flow into the country which helped him to rule “in abundance of resources and popularity”.

Several experts point out that the former metallurgical worker, born in an illiterate family, was skilled in choosing collaborators.

“Lula managed to create a good mix,” Traumann says, with more orthodox economists on one side and a team technically qualified to be in charge of social programs, constantly clashing over their views on how to manage government policy.

Another important thing that happened in those years is that the government, in addition to controlling inflation and debt, increased the country’s international reserves, which enabled it to better face the financial crisis of 2008, and in addition to gaining the confidence of business and the financial sector by showing that he is committed to economic macro stability.

What economists of different persuasions agree on is that Lula had a good time leading the country.

Robert Wood, chief economist for Latin America and the Caribbean at the British think tank Economist Intelligence Unit, defends the idea that the former president was “partially lucky” because Brazil managed a super cycle of raw materials.

This created the conditions that allowed the minimum wage to rise above inflation and, together with reforms to encourage access to credit, paved the way for job growth.

On the other hand, he adds, the expansion of social spending helped reduce poverty and income inequality.

However, “insufficient progress on growth-friendly reforms,” ​​Wood argues, left Brazil exposed as the commodity boom came to an end. “Since then, growth has been disappointing.”

Many of Lula’s supporters, especially those with lower incomes, voted for Lula with a desire to return to that time of plenty and strong social spending that allowed them to improve their living conditions.

In that sense, nostalgia for those good timesit is part of the reasons that brought him victory in a climate of great expectations surrounding the presidential figure.

Will he be able to live up to such high expectations? Will the economy grow fast enough to allow him to finance social spending to replicate the success of his social programs?

The answer from experts consulted by BBC Mundo is that it is practically impossible to create the same conditions that existed in the early 2000s.

“The country is in a different position. There are no resources to finance this type of program or increase the minimum wage as before,” says Mónica de Bolle.

And not least, Brazil is not the same country that was governed by Lula because after Jair Bolsonaro came to power, there is now a new phenomenon: Bolsonarism.

“Bolsonarismo is not willing to negotiate or build coalitions”says the expert. Therefore, one of the biggest challenges that Lula will have will be governing with a Congress in which he can only form partial coalitions and in which there is strong sentiment against the Workers’ Party.

The opposition that comes from the base of the Bolsonarians, agricultural entrepreneurs, and the evangelical church, “will be very difficult,” Traumann points out. “This time there will be no honeymoon and it will be a very tense situation from day one.”

Internationally, the world is going through a completely different moment than the scenario that existed when Lula was president.

China, the main driver of the commodity boom, is in the process of economic slowdown; relations between Washington and Beijing are at a stage of conflict; The world is emerging from a pandemic, and the war in Ukraine has destabilized much of the balance that existed in the past, making global politics much more unpredictable.

“Everything that was good in your previous governments is now upside down”says de Bolle.

The bet of many Brazilians who voted for Lulu was along the lines of “I want my glory back,” says Santos. The problem is that “no one can turn back the clock on the boom in commodity exports”.

Therefore, he says, “we should not expect miracles in the next four years”.

With the high probability that some of the developed countries will go into recession, Brazil’s economic growth expectations for 2023 are quite low, with some experts, such as Robert Wood, predicting growth of only 0.5%, which would tend to recover in the following years . , as high interest rates and inflation subside.

However, fiscal spending will be limited, he adds, by the high public debt. In this context, “it will be a challenge to repeat the improvement in socioeconomic conditions of Lula’s first two terms and while there will still be some gradual improvements, it is likely that he will not reach the achievements of 20 years ago.”

This, with the strong opposition of the Bolsonarians, says Wood, predicts the coming of difficult times affected by social and political tensions which can affect management.

You can now receive notifications from BBC World. Download the new version of our app and activate it so you don’t miss our best content.