Lula's return: Brazil's left turn may be more muted this time

Lula's earlier popularity lay in his redistributive policies, but this time around, he will have to demonstrate an ability to negotiate the narrow path between populism and pragmatism

Luiz Inacio Lula da Silva’s razor-thin victory over the extreme right-wing Jair Bolsonaro may not signal the kind of decisive turn to the left that had determined the Workers’ Party boss’s huge popularity during his two consecutive four-year terms between 2002 and 2010. Known mononymously as Lula, his 50.9 per cent to 49.1 per cent margin of victory suggests that South America’s largest country remains starkly divided, a reality that is clear from the fact that Mr Bolsonaro, the first incumbent to lose an election, is yet to officially concede. His associates, however, have held preliminary meetings with Lula’s camp, suggesting that a democratic transition of power will take place. Lula is well aware of the challenges he faces, declaring Obama-style that he would govern for all the people, not just those who voted for him. But he is up against powerful vested interests in the form of the military, which ruled Brazil between 1964 and 1985 and which explicitly backs Mr Bolsonaro, and business interests that have enriched themselves from the alarmingly accelerated exploitation of the Amazon rainforest, the world’s largest carbon sink.

The basis of Lula’s earlier popularity lay in his redistributive policies under which he transferred surpluses from state-owned Petrobras, the world’s tenth-largest petroleum company by market capitalisation, to the benefit of poor families. His trademark Bolsa Familia programme ensured the Workers’ Party’s enduring popularity when Lula handed power to his protégé Dilma Rousseff, who was impeached and removed from office in 2016 on a fairly minor transgression, signalling the rise of the right. Both Ms Rousseff and Lula paid the price for the famous “car wash scandal”, in which several senior Petrobras officials were indicted for accepting bribes for awarding contracts. Although Lula was sentenced to nine years in prison in 2017, the Supreme Federal Court quashed the order, ruling that the judge concerned had not applied due process during the case.

Much is being made of the fact that Lula’s return is part of a “pink tide” in Latin America that has seen the election of leftist leaders in Bolivia, Chile, Peru, Colombia, and Honduras since 2020. And certainly Vladimir Putin’s “special military operation” in Ukraine has had a salutary effect on Petrobras, which, in consonance with its global peers, smashed profit estimates in the first quarter on the back of soaring oil prices. Lula left a booming economy and relatively low unemployment, debt, and inflation. None of those conditions obtains today, suggesting that it may not be easy to reinstate the old redistributive policies, given the demands on the state budget. Neighbour Venezuela’s crisis also highlights the limits of relying on natural resources to fuel economic booms. Lula will have the task of reviving the Brazilian economy, which is suffering from the ravages of record Covid-19 deaths even as he seeks to make good on an electoral promise to end the exploitation of the Amazon rainforest. Under him, deforestation had slowed sharply; under Mr Bolsonaro, it rose to levels seen during the military dictatorship. Reversing this trend is by no means easy since the exploitation of the Amazon benefits Brazil’s impoverished farmers as much as powerful logging companies. At age 77, therefore, will have to demonstrate an ability to negotiate the narrow path between populism and pragmatism.