Chapter 3

Oh, Lula!

The ghosts of all the revolutions that have been strangled or betrayed through Latin America’s tortured history emerge in the new experiments, as if the present had been foreseen and begotten by the contradictions of the past.

—Eduardo Galeano1

You can’t understand why the presence of the World Cup and Olympics jangles every frayed nerve in Brazil without understanding the presidency of Luiz Inácio Lula da Silva. Lula served as president from January 1, 2003, to January 1, 2011, and left office as the most popular living politician on earth with an eye-popping 80 percent approval rating.2 Yet, even at his peak, discontent rumbled beneath the surface of Lula’s presidency. As long as growth rates continued to hum, everyone cheered the “Lula model” of leadership, despite concerns about corruption, health care, and education. Today, as growth begins to sputter and the nation pours billions into hosting the World Cup and Olympics, the current president, Lula’s anointed successor from the Workers’ Party, the less charismatic, more technocratic Dilma Rousseff, has paid the price. Despite continuing Lula’s policies, a unique amalgam of social democracy and free-trade neoliberalism, her popularity sits at less than half that of her mentor.

Let’s talk Lula.

Lula’s Rise

Luiz Inácio Lula da Silva is known by a single nickname, Lula, in the style of the nation’s great soccer players. And like soccer in Brazil, his reign as president feels larger than life, with the tall tales becoming even more burnished depending on who is doing the telling. It seems that almost everyone, friend and enemy alike, has a personal favorite story involving the labor leader turned head of state. To me, the most evocative, if unflattering, Lula story starts in 1998. That year Brazil, still reeling from record inflation, was granted the largest rescue package in history of the IMF, as described in the last chapter. The loans totaled more than forty-one billion dollars, and the conditions tied to them included deep cuts in Brazil’s already tenuous social safety net. Lula, like all labor leaders, was on the front lines protesting the aid package.

A decade later, under Lula’s rule, Brazil officially became an IMF creditor—not a debtor—after securing the purchase of ten billion dollars in bonds. In other words, Brazil was buying a profitable piece of the debt of the poorer nations of the world. Lula, deploying the swagger that made him formidable when he was on the other side of the barricades, strutted like a peacock and said, “Don’t you think it’s chic for Brazil to lend to the IMF?” He laughed and said that he looked forward to “go[ing] down in history as the president who lent a few reals to the fund.”3 It is difficult to find historical precedent anywhere on earth for Lula’s leadership in Brazil, primarily for what he accomplished and the way he accomplished it. There may be similar leaders, and parts of his social agenda may have found echoes in other places, but the Lula experience has been unique. Lula was a true neoliberal social democrat. He stitched together left-wing and right-wing economic prescriptions to bring millions out of abject poverty, but did little to solve some of the country’s most pressing social problems. And he did so in a context that few—perhaps no—other social-democratic leaders faced in the 2000s: extremely high growth rates and a commodity boom that left the country flush with cash. To know how he and the country arrived at this point, you need to know the man.

Lula was born on October 27, 1945, the seventh of eight children all raised in poverty in Brazil’s impoverished Northeast. When he was seven, his mother moved the whole lot of them to São Paulo, traveling for thirteen days in the back of a flatbed truck. Lula had to leave school in the second grade to work and support his family, but taught himself to read at the age of ten—the beginning of his impressive intellectual life as an autodidact. At nineteen he lost a finger in a factory accident and, according to lore, ran from hospital to hospital, doors slamming in his face. This experience was transformative, spurring him to become involved in union activities, a nine-fingered firebrand determined to improve conditions for workers and fight the antilabor priorities of the military dictatorship.4

No matter where the mythmaking ends and the reality begins, there is no question that Lula’s rise was meteoric. He was elected president of the São Paulo steelworkers’ union at twenty and brashly expanded its numbers, despite organizing under the conditions of a military dictatorship. During this time, young Lula was imprisoned for a month for organizing what the dictatorship’s Labor Courts deemed an illegal strike. In February 1980, he helped found the party that would catapult him to the presidency, the PT (Partido dos Trabalhadores, or Workers’ Party), at age thirty-four. The PT brought together reformists, revolutionaries, trade unionists, socialists, environmentalists, and liberation theologists into an electoral as well as activist political organization. It became home to some of the leading theorists and academics in the country, who attempted to articulate just how Brazil, with all of its natural wealth and radical multiculturalism, had arrived at this point of military dictatorship and economic crisis.5

Lula further built his base in 1983 by launching the CUT (Central Única dos Trabalhadores, or United Workers’ Federation), now the largest union federation not only in Brazil but in all of Latin America, with seven and a half million members. He ran for president unsuccessfully three times before being elected in 2002 in a landslide, with 62 percent of the vote. In that election, Lula received more votes than anyone who had ever run for public office in the history of democratic politics.

When Lula took office, he inherited a country in crisis. Inflation had stabilized, yet more than one-third of the population lived under the UN poverty line—the highest rate of inequality in the world. Argentina had just declared the largest sovereign default in history and Brazil, many predicted, would follow suit. Lula’s immediate agenda was to assure international financial institutions and investors that he was no flaming radical and that Brazil would honor its debts—the very IMF debts he had protested as usurious and immoral. To make sure the international loan sharks were paid, Lula selected a motley crew of economic conservatives and globalists to head his Central Bank and Ministry of Finance. On his orders they went even further than what the IMF demanded, raising interest rates and slashing public spending. He became known as “the IMF’s favorite president.” The Financial Times was so besotted with him it suggested he be named to head up the World Bank.6 It was a bitter pill to swallow for many in the PT and the social movements that had propelled him to power.

By the time Lula left office, the number of Brazilians living in poverty had dropped dramatically. As millions were lifted out of poverty, inequality lessened even as business boomed (according to—disputed—government statistics). During Lula’s tenure, from 2002 to 2010, while many of the world’s economies drooped and the United States poured more than a trillion dollars into its war in Iraq, international capitalists chose Brazil’s stock market as their favorite place to park their currency. Between 2009 and 2011, Brazil vaulted from fifteenth to fourth on the list of countries receiving the most foreign direct investment. In 2011, that figure totaled sixty billion dollars. In 2011, Brazil also surpassed Italy and Great Britain to become the fifth-largest economy on earth.7 Today, three-fifths of Latin American industrial production takes place in Brazil. This is remarkable when you consider that industrialization was not even a tangible reality in the country until 1950.8 São Paulo, all by itself, is now larger and has a higher gross domestic product (GDP) than the next two biggest South American countries, Argentina and Colombia. Brazil now exports more beef than any nation on earth, with Russia its largest single customer.9

In the context of this stunning growth, Lula sought to identify himself as a personification of the Brazilian masses. When he left office, he said, “If I failed, it would be the workers’ class which would be failing; it would be this country’s poor who would be proving they did not have what it takes to rule.”10 As self-serving as that statement is, there is at least an element of truth in it. You cannot understand Lula’s rise from union militant to the highest office in the land without understanding that this was not the triumph of an individual, but the culmination of what historian Perry Anderson calls “the most remarkable trade-union insurgency of the last third of a century”11—the same insurgency that toppled the Brazilian dictatorship in 1985.

And yet, as much as this seemed like a storybook rise of man, economy, and nation, there was a rot beneath the surface, seen most publicly in a series of corruption scandals. With the election of Lula and the PT, many expected that a page had been turned and that organized graft in Brazilian politics would become a thing of the past. Instead, corruption emerged so quickly and virulently that the Lula era almost ended just as it was getting started.

First, in the spring of 2005, José Dirceu, the head of Lula’s cabinet, and Delúbio Soares, the PT treasurer, were caught conducting a “cash for votes” operation, using an illegal slush fund to wire money to the deputies of the smaller parties in Congress.12 Then there was the resignation of Antonio Palocci, a key PT leader, in the spring of 2006. Palocci was running a “party house” near Brasília that operated as a den of prostitution and bribery. Instead of coming down on this with the full weight of the presidency, Lula made a massive effort to keep Palocci. In typical Lula style, he compared Palocci to the soccer star Ronaldinho, making the case that, whatever his faults, he was too valuable a player to give up.13 (Lula has never hesitated to use soccer to make his points, whether through metaphor, criticizing certain players, or just wearing the color of his favorite team, Corinthians. Like Vargas before him, he knows that the cultural value of soccer should never be underestimated.) But as further details emerged, Palocci had to step down. He was eventually acquitted by the nation’s Supreme Federal Tribunal—yet this only added to the cynicism about the “new day” Lula had promised. As Anderson detailed:

Of the eleven current members of the tribunal, six of them appointed by Lula, two have been convicted of crimes in lower courts. One . . . made legal history by guaranteeing immunity to a defendant in advance of his trial, but was saved from removal by his peers to “preserve the honor of the court.” Another supported the military coup of 1964, and could not even boast a law degree. A third, on casting a crucial vote to acquit Palocci, was thanked by the president in person for assuring “governability.” . . . Scenes like these, not vestiges of an older oligarchic regime, but part and parcel of the new popular-democratic order, preclude complacency about the prospects ahead, without abrogating them.14

The scandal could have brought Lula down before he even started; many believed that, at the very least, it would cause the PT to get blown out of office in the 2006 elections. They were wrong. Lula won his second election with 61 percent of the vote, roughly the same number as before, although the composition of his voters was poorer and more elderly. Many in the middle classes were pushed away, according to polls, by the corruption scandals and the absence of progress on—this will sound familiar—education and health care.15

In the period prior to the 2006 elections, the Brazilian economy improved dramatically. Credit for this goes less to the austerity programs IMF officials and Economist editors advocated than to the discovery of massive oil deposits and to China’s unprecedented economic growth. No matter who was in office, Brazil would have benefited dramatically from a China desperate for two of Brazil’s most plentiful exports, soy and iron ore. It also became a major buyer of Brazil’s cattle reserves. All of this production for export meant that the country’s average growth in Lula’s first three years as president was 4.3 percent and climbing (compared to just 1.6 percent in the 1990s). With these numbers, Lula was going to win again—and win he did.16

Unlike Venezuela’s Hugo Chávez, who positioned himself as an opponent of unfettered globalization, the PT and Lula were avid participants in free-marketeering and international finance. This paid dividends in the mid-2000s, rocketing the Brazilian economy to unprecedented heights with growth of 8 percent per year. The country was flooded with consumer goods from its new partners in China and East Asia; employment, as well as consumer spending, was on the rise. This also provided the economic basis for Lula’s highly popular social policies aimed at combating economic inequality—the very inequality aggravated by some of his own earlier policies.

Lula may have been the IMF’s “favorite president.” He did not, however, fit easily into the neoliberal mold. Lula emphasized modest social programs. He also insisted on a level of state economic control that would be distasteful to neoliberals in the United States—though, again, his record here is inconsistent at best. But his quest to make Brazil a friendly center for capital investment and a key trading partner for China showed its benefits most sharply when Wall Street crashed in 2008: in Brazil, it was no more than uma marolinha, a ripple.17 Lula said, “Crisis? What crisis? Ask Bush. It’s his crisis.”18 While the United States hemorrhaged half a million jobs per month in early 2009, Lula’s Brazil continued its rapid growth—even US treasury secretary Tim Geith­ner was praising its economy for leading the world out of a recession.

Lula the fire-breathing radical had become a darling of the Economist and Financial Times crowd, who regularly contrasted his leadership with that of the “irresponsible” Chávez. Many on the left believed that, like so many left-wing Latin American reformers before him, he would at some point have to “face a decisive choice”: either to lead a workers’ struggle for economic justice or to serve the interests of the markets.19 But Lula never had to face that choice while in office.

Negotiating Neoliberalism: Lula’s Foreign Policy

How did Lula do both? How could he feed the ravenous appetites of neoliberalism while raising the living standards of the poor?

To understand this, first we need to talk about what neoliberalism is. In the United States, when we hear the term “liberal,” it’s usually coming from Republicans who are talking about Democrats—a political term that means you lean left but aren’t a radical. The liberalism in “neoliberalism,” on the other hand, is economic liberalism, which describes people who want “free-market” capitalism to rule economic life—meaning (to greatly simplify it) that they want to expand the private sector and shrink the public sector as much as possible. (Translation: sell off the public schools to the highest bidder and start drilling for oil in national parks.) “Corporatist” is probably a better term. The neoliberal philosophy as we know it today was crafted and honed beginning in the 1960s by the economist Milton Friedman and his disciples at the University of Chicago, known collectively as the Chicago School. In the fevered imaginations of its proponents, the workings of the market are a “celestial clockwork”20 that regulates itself perfectly when left alone. As Naomi Klein put it:

Like all fundamentalist faiths, Chicago School economics is, for its true believers, a closed loop. The starting premise is that the free market is a perfect scientific system, one in which individuals, acting on their own self-interested desires, create the maximum benefit for all. It follows ineluctably that if something is wrong within a free-market economy—high inflation or soaring unemployment—it has to be because the market is not truly free. . . . The Chicago solution is always the same: a stricter and more complete application of the fundamentals.21

In practice, the “fundamentals” amount to taking money and power out of the hands of ordinary people and putting them in the hands of the rich, whose “self-interest” creates wealth that Ronald Reagan famously claimed, following Friedman’s advice, would “trickle down” to the rest of us.

The problem, of course, is that the “trickle” promised to workers never does seem to materialize. The wealth stays at the top—and in return, the masses of people are expected to make enormous sacrifices. Neoliberalism’s top priorities include crushing unions, privatizing health care and education, abolishing worker protections like safety rules and the minimum wage, and removing environmental protections—all of which stand in the way of truly “free” trade. In the developing world (and, increasingly, poor areas of rich countries, like the southern United States), neoliberals’ freedom to pursue wealth has them pushing governments to create “free-trade zones,” “promise zones,” and so on—areas with nice names in which bosses get a break from tax and labor laws, so they can run nonunion sweatshops where workers have literally no rights. If anything, the wealth trickles up as services that the wealthy do not depend upon (like public transportation and public education) are eliminated. As Klein points out, “Because of the obvious drawbacks for the vast majority of the population left outside the bubble, other features of the corporatist state tend to include aggressive surveillance . . . , mass incarceration, shrinking civil liberties and often, though not always, torture.”22

As you might imagine, neoliberal economics tend to be pretty unpopular with the electorate. This is especially true in the Global South, where people are well aware that neoliberalism is designed to give international financial institutions, the “great powers,” and particularly the United States the upper hand. Left to their own devices, people tend to vote for things that make their lives better, like sharing wealth and resources and ensuring quality health care and education for all. Nobody wins elections by promising to turn the country into a sweatshop zone. So in order to put neoliberal policies in place, the world’s elite need a strategy—some clever sleight of hand to get what they want before anyone can object. Enter the shock doctrine.

The idea is simple: people who are traumatized are more likely to agree to authoritarian measures, to suspending democracy, to doing whatever it takes. The trauma can be unexpected, like a natural disaster or a terrorist attack, or planned, like massive budget cuts or a military coup—anything that

puts the entire population into a state of collective shock. The falling bombs, the bursts of terror, the pounding winds serve to soften up whole societies much as the blaring music and blows in the torture cells soften up prisoners. Like the terrorized prisoner who gives up the names of comrades and renounces his faith, shocked societies often give up the things they would otherwise fiercely protect. . . . After the tsunami, the fishing people in Sri Lanka were supposed to give up their valuable beachfront land to hoteliers. Iraqis, if all had gone according to plan, were supposed to be so shocked and awed that they would give up control of their oil reserves, their state companies and their sovereignty.23

While people are reeling, trying to figure out how to survive, corporations and the corporatist state walk through the open door and take what they please. In New Orleans, in the wake of Hurricane Katrina, the shock doctrine meant that huge swaths of prime real estate went from the hands of poor black residents to rich developers and the public school system was completely gutted.24 After the 9/11 attacks, the shock doctrine allowed the Bush administration to pass a wide-ranging set of laws that restricted civil liberties on an unprecedented scale and created the multibillion-dollar “homeland security” industry. And across the developing world, international financial institutions are key players in implementing the shock doctrine: when an economy falls into crisis, the IMF and World Bank show up prepared to lend enormous sums—if the country agrees to a harsh new regimen of “austerity,” privatization, and neoliberal reforms.

The Chicago School trained economists from all over the world in shock doctrine tactics—and treated Latin America like its own dedicated laboratory. It engineered a coup in Chile (another 9/11 tragedy, this one on September 11, 1973), then fanned out across the continent establishing and training military dictatorships, including in Brazil. But in recent years, the military dictatorship model has become less necessary: political liberals, from Obama to Lula, have been more than willing to embrace the logic of neoliberalism.

Lula’s tenure in office coincided with the George W. Bush presidency’s careening from one crisis to the next, borrowing unprecedented sums from China, getting itself mired in the Middle East, and racking up more than a trillion dollars in debt. This gave Brazil a historically unprecedented opportunity to shake the yoke of ­perpetual peonage to a United States that had neither the economic nor the military capital necessary to keep South America in line. Chávez in Venezuela, Evo Morales in Bolivia, and other leaders were signaling a new leftward shift throughout the region. Lula’s former radicalism and continued ability to speak the language of the left allowed Brazil to maintain a good relationships with Morales, Chávez, and even Cuba’s Fidel Castro.

Lula cannily positioned himself as a buffer between the extremes of US imperialism, on the one hand, and a radical regional anti- imperialist bloc, on the other. The negotiations over the Free Trade Agreement of the Americas (FTAA) stand as the quintessential example of Brazil’s new power to mediate and even demobilize the radical wave on the continent while also presenting itself as a thorn in the side of the United States. The FTAA marked the hemispheric expansion of the controversial North American Free Trade Agreement (NAFTA), which in 1994, over the opposition of labor and environmental groups, created a “free-trade” bloc and eliminated tariffs between the United States, Canada, and Mexico. As the FTAA was hammered out over the course of the last decade, it sparked antiglobalization protests wherever negotiators met. Cuba, Venezuela, Bolivia, Ecuador, the Dominican Republic, Nicaragua, and Honduras all bitterly opposed it. But Brazil managed to lead a “moderate bloc” in conjunction with Argentina and Chile that for all intents and purposes scrapped the FTAA and, in its place, instituted a series of bilateral trade deals. This was not just an embarrassment for the United States; it established Lula’s Brazil as the key power broker in future trade negotiations within Latin America. While Lula pursued his brand of neoliberalism economically, he used his foreign policy as a way to assert his nation’s independence from the United States. Under Lula, Brazil recognized Palestine as an independent state. He also refused to take part in economic blockades of Iran. He promoted trade pacts that excluded the United States and strengthened relations with the its greatest headaches on this side of the Atlantic: Venezuela, Bolivia, and Cuba. Most symbolically, Brazil promoted and even held meetings of a new formation known as BRIC (Brazil, Russia, India, and China, a title invented by Goldman Sachs), which set about constituting a more-than-credible counterbalance to a global economy dominated by the United States and European Union.

Just as Lula was able to position himself at the crest of a surging wave of Latin American power, he also asserted Brazil as a twenty-first-century subimperial power in its own right by sending troops to occupy Haiti after President Jean-Bertrand Aristide was deposed in 2004. Lula even sent the Brazilian national soccer team over for a friendly match. Hundreds of thousands waited for hours to see Rivaldo, Ronaldinho, and other Brazilian stars defeat Haiti 6 to 0. Brazil’s team was escorted to the stadium by a convoy of white tanks. They called it the Match for Peace. Here is how the Washington Post described the scene:

On Wednesday, U.N. forces—most of them Brazilian—surrounded the stadium in full combat gear. Armored personnel carriers were stationed about 100 yards apart around the stadium, which was protected by fences and barbed wire. Haitian police patrolled with German shepherds and Rottweilers, and helicopters flew overhead. Blue-helmeted peacekeepers carrying shotguns ringed the field inside the stadium.25

If you’re hearing echoes of the old nineteenth-century tactic of US troops bringing baseball bats and balls to the Caribbean, you’re not far off. Many have also pointed out that Brazilian troops in Haiti are using and honing methods developed for controlling large, densely concentrated poor populations—which could be very useful back home, for example in the favelas.

For the next seven years, until 2011, several thousand Brazilian troops aimed to, as one UN official admiringly put it, “turn Port-au-Prince into Disneyland.”26 For all of the UN’s admiration, it must be noted that it bears responsibility for a cholera outbreak in Haiti and that its troops were also used to repress labor demonstrations and protests, among numerous other scandals.27 The cost of this occupation was roughly 450 million dollars per year, in the poorest country in the Western hemisphere—Haiti has 70 percent unemployment and an average income of three dollars per day.

Lula’s Domestic Policy: Image and Reality

At home, Brazil’s rapid economic growth allowed Lula to spend freely on social programs that challenged inequality and made his ­administration incredibly popular among his base of supporters, despite the stubborn facts that inequality and poverty still plagued the country. Once the economic upturn began to gain steam, Lula launched the social program called Bolsa Família. This is the policy most frequently used to explain Lula’s popularity among the poor. Much of what it encompasses also existed under his predecessor Cardoso, but it was not “branded” in the same fashion. Bolsa Família, which translates roughly to “family purse,” provides direct payments to 13.8 million impoverished families—fifty million people in total—but only if they are able to prove that their children attend school until age seventeen and go to health clinics for basic vaccinations and regular checkups. As the Christian Science Monitor reported, “the stipend is then deposited into the recipient’s bank account (preferably that of a woman),” which has “helped raise 36 million Brazilians out of extreme poverty.”28 Between 2001 and 2011, the infant mortality rate did fall by 40 percent. In the impoverished Northeast it fell by 50 percent, a historic accomplishment. Malnutrition has also dropped, although numerous factors led to this improvement in the quality of life for Brazil’s poor. The program only cost 2.5 percent of the nation’s GDP, but its image mattered even more to Lula’s presidency than its substance because, as Perry Anderson wrote, of “the symbolic message it delivers: that the state cares for the lot of every Brazilian, no matter how wretched or downtrodden, as citizens with social rights in their country. Popular identification of Lula with this change became his most unshakeable political asset.”29 The question that tortures analysts is whether Bolsa Família is a fig leaf on an otherwise neoliberal agenda or whether its existence marks a fundamental departure from neoliberalism itself.

Far more economically substantive, even if less symbolically powerful than Bolsa Família, was raising the minimum wage, which Lula increased by 50 percent between 2005 and 2010.30 Other programs also acted as an economic stimulus to the poor and the working class, such as the crédito consignado, which guaranteed bank loans for household purchases to those who had never before held bank accounts, with repayment automatically deducted from monthly wages or pensions. Lula also required colleges to offer scholarships to poor students, which opened higher education to more than seven hundred thousand poor and working-class students. This collectively brought millions of Brazilians into an income bracket above seven thousand dollars per year, which the government was quick to classify as “middle class.” It was estimated to cost 0.5 percent of GDP. As Lula liked to say, “It’s cheap and easy to look after the poor.”31

The sum total of these programs—the Bolsa Família, an increased minimum wage, and new access to credit—“set off a sustained rise in popular consumption, and an expansion of the domestic market that finally, after a long drought, created more jobs.”32 It also, even more importantly, created a popular impression that Lula genuinely cared about the poor—even as he was turning Brazil into a neoliberal paradise and the engine of an ailing global capitalism. Lula’s supporters are quick to point out that progress for the poor under his administration, while rife with contradictions, was truly substantive. They point to numbers that, on paper, appear staggering: government data show the number of people classified as “poor” dropping from fifty to thirty million in Lula’s first six years in office; the number of those described as “destitute” was cut in half.33

Yet when examining just how successful Lula was at “tackling inequality” while achieving growth, it is worth looking closer and remembering something Marcos Alvito told me: “Statistics are like a bikini. They show so much, but they hide the most important parts.” First, the inequality numbers pointedly do not include the new stratum of Brazil’s superrich, a rapidly growing class of billionaires, who have purchased the H. J. Heinz ketchup company, Anheuser-Busch, and other multinational companies. After buying Heinz and laying off hundreds of workers at its Pittsburgh headquarters, the wife of one employee rushed to early retirement referred to the situation as “the Brazilian plague.” Meanwhile, between 2006 and 2008, the number of Brazil’s millionaires increased by 70 percent—more than that of India. Taxes are also highly regressive for working people—another reason the excessive taxation to pay for new soccer stadiums spurred protests in 2013. If you live on less than twice the minimum wage, half of your income is taxed. In contrast, if you make thirty times the minimum wage, only a quarter of your income is taxed.34

One result of all this growth on capitalist, neoliberal terms has been that the oligarchy—the social class that has dominated Brazil since its founding five centuries ago—has actually become more powerful. This is particularly the case in Rio. The 2016 Olympic site is the only region of the country where inequality actually worsened under Lula’s rule. The oligarchs’ land ownership has not only increased but has become more concentrated than it was fifty years ago, a result of Brazil’s transforming into one of the leading agribusiness and beef-producing countries on earth. As a part of this land grab, Lula and his successor Dilma Rousseff have been far tougher on the landless peasant movement than his right-wing predecessors.

In addition to the oligarchy’s traditional power base, the countryside, over the last decade they have also ventured into the cities, where real-estate speculation reigns. Urban real-estate speculation, as anyone in Brazil’s megacities will be quick to tell you, has followed an even more aggressive pattern, with a rush to seize urban land. When I was in Brazil, I visited comfortable middle-class apartments with rents that would make a New Yorker blanch. At one, on the twenty-first story of a high-rise, the elevator had been “out” for months, forcing people to walk up and down the stairs. It is like a slow-motion version of the age-old practice of landlords burning tenants out of their apartments. “They think they can turn this place into a luxury hotel,” the residents told me. “So they are doing what they can to make us move. It is happening everywhere.”

Not to shock anyone, but real-estate developers and construction workers are the biggest contributors to Lula’s Workers’ Party. Chris Gaffney described the situation to me:

It’s important to remember that Brazil, twenty-five years ago, was still a dictatorship . . . so the consolidation of democratic institutions is recent and they’re still very weak. It’s very easy to criticize, especially from a North American perspective, what we perceive as the neoliberalization of the Brazilian economy. But before, there was really no stability, so inflation’s been under control for fifteen years, the economy has grown, it is more stable, but at the same time that there are people that have left poverty, the rich are more rich than they’ve ever been. Lula and the PT gave out scraps to the left that allowed them to really open up the country for massive profits on the right.

A Political Root Canal

During his second term in office, Lula expanded both his social welfare projects and Brazil’s importance on the global stage after the discovery of massive offshore oil deposits in 2007 and 2010. With eighty billion barrels of oil and gas deposits for export, Brazil joined rarefied company among energy-producing countries.35 The PT has pursued an aggressive program of offshore drilling (even though environmentalists were critical players in founding the Workers’ Party), with a terrible toll on Brazil’s environment.

Lula also dramatically slowed the gains of the Landless Workers’ Movement (Movimento dos Trabalhadores Rurais Sem Terra, or MST). The MST has, for twenty-five years, been one of the most important organizations for social change in Brazil. It has 1.5 million members and a presence in twenty-three of Brazil’s twenty-six states. Under Cardoso, a series of violent confrontations with the government turned the MST into an international cause. The attention did not stop Cardoso from criminalizing the movement, meeting its occupations with armed assaults. Believing Lula and the PT to be a friendly government, the MST shifted its strategy away from occupying public lands and began focusing on the areas gobbled up by agribusiness. Yet Lula resisted meeting with the MST until 2005. The meeting was hostile, with MST leaders pledging afterward to return to their confrontational ways. But they had been weakened by their earlier alliance with the PT.

Given that Lula was tough on labor unions, the environment, and the MST, one might think that grand social movements challenging these imperatives would mark his presidency. One would be wrong. Lula succeeded in dismantling any kind of popular response to his agenda. This point is critical, because it explains the spontaneous, disunified, and youthful nature of the 2013 protests.

Lula was able to demobilize the opposition to his neoliberal policies first and foremost by thoroughly transforming both the PT and the main trade-union federation that he helped found, the CUT. He “converted the party from a ‘movement-party’ to an electoral party.”36 These bureaucracies became a part of the ruling apparatus of the government and in return they were Lula’s great defenders. The PT was now a political machine, in charge of accruing votes and doling out twenty thousand highly paid federal jobs. The CUT was now officially in charge of the country’s largest pension fund. They were “inexorably sucked into the vortex of financialisation engulfing markets and bureaucracies alike. Trade unionists became managers of some of the biggest concentrations of capital in the country. . . . Militants became functionaries enjoying, or abusing, every perquisite of office.”37 The union paid a price for this. During the 1980s, under a period of dictatorship, the CUT represented more than 30 percent of Brazil’s workers. Today, after a decade of Lula and the PT in power, that number is now 17 percent.38 That is in many respects the most stunning statistic of Lula’s presidency. The bitter fruit of neoliberalism—and its siblings, austerity and inequality—is that when these economic policies flourish, even under a “workers’ party,” the workers suffer.

The majority of the Brazilian left supported the PT from its formation in the 1970s through the election of Lula. The general impact of Lula’s presidency was to throw this left into disarray and to confuse and demobilize social movements. Lula retained the loyalty of important sections of the left with large social bases, like the MST and the CUT, even as he carried out policies aimed at satisfying the international financial powers at the expense of Brazilian workers and failed to follow through on the agrarian reforms the MST had turned into an international issue. The PT was able to keep its core, but this new organization led to a massive disconnect with the working classes and shop floors from which the PT grew. I spoke with Marcelo Freixo, Rio’s mayoral candidate from the left-wing Socialism and Freedom Party (Partido Socialismo e Liberdade, or PSOL), which formed after splitting from the PT. Freixo is an elected lawmaker in Rio who has repeatedly risked his life to expose the city’s powerful militias; he even had to flee the country in 2011 because of his work.39 He told me,

The arrival of Lula in power actually weakened social movements initially because it co-opted them. These were people who had historically fought side by side with the PT and with Lula. So they naturally wanted to go with Lula, but many of them were co-opted as Lula moved to the right during his time in office. One of the damaging aspects of this is that for young people, it looks like all parties are the same. That they all form coalitions and come to power and behave in a similarly corrupt way. Lula is now allied with Fernando Collor, who was impeached in the early 1990s, and with [José] Sarney, who was a corrupt politician, Brazil’s first democratically elected president [after the end of the military dictatorship]. They’re all now aligned in the government. This generated amongst the population a sense that “they’re all the same.” That’s very difficult to reverse. We are working on this, trying to reverse this perception: that’s why our campaign has involved social movements as well as many young people.

The PT also lost many of its theorists and academics, who abandoned the party in despair. Radical Brazilian sociologist Chico de Oliveira, one of the historic founders of the PT, left the party in protest. When Perry Anderson asked Oliveira whether Lula’s effect on the left could be compared to Franklin Roosevelt’s New Deal in the United States, Oliveira replied that

a more appropriate analogy . . . [is] the South Africa of Mandela and Mbeki, where the iniquities of apartheid had been overthrown and the masters of society were black, but the rule of capital and its miseries was as implacable as ever. The fate of the poor in Brazil had been a kind of apartheid, and Lula had ended that. But equitable or inclusive progress remained out of reach.40

In 2004, expelled PT members formed the aforementioned ­Socialism and Freedom Party, an electoral left party that has had some electoral successes and important, albeit not extensive, connections to the broader social movements in the country. Its divisions from the MST can be seen in the comments of João Pedro Stedile, an MST leader, who said, “The PSOL tried to reconstruct a PT of the left but did not manage to do so, because the tactic, the [electoral] path is defeated. We will not accumulate the forces to vie for power through institutional paths.”41

The social movements also suffered because Lula provided something the nation had not experienced in decades of economic upheaval and military dictatorship: stability. Brazilians’ widespread desire for stability in the 2000s cannot be ignored. As one veteran movement activist said to me:

Social movements throughout Brazil have been eviscerated under the PT, absolutely eviscerated. One of the reasons is . . . that people assumed they had a friend in power, and why would that person betray them in the way that Lula, or the PT, has? Once you assume power, you don’t need to fight anymore. And so all these long-term social structures stopped, or they were co-opted, or they were given power so now the struggle needs to go against them. But the struggle against them comes from the right. So you either go all the way back to some mixture of fascism or Marxist/Leninism, or you just conform to the increase of the power that you’ve got and your struggle’s over.

When Lula left office, the 2014 World Cup and particularly the 2016 Olympics were seen as his swan song: a signal that the world was finally granting Brazil the respect it felt it had deserved for almost a century. Tragically, the World Cup and Olympics are not symbolic successes. They walk hand in hand with graft, austerity, security crackdowns, and a set of spending priorities that would have made the young Lula blush. Yet he also had the good fortune to win the bids for these mega-events just before the end of his term of office—meaning he avoided the much more difficult task of their implementation.

The Election of Dilma

Lula’s political career brings to mind a line from the movie The Dark Knight: “Die a hero or live long enough to become a villain.”42 Lula did not die, but term limits pushed him out of office before economic stagnation, scandal, or the fallout from hosting the World Cup and Olympics could be pinned directly on his legacy. That has fallen on the shoulders of his chosen successor, Dilma Rousseff, popularly known as Dilma. Unlike Lula, Dilma was born into the upper middle class, her father a Bulgarian entrepreneur. After the military coup of 1964, seventeen-year-old Dilma became a socialist and an urban guerrilla. She joined the militant left-wing group Colina (Comando de Libertação Nacional, the National Liberation Command). Unlike Lula, who spent one month in prison during the dictatorship, Dilma was behind bars from 1970 to 1972, where she was tortured by the very government she would someday lead.43 When Lula chose Dilma to succeed him, she was largely a political unknown, the last person standing to hold the banner of the Workers’ Party after a series of scandals struck down more obvious contenders. It was a testament to Lula’s legacy, the economic boom, and the social movements’ inability to find purchase that Lula could sell the public on electing a veritable political unknown to lead the nation. Not only did Dilma win the first election after Lula left office, but the PT also emerged as the largest political party in Congress.

While Lula was basically able to have his cake and eat it too—both neoliberalism and social programs—Dilma has been president of the post-party hangover.

The Economist, the magazine of the neoliberal consensus, now blasts its former darling Brazil for being “a stagnant economy, a bloated state” with “the world’s most burdensome tax code.” Its editors sniff that “the markets do not trust Ms. Rousseff.” Most hilariously, they tie the mass protests of 2013 to her lack of “fiscal rectitude,” comparing her unfavorably to “the pragmatic Lula.”44 They do not see that, while they may have the right diagnosis for why her approval rating has fallen from 65 percent to a low of 30 percent—that is, taxation, corruption, health care, and education—the austerity they claim as a cure would, without question, bring people back into the streets. They didn’t consider that her pledge to hold down the minimum wage and place strict boundaries on public spending might also have something to do with it.45 Or that possibly, with the economy dragging, people who have clamored for years for massive public investment in the cities aren’t pleased to see all that money getting plowed into hosting the 2014 World Cup and 2016 Olympics. They certainly didn’t consider that maybe, just maybe, Brazilians don’t want to spend billions on new stadiums while the poor are being displaced—especially when it’s all for the benefit and service of the twenty-first-century version of the same European powers that have been stripping the country of its skin for four hundred years.46

“I used to be a fan of Dilma,” a Rio teacher said to me, adding:

But I lost respect for her when she sided with the mayor’s plan for Olympic development. There are some huge contradictions between her federal policy and the local impact of the Olympic development, which she supports. . . . Dilma is just a capitalist. And this is just capitalism, it’s all about making money. The poor are the ones who built this city. You couldn’t be here without the poor of Rio. But now, the people who built the city are being pushed out. You can’t have a positive legacy of the Games when the poor who created this city aren’t part of that legacy.

Brazil has long sought respect on the international stage. At a state dinner held in his honor in Brasília in 1982, Ronald Reagan raised his glass to toast to Brazil and instead, whether by accident or as an act of condescension, toasted “to Bolivia.”47 Those days may be done, but international respect has its price. The neoliberal price, paid by Lula and continued by Dilma, is what laid the groundwork for the explosive 2013 Confederations Cup protests.