President Luiz Inacio Lula da Silva and Geraldo Alckmin were inaugurated as 39th President of Brazil and 26th Vice President of Brazil, respectively, on 1 January 2023, in a ceremony held in the National Congress in Brasília. President Lula won the second round run-off with closest margins of victory (50.9% for President Lula and 49.1% for former President Jair Bolsonaro) in an election since Brazil reverted to democracy in the 1980s. The close margin has led former President Bolsonaro to question the election results, with some of his supporters camping out in front of military barracks in a bid to prompt a military intervention to roll back the results of the election. He left the country avoiding the inauguration ceremony and the handing of the traditional presidential sash to the incoming President.
In a remarkable political comeback, President Lula assumed the presidency for third time in a closely contested election. In his two previous terms between 2003 and 2010, he led Brazil to achieve economic growth and social inclusion. Three key social policies of President Lula’s government are cash-transfer programs to the poor, aid to small farmers, and labour and pension reforms. Most prominent among these was the cash-grant program, Bolsa Família (Family Stipend), which expanded an already existing welfare system that lifted a record number of people out of poverty. As he sets for his third term in office, he faces a Brazil and an international system that is in flux.
Challenges before President Lula and his Government
A prominent challenge before the new President is the political divide within the country. While President Lula has stated that he would be the President of all Brazilians, the path ahead would be difficult. Former President Bolsonaro may have lost the election but Brazil’s conservative movement has done well in the October elections. Allies of President Bolsonaro and his Liberal Party (PL) have won political positions across the country. The party is in a majority in the Senate where five of Bolsonaro’s former ministers have also won seats. Three of Bolsonaro’s ex-cabinet members have won seats to the lower house of the national Congress, where the PL is also the largest party. In the states, candidates aligned with Bolsonaro have won 11 of 27 state governorships, while candidates aligned with Lula won only eight. More importantly, the three biggest and most important states in Brazil – Minas Gerais, Rio de Janeiro, and Sao Paulo – will be governed by pro-Bolsonaro governors from 2023.
President Lula also leads a coalition of ten parties. The coalition members include liberal to left-leaning parties that have differing ideologies and priorities. While they remained united during the campaign, when they had shared the goal of defeating the incumbent President, it remains to be seen if they would continue to work in harmony now that they have formed the government. President Lula will now have to build a Cabinet that reflects the priorities of his coalition partners, give equal importance to the old and new allies, and balance the liberal and the left-leaning policy ideas.
The second challenge before the new government would be reviving the economy. One of the strongest upsides to Brazil’s economy has been from exports. The drop in commodity prices coupled with the Covid-19 pandemic and the global environment of high inflation and geopolitical insecurity as a result of the Ukraine crisis have added to the slowdown of the Brazilian economy. In order to overcome the numerous challenges, the Bolsonaro government had provided subsidies to certain sectors of the economy, tax incentives, price controls and additional credit by public banks. While the measures were partially effective in addressing inflation and unemployment, they were unable to stimulate economic growth and encourage investments. A weaker global economic environment, the threat of global recession and the related drop in commodity prices will all lower demand for Brazil’s exports. High income inequality and rising inflation, unemployment and food insecurity would be the major challenges before the new government.
The third challenge before the new government would be to rebuild the state capacity in such areas as healthcare, education and environment protection. Brazil inscribed health as a universal right in its 1988 constitution. This led to the creation of a publicly funded national health system with universal access: the Unified Health System (SUS) which initiated the Family Health Strategy (ESF), a primary healthcare scheme. While the SUS and the ESF remain underfunded, under the Bolsonaro government, some government programs such as National Program to Support Oncological Care (PRONON) were suspended. The mismanagement of the pandemic, lead Brazil to have one of the world’s highest infection and death rates resulted in stressing the healthcare system. Despite this, the outgoing government proposed R$149·9 billion, a reduction of R$22·7 billion, compared to 2022 in the 2023 budget bill sent to Congress for approval. The cut is likely to affect primary care; the prevention, control, and treatment of HIV/AIDS and other sexually transmitted infections; as well as immunisation actions and indigenous health programs.[i] President Lula has criticised the lack of public investments in health, and during his campaign pledged he will end the expenditure cap – in force since 2017 by Constitutional Amendment No. 95/2016 – to limit the Federal Government’s spending over the following 20 years and allow its expansion only according to inflation.[ii] His government is also in the process of reformulating the health budget for 2023. Nonetheless, in a fiscally tight situation, it will require the creation of other fiscal balance measures that have not yet been clarified.
Brazil’s public education system has faced similar cuts in budgets especially in subjects such as environmental studies, cultural studies and education. Reductions in the Budget for federal universities began in 2015 when Dilma Rousseff (of the Workers' Party) was the President but accelerated under Bolsonaro, leading students and teachers to lead protest marches. In 2005, President Lula had made access to education easier for disadvantaged students by introducing the University for All program which set up a scholarship system for low-income students. Many are hoping that he would be able to do the same as he has stated in his campaign that education would be a priority for his government.
One of the current outgoing government’s biggest impacts has been on the environment and environmental science. Data from Brazil’s National Institute for Space Research (INPE) show that deforestation in the Brazilian Amazon has surged since the start of 2019, and in 2022, it reached its highest level since 2008.[iii] The Amazon has witnessed increased illegal mining, and with the Bolosnaro government reducing fines on such illegal activities it has continued unhindered. The lax enforcement of environmental laws has been blamed for the vast increase in wildfire, often caused by people clearing land for cultivation. The Government also made substantial cuts in the budget for science and technology research activities. President Lula has vowed to undo the environmental damage. At the COP27, Egypt, he pushed the climate conference to be held in the Amazon and stated that his government would crack down on illegal activities and restore climate critical ecosystems. He has laid stress on partnerships and working with regional Amazonian countries such as Peru, Colombia, Guyana and Venezuela. He has also spoken of the need for the rich countries to deliver on their promise of US$100 billion for climate finance. He laid a similar stress during his campaign and in his inaugural speech that Brazil’s goal is to achieve zero deforestation and zero greenhouse gas emissions. Among the first decrees he signed were measures strengthening environmental protections and fighting deforestation.[iv] President Lula’s promise to protect the environment and his past record on the issue has gained him support from the German President Frank-Walter Steinmeier, who attended Lula’s inauguration, pledging support of €35 million for the Amazon Fund. Nonetheless, the challenge for the government would remain balancing the agricultural interests, which is a key sector in the country’s foreign trade portfolio with the need to deliver on environmental protection. The environmental degradation is a critical development that has impacted Brazil’s relations with the international community.
In foreign policy, President Lula would have to navigate both the rising tensions between China and the United States and the ongoing crisis between Russia and Ukraine. Brazil desires a prominent role in international politics but there are many challenges. Bolsonaro’s Brasil acima de tudo (Brazil above everything) discourse had led to a break with Brazil’s pursuit of multilateralism. In January 2019, Brazil withdrew from the Global Compact for Migration and, in January 2020, the country withdrew from the Community of Latin American and Caribbean States (CELAC). The Bolsonaro government also repeatedly threatened to withdraw from Mercosur, the World Health Organization (WHO) and the Paris Agreement on climate change. Within the region, Brazil’s relations with Argentina have suffered as a result of ideological differences after the election of the left party in Argentina. Brazil’s repeated criticism of domestic affairs of countries such as Bolivia, Chile, Paraguay etc have also strained relations. President Lula is likely to make his first official visit to Argentina later in the month to attend the Community of Latin America and Caribbean States (CELAC) meeting. Official visits to China and the United States are also in the pipeline. And while President Lula has claimed that “Brazil is back” and that it will pursue an active and assertive foreign policy, the reality is that Bolsonaro’s PL holds the majority in both the Houses of the Congress, and President Lula would require their support to appoint Ambassadors, approve treaties and agreements, and reorient Brazil’s foreign policy.
Conclusion
President Lula begins his unprecedented third term in office facing a divided country, a hostile Congress and an international order in flux. Domestically, compromising with the legislature would be much needed to balance the budget, allocate funding and pass new laws. President Lula has to also ensure that the coalition continues to work together despite the ideological differences within the members. International support for President Lula should lend him credibility to manoeuvre the domestic constraints on his foreign policy. Brazil can play to strengthen it, and once again become a leader for increased South-South cooperation like it did in the past. Nonetheless, it has to also understand that the 2023 Lula presidency would be at a time when Brazil would have to re-develop its relationships with the world based more on a pragmatic approach for the future rather than based on the shared friendships from the past.
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*Dr. Stuti Banerjee, Senior Research Fellow, Indian Council of World Affairs, New Delhi.
The views expressed are personal.
Endnotes
[i] Lise Alves, “Health-care challenges for new Brazilian President,” The Lancet, 2022, https://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(22)02299-1.pdf, Accessed on 06 January 2023.
[ii] Brazil approved the Amendment 95 in December 2016. The amendment implemented a new tax regime with a limit on the expenses of the federal government for a period of twenty years. Text is available at https://www25.senado.leg.br/web/atividade/materias/-/materia/127337
[iii] Meghie Rodrigues, “Bolsonaro’s troubled legacy for science, health and the environment,” Nature, September 2022, https://www.nature.com/articles/d41586-022-03038-3, Accessed on 06 January 2023.
[iv] Andre Pagliarini, “Can Lula save the Amazon? His record shows he might just pull it off,” The Guardian, 03 January 2023, https://www.theguardian.com/commentisfree/2023/jan/03/lula-protect-amazon-brazil-bolsonaro, Accessed on 06 January 2023.