Lula and the Right: Between Contestation and Cooperation

This research paper places the policies of the Lula government in Brazil within the debate on development policy in Latin America and the efforts of the Latin American left to assert an alternative agenda to the increasingly unpopular neoliberal agenda. Considering the considerable convergence between the Post-Washington Consensus (PWC) and its most significant alternative on the left, known as neostructuralism, the author raises the question whether Lula can fulfill his electoral promise to significantly depart from neoliberalism. Moreover, it is suggested that, facing severe external constraints, Lula runs the risk of spending large amounts of political capital to further deepen neoliberal reforms that will enjoy renewed credibility, due to Lula's left-wing identity and high levels of personal popularity. As the subsequent analysis ofthe Lula government policies shows, the former unionist has indeed become a champion of a neoliberal macroeconomic framework. Based on the need to repay Brazil's enormous levels of public debt, this has entailed severe budgetary restraint as well as the advancement of several key, neoliberal fiscal reforms. Similarly, in the areas of social policy and land reform, Lula has lagged far behind his promises and has essentially continued the agenda of President Cardoso. T he most significant departures from the neoliberal agenda of Lula's predecessor are identified within the sphere of micro economic policy as well as foreign and trade policy. On the micro economic level, Lula has essentially halted the privatization process and has reemphasized the role of the state in regulating certain key areas of the economy, such as the energy sector. On trade and foreign policy, Lula has pursued Brazilian interests with renewed assertiveness and has reemphasized the goal of South-South cooperation. These policies are thus interpreted as a reorientation to a neostructuralist framework by the Lula government. However, in light of the continuing macroeconomic orthodoxy, this is not viewed as a significant challenge to the neoliberalparadigm promoted by Washington. On the contrary, as the author demonstrates, Lula's Brazil is largely viewed as a formidable ally by representatives of the international financial institutions (IFIs) as well as the conservative US establishment. Rather than signifying a break with neoliberalism, Lula's neostructuralist policies are thus primarily viewed as a more assertive articulation of Brazilian (business) interests within a consolidating neoliberal macroeconomic framework.