On 30th October 2022, The Federative Republic of Brazil elected its 39th President, Luiz Inácio Lula da Silva. His win has been celebrated by indigenous right activist, scientists and the international community. His presidentship has made many stakeholders optimistic about the Amazon’s future. However, one can’t be naive about the unique set of challenges his presidency will be facing in protecting the forest. Particularly one critical challenge: the stagnant economy. The new president has to overcome it to combat deforestation of the Amazon rainforest.
Stagnant economy
The Brazil economy had officially entered the recession phase in 2014. It is important to understand why the Brazil economy has not be able to perform well compared to its BRICs counterparts (BRICS is an acronym for five leading emerging economies: Brazil, Russia, India, China, and South Africa). The 2010 recession forced the governments to use fiscal stimulus such as credit subsidies and tax exemptions to improve consumer confidence. However, Brazil also had to deal with massive household debts as result of “collateral debt” established in 2003 by Lula da Silva. The loan encouraged poor households with school aged children to incur huge debts as it was provided in low interest alongside cash transfers and several other expansionary fiscal and monetary policies. Arguably expansionary fiscal and supply side policies are necessary macroeconomic tools to improve consumer confidence in trying times. It would also be unfair to put the blame on such otherwise poor fiscal and supply side policies solely on da Silva. The reason being that the global economy had been experiencing a downfall in major non-energy export commodities.
Such exogenous factors are part and parcel of every economy. However, the issue at hand is whether the Brazil government has the right tools to show resilience in such volatility. The answer is no. In Brazil, the trade barriers are naturally high given that there are regulatory complications and an uncertain customs system makes it difficult for any export-side business to manage its business activity. It has greatly reduced business confidence quite apart from the issues caused by pandemic overall. What does it really mean for the Amazon? Brazil is a major exporter of agricultural commodities such as soya. Bolsonaro’s economic orthodoxy has made him an ally to agribusiness.
Bolsonaro’s executive order transfers regulations of indigenous reserves to agricultural ministry means that companies can influence the government in land deals and legalise “green grabs” easily in the name of economic growth. In 2019, there were many disclosed files suggesting that the Brazilian government was using political leverage to promote the interests of agricultural business. These interests were crystallised by the Interamerica Group who worked with Wilson Lima to promote Amazon rainforest regional development. The current institutional system is under control of the rural elites.
These rural elites have been the most influential voting banks for Bolsonaro ever since his tenure began. It is concerning because the stagnant economy makes the current government more obligated to the vested commercial interests to boost economic growth and attract businesses. Lula da Silva is more likely to overturn these Amazon exploitation laws. His passionate words on stopping deforestation are not hollow as he proved his mettle in reducing the deforestation rate in his previous tenure. However, the issue lies in the question of how is he going to manage the expectations in an extremely liberalised political economy. Time is the only witness.
The stagnant economy complicates power sharing in the current political situation. Lula da Silva won the election by a narrow margin. It means that Brazil will be governed under a coalition government. Many argue that coalition government in Brazil may not be effective because the political parties are opportunist. It provides disincentives for political parties to cooperate. It is important to understand that both the political parties have divergent principles. It can be best described as polarised.
However, the polarising nature is maintained by the right wing political parties through their extremist views. Political polarisation defines democracy as everyone having the right to their opinion. The country is paying a heavy price for its polarised views. People are protesting on the streets to express their disapproval of the elected leftist president. These protest are bold expressions of disharmony not only in ideologies but also in policy making as well. Lula da Silva positioning himself as a green leader may earn him ovations on global platform. However, the president has failed to make a good impression on investors by coming up with a concrete economic policies to restore faith in the economy. He has to realise that unless and until, he can solve the economic backlog, he cannot bolster support for stopping the deforestation. The right wing political systems are going to take advantage of the lack of support to the citizens through propaganda. It will incite extreme reactions and cause disturbances in the economy and may jeopardise his position. It will make “Healed Amazon” a distant dream.
Conclusion
It is important to acknowledge that Lula da Silva’s win does bring some positive news. However, a stagnant economy is the biggest challenge for securing the future of the rainforest. Lula da silva has to step up in being a credible job creator to restore faith in the economy. The political disharmony causes polarised policy making where opportunism and weak institution is a perfect weapon to destruct his ambitious non-deforestation strategies. If he truly wants to save the Amazon rainforest, he needs to be in the good books of his people not only the international community. The reason being that they are the first responder and activists on the ground. The effects of political polarisation can only be resolved through boosting the stagnant economy. It is time for the current government to balance both the economic and environmental needs.
