Opinion: Lula to Back Bolsa Família, Push Quantitative Easing and Help Failing States

03/16/2016 - 15h43

The more level-headed of those occupants of the Planalto Palace, the seat of the Brazilian government, admit that Luiz Inácio Lula da Silva's return to government is the last card Dilma Rousseff can play to avoid impeachment.

As things stand, in the eyes of those ruling party members who are, while loyal, not totally blind, the government does not have enough votes to stop the impeachment, if and when the trial starts in court.

There are some members of the ruling party who believe that not even Lula can perform the miracle of saving Dilma, given the gloomy outlook of affairs.

Inevitably, the next thing to do is to dwell on what Lula might well propose to save the government. Well-informed analysts say that he will undertake three tasks, namely:

1) In an attempt to regain the government's previously reputable status, he will propose an increase in the nation's conditional cash transfer programme the "Bolsa Família", which, notably, will favour 14 million families, more than 40 million people.

If this programme has already created a hotbed for pro-Lula loyalties, it will only continue to do so, which, in turn, will aid in mitigating the current president's lack of support.

2) As many analysts have already anticipated, Lula plans to release money into the economy, so that Brazil's financial cogs and wheels can begin to turn smoothly again.

Easy credit was perhaps the great secret behind the rapid growth in domestic consumption during Lula's time in government - and thus, by extension, behind the success with which he ended his mandate.

3) Lula will also help those Brazilian states that are failing financially or, in many cases, insolvent. In this instance it's not a case of charitableness, however, but of vested interests: aiming to incite these governors to put pressure on their state backbenchers into voting against the impeachment.

An important part of the Lula package is intangible: saliva. Or, more objectively speaking, his winning political eloquence. This gift of the gab has allowed him to keep PMDB on the side of the government, which is, as everybody knows, the key to the whole story.

Whether this will work or not, only time will tell. Yet this sudden flurry of activity, the appointment of Lula, and the more or less heterodox plans, also means that war has been declared on the markets.

It's worth noting that the simple possibility of Lula assuming a ministerial role has caused the dollar to go up and the real to suffer. The revealing of these plans - expansionist, just at a moment when the market is feeling the pressures of extreme austerity - can only lead to further turbulence.

What's more, it's always necessary to take into account the unimaginable, which has, for precisely these reasons, not made it into the anlysis. Nobody knows what else might come of the Lava Jato operation. Nobody knows whether the judge Sérgio Moro will press for Lula's arrest, and, if so, whether the Supreme court judge will agree or not.

If appointing Lula to government is Dilma's last card, his departure from government (whether by judicial ruling or by the failure of his plans) will mean, obviously, the end of the game.

One way or another, Dilma's government is finished. Now, for better or for worse, it's the turn of government Lula-3.

Translated by GILLIAN SOPHIE HARRIS

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