Finance capital’s ultimatum to Lula in Brazil: Impose austerity or your victory “will turn to ashes”
by Tomas Castanheira
Part 3 - The orders of finance capital
Alongside this brazen criminal interventionism, the main organs of international finance capital are dictating their demands to the elected Brazilian government, in a tone of command that dispenses with diplomatic niceties.
The British magazine The Economist published after the election an editorial titled “Markets are dismayed by Lula’s surprise win—and for good reason.” The text argues bluntly: Either the government abandons its campaign promises and submits to the demands of capital, or it will be reduced to “ashes.” The magazine begins by noting that “if Lula’s supporters are elated, the markets are running scared,” and adds that “they are right to.”
Lula is accused of having “talked down the need for fiscal discipline” during the campaign and of having promised “an extravagance of big new bungs.” What the spokesmen of the capitalist oligarchy call “extravagance” amounts in fact to crumbs—such as the promise of increased welfare benefits for the poorest and free public transportation on weekends—that do not even begin to address the brutal levels of social inequality in the country.
The Economist concludes flatly that Lula’s final four years in office “will have to look very different from the past four” and that he “does not have much time to persuade investors that he will change course.” Lula’s last term, far from having expanded social spending, was a government of fiscal austerity, and the massive rejection the PT suffered in the first round was a direct product of those policies.
Then come the orders: Lula “should make a start immediately by naming a finance minister whom investors will trust” and “then must announce a credible plan for fiscal reform.”
The Financial Times was even more explicit about the mechanism of blackmail. Lula “needs to rein in public spending or his hand could be forced by investors increasingly reluctant to fund his government.” The newspaper even dictates his words to him: “Lula should start by changing his rhetoric.” It recalls that during the campaign the president “said that it was ‘babaquice’ or foolishness to talk about fiscal tightening.” Lula must also build “as broad a coalition as possible” in Congress, deepening the alliances of 2022, which, in the FT’s view, did not go far enough to the right. Lula himself indicated in his victory speech that this is his aim: “I did not choose the Congress, the people chose it, and it is with it that I will work and get things passed.”
The dictates of the financial oligarchy are summed up in the sentence with which The Economist closes its editorial: If Lula believes that his victory is “an excuse to double down on the policies that saw off Flávio, he will cause a fiscal crisis and a deep recession. His golden victory will turn to ashes.” What capital demands is that the elected government apply the same austerity program the bourgeoisie expected from Flávio Bolsonaro—the same program the IMF has declared “urgent” on a global scale and that brought hundreds of thousands of young people and workers into the streets of France.
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