Social classes, newdeveloptalism and foreign policy under presidents Lula and Dilma

LATIN AMERICAN PERSPECTIVES, Issue 198, Vol. 41 No. 5, September 2014, 94–109DOI: 10.1177/0094582X14543790© 2014 Latin American Perspectives

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Social Classes, Neodevelopmentalism, and Brazilian Foreign Policy under Presidents Lula and Dilma

byArmando Boito and Tatiana Berringer

Translated by Gregory Duff Morton

The transition from the FHC to the Lula administration produced an epochal change within the power bloc. Large-scale international financial capital lost power, while the internal grande bourgeoisie ascended politically because of a policy-oriented broad-front approach that included even the popular classes. The Lula and Dilma governments did not break with the neoliberal model for capitalism, but because they represented a particular fraction of the capitalist class and because they owed their support to particular classes they introduced major changes in the economic policy, the political orientation, and the international performance of the Brazilian state.

Na passagem da era FHC para a era Lula, ocorreu uma mudança no interior do bloco no poder: o grande capital financeiro internacional perdeu força e a grande burguesia interna brasileira ascendeu politicamente, apoiando-se numa ampla frente política que abarca, inclusive, classes populares. Os governos Lula e Dilma não romperam com o mod-elo de capitalista neoliberal, mas introduziram, em decorrência da fração da classe capi-talista que representam e em decorrência também das classes nas quais se apoiam, mudanças importantes na economia, na política e na atuação internacional do Estado brasileiro.

Keywords: Social classes, Neodevelopmentalism, Foreign policy, Lula and Dilma

The institutionalist and neoelitist tendencies that are the dominant theoreti-cal orientations in political science approaches to Brazil today both proceed—for different reasons— by separating politics from society. Our approach, in contrast, unites these two terms through the intermediation of the concept of classes and class conflict. We thus return to the procedure of linking politics to the interests of classes and class fractions, thereby also connecting politics to society and to the economy. Our use of “class conflict” differs from what seems to be the most common approach, in which the “bourgeoisie” and the “working class” are imagined as two homogeneous blocs that stand in permanent oppo-sition to each other. Our approach, instead, considers the fractions that subdi-vide each of those two social classes. We also take into account the existence of intermediate classes such as the middle class and the peasantry. Finally, we

Armando Boito is a professor of political science at the Universidade de Campinas and a partici-pating editor of Latin American Perspectives. Tatiana Berringer has a Ph.D. in political science from that university. Gregory Duff Morton is a graduate student in anthropology and social work at the University of Chicago.

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Boito and Berringer / CLASSES, NEODEVELOPMENTALISM, AND FOREIGN POLICY 95

conceive of the possibility of combined fronts and class alliances that can, at particular conjunctures, moderate the conflict between the fundamental classes in a capitalist society like Brazil’s. In this more complex analysis of social classes, the collectives that enter into the political process are much more numerous. They form a multipolar arrangement with each other, enter into intricate relationships of unity and struggle, and configure the political game differently depending on the situation or issue at hand.

To analyze the bourgeoisie, we employ the notion of the power bloc. This concept attends to the asymmetry of relations between social classes: the power bloc is made up only of the dominant classes. Thus the concept distinguishes the position in the political process occupied by the dominant classes (those whose historical interests are organized by the state) from the position that has been left for the working classes. It allows us to think through the relations of unity and struggle that by turns link and divide the interests of the dominant class’s various fractions. Thus it serves as a fundamental tool for explaining a great number of political conflicts beyond those between the bourgeosie and the working class.

Further, the concept of the power bloc contributes to our understanding of the hierarchy of power that exists between the different fractions of the bour-geoisie. It includes the notion of the “hegemonic fraction,” the fraction whose interests are prioritized by the state’s economic policies even when this priori-tization damages the interests of others in the bloc. Finally, at the level of for-eign policy, it allows us to overcome the most obvious flaws of the realist theoretical orientation that dominates studies of international relations. Thinking with this notion makes it possible to conceive of the foreign policy of a particular state as the extension, on the international scene, of the domestic power dynamic and, in particular, of the interests of the hegemonic fraction. Thus the concept permits us to identify the close linkage between national and international policy. It lets us detect the real content—the class content—of what the realists call the “national interest” and what an ideologized discourse identifies as the interest of the people as a whole.

The concept of an “internal bourgeoisie” plays a key role in our analysis. We see it as a fraction of the power bloc that is engaged in competition for primacy in the state’s political orientation with the fraction of the bourgeoisie that is inte-grated into international capital. Fractioning within the bourgeoisie and the con-cept of the internal bourgeoisie were the subject of pioneering analysis by Nicos Poulantzas (1974; 1975), who identified the internal bourgeoisie as occupying an intermediate place between two extreme positions: on the one side, the national bourgeoisie, which in dependent and colonial countries may take on an anti-imperialist stance, and, on the other side, what has been called the integrated bourgeoisie, which is a mere extension, within the dependent social formation, of capital originating in the central countries. (We prefer the term “integrated bourgeoisie” to “comprador bourgeoisie,” which harks back to earlier stages in the economic relations between imperialist countries and dependent countries.) The concept of the internal bourgeoisie allows us to avoid two symmetrical and opposite errors: imagining the existence of a national bourgeoisie in contempo-rary Brazil and imagining that the new wave of internationalization in the



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capitalist economy has wiped away all differentiation and conflict of interest between Brazilian firms and international capitalism.

The Power Bloc and The neodeveloPmenTalisT PoliTical FronT

Lula da Silva’s victorious candidacy in the 2002 presidential election came to represent a set of important modifications of Brazilian politics, modifica-tions that were consolidated over the course of his two terms (2003–2010) and Dilma Rousseff’s presidency (2011–present). First of all, there was a change in the power bloc. The Brazilian internal grande bourgeoisie—the fraction of the capitalist class that maintained its own basis for capital accumulation and vied for position with international financial capital—underwent a political ascent at the expense of the interests of a different fraction of the grande bourgeoisie, the fraction that was integrated into international capital. The interests of large-scale international capital and of its domestic allies had guided the action of the Brazilian state under the governments of Fernando Collor de Mello (1990–1992), Itamar Franco (1993–1994), and Fernando Henrique Cardoso (1995–2002); these interests now found themselves displaced from the uncon-tested hegemony that they enjoyed during the 1990s. Having gone so far as to oppose the government of the Partido dos Trabalhadores (Workers’ Party—PT) altogether, they came to occupy a subordinate position.

Second, this change was connected to a broader mutation in national poli-tics. The political rise of the internal grande bourgeoisie became possible only because of the creation of a political front that brought together, alongside it, the primary sectors of the popular classes. This political front, which we could call a “neodevelopmentalist front,” is marked by heterogeneity and plagued by contradictions. At the level of political parties, it is principally represented by the PT. It links the internal grande bourgeoisie, which is the front’s driving force, to the lower middle class, urban workers, and the peasantry. It also incor-porates that broad and heterogeneous social sector that includes unemployed people, the underemployed, those who work for themselves, peasants in dire poverty, and other groups that make up the set known to the past century’s critical Latin American sociology as “workers of the marginal mass” (Kowarick, 1975; Nun, 2001).

The neodevelopmentalist front contends with the conservative political forces oriented toward neoliberal orthodoxy represented, among political par-ties, primarily by the Partido da Social Democracia Brasileira (Brazilian Social Democratic Party—PSDB)—which, despite its name, has no relationship what-soever to European-type social democracy. The orthodox neoliberal field brings together, by and large, large-scale international financial capital, the fraction of the bourgeoisie that is fully integrated into this capital, some of the large land-owners, and the upper middle class of the public and private sectors.

Let us look more closely at the program of the neodevelopmentalist front, its luminaries, and the ways in which it is meeting—in a very unequal manner—the interests of the forces that support it.




This program is “developmentalist” in that it aims at the economic growth of Brazilian capitalism, though without breaking with the constraints pre-scribed by the neoliberal economic model that still predominates at the national level. In pursuit of economic growth, the Lula and Dilma administrations have implemented certain important economic and social policies that were absent under that of Fernando Henrique Cardoso (FHC): an increase the minimum wage and income transfers, which have increased the purchasing power of the poorest Brazilians (those who are most disposed to consume their incomes); an increase in the budget allocation to the Banco Nacional de Desesnvolvimento Econômico e Social (Brazilian National Development Bank—BNDES) for the purpose of financing large national firms at subsidized interest rates; assistance to large Brazilian firms (and some non-Brazilian firms, marginally), as they seek to export both merchandise and capital; and the maintenance of aggregate demand in moments of economic crisis. More recently, the Dilma administra-tion reduced the base interest rate and the gap between bank loans and interest rates on certificates of deposit and devalued Brazil’s currency, the real. These new approaches are an attempt to lower the cost of productive investment and make imported products more expensive.

We attach the prefix “neo-” because great differences separate this orienta-tion from the developmentalism characteristic of the period from 1930 to 1980. Neodevelopmentalism is the developmentalism of the era of neoliberal capitalism. Neodevelopmentalism (1) gives rise to a level of economic growth that, although much higher than that witnessed during the 1990s, is nonetheless considerably more modest than that provided by the old developmentalism; (2) grants less importance to the domestic market; (3) attributes less signifi-cance to policies that develop the local industrial plant; (4) accepts the struc-tures imposed by the international division of labor, thus promoting, under new historical conditions, a reactivation of an earlier function of Brazilian cap-italism, the export of primary commodities; (5) has less capacity to redistribute income; and (6) is directed by a fraction of the bourgeoisie that has lost even the faintest interest in acting as an anti-imperialist force. These characteristics, each one tightly linked to the rest, make neodevelopmentalism a considerably less ambitious program than its predecessor, and they flow from the fact that this is the development policy that is possible within the limits of the neoliberal capi-talist model. The lower rates of growth of the gross domestic product are the rates possible for a state that sterilizes roughly 40 percent of its budget by applying it to the interest and amortization of the public debt, thus sapping its own capacity to invest; the low level of importance attributed to the domestic market is the result of a commitment to maintaining openness to trade; the reactivation of the primary commodity-export function is the growth model possible for an economic policy that has no plans to counter the offensive of imperialism against Brazil’s industrial plant; and all of these characteristics block or discourage a stronger approach to the redistribution of income.

The internal grande bourgeoisie, the driving force behind the neodevelop-mentalist front, is distributed throughout many sectors of the economy: com-modity-processing industries, shipbuilding, construction, mining, and the segment of agribusiness made up of firms that process and/or export agricul-tural and ranching products, such as meat, sugarcane, soy, and citrus. What




unites such different firms is their demand for favorable treatment and state protection in their competition with international capital. So-called globaliza-tion has not, as some authors argue, produced a homogeneous worldwide bour-geoisie (Martuscelli, 2010). In innumerable areas of economic policy under Lula and Dilma, the state prioritizes the interests of this fraction of large-scale domes-tic capital. One fundamental aspect is the pursuit of a surplus in the balance of trade, which enormously favors agribusiness, mining, and other sectors linked to the export of agricultural goods and natural resources. The BNDES, which survived unscathed the wave of privatizations in the 1990s, benefits from a bud-get many times greater than it enjoyed during the 1990s, and it has come to prioritize a limited number of large firms, predominantly Brazilian, as recipients of loans at subsidized interest rates (Bugiato, 2012). The state’s purchasing poli-cies have also changed under the neodevelopmentalist governments, and so have the purchasing policies of the large state-owned firms. These policies have begun giving priority to large firms that are predominantly Brazilian or have major operations in Brazil. Finally, Brazilian foreign policy is linked to this new set of economic policies, once again in such a way as to privilege the interests of the internal grande bourgeoisie. It is this fraction of the internal grande bour-geoisie that has gained the most from neodevelopmentalist policy.

Among the dominated classes, urban workers and the lower middle class participate in the neodevelopmentalist front through the intermediation of the labor movement and the PT. It was, in fact, these forces that created the party. Throughout the 1990s the PT struggled for the implementation of a welfare state and the shoring-up of state capitalism; it became attracted by the internal grande bourgeoisie, which had been making moderate criticisms of neoliberalism, and at the turn of the century it combined its earlier tradition with bourgeois dis-satisfaction and opportunistically turned itself into the party of neodevelop-mentalism. The working class and the lower middle class have continued to be present in the PT but now serve as a social base rather than as its driving force. These wage earners have gained something from neodevelopmentalism. Economic growth has led to a serious reduction in unemployment, and the increase in the minimum wage has increased the purchasing power of the peo-ple at the base of the income pyramid. According to data from the Instituto Brasileiro de Geografia e Estatística (Brazilian Institute for Geography and Statistics—IBGE), between 2002 (the last year of FHC’s administration) and 2010 (the last year of Lula’s administration), the unemployment rate declined from 12.6 percent to 6.7 percent (IBGE, 2013). Under the Dilma administration, the trend has continued. In 2012 the unemployment rate was only 5.5 percent—in other words, half of the rate inherited from the FHC era. The minimum wage increased 53.67 percent in real terms over Lula’s two terms in office (Table 1).

The new economic conditions and policies greatly favored union organizing and struggle, allowing workers to win wage increases. This situation contrasted with the state of affairs in the 1990s (Boito and Marcelino, 2011). Between 2003 and 2012, there was a nearly constant increase in the number of strikes, and this growth was not restrained even by the economic crisis that began in 2008. In 2004, 302 strikes took place. This number increased steadily until it reached 411 in 2008, a year of dramatic economic events (Boito and Marcelino, 2011). Four years later, in 2012, there were 873 strikes (Figure 1). Although the average




annual number of strikes since 2000 has remained below the mean for the 1990s, the great majority of strikes are offensive—strikes for real wage increases, improvement in working conditions, and new rights— whereas the 1990s were dominated by strikes against layoffs, violation of the terms of wage agree-ments, or nonpayment of wages (DIEESE, 2013).

Proof of the recovery of the labor movement in the 2000s is the exponential growth in the number of collective agreements and pacts that granted wage increases above inflation. In 2003 only 18.8 percent of such agreements and pacts did so; in 2008 this proportion was 76.1 percent (Boito and Marcelino, 2011). In 2012 95 percent of the 704 bargaining units analyzed by DIEESE had real increases in their wages, and in approximately 4 percent the wage increase equaled infla-tion. The mean real wage increase obtained by workers was not very high, hover-ing around 1.96 percent above the consumer price index (DIEESE, 2013).

In innumerable government consultative bodies, union representatives are seated alongside the spokespeople of the big firms. Moreover, associations of

TaBle 1

changes in the minimum monthly wage, april 2002 to January 2010

Period Value (in constant R$)a Increase (%)

April 2002 331.88 –April 2003 335.96 1.23May 2004 339.96 1.19May 2005 367.93 8.23April 2006 415.91 13.04April 2007 437.12 5.10March 2008 454.74 4.03February 2009 481.05 5.79January 2010 510.00 6.02Total 53.67

Source: DIEESE (2014).a. Adjusted for inflation to January 2010.

Figure 1. annual number of strikes in Brazil, 1983–2012 (dieese, 2013).




large industrial leaders have undertaken frequent joint campaigns with union coalitions to press the government to grant trade protections to local industry and to lower the base interest rate. Recently, as a result of this coordinated pres-sure, Dilma’s administration has reduced the interest rate and taken measures to lower the exchange rate in order to privilege exports, protect the domestic market, and make investment less expensive.

The peasantry is also present in the neodevelopmentalist front in an orga-nized way. In its second term, the FHC administration persecuted and crimi-nalized peasant movements; when Lula took power, his government recognized these movements’ right to make demands. The universe of rural labor is a hodgepodge, and workers are represented by a number of different organiza-tions. Peasants find representation in the Movimento dos Trabalhadores Rurais Sem Terra (Movement of Landless Rural Workers—MST), the Movimento dos Atingidos por Barragens (Movement of People Affected by Dams—MAB), the Confederação dos Trabalhadores na Agricultura National (Confederation of Agricultural Workers—CONTAG), and others. Rural wage laborers are repre-sented by the network of official unions, and the mid-level peasants and, sec-ondarily, the sector of peasants who have entered permanent settlements through the MST are prominent in the CONTAG. This stratum demands tech-nical assistance, financing for production, access to markets, and a decent price for its products. The neodevelopmentalist administrations have met these demands in part through financing for family agriculture, which has grown significantly in comparison with the FHC era, and through programs in which the government buys goods produced by peasants (MST, 2009).

The poorest stratum of the peasantry includes the landless and those with very small parcels, and their basic demand is the expropriation of idle land and an aggressive policy oriented toward establishing new settlements. This stra-tum, also organized by the MST, finds itself more marginalized by the neode-velopmentalist front. The Lula and Dilma administrations considerably reduced the number of land expropriations. Agribusiness weighs heavily in neodevelopmentalist policy, and this reality tends to block the expropriation approach (Scarso, 2012).

Unemployed workers, underemployed workers, those depending on pre-carious employment, and the “self-employed” make up the most distant fringe of the neodevelopmentalist front and have a unique relationship with it. This “marginal mass” largely resides in the peripheries of the country’s great urban centers and in the backlands of the Northeast. Within it two sectors can be dis-tinguished. One consists of the so-called urgency movements, including the housing movement, the unemployed movements, and the movements that struggle for land of which we have already spoken. Of the first two of these the housing movement has the greater political and social influence. It is composed of a large number of varied organizations that are active in Brazil’s large and medium-sized cities. They mobilize tens of thousands of families and are guided by wide-ranging political theories (N. C. Oliveira, 2010). They range from movements that only demand homes for their participants to movements that press for changes in the government’s housing policy or even advocate for wholesale change in the current economic model. At the local level, these move-ments achieve victory when they obtain buildings and urban plots of land by means of direct action; at the level of national policy, they win when they




achieve new policy measures. The most important effect of the housing move-ments has been a change in the state’s housing policy. During the 1990s, the state abandoned the construction of affordable housing. The Lula administra-tion created a large-scale housing program entitled “My House, My Life,” and this program continues to be implemented by the Dilma administration (N. C. Oliveira, 2010). According to Agência Brasil (2013), over the course of three years this venture financed the construction of 2 million homes, expending more than R$50 billion.

Another segment of the so-called marginal mass is socially and politically disorganized. This segment has been included in the neodevelopmentalist front because of the income-transfer policies undertaken by the Lula and Dilma administrations. The main instruments in this policy area are the Bolsa Família (Family Grant) program, which serves more than 13 million families below the poverty line and has a budget of nearly R$15 billion, and the continuing pay-ment benefit, designed for seniors and people with disabilities (MDS, 2013). The Lula and Dilma administrations have opted to send these people income without bothering to organize them. They make up a passive electoral base that is called upon to enter the political process only through the intermediation of the vote and only to support the candidates of the neodevelopmentalist front. Thus these administrations have forged a relationship with this electoral base that follows the tradition of Brazilian political populism. In this tradition, workers make real gains (and this in contradiction to the observations of those who understand populism as “mere demagoguery”), but these gains are extremely limited and their beneficiaries remain politically and ideologically dependent on government initiatives.

Although it is broad, heterogeneous, and contradictory in its class composi-tion, the neodevelopmentalist political front exists and acts. At critical moments in the national political process, its constituent forces act jointly in the political sphere, although they also engage in sometimes sharp conflict over economic questions such as wages, work rights, social rights, land expropriation, and other issues. The neodevelopmentalist front acted in 2002, during Lula’s presi-dential victory; in 2005, during the political crisis that threatened to destroy his administration known as the Mensalão (Big Monthly Payment); in 2006, during his reelection; and in 2010, during Dilma’s victorious electoral campaign. In each of these critical moments, the survival of a neodevelopmentalist adminis-tration was threatened, and in each of them large business associations, union centrals, peasant movements for agrarian reform, and housing movements, alongside the impoverished and disorganized segment of the electorate, came out to support the Lula and Dilma governments with various actions or simply with their votes. Thus these social forces, although motivated by different inter-ests and goals, proved that they belonged to a single political team.

Foreign Policy and The neodeveloPmenTalisT FronT

Foreign policy under Lula and Dilma must be understood in the context of recent political changes. First of all, it is one component of the transformations that have taken place in the power bloc. Secondarily, it is a response to the




emergence of the popular classes in national politics. As we have said, we dis-sent from the reasoning employed by the theoretical tendencies that call them-selves realist and neorealist. We do not conceive of the state as a homogeneous institution endowed with its own interests and power whose foreign policy is separate from its domestic policies. What explains the foreign policy of the Lula and Dilma administrations is a set of changes in Brazil’s domestic politics that emerged alongside transformations at the international level.

The foreign policy of the Lula administration was an important instrument for the strengthening of the internal grande bourgeoisie. The international activity of the state changed in response to the interests of this class fraction. The internal grande bourgeoisie was united around common interests at the international level. It wanted state support in the conquest of new foreign mar-kets for export and for foreign direct investment, policies that gave priority to its goods and services in state purchasing decisions and in those of state-run firms, and increased state protection for the domestic market. In our view, it is precisely these priorities that explain the primary focus of Brazilian state action on the international scene: the emphasis on South-South relations, the prioriti-zation of South America, the creation of the G-20 to act in the Doha Round of the World Trade Organization (WTO), the generation of the IBSA (India, Brazil, and South Africa) forum, the negotiations over and ultimate derailing of the proposed Free Trade Agreement of the Americas (FTAA), the postponement of the negotiations between Mercosur and the European Union, and, most recently, the activity in the BRICS (Brazil, Russia, India, China, and South Africa) forum.

Under FHC, foreign policy was oriented toward the monetary stabilization plan and thus aimed at attracting investment and loans from the International Monetary Fund and the World Bank. For this reason, the state adopted a sub-missive attitude toward the centers of world power. It employed a strategy that involved strengthening ties with the imperialist states—the United States and Europe—and ratifying international protocols. Among these was the nuclear arms nonproliferation treaty, which was signed in 1997, 29 years after Brazil’s refusal to endorse this discriminatory pact. Also of note was the con-clusion of negotiations for Protocol 505 of April 18, 2000, which provided for the transfer of defense equipment at reduced prices and, in exchange, ceded complete control of the Alcântara base in Maranhão to the United States. The state was prohibited from using the base and from inspecting any equipment (space vessels, vehicles, etc.) imported to stock the base or to be launched. (This agreement was rejected by the Senate after Lula’s ascent to the presi-dency in 2003.)

The FTAA proposal was one of the factors that prodded Brazil’s internal grande bourgeoisie into organizing during FHC’s terms in office. This issue brought this fraction’s class interests into alignment with the interests of the people’s movements and the labor movement, both of which had been cam-paigning against the proposed agreement. While the internal grande bourgeoi-sie faced certain contradictions when presented with the FTAA proposal, in the course of the process these contradictions lost their importance. From the start of the negotiations, the internal bourgeoisie and particularly the sectors that were focused on domestic and Latin American production of manufactured




goods (paper and cellulose, electronics, chemicals, food, and capital goods) opposed the FTAA. Support for the proposal came from the sectors such as agribusiness, iron, footwear, and textiles, whose production was oriented toward production for foreign markets; these sectors had been the least nega-tively affected by the new trade openness of the 1990s.

To defend its interests and identify its demands at the level of foreign policy, in 1996 the internal grande bourgeoisie organized itself in the form of the Coalizão Empresarial Brasileira (Brazilian Business Coalition—CEB). The CEB’s goal was to organize business leaders’ demands and transform them into pressure that could affect the government as it planned and conducted hemispheric negotiations. For the first time in the history of Brazilian foreign policy, the dominant classes were united around a common set of issues nationwide and across sectors. The CEB emerged from the participation of several Brazilian business leaders in the Second Business Forum of the Americas in Cartagena in 1996—a meeting of Latin America’s bourgeoisies for the purpose of negotiating the FTAA proposal. During the meeting, Brazil’s bourgeoisie was surprised by the level of preparation of U.S. business leaders and felt threatened by these leaders’ technical knowhow and their capacity to influence the state. Coincidentally or not, it was agreed that the next forum would occur in Belo Horizonte, Brazil. This prompted the Confederação Nacional da Indústria (National Confederation of Industry—CNI) to perceive the need to expand its influence, and it accepted the task of organizing the forum (A. J. Oliveira, 2003).

While it made arrangements for the forum, the CNI succeeded in persuading a broad swath of the bourgeoisie of the necessity of participating in the making of international decisions. The CEB’s most intense activism occurred among the protectionist sectors, notably large and medium-sized firms from the South and Southeast of the country. The activities of agribusiness somewhat paralleled those of the CEB (Oliveira and Pfeifer, 2006). In fact, they were aimed at accessing the U.S. markets that would become available if the U.S. government reduced its agricultural protectionism (A. J. Oliveira, 2003). Since the U.S. government did not forgo its protectionist position, Brazilian agribusiness had no reason to pres-sure the state to sign the FTAA and ended up lending its voice to the sectors opposed to the agreement. The CEB came to serve as a model for the rest of the international economic negotiations that were in progress at that time, particu-larly the WTO’s Doha Round and the Mercosur–European Union discussions. In order to institutionalize its channels for dialogue and consultation with the bour-geoisie, Brazil’s Foreign Ministry created special discussion groups about the international economic negotiations and a permanent business committee.

On the other side, the people’s and labor movements organized themselves around a national campaign against the FTAA, an umbrella group that brought together 55 organizations, including the Central Única dos Trabalhadores (Workers’ Central—CUT), the MST, the social pastoral organizations of the Confederação Nacional dos Bispos do Brazil (National Confederation of Bishops of Brazil), Consulta Popular, the World Women’s March,, the Partido Socialista dos Trabalhadores Unificados (Unified Workers’ Socialist Party—PSTU), and some sectors of the PT. For the most part, these organizations had come into being through the fight for redemocratization and in the struggles




against neoliberalism; they had come together to call for a plebiscite on the foreign debt in 2000. The campaign’s participants conducted base-level orga-nizing and popular education to raise consciousness, thereby mobilizing the population to pressure the successive administrations not to sign the treaty (Silva, 2008).

The idea of the campaign was born at the 2001 World Social Forum in Porto Alegre. It took shape as a continental-level campaign, and as such it contrib-uted to the strengthening of a progressive field that managed to elect a number of presidents in the period from 1998 to 2011, including Hugo Chávez in Venezuela, the Kirchners in Argentina, Michele Bachelet in Chile, Fernando Lugo in Paraguay, Tabaré Vasquez in Uruguay, Evo Morales in Bolivia, and others. Lula’s relationship to these presidents played a fundamental role in the continent’s geopolitics, and it contributed to the defeat of the proposal to create the FTAA and also to the deepening of the processes of integration at work in the region.

In Brazil the campaign carried out a popular plebiscite in 2002. The plebi-scite’s methodology was oriented around mass education on the potential political and economic impact of the FTAA. Campaigners produced a variety of materials including short books, videos, and flyers. The campaign was divided into state and local committees and spread out across the entire nation, conducting discussions in schools, neighborhoods, universities, churches, radio programs, and TV shows to mobilize the population and collect signa-tures. The plebiscite produced more than 10 million votes, more than 95 percent of which opposed Brazil’s entry into the FTAA.

This effort brought together much of the Brazilian left; it also brought heavy pressure to bear on the PT government, whose base participated intensely in the mobilization. Thus the struggle against the FTAA united a wide variety of popular sectors in the struggle against the entrenchment of neoliberalism in the region (Silva, 2008). It contributed to the articulation of a neodevelopmentalist platform that would come to generate a set of demands—albeit demands underpinned by particular and sometimes contradictory objectives and under-standings—from the organizations of the working classes and also from the representatives of Brazil’s internal grande bourgeoisie.

The FTAA was one of the key issues in the 2002 election, which pitted a PSDB candidate against a PT opponent. Starting in 2001, a year before the election, the FHC administration (associated with the PSDB) began to take a more posi-tive stance toward the trade agreement, while the PT presented itself as the agreement’s enemy. Lula argued that, given the hemisphere’s asymmetries, the FTAA, rather than serving as a genuine integration scheme, amounted to a plan to annex Latin American economies to the United States (Oliveira and Pfeifer, 2006). The PT’s position became even more explicit at the beginning of Lula’s first administration thanks to the decision to name ambassador Samuel Pinheiro Guimarães general secretary of the Foreign Ministry. Guimarães had been dis-missed from his position as president of the ministry’s international-relations institute in 2001 after he declared, during a meeting of the Associação Brasileira de Máquinas e Equipamentos (Brazilian Association of Machines and Equipment), that he opposed the FTAA (Bandeira, 2004).




During the first years after Lula’s election, the new administration did not entirely abandon the negotiations and came to defend a proposal for an “FTAA lite” that would allow the various member states to take on different levels of commitment within the agreement, carrying out bilateral or plurilateral nego-tiations. The Lula government’s new position caused a considerable amount of discomfort for the organized sectors of the anti-FTAA campaign and divided the broader left effort between opponents of the government (the PSTU), the government’s base of support (the PT and the CUT), and critics of the govern-ment who argued for structural reforms to Brazilian society (the MST and Consulta Popular).

The state used the WTO negotiations and the Mercosur–European Union talks as a counterweight to the FTAA. According to Thorstensen (2001), these three negotiation processes became intertwined, permitting the state to operate strategically on the international stage. From a Brazilian perspective, these three negotiations meant asymmetric relations between imperialist and depen-dent states, threats to Brazilian industry, and a probable decrease in agricul-tural protectionism. In order to obtain special advantages and buy time in the FTAA negotiations, the state attempted to favor the negotiations with the European Union while at the same time taking action through the WTO con-flict-resolution apparatus, including its cotton and sugar panels. Thus it dem-onstrated its capacity for anti–United States and anti–European Union action in the multilateral sphere (Vigevani and Mariano, 2005: 14). For its part, the United States attempted to diminish Brazil’s influence in Latin America and to press for the approval of the FTAA by negotiating bilateral agreements with certain Andean nations (Chile, Colombia, and Peru), in the Caribbean, and with the other members of Mercosur, especially Uruguay and Paraguay.

In response, the Lula administration strove to strengthen Mercosur and other initiatives such as the relationship between Mercosur and the Andean Community of Nations and the Iniciativa de Integração em Infraestrutura Regional Sulamericana (South American Regional Infrastructure Integration Initiative—IIRSA). All of these functioned as counterweights to relations with the imperialist states (particularly the United States and Europe) and as mech-anisms for introducing new elements into regional integration policy such as energy, transport, and communications. The Lula government respected Bolivia’s decisions about the nationalization of its gas, which involved Petrobrás, and renegotiated with Paraguay, at the latter’s request, the treaty on the Itaipu Dam. In addition, it carried out a series of economic cooperation initiatives, such as the voluntary contribution of resources so that Paraguay could construct a 500-kw line from the Itaipu hydroelectric plant to Asunción. It helped create the União Sulamericana das Nações (South American Union of Nations—UNASUL), which, in addition to incorporating IIRSA, created the Comitê de Defesa Sulamericano (Committee for South American Defense) to counterbalance the OAS’s Inter-American Treaty of Reciprocal Assistance. Finally, it played an important role in checking the attempted coups d’état in Bolivia and Ecuador in 2008 and served as the arbiter of the conflict between Colombia and Ecuador in 2008. On the international political scene, it some-times took positions that opposed that of the United States, such as its disap-proval of the 2003 invasion of Iraq and the housing of Honduran President




Manuel Zelaya in the Brazilian embassy and its positions on the negotiations on Iranian production of enriched uranium and the creation of U.S. military bases in Colombia.

Moreover, Brazilian foreign policy aimed to broaden and deepen South-South relations. This involved creating coalitions such as the G-20 in the WTO, participating in the IBSA forum, actively contributing to the UN peacekeeping mission in Haiti, and tightening relationships with states on the African conti-nent and in the Middle East and also, through the BRICS forum, with Russia, India, China, and South Africa. These new, closer bonds brought great benefits to Brazil’s domestic bourgeoisie. They offered Brazilian firms increased access to new markets for exporting commodities and manufactured goods while ensuring that they could set up branches on foreign territory. Between 2003 and 2010 not only did Brazil’s trade balance shift from deficit to ample surplus but also there was a clear change in the destination of its exports. The increase in exports to Latin America (and also elsewhere) contributed, along with other factors, to a decrease in unemployment.

Brazil-based firms not only grew but internationalized. Already, nearly 1,000 Brazilian companies have a significant foreign presence, with more than 10 percent of the capital of their affiliates and direct investment exceeding US$10 million. Some of the most internationalized are JBS, Gerdau, Stefanini IT Solutions, Metalfrio, Marfrig, Ibope, Oderbrecht, Sabó, Magnesita, Suzano Papel e Celulose, Vale, Weg, Brasil Foods, CI&T, Artecola, Embraer, Camargo Correa, Marcopolo, and Petrobrás. Brazilian transnational firms have invest-ments principally in agriculture, livestock, natural resources, consumer goods (including food, beverages, and textiles), intermediate goods (including chem-ical products and equipment), construction, commerce, and transport; particu-lar strength comes from lucrative activities in natural resources, construction, and food (Fundação Dom Cabral, 2012).

After the tabling of the FTAA in 2005, the CEB saw its role diminished and transferred to ministries and the departments of foreign trade of the CNI, the Federação das Indústrias de São Paulo (São Paulo Federation of Industries—FIESP), and other major economic groups. In 2004, the Conselho Empresarial Brasil-China (Brazil-China Business Council) was formed, and the Companhia Vale do Rio Doce took the leadership position. The group was made up of national corporations in mining, energy, paper, cellulose, food, and construc-tion with interests in exporting to China or operating in its massive market. After the 2008 crisis, the importation of Chinese products increased, as did foreign direct investment. In order to contain the potential negative impacts of these developments, the state encouraged the devaluation of the real, created new protectionist tariffs, reduced the tax on industrial products, and required that a portion of government purchases be produced within Brazil. At the same time, the state’s representatives began condemning the “exchange-rate war” and the policies of fiscal austerity promoted by the European Union and the United States. Standing with the BRICS, these representatives also criticized the policies of the international financing organizations and started pushing for a new international architecture, including a new development bank.

We have summed up a variety of international economic moves made by the Lula and Dilma administrations: the tabling of the FTAA, the delay of the




European Union–Mercosur negotiations and of the Doha Round, the strength-ening of Latin American integration, the deepening of relations with depen-dent states, and the change in policies on tariffs, the exchange rate, the interest rate, and budget support for the BNDES. All of these make up a broader policy approach that aims to grant state protection to the internal grande bourgeoisie in realms both foreign and domestic.

conclusion

Political debate in Brazil, insofar as it involves the government, the elector-ally viable opposition, the media, and the large political parties, is dominated by economic themes. Among these, pride of place goes to economic growth; a secondary conversation involves the distribution of income and the possibility of reducing social and economic inequalities. The resulting arguments pit two strands of economic thought against each other: monetarism and neodevelop-mentalism. In our analysis, this debate reflects the conflict between the frac-tions of the bourgeoisie that make up the power bloc.

It is true that this is not a situation of oil and water: the internal grande bour-geoisie is not entirely separate from international capital. Both fractions belong to a larger whole, big capital, and therefore they have, in innumerable sectors and circumstances, interests in common. On the one hand, many domestic firms seek out foreign partners with the goal of increasing their economic power and incorporating technology. On the other hand, foreign firms look for domestic partners, aiming to insert themselves more easily into Brazil’s econ-omy and politics. In the processing industries, which aim for protection of the domestic market, we encounter a large number of foreign firms; by contrast, the big banks, which alongside international financial capital hold the majority of the public debt securities and have an interest in expanding their financial gains, are fundamentally domestic. While, because of the multiple categories into which a firm may fit (domestic or foreign capital, financial or productive sector, production for export or for the domestic market, agriculture or indus-try, regional or nationwide), each of these fractions includes firms that oscillate between one fraction and the other, the fact remains that the two primary polit-ical approaches—monetarist and neodevelopmentalist—divide the internal grande bourgeoisie into two sectors.

One group of big-capital firms, all of them exclusively or predominantly Brazilian, has a very strong presence in heavy construction, mining, the pro-cessing of certain agricultural products, the processing industry more gener-ally, naval construction, the arms industry, and other areas. These firms pressure the state toward neodevelopmentalist policies that would increase investment and public spending on infrastructure, reduce the interest rate, and depreciate the real in order to increase exporters’ incomes and protect the domestic mar-ket. By contrast, large-scale international capital and the sector of the Brazilian bourgeoisie that is integrated with this capital urge the state toward a monetar-ist approach that involves reducing state investment, maintaining a high pri-mary surplus, keeping the interest rate elevated, sustaining a strong real, and broadening openness to trade. They seek to ensure that the state pays back their




public debt securities, to maintain their profits, and to acquire the dollars that they send overseas cheaply, and they argue for free entry into Brazil’s domestic market.

As we have seen, the conflict between these two fractions, the principal con-flict in national politics today, has had its effects on living conditions, on the struggle of the working classes, and on the state’s actions in the international arena. Responding to the strengthening of the internal grande bourgeoisie, the state has projected itself more prominently on the international stage, question-ing the rules of international organizations and of the international order itself. This process began when the G-20 sought to challenge the unilateral opening of dependent economies in the face of continued agricultural protectionism among imperialist states. Next, through its position on the Iran-Turkey ura-nium-enrichment accord, the state revived the criticism that differential tech-nology access contributes to the gap between imperialist and dependent states. Finally, the arguments against the international financial system taken up along with the BRICS consolidated a posture of dissent from the order imposed by the United States and Europe since the end of World War II. These efforts have had few concrete results, but the contrast with the foreign policy of the FHC administration is significant. National and popular forces, after spending the 1990s relegated to the museum of political antiquities, are reentering—how-ever timidly—the world of Brazilian politics in the twenty-first century.

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Social classes, newdeveloptalism and foreign policy under presidents Lula and Dilma

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