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Lula's Downfall Won't Fix Brazil's Political Mess

Mac Margolis writes about Latin America for Bloomberg View. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”
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From hungry migrant peasant to rock-star president, Luiz Inacio Lula da Silva has played many roles over the years. Even so, taking the defendant's chair in Latin America's biggest political graft scandal will be a first.

Lula has vehemently denied the charges -- he's accused of taking some $1.1 million in bribes disguised as home improvements from a contractor for the state oil company, Petrobras -- and tearfully complained to cohorts in the Workers Party that he was the victim of a prosecutors' witch hunt.

A body blow for the 70-year-old political icon, the Lula case also marks a turning point for Brazil, which stands to lose not just a master politician but also "the most effective political party in the nation's modern history," as political analyst Octavio Amorim Neto, of the Getulio Vargas Foundation, told me.

Not since Getulio Vargas -- the storied nationalist leader whose state capitalism and elaborate labor benefits turned Brazil into a 20th-century populist welfare state -- has a politician dominated Brazilian public life as Lula has.

Lula is often cited as a neo-Getulio, having sponsored policies that lifted the poor and turned Brazil into a majority middle-class society. That is only partly true. Falling poverty and the rising middle class were the headlines across Latin America during Lula's tenure. Lula's main triumph was the form-fitting ability to shift political footing and shed woolly conceits on his ascent to power. Recall that Lula rose from the angry left, but after three failed runs at the presidency, tacked hard to the center, bought a suit, curbed his beard and reached out to the Brazilian middle class and the capitalists he used to bash.

That pragmatism won him the election and allowed him to surf the commodities wave through the roaring 2000s without jeopardizing the economic stability he'd inherited from previous governments. The bonanza also gave him revenue to decant into aggressive poverty-busting programs, like the signature cash-transfer Bolsa Familia (Family Stipend) initiative, and the inspiration to reward favored companies with tax breaks and soft loans, a habit that critics dubbed Bolsa Empresario, or the Executive Stipend.

Of course, the same lavish spending, which continued long after the commodities boom ended, later drove Brazil to its worst recession in a century and Lula's profligate successor, Dilma Rousseff, from office for budget fraud. At the same time, the ruling party's promiscuous ties with business insiders landed its higher-ups, and now Lula, on the docket of the Carwash investigators. The latest police roundups in the case included two of Lula's onetime inner circle, former finance ministers Antonio Palocci Filho, arrested this week, and Guido Mantega, who was briefly detained then released last week.

Lula's legal woes mean that he will have to divide his time between the campaign trail and federal courthouses: For now the 13th district court in Curitiba, southern Brazil, where Judge Sergio Moro is presiding over the Carwash case, and the 10th district in Brasilia, where Lula is accused of obstruction of justice.

As cleansing as the corruption probe has been, the collapse of Lulismo also has left a crater in Brazil's political system. For all its failings, the Workers Party (PT) -- a compact of labor unions, socially liberal Catholic clergy, and Marxist intellectuals --  was the first independent, modern political organization to emerge in Brazil in the last half of the 20th century.

Its leftist platform and ability to whip support among college youth and organized labor set it apart from the gelatinous norm of Brazil's political system. There are 27 political parties in Congress, and most are better known for their political appetites than their civic acumen; that includes President Michel Temer's fractious Democratic Movement Party.  "My worry now is that the collapse of the PT leaves Brazil with a party system that is neither rational nor even minimally functional," said Amorim Neto.

Of course, Lula may still beat the charges. A speedy acquittal could even boost his cachet as the left's leading contender for the 2018 presidential election, where some polls give him a slight lead. And yet in March, well before the filing of charges, 57 percent of those surveyed by Datafolha said they wouldn't vote for Lula under any circumstances -- a stinging rejection for a leader who left office in 2010 with 83 percent approval.

With his legacy on the line, Lula is heading to the streets, now playing the victim of scurrilous elites, now champion of the little guy. In a nod to the glory days, he even asked the PT faithful to don red and stand up for the party's name.

So far, though, the appeal seems to have fallen flat. Brazilians know that old tropes are the last thing their ailing politics needs.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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