Lula's Growth Strategy: Good for Brazil's Business, Bad for its Environment
• 9,000 square miles of Amazonian rainforest were destroyed in 2004, an urgent call to the Brazilian government to
implement firm policies on the preservation of the country’s natural resources.
• The February slaying of U.S.–born nun and environmental activist, Dorothy Stang, peaked international awareness of the
ongoing violence in Brazil over environmental and agrarian reforms.
• The recent legalization of genetically modified soybeans once more confirms that the economic benefits of Brazil’s
agribusiness sector have perpetually swayed Lula away from enacting stricter environmental policies.
• In pursuit of a stronger economy and higher standard of living for Brazilians, Lula’s left-of-center administration is
following a narrowly focused path of development to the detriment of the country’s ecosystems; critics argue that the
various infrastructure and energy-based programs given priority are in no way conducive to a truly sustainable system.
The Challenge
On February 12, 2005, a U.S.- born environmental and human rights activist was shot dead in the northern Amazonian
rainforest. Working in the notoriously volatile state of Para, 74-year-old Dorothy Stang, like many before her, was
targeted because of her activism against the rampant lawlessness in the Amazon where illegal ranchers and loggers poach
on the fragile rainforest. The news of her death was yet another reminder of the constant violence rising out of the
ongoing dilemma in Brazil posed by unsustainable development projects.
The suffering of a country’s poverty-stricken cannot be minimized or trivialized. Therefore, Lula’s critics argue that
steps must be taken to effectively deal with such socio-economic realities. The necessary goal of poverty alleviation
combined with Brazil’s increasing demand for energy together give some plausibility to the current policies favoring
unrestricted development. However, such a prioritization places a heavy political weight on Lula, who repeatedly has
voiced concern for the state of Brazil’s natural habitat, even while he is not doing much about it.
Nevertheless, the president’s priorities have seemingly adapted to the demands of the economy, much to the dismay of
environmentalists worldwide who have expressed their utter incredulity that the anti-environmental option that Lula is
now exercising can produce a truly sustainable system. He gave evidence of the retreat when, referring to the Amazon in
a televised speech, Lula said that “it can't be treated like it was something from another world, untouchable, in which
the people don't have the right to the benefits.”
The term “untouchable” rings hollow when applied to the Amazon, where rampant deforestation, slash and burn agriculture,
and an array of other despoliations have taken heavy tolls on the ecosystem. Five hundred years ago, the Atlantic
rainforest covered the majority of Brazil’s 8,500-kilometer coastline, yet today less than seven percent remains. The
preponderance of destruction to the Amazon, home to fifty percent of the world’s biodiversity, has taken place in the
last fifty years, an acceleration that greatly concerns environmentalists who initially expressed excitement over the
eco-conscious president but are now cooling off their enthusiasm, even feeling betrayed.
Lula’s Environmental Game Plan
Taking action in 2003 to address the issue at hand, Lula appointed Marina Silva, highly regarded at the time, as
Brazil’s Minister of State for the Environment. In May of that year, Minister Silva attended a conference, co-hosted by
Washington’s Woodrow Wilson International Center for Scholars, where she outlined the new administration’s plans for a
more integrated approach to environmental issues. President Lula “does not want a ministerial environmental policy… but
rather a governmental environmental policy,” she said. The basis for Brazil’s environmental agenda, Silva continued,
consists of “the brown, the blue, and the green.” These colors refer to three major programs: the processing and
disposal of solid waste while accounting for its environmental impact, the recovery of rivers and riparian buffers (e.g.
damaged stream banks) while addressing air pollution, and the development of agriculture while respecting forest
conservation.
Following these guidelines, the environmental ministry ostensibly sought to strengthen the articulation and coordination
of all ecological policies undertaken by both federal and state agencies while assuring that their scope reflects the
country’s priority for economic development. The minister maintained that the new administration “wants a model in which
sustainable development will promote the social inclusion of the millions of Brazilians living below the poverty line.”
In response to the poor socio-economic situation in the country, the World Bank approved in August 2004 a $505 million
loan for “Environmental Sustainability,” aimed at supporting Brazil’s goal of balancing economic growth with social
development while maintaining and improving the natural environment. Silva emphasized that “One of the most important
features of the government’s environmental strategy- recognized and supported by this loan- is its strong focus on
involving all relevant players around key issues in the sector, something unprecedented in Brazil.” The program, it was
claimed, aims to improve the efficiency and effectiveness of Brazil’s environmental management system (SINAMA) and to
maintain environmentally sustainable use of natural resources through the government’s process of economic planning. The
loan is the first of three in a four-year program that will provide up to $1.2 billion.
Environmentalists’ Growing Concern
During the latter part of Lula’s first year as president, environmentalists were already voicing apprehensions over his
apparent abandonment of various campaign promises on which he was elected, including tough policies aimed at restraining
genetically modified food, nuclear power and Amazon deforestation. In defense of the administration’s record on
environmental issues, Minister Silva declared at the time that “the idea of an integrated policy is something new and
has never been done before. You cannot expect to have a new paradigm fully in place after barely 9 months in power.”
Although the government felt the complaints in 2003 to be unwarranted (based on the sheer complexity of the issue and
the limited time it had to deal with it), the credibility of the administration undoubtedly suffered a blow that
continues to reverberate in public opinion, which grows increasingly negative towards an administration that still has
not provided definitive signals.
Despite the business sector’s initial criticism of Lula’s left-of-center government, today the administration pursues
pro-business policies and projects meant to spark economic growth. As the first leftist president to be elected in
Brazil, Lula initially faced a financial sector that suspiciously speculated whether his policies would lead the country
into recession. However, this has been avoided largely due to his emphasis on agricultural programs. Economic growth in
2004 was the highest in decades - with Brazil’s GDP increasing 5.2 percent - due to record high exports. This economic
growth was heavily dependent on the agribusiness, which wreaks havoc on the Amazon. It was against theses firms’
degradation of the Amazon that Dorothy Stang waged her private war. In light of the activist’s murder, Lula responded to
the claims that he favors agribusiness over environmental preservation by freezing development along an Amazonian
highway for six months while creating an ecological reserve and a national park within the Amazon Region Protected Areas
(ARPA), an initiative sponsored by Brazil, the World Bank and World Wildlife Fund.
Stang’s death, similar to numerous others active in the same cause, resulted from the unending battle between anarchic
ranchers and landless farmers who, sometimes resorting to violence, think nothing of bypassing the law and seizing land
and resources from indigenous reservations and national parks. Adding to the controversy, cattle-ranching has been a
leading cause of deforestation in the Amazon since the 1970s. Nevertheless, the sector’s enormous impact on Brazil’s
economic prosperity cannot be denied. Today, Brazil is the leading exporter of beef and second-largest exporter of soy,
second only to the United States. Exports from Brazil’s agribusiness grew 11.1 percent in January 2005, and a steady
growth rate is expected throughout the coming months. Lula’s recent legalization of genetically modified soybeans is
also expected to boost export figures, but the decision has sparked an outcry among environmentalists as well as Marina
Silva, who many feel should resign her post as Environmental Minister in protest.
Although environmentalists acknowledge the need for growth, they nevertheless fear that these recent policies will
accelerate Amazon deforestation and further threaten already marginalized indigenous communities. Figures released by
the Brazilian government show that in 2004 alone the Amazon suffered the destruction of 9,000 square miles, nearly the
size of New Jersey. Nevertheless, various mega-development projects are still in the works, such as the construction of
a massive pipeline that carries natural gas from Bolivia into Brazil, thereby reducing Brazil’s reliance on costly
diesel. This effort, known as the Bolivia-Brazil Gas Pipeline Integration Facility, is expected to spur economic growth
in the state of Amazonas, home to twenty million people. Twenty percent of the project will be financed by Petrobras,
the Brazilian state energy company, which plans to invest $3 billion and lay 2,921 miles of natural gas pipeline by
2010.
The Huge Price of Development
Out of concern for the massive environmental ramifications of the pipeline, a specialized contracting firm has been
hired to supervise the ecological aspects of the project. However, this step doesn’t appease opponents who expect the
pipeline to have a wrenching effect on the rainforest, including the displacement of indigenous communities. José
Freitas de Mascarenhas, a director of the Brazilian construction company Odebrecht and head of the National Industrial
Confederation told Latin Trade, "Environmentalists aren't wrong to question Lula's Amazon infrastructure projects
because they will have an environmental impact.” He maintains, however, that “they need to understand that environmental
concerns need to be weighed against urgently needed economic growth, which will improve Brazilians' quality of life. And
for the economy to grow, better roads and more energy supplying dams need to be built, even if it means building them in
the Amazon."
To the discontent of many environmental and indigenous activists, an explosion of construction throughout the Amazon has
become today’s reality. The International Monetary Fund (IMF) recently announced their approval in February 2004 of an
arrangement to spend up to $1 billion per year, through 2007, to accommodate Brazil’s plans for additional
infrastructure projects, including the construction of the BR-163 highway. Supporters of the highway, including
fazendeiros and farm workers, anticipate faster shipping schedules and therefore more competitive commercial prospects.
In opposition to the project, activists assert that the road would incur further deforestation and invite colonization
by an inundation of commercial agriculturalists and ranchers. Those narrowly focused on rapid economic growth also
expect major benefits from the Belo Monte Dam, which would provide power to foreign-owned and Brazilian-controlled
aluminum plants that produce both for export and domestic consumption. Eletronorte, the state power company that would
oversee the dam project, is aggressively lobbying for its approval. “Belo Monte will have the lowest generating costs of
any dam ever built in Brazil, or any dam on the drawing boards,” says Paulo Cesar Magalhaes Domingues, a member of the
Eletronorte energy planning council. “And this should attract industrial investors.” However, the dam’s opponents point
out that it will flood the surrounding area, creating a 400 square foot reservoir.
Also contentious are the plans for a third nuclear power plant (Angra III) that has generated warranted concerns over
its health and environmental hazards. Although nuclear officials claim that investing in Angra III will help the country
become energy self-sufficient, much of the public, aware of the persistent problems at the country’s two functioning
reactors, is not convinced that nuclear power is the best option.
The Future Seems More Grey Than Green
The future of Brazil’s environmental and economic situation rests on the shoulders of President Lula and his
administration. The issues are interdependent; unfortunately, the dominant view is that the success of one comes only at
the expense of the other. In this case, it is either environmental preservation or the possibility of a more promising
economic future that frames the debate. Lula knows all too well the vital importance of these issues, as can be seen in
his conflicting policy decisions since becoming president. “Lula is trying to appease both the developmentalists and the
environmentalists,” says Amaryllis Romano, an agribusiness and construction sector analyst with Tendencias, a São Paulo
consulting firm. “But if and when push comes to shove, I believe the developmentalists will win the day because after
three years of near-zero economic growth, Lula has to go all out to get the economy moving, that or lose widespread
popular support and part of his political base.”
For now, Lula is pursuing Brazilian economic strength through unsustainable development projects, whose ecological costs
are known and pointed out by environmentalist critics. In order to reduce poverty and turn Brazil into a fully developed
nation, the president will likely continue to compromise his initial goal of ecological conservation for immediate
economic growth. Therefore, his critics increasingly focus on the need to manage the baleful ramifications of
development, since they will be inevitably and unquestionably severe. Although many of Lula’s undertakings are
beneficial for economic progress, they need to be made compatible with ecological goals in order to curb the volume of
environmental calamities left for future generations to endure. It is not a question of choice but of developing an
integrated approach. Lula’s opponents insist that both economic and ecological factors are essential and that pursuit of
one does not necessarily sacrifice the other. Lula’s dilemma exemplifies most governments’ obstacle to creating
sustainable development policies: short-term economic interests synchronize better with election calendars than
long-term sustainable development.
This analysis was prepared by Amanda Smallwood, COHA Research Associate.