how Lula tries to support Peronism

The suspicion that President Luiz Inácio Lula da Silva acted to release a loan for Argentina from an international development bank is just the latest indication that the Brazilian government is trying to influence elections in the neighboring country. The Lula government has been making successive moves to help the Argentine left, such as bringing the country closer to the Brics (bloc formed by Brazil, Russia, India, China and South Africa), financing imports and trying to build a gas pipeline.

According to analysts, all of this is to try to prevent the victory of libertarian Javier Milei, a right-wing candidate and favorite to win the October 22nd elections in Argentina. Although there is no proof of Lula’s intentions, many of his actions would have the potential to help Peronist president Alberto Fernándes and his candidate Sérgio Massa, who is trying to beat Milei.

The most recent action was highlighted by the newspaper State of S.Paulo this week. Lula would have pressured Planning Minister Simone Tebet to approve a loan to Argentina through the Development Bank of Latin America and the Caribbean (CAF). With the money received from the bank, the country paid part of the debt it owes to the International Monetary Fund (IMF).

Tebet denied this and the Brazilian government said that CAF’s loan to Argentina was to help the country, which is short of financial reserves. But federal deputy Gustavo Gayer (PL-GO) filed this Wednesday (4) a request for an investigation with the Federal Public Ministry to investigate suspicions that Lula used Brazilian public money to indirectly finance the Argentine electoral campaign.

Only the investigations will define whether Lula acted deliberately or not. But leftist candidate Massa used news of the loan in his election campaign. He stated, at the time of the transaction in July this year, that the debt to the IMF would be paid “without using a single dollar”.

In practice, CAF transferred US$1 billion to the IMF and thus paid off part of Argentina’s debt with the fund. This enabled the IMF to lend another US$7.5 billion to the Argentine government, which is in a serious economic crisis.

“I understand that, even though there are allegations that there was no political interference in the process, the fact is that Alberto Fernández and Lula, in recent months, surrounded themselves with visits and meetings in which, clearly, there was a component of companionship”, said Cezar Roedel, PhD in Philosophy from PUCRS and Master in International Relations from UFRGS.

Lula tried to include Argentina in the Brics Bank

When Lula assumed his third presidential term this year, Argentina was the PT member’s first international destination. Shortly after the first presidential talks with Fernández, Lula announced that he would try to give the country access to resources from the New Development Bank (NDB – which is also called the Brics Bank). But not even with former president Dilma Rousseff at the head of the financial institution, Lula was able to ensure that the country had access to NDB resources.

The PT member also tried to mediate a possible change in the organization’s statute so that the credit to Argentina would have the destination that Fernández “wanted”. This is because NDB legislation provides that the amount will be allocated to infrastructure works in member countries, which is not the case in Argentina.

Without access to the NDB, Lula did not give up on trying to help Fernández’s country. In August, when the Brics announced the expansion of the bloc, the name indicated by Lula to join the group was that of the South American neighbor. In addition to Argentina, five other nations were invited to join the group next year. The process is ongoing.

Itamaraty tried to finance Argentine gas pipeline through BNDES

In recent negotiations between the foreign ministries of Brazil and Argentina, the countries discussed the possibility of Brazil financing, through the National Bank for Economic and Social Development (BNDES), the works to complete the Néstor Kirchner Gas Pipeline. The installation is located in the Vaca Muerta region, a geological formation located in northern Patagonia, Argentina, and promises to connect the natural gas reserve to Brazil in two years.

This possibility, however, is not very well regarded by economists due to the past of defaults that Brazil suffered through the same method to help other countries, in addition to corruption scandals involving Brazilian construction companies. Argentina also has a history of international heat.

Energy experts say that the construction of the gas pipeline has high strategic value, as Brazil’s main international gas pipeline today will stop operating soon. This is because Bolivia’s reserves are running low.

Brazil has already provided similar financing to Venezuela during the first terms of Lula and Dilma Rousseff.

At the time, Brazil financed, through loans from BNDES, some infrastructure works on Venezuelan soil, such as line 5 of the Caracas metro; line 2 of the Los Teques metro and Siderúrgica Nacional. In theory, the works are carried out by Brazilian companies and the money is lent through them. The country that contracts the construction, however, is responsible for returning the amount borrowed.

In case of default, BNDES activates the Export Guarantee Fund (FGE) to receive the amount owed by the foreign country. The Union assumes the debt and Brazil is the one who must start collecting debt from the debtor country. Currently, Venezuela’s debt with Brazil reaches almost US$3 billion and there is no prospect of when the country will pay it off.

Lula and Haddad provided money for Argentina to buy food and auto parts

During a visit by Massa to Brasília, the presidential candidate and Argentine minister closed a million-dollar deal with Lula and the Brazilian Finance Minister, Fernando Haddad.

Haddad announced that he would finance US$600 million to Argentina through Brazilian exports. The operation will count on cooperation from the Export Financing Program (Proex), Banco do Brasil, the National Bank for Economic and Social Development (BNDES) and the Development Bank of Latin America and the Caribbean (CAF).

In practice, Brazilian food and auto parts exporters will sell to Argentina, but will be paid by Banco do Brasil and this, in turn, will be insured by CAF. In other words, with the maneuver, Brazil becomes the creditor of the debt, preserving Brazilian companies. But the promise also improves the image of the leftist candidate in the year of the Argentine election.

São Paulo Forum tries to breathe new life into Peronism in Argentina

Argentina’s economic problems are not new, but they have become even deeper during Fernández’s tenure. With extremely low dollar reserves, the country has faced problems paying external debts and obtaining financing from international organizations.

In addition to the friendship between Lula and Fernandes, Brazil-Argentina economic co-dependence is one of Lula’s justifications for trying to help the neighboring country. In statements, the Brazilian even said that he intended to “do everything” to support Argentina. But analysts say these efforts are also intended to create a good image for Massa during his election campaign.

“The Foro de São Paulo game has always been indirect and often subtle. Since the Brics Bank episode, things were already open: to give breath to comrade Fernández and Massa’s campaign”, said Roedel.

The São Paulo Forum was founded by Cuban dictator Fidel Castro (1926-2016) in partnership with President Luiz Inácio Lula da Silva in the 1990s, shortly after the collapse of the Soviet Union. The organization’s official objective is to integrate the people of Latin America and the Caribbean, but in practice it functions as a brotherhood of government officials, politicians and activist organizations in the name of a left-wing political project for the subcontinent.

Brazil’s influence on the CAF loan must be investigated

The investigations into Lula’s alleged lobbying to facilitate the CAF loan to Argentina have not yet begun, but they are already dividing analysts. This is because the action was made possible by 19 votes against two and Brazil only had the right to one vote. The newspaper report State of S.Paulo says that Lula would have exerted influence on other countries.

“I believe that the attempt will surpass Lula as an isolated actor. It potentially involves more partners from Foro de São Paulo, who are the bank’s largest shareholders”, assesses Roedel.

Rogério Pereira de Campos, PhD in Social Sciences and researcher at Fundação Araporã, argues that Brazil’s influence on CAF is “small”.

“Politically speaking, Brazil’s influence there is very small. Those who have the greatest weight there are the Andean countries: Colombia, Peru and Ecuador, for example. These countries even have a vote with a weight of two and Brazil with a weight of one”, he stated.

But Campos said that statements by President Lula supporting the Peronist government could cause great discomfort between the two countries and, therefore, they should be avoided at all costs. “He cannot make statements of support openly, because this directly interferes, especially in this period of the final stretch of the elections in Argentina. This could cause enormous discomfort with Milei’s victory,” he explains.

“It is necessary to monitor how these actions influence the behavior of Argentine voters. Segments of Peronism express a certain appreciation for Lula, but Javier Milei can capitalize on news like this to further mobilize the portion of the electorate dissatisfied with the economic crisis and the current Peronist political caste”, said political analyst at BMJ Consultores Associados, Nicholas Borges .