São Paulo—A torrent of mud, glowing orange at sunset like molten steel, killed 17 people and poisoned all else in its path after the collapse in early November of two dams at the Samarco iron-ore mine in the southeastern state of Minas Gerais. Historians of early-21st-century Brazil may choose that image to illustrate the final chapter of the rise and probable fall of the Workers’ Party, or Partido dos Trabalhadores (PT), the historic party of the Brazilian left. The PT, voted into power in 2002 amid boundless optimism, is now immersed in the political equivalent of a million tons of toxic sludge.
As the Brazilian economy slides into stagflation, President Dilma Rousseff, her poll ratings at historic lows, is fending off attempts by the conservative majority in Congress to impeach her; she is accused of disguising the extent of Brazil’s growing public deficit. Yet the charge seems almost trivial set against the vast network of kickbacks and money-laundering revealed in the remorseless judicial investigation known as Lava Jato (Car Wash), which has already led to the imprisonment of scores of leading politicians and business executives.
Not even hostile judges or anti-PT media groups, such as the all-powerful O Globo, have dug up any evidence of Dilma’s involvement in the scandal, despite her former position as chair of the state oil company, Petrobras, the main target of the investigation. However, Rousseff, the former left-wing guerrilla and longtime PT militant, faces other charges—from her own electoral base. Re-elected as president on a socially progressive program in October 2014, she has implemented austerity policies that have stopped the economy in its tracks and reversed many of the employment and wage gains made under previous PT governments. Many on the left also criticize her development strategy, which has favored corporate titans while wreaking havoc on the environment.
The ecological disaster in Minas Gerais, first colonized by Portuguese gold-seekers in the 16th century, is a fitting metaphor for the PT’s predicament. One owner of Samarco, after all, is the Brazilian mining multinational Vale, one of the corporate national champions—along with agribusiness giants like meatpacker JBS, construction companies such as Odebrecht, and, crucially, Petrobras—considered to be allies of the successive PT governments of Luiz Inácio Lula da Silva and Rousseff. Both leaders implemented a development-and-growth strategy based on the export of commodities and the creation of a new consumer class.
Helped by soft loans from the enormous Brazilian public development bank BNDES, the key vehicle for the PT’s state-driven industrial policy, Vale became the biggest iron-ore producer in the world, shipping billons of tons of ore to China on enormous Vale max tankers. The company also tapped the dollar debt markets for cash when the commodity boom was in full flight, powering Brazil’s economy to 4 percent growth rates and the Brazilian currency, the real, to a rate of 2.5 to the dollar. Those halcyon days for Vale and other Brazilian corporate giants marked the most extraordinary achievement of the Lula years: Brazil became the darling of international financial markets, while, at the same time, full employment, government minimum-income programs, and wage increases took 30 million citizens out of extreme poverty. Lula became the savior of both the favela (Brazil’s urban slums) and the fund manager.