Privatization under Lula 3.0

The successive attempts to promote political and military coups by the far right and Bolsonaro's supporters are a very worrying factor in the current situation. In fact, the coup attempt began even during Bolsonaro's own term. However, despite numerous failed attempts, the spirit of the military coup remains present to this day. It is hoped that the final stage of the trial at the Supreme Federal Court (STF) will put a stop to this movement and punish, according to the law and the Constitution, all those involved in committing such crimes. Finally, may our motto be spread throughout the country: "Dictatorship, never again!" And may the convictions of those involved at the highest levels be exemplary of this motto.

The problem is that life goes on, and the federal government, unfortunately, stubbornly remains committed to the essence of Minister Haddad's neoliberal economic policy. Beyond extreme fiscal austerity, the Treasury is guiding the government to continue the privatization of public services and assets. The alternatives for favoring capital participation in the private appropriation of profits in various operations with the State are numerous. Increasingly, public services and responsibilities assigned to state administration are being willingly transferred to private enterprise.

Since the beginning of President Lula's third term, the privatization issue began to take shape and form again. One of the first scandals to come to light was a general directive to expand the scope of public services that could be the subject of financial support from the BNDES (Brazilian Development Bank), in the form of both the perfumed and the foul-smelling... Public-Private Partnerships (PPP)Among this generalization of sectors to be benefited by the process of granting concessions to private capital is the area of ​​defense and security, with Special mention should be made of the symbolism of the process relating to the prison in Blumenau (SC).This unit, under the responsibility of the state government, is being transferred to the private sector in the form of a PPP inspired by the example of the unit in Erechim, in Rio Grande do Sul (RS).

PPP: poorly disguised privatization

It so happens that, amidst the attacks that Brazilian democracy has been suffering from the far-right coup plotters, the unexpected presented us with a significant shift on the international stage, due to Trump's victory in the US elections last year. By choosing to attack Brazil with blackmail regarding Bolsonaro's conviction process in the Supreme Court, the White House occupant achieved an unprecedented feat: rekindling the true spirit of defending the homeland against aggressions from imperialism. Furthermore, by becoming inextricably linked to the defense of the already convicted and ineligible former president, Trump managed to have against himself and his government a broad front led by Lula and supported by various sectors. Thus, in this period of "all united against the external aggressor," there was a kind of cooling down of debates regarding the mistakes that have been made throughout our president's third term, especially concerning economic policy.

The problem is that the seriousness of the chosen paths cannot and should not be ignored. This veritable cover-up operation is being pursued at all costs due to the improvement in Lula's administration's approval ratings and also the significant recovery of his own voting intentions for the 2026 election. But the reality is objective, and criticism is necessary. Haddad's preferred option for privatization, for example, is one of the most serious cases. The complete transfer of assets through the sale of state-owned companies is the phenomenon most ingrained in the popular imagination. However, there is a set of other mechanisms that, in practice, signify a privatization process. The choice of a PPP or the concession of public services for decades, in practice, means the transfer of public resources to private capital.

Lula authorizes privatization in Pernambuco.

The most recent cases receiving greater visibility concern the state of Pernambuco. The company that manages and operates the Recife Metro belongs to the federal company Companhia Brasileira de Trens Urbanos (CBTU). The issue of its privatization is an old one, given the immense lobbying exerted by sectors of private capital. During the 2022 presidential campaign, Lula pledged not to move forward with the sale of the subway system.However, we were all caught by surprise when the president-elect began negotiations with local political and economic elites to resume privatization. Madness! In arranging the process, Haddad saw an opportunity to inject resources into the National Treasury's coffers for his sacrosanct primary surplus. The state governor (Raquel Lyra - PSD) and the mayor of the capital (João Campos - PSB) saw in the measure an opportunity to boost their candidacies and political-electoral ambitions.

The other case refers to the Pernambuco Sanitation Company (COMPESA). This is a company owned by the state government. However, without the participation and support of BNDES (Brazilian Development Bank), this operation would hardly be carried out. The federal bank is involved in the process of assembling the model to be adopted for the sale of the company, as well as in financing the future buyers. In other words, the well-known strategy of offering public resources and state benefits to private capital to acquire public assets practically for free is maintained.

Now, in both examples mentioned here, we are faced with business models that do not accommodate the liberal and fallacious discourse that it would be possible to increase competition to improve efficiency and lower prices for the consumer. As everyone knows, there is no possibility of competition in a metropolitan urban train model. Imagine the poor citizen user (in neoclassical privatization manuals called a "client" or "consumer") wanting to choose which train to use to pay a lower fare or a better quality service. Well, at each station there is only one track, and that is where the trains run. This is a situation that economics textbooks classify as a "natural monopoly." Suggesting the privatization of this type of public service is a misleading narrative that only serves to justify the shady deal.

Sale of sanitation companies

The same reasoning can be applied to the sanitation model. The underground water and sewage pipes in urban or rural areas also preclude the application of the idealized model of liberalism. Imagine the consumer deciding which company to connect their water inlet pipes to and then their sewage outlet pipes to. It seems clear that in this case, too, we are facing a natural monopoly. Certainly, the blinded adherent of armchair liberalism will assure us that the resident will choose the company that offers the lowest rates and best access to sanitation services (sic). It matters little that this is a concrete impossibility. What matters are the doctrinal principles of the free market in its zeal against any trace of the public sector's presence in the economy.

This was also the path taken by the governor of the state of Piauí, Rafael Fonteles, from the PT party. He led a privatization process of the state-owned sanitation company, AGESPISAIn fact, this is a huge setback that will have its social consequences in the years to come. In the state of Bahia, for many years the PT governors have been fighting to privatize EMBASA, a state-owned mixed-economy company responsible for sanitation. In 2022, the then-governor of the state, the current Minister of the Civil House, Rui Costa managed to get a law passed in the Legislative Assembly to obtain permission to begin the process of selling the company.However, there has been much resistance since then, and initiatives to implement privatization have been temporarily relegated to the back burner by the current governor, Jerônimo Rodrigues.

Thus, perhaps what saddens some and frustrates others most is Lula's abandonment of all the expectations generated for this third term. He had promised that he would do more and better than he had done during his first two terms, between 2003 and 2010. Furthermore, in 2022 he adopted Juscelino Kubitschek's motto—to accomplish 40 years' worth of work in 4. But, so far, he has accomplished so little that he has ended up opening space for the governor of São Paulo, Bolsonaro supporter Tarcísio de Freitas may be able to reclaim the slogan for his 2026 campaign..

And the trillion-dollar privatization continues through PPIs.

In short, the fact is that the current government continues to demonstrate profound pride in initiatives in the field of privatization. Perhaps the main showcase is comprised of projects from the Investment Partnerships Program (PPI), which was created by none other than Michel Temer, shortly after... golpeachment against Dilma Rousseff. The program is planned in Law No. 13.334 / 16 and it remains anchored in a Special Secretariat in the Presidency of the RepublicThere, one can see that 280 concession projects for capital have already been completed, while another 227 arrangements between the public and private sectors are still underway. The sectors benefiting are many and varied: i) agriculture and supply; ii) defense and security; iii) energy; iv) water infrastructure; v) social infrastructure; vi) urban infrastructure; vii) environment; viii) mining; ix) sanitation; x) transport; xi) tourism.

Although the numbers are not yet finalized, this is undoubtedly the largest privatization process in our history. Some predictions point to... A total of approximately R$ 1,5 trillion has already been approved and granted to capital.Most privatization experiences in so-called developed countries have been the subject of controversy and even reversal. Several companies in the public service sector have been renationalized, as the objectives were deemed not to have been achieved. This is the case of... The US, France, the UK, and Germany and the turnaround in privatization. of their water, sewage and even of energy.

A broad debate regarding the direction of the current avalanche of partnerships and privatizing concessions is urgently needed. Lula cannot leave such a negative mark as privatization during his time in the Presidential Palace. This process must be stopped.