Chávez vs Lula: Two distinct approaches to poverty reduction in Latin America

For those with merely a passing interest in Latin American politics, just 10 years ago it was easy to see Brazil and Venezuela as identical tropical states with charismatic presidents leading their countries toward socialism.

The reality, however, is much different, and goes way beyond the rivalries of Portuguese vs. Spanish, samba vs. salsa, or soccer vs. baseball.

Both Hugo Chávez in Venezuela and Luiz Inácio "Lula" da Silva in Brazil dramatically reshaped their societies, reducing inequality to its lowest level in decades. But to many observers, the differences in their approach may have long-lasting implications: While Chávez boosted the poor at the expense of the economy and the country’s democratic institutions, they argue, Lula took a more moderate and potentially sustainable route.

“Both were part of the so-called pink tide in Latin America – the shift toward the left – so there is a reason for putting them in the same box,” says Gerardo Munck, a Latin American scholar at the University of Southern California. “But it is a mistake to say they are both the same. The policies of Lula and [current President] Dilma Rousseff have been very moderate.”

In the wake of the announcement of Chávez’s death on March 5, many have praised the gregarious and polarizing leader’s focus on the poor. Venezuela moved up seven spots on the United Nation’s Human Development Index – which is based on life expectancy, health, and education levels – between 2006 and 2011, and income inequality tapered off during his presidency. But there is also the resounding question of whether or not Chávez’s approach was the best – or only – way to achieve his goals.

Chávez went out of his way to antagonize the United States, limit presidential checks and balances, and intimidate the media and his opponents, all in the name of his so-called Bolivarian Revolution to lift the poor and bring equality to Venezuela.

“Brazil followed democratic principles and stuck to the Constitution and the laws of the land,” says Rubens Barbosa, a former Brazilian ambassador to Washington who knows both Lula and Chávez. “In Venezuela redistribution of wealth was done under a different kind of democracy. Chávez used democracy to change the laws in accordance with his interests.”

Modus operandi

Lula and his successor Ms. Rousseff are fiscally conservative, respectful of the country’s laws, and crave international respect. Mark Jones, a political science professor and chair of the Latin American studies program at Rice University, in Texas, says the Brazilian approach is closer to Western European models of social reform.

Chávez, meanwhile, was a protégé of Fidel Castro who used his widespread support – he was elected president four times in 14 years – to push through reforms.

“When Chávez was attempting to carry out his redistribution of wealth and improvement of standards of living he had in mind the Castro model of implementing from above,” says Mr. Jones.

Jones describes his approach as a “delegated democracy” where after winning popular elections, he believed he was “endowed the power to do whatever he wanted.”

“He didn’t see the need for engaging in compromise or coming through laws approved by some degree of consensus,” he adds.

Chávez stacked the Supreme Court with allies in 2004, doing away with a vital check on presidential power, and he urgently and sometimes impulsively demanded and brought about the change many Venezuelans desired. But it came at a cost.

Violence and kidnappings have risen and the country is incredibly polarized. The United Nations reports that in 1995, four years before Chávez began his presidency, the homicide rates was 20.3 per 100,000 people. By 2010 that number had more than doubled to a rate of 45.1 per 100,000.

Debt has skyrocketed, inflation is currently running at 22 percent, and the local currency has been devalued three times in less than a decade. Chávez cracked down on private business, expropriated land deemed unproductive, and nationalized stakes in oil projects. Venezuela has the largest known oil reserves in the world, and even though PDVSA, the state-run oil company, has more than twice the staff it did before Chávez took office, oil output has fallen by 13 percent over the past 10 years.

In Brazil, Lula and Rousseff brought about their changes without the same type of economic shocks. They reduced poverty faster than ever before but also guaranteed big companies a safe environment in which to invest – and huge profits.

“All the social inclusion programs took place while respecting civil liberties, freedom of speech, and human rights,” Mr. Barbosa says.

‘More democratic?’ 

There are some who say Chávez’s approach was necessary.

“In many ways Venezuela is more democratic now than it was before Chávez,” says George Ciccariello-Maher, a professor at Drexel University in Philadelphia and author of “We Created Chávez: A People’s History of the Venezuelan Revolution.”

Venezuela was a “perfectly undemocratic democracy” in the 1970s and '80s, Dr. Ciccariello-Maher says, when a two party system controlled a government that largely served only the top echelons of society. Today, the poor feel empowered by Chávez’s approach, and will take to the streets to voice their concerns knowing their government is listening, he says.

Ciccariello-Maher argues Brazil hasn’t spawned the same participatory democracy.

“Brazil hasn’t had the same empowerment and political mobilization we’ve seen in Venezuela,” he says.

Although he was elected as a socialist, Lula soon shed that leftist rhetoric and adopted conservative policies that appeased not just the doubters but also gave him the money – and the freedom – to attack the country’s shocking inequality.  Lula quickly realized that confrontation was never going to work in the world’s fifth biggest nation and one where the elites were hugely powerful. 

His reign was far from perfect. He turned a blind eye to corruption and did little to resolve the precarious health, education, or justice systems.

But by attacking inequality while promoting business he became a darling of the West, with his policies replicated across the world. Leaders like former British Prime Minister Tony Blair, former French President Nicolas Sarkozy, and even President Obama – who called him “the man” – feted him for his sensible approach.

‘Trajectory and training’

The paths taken by Brazil and Venezuela, and Chávez and Lula, also reflect the national characteristics of both countries as well as the personalities of their leaders, experts say.

Chávez, a bellicose former military officer, chose a confrontational style his supporters say was necessary to combat the oligarchies that had long mismanaged a state that had no right to be poor given its massive oil reserves.

Lula, meanwhile, adopted a more conciliatory style that was in keeping with his history as a union negotiator.     

“Being a trade union leader you pressure and you go on strike but eventually you’re drawn to the bargaining table and that was very much Lula’s style and that is very different than Chávez,” says Dr. Munck. “Both come from humble backgrounds. So they share something in terms of background but their trajectory and training account for their different political styles.”

That was perhaps most obvious in the realm of foreign policy. Chávez cozied up to rogue nations like Iran and Syria and famously followed former US President George W. Bush in the UN General Assembly, declaring he could still smell the devil’s sulfur.

Lula also befriended dictators. But that was partly because Brazil wants to be a diplomatic superpower and influential with everyone. Lula, who like many Brazilians goes out of his way to avoid conflict, got on well with Mr. Bush and even held a barbecue for him at his official residence.

Commodities and poverty

One thing the two countries do have in common is that they both benefited hugely from the commodities boom and China’s thirst for raw materials.

Neither could have implemented such generous wealth redistribution programs without the windfall from oil in Venezuela’s case, and in Brazil’s, iron ore, soy beans, beef, coffee, and other crops.

But the two powers implemented them differently.

In Brazil, the government has doled out billions of dollars to the poorest families since 2003 on the condition they send their kids to school and have regular medical check-ups. More than 30 million people have been lifted from poverty into the so-called "middle classes."

In Venezuela, Chávez funneled much of the country's oil wealth into social programs and subsidies. The percentage of people living in extreme poverty fell from 23 percent in 1999 to just 9 percent today, and both unemployment and infant mortality were almost halved. He gave generous aid packages to like-minded leaders in places like Cuba, Bolivia, and Nicaragua, as well.

“Chávez could carry out these populist policies because he [had] oil money,” Barbosa says.

In nations where inequality was as ingrained as it was shocking, those transformations made heroes of both men.

Lula won re-election to a second term in 2006 and four years later convinced voters the good times would continue to roll if they elected Rousseff, a little-known technocrat who had never before run for public office. She won with 56 percent of the vote and is currently one of the most popular presidents Brazil has ever seen.

Chávez won his last reelection in October 2012 with 55 percent of the vote. After fighting cancer for more than a year and a half, his health dwindled after the election and he returned to Cuba for treatment in early December.

He will be remembered as a hero to the poor and to old-style leftists the world over. Tens of thousands of people, many of them stricken with grief, have taken to the streets to salute his coffin and his legacy.

But perhaps the final test of Chávez’s approach will be how the next Venezuelan leader deals with the economic and institutional disorder that’s been left behind.

- Andrew Rosati contributed reporting from Caracas.