Brazil - Six months of the Lula government: good news for the capitalist class

Jul/Aug 2003

Luiz Inacio da Silva, who is better known under the nickname "Lula", took office as Brazil's president on 1 January 2003 - at the same time as his appointed government. For four months now, Brazil, a huge country of 170 million people spreading roughly over half of South America, has thus been run by a former steelworker and trade unionist who, as such, repeatedly spent time in jail in the 1970s. Lula is also the undisputed leader of Brazil's main left-wing party, the Partido dos Trabalhadores (PT, the Workers' Party).

His election by 61% of the voters in the second round of the October 2002 presidential election crowned a 25-year march to power, through circumstances which saw the PT emerge as the only big, working-class, left-wing party in the country.

But what lies behind Lula's "success". And is it a "success" for the working class?

The evolution of the PT over the last 25 years and then Lula's 2002 election campaign already indicated without any doubt that his policy would serve the interests of the wealthy, in Brazil and in the imperialist countries, rather than those of the workers and the poorer layers of the population. The measures taken so far by Lula's government confirm this orientation.

The PT: a party based on struggles, but a reformist party from the start

The PT was founded in the early 1980s. It has since maintained its reputation as a radical party and has managed to keep its working-class electorate. But its whole evolution has shown that it is not and never was a revolutionary party, aimed at overthrowing the capitalist system. From the start, its objective was to use its influence on the working class to come to power, and not to serve the workers' interests.

Between 1964 and 1985, Brazil's military dictatorship had to a large extent destroyed the unions and political organisations built by the workers since the beginning of the century. This destruction coincided with the rapid growth of the big industry (the so-called "Brazilian miracle") which concentrated new and huge masses of workers in the big cities of Brazil's southeast. These workers lacked organisational traditions. However, they soon became conscious of the strength they represented and started fighting for decent wages and living conditions. During the 1978-1979 strike waves, a new generation of activists appeared and a new set of leaders emerged: Lula was one of them.

The PT offered a political expression to this new current. It fought for democracy, against a waning military dictatorship - but not against the capitalists. In its early texts, it often portrayed itself as a working-class, revolutionary and anti-imperialist party, which was the "in" thing to do at the time. The leadership of the party was made up of union officials, Christian activists and Social-Democratic intellectuals whose aim, from the start, was to win elections. They tolerated revolutionary Trotskyist or Maoist militants in their midst, because the party was in great need of their energy and skill as organisers. But they also tried to assimilate these militants and eventually rejected those who refused to be swallowed by the party machine.

The PT never called itself Communist or Marxist - or even Socialist for that matter. It derived its strength not from its ideas or principles, which varied according to the period and according to which individual was acting as its spokesperson, but from its influence on the working class, based on the thousands of union militants who organised the workers' struggles against the capitalists and their resistance to the military dictatorship. However, the PT's aim was to control these struggles in order to use them for its own benefit - not to transform them into a weapon for social revolution.

Despite its ultra-democratic and somewhat libertarian image, the PT is a bureaucratic party. The way it is organised apparently guarantees the rank and file's freedom of expression, but in fact concentrates power in the hands of the national leadership which elaborates and carries out its policies totally independently from the grassroots activists. These activists are in fact not organised: there are no membership cards, no dues, no rank-and-file groups, no regular meetings, no regular press. The party's policies are made public through press releases issued by the leadership - who are most often elected members of local councils or legislative assemblies. A "PTist" is someone who agrees with these policies and follows the party's guidelines. The concrete actions are left to the activists' own initiative. There were millions of such activists after the fall of the dictatorship and their voices were heard everywhere in the country. But as time passed, their enthusiasm waned and the PT's propaganda is now mostly dependent on its own financial resources.

Activists can try and influence the party's policies; but they have no decision-making powers whatsoever not even formally, as is the case in the traditional left-wing parties of Europe. The first PT congress was held in 1990, ten years after the party was founded (the year before, Lula had already gained 47% of the vote in the second round of the presidential election). And PTists had to wait until the end of 1999 before the second congress was convened.

The leadership does not care about the opinion of the grass roots. Time and again, the party leaders have ignored the fact that their decisions have been criticised, even if it meant demoralising or losing militants. In Rio de Janeiro in 1998, the leadership decided that in the first round for state governorship, the party would support Garotinho, who was a member of Brizola's PDT (a vaguely left-wing party that belongs to the Socialist International). But Brizola had been involved in a number of bribery scandals and the Rio activists therefore tried, unsuccessfully, to impose their own candidate. In the end, thanks to the PT's support, Garotinho was elected governor a result which completely disgusted many of the PT's activists. Ironically, 4 years later, one of Lula's opponents in the first round of the presidential election was none other than Garotinho.

PT leaders are not chosen by grass-roots activists but by the party machinery, so that they tend to be selected on the basis of their ability to fit in with this machinery. Except for Lula, the leaders chosen by the PT are all intellectuals or members of the petty- bourgeoisie (or even the big bourgeoisie) who are very much like their counterparts in the other Brazilian parties.

The PT focuses on elections. Its number one task consists in choosing its candidates, its campaign themes and electoral allies. Very rapidly, the apparatus has come to consist of the PT's sitting governors, mayors, senators, deputies and councillors - and the few hundred obedient party officials they can employ on their budget. These party officials tend to come from the administrative offices at city and state levels (Brazil is a federation of states).

The PT was founded after the great strike waves of 1978-1979. But even though the party gains great advantage out of workers' struggles it remains suspicious of them. For example, in 1992, when the blatant corruption of president Collor (who had used every kind of trick against Lula in 1979) was denounced by hundreds of thousands of demonstrators in the streets, the PT rejected the slogan "Collor out!". When parliament finally forced Collor to resign, the PT did not call for new elections even though it would probably have won, given its longstanding opposition to Collor. Instead, it did all that it could to facilitate the replacement of Collor by his mate, vice-president Itamar Franco.

While the party's policy is decided by its representatives who hold electoral office, nothing is imposed on them. However, the mere fact of their being in office, let alone the policies they might propose and implement, often raises problems with the working class. But in the eyes of the PT leaders, those who are in office are always right. For example, in 2000, when teachers in the state of Rio Grande do Sul went on strike and the PT governor sent in the police, the handful of local PT deputies who expressed their solidarity with the strikers were disowned by the party and threatened with expulsion. The leadership will tolerate anything from its right wing, but it is very touchy and sensitive when it comes to its left-wing currents.

As for the capitalists, they have warmly welcomed the PT's evolution toward the right, which is precisely what the PT leadership aimed at. In the states and cities controlled by the PT, it has carried out to the letter the government's orders to cut the public budget and services down to size. From that point of view, PT governors were the best supporters of president Cardoso (Lula's predecessor). They refused to take what they called "demagogical" positions against him. And Lula changed his appearance: the "hairy toad" who used to be mocked by the right now moved in fashionable circles. At the same time, the party's policy lost whatever was left of its former rough edge. It became more "positive", and less critical. The party slogan was now "A party that says yes". And so the PT was acknowledged and sometimes approved by the military, the economists and the bosses. The president of the Federation of State Industries of Sao Paulo (FIESP), the biggest employers' organisation in Brazil, had declared in 1989 that if Lula was elected, a million bosses would leave the country. Four years later, he claimed that Lula had changed and that he could be a good president.

This evolution has been accompanied by a change in the party's electoral allies. In the beginning, the PT always ran alone. But it quickly abandoned what its more ambitious candidates called a "sectarian" attitude. It struck an alliance with Brazil's two Communist parties, the PCB and the PCdoB, and with Brizola's party, the PDT. Later, it extended its alliances beyond the left to any party which could bring it more votes and positions. These alliances with respectable bourgeois parties made the PT itself more respectable. However, this new "respectability" was marred by a number of serious scandals involving PT officials. But this was merely another way of showing to other politicians that the PT was a regular party like the rest! After all, in a country where corruption is everywhere, it is bad form to appear to be incorruptible.

The PT, which was a reformist party from the start, had finally been accepted by the Brazilian capitalists and the imperialist powers. The time had come when it could safely take office.

The strong signals of 2002

The opportunity came in 2002. The PT's approach was to foster a limited number of illusions in the working class to reassure the Brazilian and international capitalists as best as it could. From the beginning, the PT's campaign took on the aspect of a victorious march to the presidency and government (in Brazil, the government is appointed by the president).

The right was divided. Weakened by the economic crisis, the 50% devaluation of the real within a few weeks in early 1999, the austerity measures, the electricity supply crisis of 2001, president Cardoso found himself, at the end of his second and last term, without a successor who could have been accepted by all right-wing parties. His favoured candidate was former health minister, José Serra - who tried to appear semi- opposed to Cardoso's policies. In contrast to Serra and two right- wing outsiders, Lula was the whole of the left's champion and he led the race from the very beginning.

As he felt sure the working class would support him no matter what, all his efforts were aimed at gaining support in bourgeois circles. He struck an alliance with the Liberal Party, a right-wing party closely associated with the Universal Church of the Kingdom of God, the biggest and most dynamic evangelical sect - and one of the most reactionary too. His running mate for vice-president was in fact a member of this Liberal Party, José Alencar, the biggest Brazilian textile boss. Lula shamelessly presented him as "the boss Brazil needs".

Many other bosses campaigned for Lula, including the heads of powerful international corporations. For these businessmen - he preferred to call them "investors" - Lula promised tax cuts. The bosses loved Lula, and the generals loved him too. To please them, Lula went so far as to invoke the economic policy of the period of the dictatorship, which happened to coincide with economic growth and full employment. To those who speculated on the country's debt, to the financial circles and to imperialism, he pledged he would stick to the agreements passed between his predecessor and the International Monetary Fund (IMF).

Towards the end of the campaign, Lula declared that he was going to be elected in the first round - a way of asking voters not waste their vote on the two "small" candidates who represented the far left. But he only got 47% of the ballot. However, in the second round, he received the support of these two candidates and a dozen or so parties campaigned for him.

Like his rivals, Lula made a lot of promises to the poorer layers of the population: food aid to the 44 million Brazilians who suffer from hunger; the creation of 10 million jobs to combat unemployment; an increase in the minimum wage; the end of the 8-year wage freeze in the Public Services; agrarian reform aimed at giving a piece of land to 12 million landless peasants.

However, to accomplish all this, not only did he refuse to say that he would take the money from the wealthy, but he said quite the opposite: he promised to maintain the previous government's policy of economic austerity, to avoid public deficits, to defend Brazil's currency and to respect the markets as well as the country's international commitments.

It was these commitments to the capitalists that Lula, once in office, started to honour. For instance, his cabinet includes well- known capitalists who supported his rivals: an international banker has been appointed head of the Central Bank (whose board remains unchanged); an agribusiness boss is minister of Agriculture; a prominent industrialist is minister of Development, Industry and Commerce; a former ambassador is now minister of Foreign Affairs. The parties which had supported him in the second round received a ministry each: which is why Ciro Gomes, former Finance minister and Lula's main opponent in 2002, can now be found heading the Ministry of National Integration.

As for the PT's own ministers, they all come from the most right- wing, most business-oriented fraction of the party. This is true of José Dirceu, former PT president and promoter of the party's movement toward the centre, who has been named head of the Casa civil (the president's cabinet), and of Antonio Palocci, the present Finance minister, who as a mayor was a dedicated advocate of privatisation - which made him the financiers' darling. The world's imperialist circles soon let it known that Lula suited them fine, as did the US leaders when Lula went to Washington in December 2002 to show his allegiance.

Four months of the Lula government

Lula has been in office for four months now and the pro-capitalist orientation of his policy has been maintained throughout. Truly, Lula has scrupulously kept the promises he made to the capitalists. The workers have seen none of Lula's promises fulfilled, but they did not have to wait long for a series of "reforms" to threaten them directly.

Lula's main promises to the poorer layers of the population concerned unemployment, the fight against hunger, wage increases and agrarian reform.

Unemployment is undoubtedly the workers' main concern today. The unemployment rate is an official 9% (but 18% among young people). Lula promised the creation of 10 million jobs. Since he has been in office, he has not even touched on the subject. He only mentions new jobs when he tries to justify his gifts to the bosses in tax cuts and government subsidies.

A "Zero Hunger" program was loudly proclaimed in December 2002. During his 1 January inaugural speech in Brazilia, he declared: "If, at the end of my term, each Brazilian can have breakfast, lunch and dinner every day, the mission I have set myself in life will be fulfilled". Huge advertisements for the program are everywhere in the big cities, proclaiming: "It is against hunger that we are at war". According to press reports, it is fashionable among the "jet set" to make a donation to the program: a piece of personal jewellery or their dog's collar (encrusted with gems)! However, the first concrete measures were only taken after a hundred days. The food aid program was launched on 15 April in 12 towns - out of the 1000 towns that are most in need. As for the program's funding, it has been reduced to one third of what it should have been this year - and the money thus saved will go toward servicing the national debt! Lula obviously believes that the hungry can wait, but not the speculators who strangle the country.

To his working-class voters, Lula also promised better wages. He even declared that the minimum wage would be doubled. For the time being, however, the minimum wage, which is under subsistence level, has been increased by a nominal 20%, but taking inflation into account this is a real increase of only 1.8%! As for the federal civil servants who are directly under his authority and whose wages were frozen for 8 years under the Cardoso government, he has given them a lavish 1% increase! But he refused to pay many of them their "13th month" bonus, causing 200,000 civil servants to go on strike in early April. This is why Finance minister Palocci so sourly criticised some industrialists of the Sao Paulo area who anticipated the government's decision and gave their employees a 10% wage increase, having naïvely expected that the Lula government could not do less!

For more than a century, agrarian reform has been the stumbling block of every Brazilian government. Lula's plan is one of the most timid ever, even compared with Cardoso's timid schemes. The minister in charge of the reform in fact belongs to the PT current that is linked to the United Secretariat of the Fourth International, (the Trotskyist organisation represented in Britain by the ISG). The plan initially allowed for the installation on new land of 60,000 families in the first year (out of 12 million landless peasants). But the budget has been cut in half for the same reason as the "Zero Hunger" program and only 27,000 families will finally be taken care of. Concerning land occupations, cabinet head José Dirceu declared that the government would not repeal Decree No.2027 which excludes from the benefits of agrarian reform anyone taking part in a land occupation - despite the fact that when the decree was adopted in 2000, the PT contested it as anti-constitutional!

The workers certainly did not expect miracles from Lula. And they are all the more patient as Brazil's Central Unica Dos Trabalhadores (CUT), the most important, most combative union confederation, which is close to the PT, has so far covered for the government and calmed down the workers. Its future president, Marinho, said that the 1% (only) wage increase in the Civil Service could bring about a wave of struggles, but he added: "We need to stabilise our strangled economy before taking a new direction".

Finance minister Palocci was more brutal. He said he was sure that today's policy would be maintained, as there is no possible alternative. In other words, the social priorities put forward by Lula were merely electoral arguments that did not have any value except for those who believed in them.

Lula has not carried out the reforms he promised, but he has very quickly carried out other reforms that he, understandably, never mentioned to his working-class audiences. These are anti-worker reforms concerning the social security system and labour legislation, which Cardoso had prepared, but failed to carry out himself.

The reform of the Previdencia Social (social security, retirement benefits and various welfare programs) boils down to increasing the contributions and cutting the benefits. In particular, the government wants retired civil servants to pay contributions, which was not the case before. It also wants to merge all welfare programs into a single one, in order to cut down its universal aid to the needy.

Concerning retirement benefits, the government wants to set up pension funds and intends to ask the private sector to run the supplementary pension plans. The majority of workers have no pension plan at all. But for those who have one (civil servants and big company employees), the government wants to impose a minimum retirement age (60 years of age for men, 55 for women) and to increase the number of working years needed for retirement. Until now, for instance, federal civil servants were entitled to a full pension (100% of their former salary) after 25 years of service.

The draft bill to reform the Labour Code says that the law only sets minimum standards and leaves the rest open to "free" negotiation. The aim of the government is in fact to deregulate work contracts as much as possible. In order to establish the "social pact" he talked about, Lula created a council for economic and social development, to which he invited a handful of trade unionists but a majority of bosses.

But in the economic field, Lula has kept all his promises, and sometimes more. He had promised to look after Brazil's currency: the real has risen a little against the dollar (3.2 instead of 4 reals to one dollar). Lula achieved this by raising the base lending rate three times (from 25% to 26.5%). Loans are costlier, but capital owners will be attracted by the prospect of a rapid profit.

He had also promised to maintain a balanced budget and to run a primary budget surplus (before paying the debt) of 3.75%. He has done better with a budget surplus of 4.25%, which allowed the government to repay a bigger chunk of Brazil's debt. Too bad if this is done at the expense of the social budgets ("Zero Hunger", agrarian reform, health, education, etc.)

Lula has announced state aid for the industrialists. $1bn will go towards encouraging exports. It is said that this money will help the small and medium-sized companies cut down the "cost of labour". But no doubt the big companies will manage to get their share too. A "First Job" scheme has been put together which includes a 6-month tax cut for employers who hire young people between 16 and 24 years of age (the age bracket with the highest unemployment rate).

Lula obviously does his best to guarantee the bosses' profits, but he also wants to give them more control over economic life through a constitutional amendment which would give the Central Bank full autonomy. Ironically enough, the amendment was originally proposed by Serra, Lula's unhappy rival in last October's election, who was presented at the time by the PT as a puppet in the hands of the capitalists and the IMF.

It is thus not surprising to hear the FIESP bosses declare that Lula's policy is "healthy, serene and orthodox". And it is no surprise that Lula was given a big round of applause by the world's financial elite in Davos.

The first signs of an opposition

This policy has not so far given rise to a sizeable opposition inside the working class. Inside the unions, some criticisms have come from the Força Sindical (FS) federation, which is politically right-wing. The FS federation has reminded Lula of his unkept promises and criticised his having submitted to the IMF's diktats as a cause of economic recession and unemployment. But it has no influence on the more combative militants and on the workers in the big plants. Even if it wanted to, it could not represent a threat to the government.

However, some sectors have already started to fight back. The civil servants, in particular the teachers, have organised strikes in some states. The government is their boss and they quickly understood that they had nothing to expect from it. The landless peasants have also occupied new lands, with or without the approval of the Movimento dos Trabalhadores Rurais Sem Terra (MST, Landless Rural Workers' Movement). The MST leaders, who campaigned for Lula despite the fact that he kept his distance from them, now say that they are disappointed, but have no political perspective of their own.

The only clear criticisms of Lula's politics are those of the far-left tendencies, both outside and inside the PT.

First, there is the Partido Socialista dos Trabalhadores Unificado (PSTU, Unified Socialist Workers' Party), a Trotskyist origin which split from the PT in 1992. Before the presidential campaign, the PSTU contacted the PT and offered to support Lula if he adopted a working-class anti-imperialist program and if he chose his candidate for vice-president from inside the PSTU. The PT refused and, as in 1998, the PSTU ran its own candidate, Sé Maria de Almeida, who got 400,000 votes, that is, 0.5% of the ballot. Since Lula's election and even more so since his coming to power, the PSTU has been very critical of Lula for his continuation of Cardoso's policy, for the team of people that surround him, for his government, for his anti-worker measures and for his respect of imperialism.

The most visible opposition has come from within the PT. It can be read about every day in the papers and heard on television. It comes from four prominent PT members (who were all, at one time or another, close to the PSTU): federal deputies Lindberg Faria, Luciana Genro and Baba Araujo and senator Heloisa Helena. They are not the only ones to be critical of Lula, but their opposition has a bigger impact in the press.

These opponents criticise the government's socio-economic policy. Luciana Genro of the Movimento Esquerda Socialista (MES, Socialist Left Movement) was quoted as saying: "We need an about-turn in the economic field". Lindberg Farias said he expected "the fiscal screws to be turned for the coming four years". Baba Araujo, of the Corrente Socialista dos Trabalhadores (Workers' Socialist Current) declared: "We are concerned that the chosen orientations are reinforcing the foundations of the old model which was rejected by the voters. We must carry on the fight against the neoliberal model." And he asked Lula "to honour the commitments made to the poor", to retain the state's control over the central Bank, to suspend the payment of the debt and to say no to the FTAA (Free Trade Area of the Americas - a kind of inter-American common market under the auspices of the US to be activated in late 2005).

These criticisms still imply a basic fidelity to the PT. The critical deputies refer themselves to the true nature of the party, to its genuine program, to its real aspirations. For Lindberg Faria, "the government's defeat would a defeat for the whole left". And Baba Araujo adds: "I'm not a fool, I don't want to destabilise the government".

Senator Heloisa Helena shares their criticisms - and their fidelity. She considers the Lula government as "her own" government. But her position is even more ambiguous than that of her colleagues, as she is a member of Democracia Socialista (DS, Socialist Democracy), a current linked to the United Secretariat and represented inside Lula's government by the Minister of Rural Development, Miguel Rossetto, in charge of agrarian reform.

The DS is a relatively important current inside the PT and at present the most important Trotskyist group. It has been active inside the PT for a long time and holds important posts, for instance, in the state of Rio Grande do Sul, where members of DS previously held the positions of state governor and mayor of Porto Alegre, the capital.

The DS is fairly well integrated into the leadership of the party but its participation in the government was not approved by all of its members. However it was approved by the majority of the DS as well as by the United Secretariat's world congress. So, in the same USec paper, the USec leadership was able to write that "Lula's government is a government for managing the affairs of the capitalists" but also that "the making-up of Lula's cabinet is a victory of the popular classes over imperialism and the ruling classes of Brazil". A spokesperson for SD concluded his interview with the following exciting perspective: "In the present situation, this government can revolutionise the country's democratic framework, transform itself into a democratic, popular government, and become an eminently socialist government".

Heloisa Helena, who was elected senator in the small northeastern state of Alagoas in 1998, refused to run for governor when Lula chose Alencar, the industrialist, as his running mate for vice- president. In early 2003, she refused to vote for Meirelles, the banker, as head of the Central Bank, and for ex-president Sarney, one of the long-established figures of the right wing, as president of the Senate - despite the instructions of the PT leadership. She criticises the continuity between Cardoso's and Lula's policy, Lula's subservience to the IMF and the Central Bank's autonomy. But she also expresses her solidarity with "her" government, declaring that "The success of the government is of vital importance", while finding excuses for Lula ("I don't think what happens is Lula's fault") and trying to "help the PT remember our speeches against Cardoso". The PT leadership has been very critical of her, sometimes threatening to expel her, but without actually doing anything about it.

These opponents, who sometimes make the papers' headlines, have so far participated in all the political turns of the PT. They encouraged the population to trust the PT and to all intents and purposes they continue to do so. These are people who call themselves revolutionaries, they have been active in the PT for 20 years, and remain active in this party, now that it is in government. The implication of such a choice can only be that the PT, in their view, is a party which is either revolutionary, or nearly revolutionary. This, in and of itself is the mark of a betrayal in that from the point of view of the population, it makes the criticisms formulated by these opponents irrelevant.

The independent political existence which would permit honest and unambiguous criticism, thus warning the working class against the PT, is certainly a less comfortable one, when the overwhelming majority of workers have confidence in the PT and in Lula. But it is the only way to prepare for the future struggles of the working class against the capitalists - more especially when the capitalists' interests are defended by a PT government and a PT president.

Because the working class, which at present is still waiting in expectation, can quickly come to the realisation that Lula's government is not working in its interests but against it, in favour of the capitalists. All the more so, given the conditions created by the economic crisis in a country dominated by imperialism. If this realisation is not to turn into disgust with politics, or provide an opportunity for reactionary demagogues, but rather to develop into a struggle against the capitalists for a different society, workers will need to find leaders who are worthy of their trust, who have proved their ability and shown their political courage.

30 June 2003