National Sections of the L5I:

Lula’s fall from grace

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The global justice movement has fallen out of love with Lula. Only the right-wing of the World Social Forum still revere him; many are disillusioned by his record as Brazil’s president and a growing number in his own country revile him. Whereas he was man of the moment when he was lauded at the second WSF in Brazil in 2003, just after he won the presidential election, now many in the anti-capitalist movement identify with those in the trade unions and the impatient landless peasants’ movement, the MST – in their fight against Lula’s government.

His party – the Workers’ Party (PT) – which he founded in 1980 and still leads has been rocked by crisis as a result of the right wing course taken by Lula’s government. PT members of Congress have been expelled for defying Lula’ reactionary attack on pensions, which in turn precipitated a significant split from the PT and the formation of a new, rival, party.

The PT has gone from a 300 member propaganda group under a military dictatorship when it was formed in 1980 to today’s ruling party of about 600,000 members in a bourgeois democracy.

When it was founded the PT brought together a group of diverse activists: key leaders and rank and file activists of the new trade union federation – the CUT; members of the anti-dictatorship committees; and Catholic grass roots radicals. They were united however in seeking to build a party that was independent of the existing bosses and landlord parties; in short, a party of the workers and poor.

One early PT document summarised the mixture of influences and ideologies that were built into the foundations of PT:

“We are in fact a synthesis of libertarian cultures, united in our diversity. Different currents of democratic and revolutionary thought – Social Christianity, various Marxisms, non-Marxist socialisms, democratic radicalism, secular theories of revolutionary action, etc.—joined together to create the PT . . .The ideology of the party does not unilaterally express any of these sources.”

During its first decade, before a defining commitment to electoralism took hold of the party, the different competing strands struggled to give the PT political and organisation direction. As we said in 1994:

“At its foundation and in its early years the loose coalition of radical commitment to revolutionary change and amorphous programme marked out the PT as a centrist party, that is one that hovered between reformism and revolution, eclectically combining aspects of the programmes and organisational regimes of both.”

For most of the 1980s elections were seen as a subordinate part of the overall strategy of the PT. Gearing up for the 1982 election campaign the PT argued that “participation in elections and parliamentary activity will be subordinated to the objective of organising the exploited masses and their struggles.”

The thought of running local and regional government was hardly contemplated for the first half of the decade. But all this changed between 1986-88. As the PT’s support broadened, as its success in city and state elections increased, and as the date of the first direct Presidential elections approached (November 1989) elections moved to the centre of the party’s political strategy.

In the November 1986 elections PT’s vote went from 3 per cent to 7 per cent and from 1.5 million votes to 3.5 million. It now had representatives in half (i.e. 13) of the state legislatures and had federal congress representation from seven states. Lula received more votes (650,000) than any other congressman.

But it was the PT’s victory in Porto Alegre in 1989 and its subsequent continuous control there that has defined more than anything else the political strategy of the party and which shaped its programme for the national Presidential election campaign in 2002.

Indeed in his first public statement after winning the October 2002 election, Lula pointed to the example of PT governments in various states and cities to point up that fiscal responsibility and “creativity in the social area” can go hand in hand to meet the expectations and aspirations of “all Brazilian civil society.” (see Participatory Budgets box chapter 5)

Since winning the election in December 2002 Lula has won the plaudits of the rich and powerful for agreeing to slash pubic spending in order to stay within budget surplus targets agreed with the IMF. These targets were considered central to the government’s ability to honour its interest payments on the more than $430bn of debt, much of it held by foreign creditors.

Under Lula, Brazil’s currency has surged 24 per cent, the main Bovespa stock index has doubled and the value of the benchmark government bond due in 2040 has jumped 72 per cent.

Lula’s (and the right-wing of the WSF) strategy is founded on the belief that it is possible to reconcile economic policies that protect and promote Brazilian capitalist and foreign creditors (e.g. tax cuts, investment credits, budget surplus, strong currency) with the needs of the mass of Brazil’s poor, working class and landless peasants for jobs, wage increases and land. He believes the secret to squaring this circle is the promotion of economic growth, which will create the jobs and raise incomes without too much radical redistribution.

But in the first 16 months of his government he managed to steer the economy into its first real recession for ten years, And the reason was his pro-IMF policies. To stifle inflation, he endorsed the central bank’s decision to increase lending rates to a four-year high of 26.5 per cent. In 2003 Lula slashed spending by $4.7 bn, equal to a quarter of proposed social and public works budgets. Because of the cuts, the government has spent just 10 per cent of its budget for social programs, roads and housing halfway into the year. Hardly any wonder that jobs and consumption collapsed.

Unemployment grew to 13 per cent – the highest since 2001 – in April this year. Real wages have fallen considerably for those in work, as increases lagged behind inflation.

But Lula feels more needs to be done to reassure the capital markets. On 22 September this year Lula raised this year’s primary surplus target to 4.5 per cent of GDP from 4.25 per cent to help reassure investors about the government’s commitment to cut the nation’s debt.

Even Lula’s flagship policy Zero Hunger – the one above all he has said he wants to be judged upon – failed to get off the ground in the first year, hampered by lack of funds and corruption. Lula set a goal of assuring 11 million Brazilian families too poor to buy enough food to eat three meals a day that their situation would change by 2006. By the end of 2004 about one-third will have been registered for the programme.

As a result of all this the government’s popularity has collapsed to 29.4 per cent by June this year down from about 56 per cent when Lula was elected.

Sentiment has turned to anger and action. In mid-July, United Workers’ Central, Brazil’s biggest union federation and a supporter of Lula’s ascent to the presidency, called a rally in front of the presidential palace in Brasília to protest against the wage freeze Lula had ordered.

Progress with land reform has been minimal leading to protest and action by the MST. In response the repression against the MST in the Lula’s first year has been much higher than in any single year of the previous Cardoso government. The land owners and the police have victimised and killed far more MST militants.

As the MST leader said earlier this year: “The social movements, from church-related movements to trade union movements, consider that the current economic policy is limited to the parameters of maintaining the interests and advantages of financial capital. We don’t have inflation, we have macro-economic stability, but we can’t succeed in finding a solution for social problems. What good is stability if the problems of the poor are growing?”

Lula hopes that an economic recovery in 2004 and next year will come to his rescue and validate his strategy, allowing room to satisfy the markets while spending more to alleviate hunger, poverty and redistribute land. But the continued vulnerability of Brazil’s economy to global investor sentiment means that when the next crisis hits there can be no doubting where Lula’s loyalty will lie.

The PT has failed the Brazilian workers’ movement. Committed to reforming it “when possible”, it is dedicated to defending it in the face of attack at all times. This fact has become clear to the thousands of PT members and supporters in the last year who abandoned the PT to form the Partido Socialismo e Liberdade (P-SOL) in June 2004.

Its leaders are the parliamentarians Heloísa Helena, Babá, Luciana Genro and Joăo Fontes, who opposed the leaders of the PT. Its founding declaration states that it opposes not only neoliberal policies but seeks to lead: “workers to action and constructing a political alternative that breaks with capitalism. Our aim is to govern the country and to reorganise completely the economy and society, laying the foundations for production according to social need”.

But its programme is vague and silent on key issues in ways that suggest the leaders want to turn P-SOL into a party that the PT was in the 1980s – a right centrist party. It seeks alliances with the smaller bourgeois opposition parties, it seeks the democratisation of the army and police (and is silent on workers’ self-defence in the face of attacks). It refuses to advocate the right to abortion for fear of offending its Catholic allies.

When the P-Sol holds its national conference during the 2005 WSF in Porto Alegre, its rank and file militants must learn the lessons of the PT, reject the idea of building a broad party that embraces reformist and revolutionaries and sets a course for a genuinely revolutionary alternative to the PT in the battles that lie ahead.