The election of Luis Inacio “Lula” da Silva raised great expectations on the centre-left. For most, his election heralded a new progressive epoch, which, while not revolutionary, defined the “end of neoliberalism.” Noted progressive religious figures like Leonardo Boff announced imminent “change,” which would challenge U.S. hegemony and lead to great popular participation. These hopes have not been realized.

The rightward turn of the da Silva regime has spurred a range of explanations. In the first few months of his regime, da Silva loyalists argued that the orthodox neoliberal policies were “tactical moves” to stabilize the economy before turning to social reform. As da Silva’s policies, appointment alliances and legislation all converged into a logically coherent, orthodox neoliberal strategy, however, this explanation has gradually lost credibility. Among radical sectors of the Left, it has been replaced by a much more convincing, multi-causal explanation.

One strand of this explanation points to the changes that have occurred in Lula’s Workers’ Party (PT)–for example, the evolution of the PT from a movement-based party into an electoral machine built around the persona of da Silva and his personal coterie of advisers. A second strand is the transformation of trade-union bureaucrats into a new class of managers of millions of dollars, directors of public firms and public funds. A third strand relates to the right-wing alliances of many of the governors, mayors and other elected PT officials leading up to the presidential elections of 2002. Then there’s the changing class composition of the PT Party Congress, highlighted by the predominance of middle-class professionals, party officials and trade-union bureaucrats, which rose to 75 per cent at the last party congress.

It is the sum of all these various factors that explains the PT’s programmatic shifts from a socialist agenda in the 1980s to a social-welfare program agenda in the 1990s to a social liberalism prior to the presidential election and, finally, to the orthodox neoliberal practice of today.

Leadership and Party Democracy

The Workers’ Party has fundamentally changed. During the course of the 1990s, the PT became a personalist party organized around Lula, as the embodiment of the Popular Will, with the result that da Silva’s own “style of politics” now plays a big role in mystifying the poor, even as he strikes blows against their living conditions, social demands and hopes. Da Silva has mastered the pseudo-populist demagogy of U.S. ex-president Clinton by telling the poor he “feels their pain,” while he proceeds to push one regressive measure after another, lowering the minimum wage, facilitating the firing of workers and criminalizing the social movements. From its founding to the late 1980s, the PT had a vibrant, open, free-wheeling internal life. Members came to general assemblies and debated with leaders, and held them responsible for their policies, speeches and presence or non-presence at popular demonstrations. Leadership was collective and the different political tendencies argued their positions without being disciplined or expelled.

By the end of the 1980s, the social-democratic electoral wing of the party gained ascendancy and proceeded to discipline and expel some sectors of the radical Left of the party. Assemblies were replaced by leadership meetings of full-time functionaries. Thousands of activists began to drift away, in part due to the growth of clientelism, in part by the emerging vertical structures, and in large part because the party turned almost exclusively toward electoral politics.

By the election of 1994, voluntary party activists were increasingly being replaced by paid functionaries, political appointees to public office and public-relations specialists in polling, image-making and television ads. Strict rules on electoral financing were breached as the leadership sought and accepted funds from state contractors to pay for the new and expensive mass-media style of electoral campaigning.

At the beginning of the new millennium, the party was being run by a small nucleus of close advisers and a small elite of party bosses. Programs were no longer open to serious debate. The party program, everyone was told, was what Lula wanted in order to run for office, or, later, in order to win the campaign.

With his group of advisors, Lula decided to form an alliance with the right-wing Liberal Party without consulting the mass base concerning this strategic shift. In government, he formed an alliance with the right-wing Brazilian Democratic Movement Party (PMDB) in a similar fashion. The same group rammed through a new social-liberal program via its control of the full-time functionaries at the Party Congress just before the 2002 elections.

Top-down personal leadership has become the hallmark of the PT–a far cry from its earlier horizontal structure. The shift to authoritarian political structures has facilitated the repudiation of all of the PT’s remaining social-reformist demands.

The PT: A Contemporary Unholy Alliance

The PT is a party that today aspires to represent an alliance between domestic big industrialists, agribusiness interests and overseas bankers. The PT secures the loyalty of labour bureaucrats for “social pacts” through lucrative pay-offs and “pacts” that allow business to reorganize the workplace, fire workers with little or no severance pay, and increase part-time and short-term employment. In exchange, trade-union bosses will receive future government posts and monetary remuneration.

The appointment of trade-union bureaucrats and left-wing PT members to the Agrarian Reform and Labor Ministries is designed to pacify the unions and the Rural Landless Workers Movement (MST–see below) with symbolic, not substantive, representation. The job of the PT ministers is to preach “patience” and to make inconsequential radical speeches at industrial workers’ and landless workers’ meetings. Eventually the impotent leftist ministers are ousted and replaced by others adapted to the liberal orthodoxy, who argue for what they call “new realism” or “possibilism.”

Agrarian Reform

Lula met with the MST before and after he was elected president. In both cases, he solemnly promised to settle 430,000 families by the end of his term. According to Joao Pedro Stedile, secretary general of the MST, he has repeatedly failed to honour his agreement.

In two years in office (from January, 2003, to June, 2005) only 60,000 families have benefited from land reform, the least under any president since the military dictatorship ended 20 years ago. That’s only half the number of beneficiaries as under the previous neoliberal president, Enrique Cardoso, and one-fifth of what Lula promised to the MST in highly publicized meetings prior to the elections and at two subsequent meetings during his presidency.

The MST has over 200,000 landless workers organized in makeshift plastic tents on sites waiting for the agrarian reform agency to act. In the meantime, several score of land occupations have been launched by regional leaders of the MST to pressure the Agrarian Reform Agency (INRA) to act. Despite widespread rejection of Lula among most rank-and-file landless rural workers and some regional leaders, the national leadership of the MST has refused to break with Lula or the PT, even as it criticizes his ministers and their neoliberal policies. In 2005, Lula slashed the budget for agrarian reform by 50 per cent, heightening tensions between the regime and the MST.

In response to Lula’s unconditional support for the big agro-export elite, the MST (along with Rural Pastoral Commission, the Via Campesina and the “Cry of the Excluded” movement) organized a thousand-kilometre march by 10,000 campesinos to Brasilia in May, 2005, hoping to pressure Lula to respect his (broken) promises. Meanwhile, every major NGO, peasant and rural organization, the National Bishops Organization and almost all the popular civil-society organizations have condemned the Lula regime’s failure to promote social justice. None of the agrarian reform recommendations put forth by the MST, ecologists and the Church have had any impact on policy. In interviews in 2003 and 2004 with peasant leaders, bishops and church people, NGOs and agronomists, I found no one portraying Lula’s agrarian policy as any different from his predecessors.

The Rural Landless Workers Movement faces a profound dilemma: after years of building a successful mass independent socio-political movement that settled over 350,000 landless families on unproductive land via direct action (land occupations), it temporarily substituted electoral work for da Silva in the hope of positive agrarian reform legislation. Da Silva’s electoral campaign of 2002 demanded and secured from the MST an unprecedented concession: the stoppage of all mass direct action–no land occupations–arguing that this would “play into the hands of the Right,” “scare” the middle-class voters and cost da Silva the elections. The MST fell into the trap. They stopped mass action and joined the electoral campaign.

Unfortunately, most of the MST leaders continued to hold out hope that da Silva and the impotent minister of agrarian reform and other left functionaries in the same ministry will make a “left turn.” But many of the regional and local MST leaders and activists recognize that the landless rural workers have no future with the da Silva regime, that the movement will have to part ways and return to the tried and proven method of mass direct action.

Da Silva’s Agro-Export Strategy

While da Silva has totally ignored the needs of millions of impoverished landless workers and publicly ridiculed the MST’s successful agrarian reform program, he has traveled to over 20 countries, attended numerous international forums and engaged in hard negotiations with the U.S. to open up markets for the big plantation growers of citrus fruit, soybeans, sugar and cattle. The major protagonists and principal beneficiaries of da Silva’s financial aid are the agribusiness elites.

Luis Furlan, the commerce minister, increased exports through generous subsidies–favouring exporters over domestic producers–eliminated regulatory measures on foreign investment, provided 20 “priority industries” (large-scale exporters) with preferential loans at lower, subsidized interest rates, and exempted exports from a host of taxes, shifting the tax burden to wage and salaried workers, and producers for the local market. The net effect of Furlan’s interventionist policies was to increase profits and opportunities for the export sector, mainly agro-mineral, while prejudicing the small producers and landless workers.

Da Silva’s lowering of wages and weakening of labour unions decreased labour costs and increased the profits of the “dynamic” export sector. The “export surplus” will not be re-cycled within the economy to support multi-sector growth, as much of the surplus in hard currency will be used to pay foreign and domestic creditors and speculator bondholders. There are few if any “spread effects” from the “export pole” to the domestic market. Moreover, the success of the regime’s subsidized export sector is leading to the greater centralization and concentration of capital and land, as well as the expansion of export crops into the Amazon, thus destroying valuable ecological regions. The result of the highly capital-intensive agro-mineral growth is to increase the poverty of the marginalized small farmers and unemployed landless rural workers, predictably making a sham of da Silva’s “Zero Hunger” campaign.An Authoritarian Style of Government

Da Silva consistently ignores opinions expressed by most popular civil-society organizations. He has refused to consult with or take account of the vast majority of progressive civil-society organizations in: - Co-chairing (with the Bush Administration) the Free Trade Area of the Americas (ALCA) - Sending Brazilian troops to prop up the U.S. puppet regime in Haiti - Supporting the use of genetically modified seeds - Promoting agribusiness expansion of soya and beef production into the Amazon rainforest, leading to the recent destruction of over three million hectares of forest - Raising the minimum wage over two years by a measly one per cent

Every major policy was dictated by Lula without any input from civil society, or by the critical minority within his own party. The PT takes its cues from the IMF, with which it signed a renewable agreement in 2003 and 2004. Critical differences with Lula’s regressive wage, salary and pension policies have led to the expulsion of one senator and three congress people from his own party and the suspension and threats of sanctions against others in the parliamentary party who object to Lula’s neoliberal line.

Lula’s Economic Policy

The explicit policy of Lula’s finance minister, Antonio Palocci, is to privatize all sectors of the economy. As a first step, he has moved to open foreign private investment in every sector of the infrastructure, abolishing or loosening regulations and promising to sell off sectors of the strategic and lucrative public petroleum, gas, electrical and financial sectors.

What this means is that the state is active in promoting agribusiness and mineral exports benefiting large corporations. These receive 85 to 90 per cent of the state credits and subsidies at the expense of heavily indebted family farmers producing for the domestic market. And the state is inactive in pursuing landlords and their death squads: over 90 peasant activists were killed in 2003, and over 80 in 2004, including over two dozen MST activists and several dozen in 2005 (up to the end of April), including a U.S.-Brazilian activist nun. The Church’s Pastoral Land Commission provided detailed accounts of the agribusinesses implicated and the fact that none have been convicted.

The class background and interests of the key economic policymakers in Lula’s government tells us a great deal about the regime’s pro–big-business, anti-popular policies. The key post of Central Bank governor is held by Henrique Meirelles, former president of Fleet Boston Global Bank, who voted for President Cardoso’s candidate (Jose Serra) in the presidential elections. He is a practicing neoliberal who has been in the forefront of implementing the IMF’s pension-slashing, minimum-wage–freezing and debt-paying, high-interest policy. Luiz Fernando Furlan, a millionaire chair of the agricultural corporation Sandia, is head of the Trade and Development Ministry. Roger Rodriguez, agricultural minister, is president of the Brazilian Agrobusiness Association and a close associate of Monsanto. He successfully legalized GM farming. Palocci, the finance minister, is an ex-Trotskyist who converted to Milton Friedman, and has enthusiastically endorsed the free market and received the highest-per-cent favour rating in a poll of the business elite.

The socio-economic composition of the Lula regime explains why the government paid out over U.S. $40 billion to foreign creditors like the IMF, while slashing pensions for the great majority of public employees in 2003 and 2004. Regressive policies on the minimum wage have nothing to do with “saving social security” (as Lula demagogically claimed), but are instead a way to accumulate an exorbitant budget surplus to pay wealthy bondholders who are a high priority for the big-business cabinet.

Da Silva’s “Zero Hunger” campaign has been an abysmal failure. The food baskets have sporadically reached 10 per cent of those suffering from malnutrition. The program is administered through Lula’s local political bosses, and has been rife with corruption, political favoritism and bureaucratic ineptness. Frei Betto, a close personal friend of Lula and a leading advocate of Zero Hunger, resigned. According to close friends and associates, Betto deeply deplored the operations and dismal impact of the program.

Pushing Neoliberalism to the Limits

The operating philosophy of the PT regime has four key postulates. First, Brazil is in a crisis. This can only be addressed by satisfying the austerity policies promoted by the international financial institutions in order to secure new flows of loans and foreign investment, which are identified as the principal vehicles for development. Second, Brazil will grow only by providing incentives to domestic big business, agribusiness and foreign multinationals. These incentives include lower taxes, reducing labour welfare provisions and strengthening business positions in labour-management negotiations. Third, the free market, with minimum state intervention, regulation and control is essential for solving the problems of growth, unemployment and inequalities. The major task set by da Silva’s economic team is to promote Brazilian exports to overseas markets–over and against domestic markets–and to pressure the U.S. and Europe to liberalize their markets. Fourth, growth will eventually result from price stability, foreign capital flows, tight fiscal policy and, above all, strict payment of public and foreign debts, hence the need to slash government budgets, particularly social budgets, to accumulate a budget surplus for debt payments and to control inflation. Once stability (the “bitter medicine”) is achieved, the economy will take off into market-driven export growth, financing the poverty programs to alleviate hunger. “Premature” welfare spending, raising the minimum wage, extensive poverty programs and agrarian reform would “destabilize” the economy, undermine “market confidence” and lead to deepening the crisis and worsening the condition of the people.

Both in terms of the neoliberal philosophy that guides his economic team and their actual economic practices, da Silva thus represents a continuity, extension and deepening of the disastrous neoliberal policies pursued by the Cardoso regime. These policies led to eight years of economic stagnation, profound social inequalities, increased indebtedness and a near collapse of the financial system, dependent almost entirely on volatile external flows of speculative capital.

Lula’s Foreign Policy

In foreign policy, the Lula regime has stated repeatedly that it is completely in favour of free trade everywhere. The regime’s main criticism of ALCA (the FTAA) was that the U.S. would not lift its subsidies on its agricultural exports or its quota restriction on Brazilian agricultural or steel exports. That was the main dispute at Cancun, as far as Brazil was concerned. In subsequent meetings between Foreign Minister Amorin and U.S. Trade Representative Zoellick, they agreed to continue discussions to narrow differences within an overall agreement on the ALCA framework, which Amorin called “ALCA-lite.” Lula has supported the U.S.’s piecemeal implementation of ALCA via bilateral agreements with Peru, Chile, Ecuador and Colombia.

Lula’s decision to send 1,500 troops to Haiti in 2004 to defend an illegal puppet regime imposed by U.S. military force is clearly an indication of Brazil’s opportunist policy of catering to U.S. hegemonic interests in order to obtain U.S. support for a seat on the UN Security Council. A Brazilian General heads the occupation forces under the political directives of the U.S. State Department and Pentagon “advisors.”

Real Alternatives

What are the alternatives to Lula’s neoliberal policies and regime? It is necessary to say that any alternatives can begin only by changing the composition of the regime, the class interests it serves, its ideology, the membership of its Economic and Social Council (two-thirds dominated by business) and its coalition with right-wing parties.

But assuming a democratic leftist government with a reformist agenda, there are a multitude of alternatives presented by most of Brazil’s leading economists, as well as spokespeople from the leading popular civil-society organizations.

First, set a ceiling or debt moratorium on foreign-debt payments. Second, retain foreign-exchange earnings and place a surcharge on agro-mineral export sales and revenues. Third, tax financial transactions, especially speculative investments. Introduce an effective tax-collection policy on the capital gains and income of the Brazilian elite. Re-nationalize mining, public utilities, communication banking and other lucrative sectors.

Together, this should provide a reform regime with between U.S. $100 and 200 billion per year in new revenues to finance an agrarian reform that would reduce unemployment and disguised unemployment from 40 per cent to less than 10 per cent in four years, increase food production for local consumption and reduce poverty (mostly but not exclusively concentrated in the countryside) by providing the tools (land, credit and tech assistance) for collective improvement (rather than food-basket handouts for the few from the state). The added revenues from income tax could be used to fund public, productive enterprises linking agriculture and mining to industry, adding value, jobs and increasing employment. The re-nationalization would lead to retaining more than U.S. $15 billion in profits and could allow for a reduction in public utilities costs, making electricity, clean water and power generation available and accessible to millions of poor families and small- and medium-size private enterprises.

An industrial policy based on public ownership of strategic economic sectors would give high priority to producing goods for popular consumption and financing–public housing, public health, subsidized public-school attendance and other measures to lessen the grotesque inequalities that continue to grow under the Lula regime (the number of millionaires grew from 76,000 to 85,000 between 2003 and 2005).

A Future Revival of the Brazilian Left?

Today, any revival of the Brazilian Left faces formidable new barriers in pursuit of jobs, land, dignity and justice. This is because their former political leaders and trade-union officials are now allied with the U.S., the IMF and the Brazilian elite, and are backed by the resources of the state and the support of the mass media. The CUT, the old-line trade-union confederation is divided at several levels. Approximately 80 per cent of the executive backs Lula, despite occasional token criticisms. The rest are in opposition to his policies and favour greater opposition. At some regional and especially local levels there is more militant opposition and greater disillusionment, especially among the rank and file.

Public-sector unions (PSUs), the hardest hit by Lula’s regressive wage and pension policies, are the cutting edge of trade-union opposition to Lula and the leading force supporting the formation of the new confederation, “Con Luta” (With Struggle). At the end of January, 2005, I was invited to address a meeting of 1,500 Con Luta delegates at their formative meeting. Many delegates were founding members or supporters of the CUT and Lula’s Workers Party, or were profoundly disillusioned and angry with his anti-labour legislation.

Overall, support for da Silva among trade unionists and unorganized workers is declining, strikes are increasing and any downturn in the economy will likely accentuate the polarization and conflict between the workers’ movement and the Lula regime. Most disenchanted workers are withdrawing support from da Silva rather than joining new parties. This could change, as more of the populace sees through da Silva’s populist theatrical “plain talking” and understands his servile and unconditional support for foreign investors, agro-exporters and speculators.

So far, the MST has refused to support Con Luta, or the new political formation, the “Socialism and Liberty Party” (PSOL), or to join with militant public-sector unions fighting pension cuts. By mid-2005, internal debates and mass pressure from below may yet force the more conservative national leadership to break with Lula, especially if the “March to Brasilia” fails to result in any shift in Lula’s policies, which is more than likely.

So, new winds are blowing. Progressive church groups voice strong criticism of da Silva’s orthodox neoliberal priorities. As noted, this past January 1,500 trade-union leaders met to form Con Luta as an alternative to the Lula-dominated CUT. Most of the big union affiliates pertain to the public sector and many of the leaders belong to the Marxist PSTU (United Socialist Workers Party). The new party, Socialism and Liberty, formed by former PT Congress representatives, is also growing among disaffected unionist and intellectuals. Land occupations accelerate. The long march to socialism, briefly sidetracked by Lula, has begun once more.

James Petras, a former Professor of Sociology at Binghamton University, New York, owns a 50 year membership in the class struggle, is an adviser to the landless and jobless in brazil and argentina; co-author of Globalization Unmasked (Fernwood) and a member of the Canadian Dimension collective.

The election of Luis Inacio “Lula” da Silva raised great expectations on the centre-left. For most, his election heralded a new progressive epoch, which, while not revolutionary, defined the “end of neoliberalism.” Noted progressive religious figures like Leonardo Boff announced imminent “change,” which would challenge U.S. hegemony and lead to great popular participation. These hopes have not been realized.

The rightward turn of the da Silva regime has spurred a range of explanations. In the first few months of his regime, da Silva loyalists argued that the orthodox neoliberal policies were “tactical moves” to stabilize the economy before turning to social reform. As da Silva’s policies, appointment alliances and legislation all converged into a logically coherent, orthodox neoliberal strategy, however, this explanation has gradually lost credibility. Among radical sectors of the Left, it has been replaced by a much more convincing, multi-causal explanation.

One strand of this explanation points to the changes that have occurred in Lula’s Workers’ Party (PT)–for example, the evolution of the PT from a movement-based party into an electoral machine built around the persona of da Silva and his personal coterie of advisers. A second strand is the transformation of trade-union bureaucrats into a new class of managers of millions of dollars, directors of public firms and public funds. A third strand relates to the right-wing alliances of many of the governors, mayors and other elected PT officials leading up to the presidential elections of 2002. Then there’s the changing class composition of the PT Party Congress, highlighted by the predominance of middle-class professionals, party officials and trade-union bureaucrats, which rose to 75 per cent at the last party congress.

It is the sum of all these various factors that explains the PT’s programmatic shifts from a socialist agenda in the 1980s to a social-welfare program agenda in the 1990s to a social liberalism prior to the presidential election and, finally, to the orthodox neoliberal practice of today.

Leadership and Party Democracy

The Workers’ Party has fundamentally changed. During the course of the 1990s, the PT became a personalist party organized around Lula, as the embodiment of the Popular Will, with the result that da Silva’s own “style of politics” now plays a big role in mystifying the poor, even as he strikes blows against their living conditions, social demands and hopes. Da Silva has mastered the pseudo-populist demagogy of U.S. ex-president Clinton by telling the poor he “feels their pain,” while he proceeds to push one regressive measure after another, lowering the minimum wage, facilitating the firing of workers and criminalizing the social movements.

From its founding to the late 1980s, the PT had a vibrant, open, free-wheeling internal life. Members came to general assemblies and debated with leaders, and held them responsible for their policies, speeches and presence or non-presence at popular demonstrations. Leadership was collective and the different political tendencies argued their positions without being disciplined or expelled.

By the end of the 1980s, the social-democratic electoral wing of the party gained ascendancy and proceeded to discipline and expel some sectors of the radical Left of the party. Assemblies were replaced by leadership meetings of full-time functionaries. Thousands of activists began to drift away, in part due to the growth of clientelism, in part by the emerging vertical structures, and in large part because the party turned almost exclusively toward electoral politics.

By the election of 1994, voluntary party activists were increasingly being replaced by paid functionaries, political appointees to public office and public-relations specialists in polling, image-making and television ads. Strict rules on electoral financing were breached as the leadership sought and accepted funds from state contractors to pay for the new and expensive mass-media style of electoral campaigning.

At the beginning of the new millennium, the party was being run by a small nucleus of close advisers and a small elite of party bosses. Programs were no longer open to serious debate. The party program, everyone was told, was what Lula wanted in order to run for office, or, later, in order to win the campaign.

With his group of advisors, Lula decided to form an alliance with the right-wing Liberal Party without consulting the mass base concerning this strategic shift. In government, he formed an alliance with the right-wing Brazilian Democratic Movement Party (PMDB) in a similar fashion. The same group rammed through a new social-liberal program via its control of the full-time functionaries at the Party Congress just before the 2002 elections.

Top-down personal leadership has become the hallmark of the PT–a far cry from its earlier horizontal structure. The shift to authoritarian political structures has facilitated the repudiation of all of the PT’s remaining social-reformist demands.

The PT: A Contemporary Unholy Alliance

The PT is a party that today aspires to represent an alliance between domestic big industrialists, agribusiness interests and overseas bankers. The PT secures the loyalty of labour bureaucrats for “social pacts” through lucrative pay-offs and “pacts” that allow business to reorganize the workplace, fire workers with little or no severance pay, and increase part-time and short-term employment. In exchange, trade-union bosses will receive future government posts and monetary remuneration.

The appointment of trade-union bureaucrats and left-wing PT members to the Agrarian Reform and Labor Ministries is designed to pacify the unions and the Rural Landless Workers Movement (MST–see below) with symbolic, not substantive, representation. The job of the PT ministers is to preach “patience” and to make inconsequential radical speeches at industrial workers’ and landless workers’ meetings. Eventually the impotent leftist ministers are ousted and replaced by others adapted to the liberal orthodoxy, who argue for what they call “new realism” or “possibilism.”

Agrarian Reform

Lula met with the MST before and after he was elected president. In both cases, he solemnly promised to settle 430,000 families by the end of his term. According to Joao Pedro Stedile, secretary general of the MST, he has repeatedly failed to honour his agreement.

In two years in office (from January, 2003, to June, 2005) only 60,000 families have benefited from land reform, the least under any president since the military dictatorship ended 20 years ago. That’s only half the number of beneficiaries as under the previous neoliberal president, Enrique Cardoso, and one-fifth of what Lula promised to the MST in highly publicized meetings prior to the elections and at two subsequent meetings during his presidency.

The MST has over 200,000 landless workers organized in makeshift plastic tents on sites waiting for the agrarian reform agency to act. In the meantime, several score of land occupations have been launched by regional leaders of the MST to pressure the Agrarian Reform Agency (INRA) to act. Despite widespread rejection of Lula among most rank-and-file landless rural workers and some regional leaders, the national leadership of the MST has refused to break with Lula or the PT, even as it criticizes his ministers and their neoliberal policies. In 2005, Lula slashed the budget for agrarian reform by 50 per cent, heightening tensions between the regime and the MST.

In response to Lula’s unconditional support for the big agro-export elite, the MST (along with Rural Pastoral Commission, the Via Campesina and the “Cry of the Excluded” movement) organized a thousand-kilometre march by 10,000 campesinos to Brasilia in May, 2005, hoping to pressure Lula to respect his (broken) promises. Meanwhile, every major NGO, peasant and rural organization, the National Bishops Organization and almost all the popular civil-society organizations have condemned the Lula regime’s failure to promote social justice. None of the agrarian reform recommendations put forth by the MST, ecologists and the Church have had any impact on policy. In interviews in 2003 and 2004 with peasant leaders, bishops and church people, NGOs and agronomists, I found no one portraying Lula’s agrarian policy as any different from his predecessors.

The Rural Landless Workers Movement faces a profound dilemma: after years of building a successful mass independent socio-political movement that settled over 350,000 landless families on unproductive land via direct action (land occupations), it temporarily substituted electoral work for da Silva in the hope of positive agrarian reform legislation. Da Silva’s electoral campaign of 2002 demanded and secured from the MST an unprecedented concession: the stoppage of all mass direct action–no land occupations–arguing that this would “play into the hands of the Right,” “scare” the middle-class voters and cost da Silva the elections. The MST fell into the trap. They stopped mass action and joined the electoral campaign.

Unfortunately, most of the MST leaders continued to hold out hope that da Silva and the impotent minister of agrarian reform and other left functionaries in the same ministry will make a “left turn.” But many of the regional and local MST leaders and activists recognize that the landless rural workers have no future with the da Silva regime, that the movement will have to part ways and return to the tried and proven method of mass direct action.

Da Silva’s Agro-Export Strategy

While da Silva has totally ignored the needs of millions of impoverished landless workers and publicly ridiculed the MST’s successful agrarian reform program, he has traveled to over 20 countries, attended numerous international forums and engaged in hard negotiations with the U.S. to open up markets for the big plantation growers of citrus fruit, soybeans, sugar and cattle. The major protagonists and principal beneficiaries of da Silva’s financial aid are the agribusiness elites.

Luis Furlan, the commerce minister, increased exports through generous subsidies–favouring exporters over domestic producers–eliminated regulatory measures on foreign investment, provided 20 “priority industries” (large-scale exporters) with preferential loans at lower, subsidized interest rates, and exempted exports from a host of taxes, shifting the tax burden to wage and salaried workers, and producers for the local market. The net effect of Furlan’s interventionist policies was to increase profits and opportunities for the export sector, mainly agro-mineral, while prejudicing the small producers and landless workers.

Da Silva’s lowering of wages and weakening of labour unions decreased labour costs and increased the profits of the “dynamic” export sector. The “export surplus” will not be re-cycled within the economy to support multi-sector growth, as much of the surplus in hard currency will be used to pay foreign and domestic creditors and speculator bondholders. There are few if any “spread effects” from the “export pole” to the domestic market. Moreover, the success of the regime’s subsidized export sector is leading to the greater centralization and concentration of capital and land, as well as the expansion of export crops into the Amazon, thus destroying valuable ecological regions. The result of the highly capital-intensive agro-mineral growth is to increase the poverty of the marginalized small farmers and unemployed landless rural workers, predictably making a sham of da Silva’s “Zero Hunger” campaign.

An Authoritarian Style of Government

Da Silva consistently ignores opinions expressed by most popular civil-society organizations. He has refused to consult with or take account of the vast majority of progressive civil-society organizations in:

• Co-chairing (with the Bush Administration) the Free Trade Area of the Americas (ALCA)
• Sending Brazilian troops to prop up the U.S. puppet regime in Haiti
• Supporting the use of genetically modified seeds
• Promoting agribusiness expansion of soya and beef production into the Amazon rainforest, leading to the recent destruction of over three million hectares of forest
• Raising the minimum wage over two years by a measly one per cent

Every major policy was dictated by Lula without any input from civil society, or by the critical minority within his own party. The PT takes its cues from the IMF, with which it signed a renewable agreement in 2003 and 2004. Critical differences with Lula’s regressive wage, salary and pension policies have led to the expulsion of one senator and three congress people from his own party and the suspension and threats of sanctions against others in the parliamentary party who object to Lula’s neoliberal line.

Lula’s Economic Policy

The explicit policy of Lula’s finance minister, Antonio Palocci, is to privatize all sectors of the economy. As a first step, he has moved to open foreign private investment in every sector of the infrastructure, abolishing or loosening regulations and promising to sell off sectors of the strategic and lucrative public petroleum, gas, electrical and financial sectors.

What this means is that the state is active in promoting agribusiness and mineral exports benefiting large corporations. These receive 85 to 90 per cent of the state credits and subsidies at the expense of heavily indebted family farmers producing for the domestic market. And the state is inactive in pursuing landlords and their death squads: over 90 peasant activists were killed in 2003, and over 80 in 2004, including over two dozen MST activists and several dozen in 2005 (up to the end of April), including a U.S.-Brazilian activist nun. The Church’s Pastoral Land Commission provided detailed accounts of the agribusinesses implicated and the fact that none have been convicted.

The class background and interests of the key economic policymakers in Lula’s government tells us a great deal about the regime’s pro–big-business, anti-popular policies. The key post of Central Bank governor is held by Henrique Meirelles, former president of Fleet Boston Global Bank, who voted for President Cardoso’s candidate (Jose Serra) in the presidential elections. He is a practicing neoliberal who has been in the forefront of implementing the IMF’s pension-slashing, minimum-wage–freezing and debt-paying, high-interest policy. Luiz Fernando Furlan, a millionaire chair of the agricultural corporation Sandia, is head of the Trade and Development Ministry. Roger Rodriguez, agricultural minister, is president of the Brazilian Agrobusiness Association and a close associate of Monsanto. He successfully legalized GM farming. Palocci, the finance minister, is an ex-Trotskyist who converted to Milton Friedman, and has enthusiastically endorsed the free market and received the highest-per-cent favour rating in a poll of the business elite.

The socio-economic composition of the Lula regime explains why the government paid out over U.S. $40 billion to foreign creditors like the IMF, while slashing pensions for the great majority of public employees in 2003 and 2004. Regressive policies on the minimum wage have nothing to do with “saving social security” (as Lula demagogically claimed), but are instead a way to accumulate an exorbitant budget surplus to pay wealthy bondholders who are a high priority for the big-business cabinet.

Da Silva’s “Zero Hunger” campaign has been an abysmal failure. The food baskets have sporadically reached 10 per cent of those suffering from malnutrition. The program is administered through Lula’s local political bosses, and has been rife with corruption, political favoritism and bureaucratic ineptness. Frei Betto, a close personal friend of Lula and a leading advocate of Zero Hunger, resigned. According to close friends and associates, Betto deeply deplored the operations and dismal impact of the program.

Pushing Neoliberalism to the Limits

The operating philosophy of the PT regime has four key postulates. First, Brazil is in a crisis. This can only be addressed by satisfying the austerity policies promoted by the international financial institutions in order to secure new flows of loans and foreign investment, which are identified as the principal vehicles for development. Second, Brazil will grow only by providing incentives to domestic big business, agribusiness and foreign multinationals. These incentives include lower taxes, reducing labour welfare provisions and strengthening business positions in labour-management negotiations. Third, the free market, with minimum state intervention, regulation and control is essential for solving the problems of growth, unemployment and inequalities. The major task set by da Silva’s economic team is to promote Brazilian exports to overseas markets–over and against domestic markets–and to pressure the U.S. and Europe to liberalize their markets. Fourth, growth will eventually result from price stability, foreign capital flows, tight fiscal policy and, above all, strict payment of public and foreign debts, hence the need to slash government budgets, particularly social budgets, to accumulate a budget surplus for debt payments and to control inflation. Once stability (the “bitter medicine”) is achieved, the economy will take off into market-driven export growth, financing the poverty programs to alleviate hunger. “Premature” welfare spending, raising the minimum wage, extensive poverty programs and agrarian reform would “destabilize” the economy, undermine “market confidence” and lead to deepening the crisis and worsening the condition of the people.

Both in terms of the neoliberal philosophy that guides his economic team and their actual economic practices, da Silva thus represents a continuity, extension and deepening of the disastrous neoliberal policies pursued by the Cardoso regime. These policies led to eight years of economic stagnation, profound social inequalities, increased indebtedness and a near collapse of the financial system, dependent almost entirely on volatile external flows of speculative capital.

Lula’s Foreign Policy

In foreign policy, the Lula regime has stated repeatedly that it is completely in favour of free trade everywhere. The regime’s main criticism of ALCA (the FTAA) was that the U.S. would not lift its subsidies on its agricultural exports or its quota restriction on Brazilian agricultural or steel exports. That was the main dispute at Cancun, as far as Brazil was concerned. In subsequent meetings between Foreign Minister Amorin and U.S. Trade Representative Zoellick, they agreed to continue discussions to narrow differences within an overall agreement on the ALCA framework, which Amorin called “ALCA-lite.” Lula has supported the U.S.’s piecemeal implementation of ALCA via bilateral agreements with Peru, Chile, Ecuador and Colombia. Lula’s decision to send 1,500 troops to Haiti in 2004 to defend an illegal puppet regime imposed by U.S. military force is clearly an indication of Brazil’s opportunist policy of catering to U.S. hegemonic interests in order to obtain U.S. support for a seat on the UN Security Council. A Brazilian General heads the occupation forces under the political directives of the U.S. State Department and Pentagon “advisors.”

Real Alternatives

What are the alternatives to Lula’s neoliberal policies and regime? It is necessary to say that any alternatives can begin only by changing the composition of the regime, the class interests it serves, its ideology, the membership of its Economic and Social Council (two-thirds dominated by business) and its coalition with right-wing parties.

But assuming a democratic leftist government with a reformist agenda, there are a multitude of alternatives presented by most of Brazil’s leading economists, as well as spokespeople from the leading popular civil-society organizations.

First, set a ceiling or debt moratorium on foreign-debt payments. Second, retain foreign-exchange earnings and place a surcharge on agro-mineral export sales and revenues. Third, tax financial transactions, especially speculative investments. Introduce an effective tax-collection policy on the capital gains and income of the Brazilian elite. Re-nationalize mining, public utilities, communication banking and other lucrative sectors. Together, this should provide a reform regime with between U.S. $100 and 200 billion per year in new revenues to finance an agrarian reform that would reduce unemployment and disguised unemployment from 40 per cent to less than 10 per cent in four years, increase food production for local consumption and reduce poverty (mostly but not exclusively concentrated in the countryside) by providing the tools (land, credit and tech assistance) for collective improvement (rather than food-basket handouts for the few from the state). The added revenues from income tax could be used to fund public, productive enterprises linking agriculture and mining to industry, adding value, jobs and increasing employment. The re-nationalization would lead to retaining more than U.S. $15 billion in profits and could allow for a reduction in public utilities costs, making electricity, clean water and power generation available and accessible to millions of poor families and small- and medium-size private enterprises.

An industrial policy based on public ownership of strategic economic sectors would give high priority to producing goods for popular consumption and financing–public housing, public health, subsidized public-school attendance and other measures to lessen the grotesque inequalities that continue to grow under the Lula regime (the number of millionaires grew from 76,000 to 85,000 between 2003 and 2005).

A Future Revival of the Brazilian Left?

Today, any revival of the Brazilian Left faces formidable new barriers in pursuit of jobs, land, dignity and justice. This is because their former political leaders and trade-union officials are now allied with the U.S., the IMF and the Brazilian elite, and are backed by the resources of the state and the support of the mass media. The CUT, the old-line trade-union confederation is divided at several levels. Approximately 80 per cent of the executive backs Lula, despite occasional token criticisms. The rest are in opposition to his policies and favour greater opposition. At some regional and especially local levels there is more militant opposition and greater disillusionment, especially among the rank and file.

Public-sector unions (PSUs), the hardest hit by Lula’s regressive wage and pension policies, are the cutting edge of trade-union opposition to Lula and the leading force supporting the formation of the new confederation, “Con Luta” (With Struggle). At the end of January, 2005, I was invited to address a meeting of 1,500 Con Luta delegates at their formative meeting. Many delegates were founding members or supporters of the CUT and Lula’s Workers Party, or were profoundly disillusioned and angry with his anti-labour legislation.

Overall, support for da Silva among trade unionists and unorganized workers is declining, strikes are increasing and any downturn in the economy will likely accentuate the polarization and conflict between the workers’ movement and the Lula regime. Most disenchanted workers are withdrawing support from da Silva rather than joining new parties. This could change, as more of the populace sees through da Silva’s populist theatrical “plain talking” and understands his servile and unconditional support for foreign investors, agro-exporters and speculators.

So far, the MST has refused to support Con Luta, or the new political formation, the “Socialism and Liberty Party” (PSOL), or to join with militant public-sector unions fighting pension cuts. By mid-2005, internal debates and mass pressure from below may yet force the more conservative national leadership to break with Lula, especially if the “March to Brasilia” fails to result in any shift in Lula’s policies, which is more than likely.

So, new winds are blowing. Progressive church groups voice strong criticism of da Silva’s orthodox neoliberal priorities. As noted, this past January 1,500 trade-union leaders met to form Con Luta as an alternative to the Lula-dominated CUT. Most of the big union affiliates pertain to the public sector and many of the leaders belong to the Marxist PSTU (United Socialist Workers Party). The new party, Socialism and Liberty, formed by former PT Congress representatives, is also growing among disaffected unionist and intellectuals. Land occupations accelerate. The long march to socialism, briefly sidetracked by Lula, has begun once more.

James Petras, a former Professor of Sociology at Binghamton University, New York, owns a 50 year membership in the class struggle, is an adviser to the landless and jobless in brazil and argentina; co-author of Globalization Unmasked (Fernwood) and a member of the Canadian Dimension collective.

This article appeared in the July/August 2006 issue of Canadian Dimension (Oil Sucks!).