A contradiction is gaining momentum in Brazil’s political outlook for the months of May and June: on one hand, Brazilian public opinion’s broad support for the federal government and President Lula; on the other, the opposition is increasingly stepping up negotiations and making alliances with the aim of defeating the Workers’ Party (PT) in the 2010 presidential elections.

A contradiction is gaining momentum in Brazil’s political outlook for the months of May and June: on one hand, Brazilian public opinion’s broad support for the federal government and President Lula; on the other, the opposition is increasingly stepping up negotiations and making alliances with the aim of defeating the Workers’ Party (PT) in the 2010 presidential elections.

The government’s popularity and that of the president, too, have several causes, ranging from the president’s charisma; the empathy (a popular version of class consciousness) that popular sectors nurture for Lula; the popular segments’ rising income, employment and consumption levels; and the weaknesses and options of the opposition itself.

The opinion polls are crystal clear: the government and the president are supported by nearly 70% of the respondents. In other polls, half the population upholds a third term for Lula (the Brazilian legislation allows only one reelection).

These figures, as is natural to expect, generate certain optimism in sectors within the government and in the parties that support it. Yet caution is called for, since there are contradictory signs in the electoral-institutional policy and in popular organization.

In the economy, the first indicators point to further economic growth, with rising employment rates and growing income and consumption levels. Yet these figures should be viewed with caution.

Brazil’s economic growth is real and higher than that accumulated during the Fernando Henrique Cardoso administration of social-democratic PSDB. Nevertheless, there are two questions that must be answered: a) Is such growth sustainable? b) Is this growth occurring in combination with a reduction of inequalities?

As for this growth’s sustainability, there are huge controversies. The leftist opposition (which has little electoral and social strength, but is a relevant presence with opinion makers and the media) downplays the growth achieved by the Lula government and concentrates its criticisms on two aspects: On one hand, it states that the country’s structural bottlenecks are still present, which would impede long-term growth; on the other, it sustains that the growth obtained is embedded in the framework of a model which, ultimately, reproduces social inequalities.

The right wing opposition argues that the growth achieved during the Lula administration is the product of a virtuous coincidence of two variables: On one hand, of the policies of the Fernando Henrique government; on the other, of a favorable international context, free of crises and with rising commodity prices.

The right wing opposition also states that the Lula government took up part of the Fernando Henrique government policy, but did not make the “structural reforms” necessary to give sustainability to the country. Besides, the right wing opposition accuses the Lula government of having irresponsibly increased “public spending”. Finally, the right wing opposition states that the current international crisis, combined with the absence of reforms and increased public expenditures, will not enable Brazil to grow sustainably.

Inside the government and the party coalition that supports it, there are at least two main opinions.

On one hand, there are those who consider that the growth obtained is sustainable, requiring only careful monitoring of the country’s fundamentals (inflation, interest rates, foreign exchange, “public spending”) and, secondly, avoiding being contaminated by the international crisis. It seems to us that this is the opinion shared by, for instance Henrique Meirelles, chair of the Central Bank. But it is also shared by other sectors of the coalition backing the Lula government, including Workers’ Party members.

Conversely, there are those who consider that the growth obtained will only be sustainable if two critical variables undergo alterations: The interest-rate policy and foreign exchange controls, alterations that become the more urgent as the international crisis deepens. This seems to us to be, for instance the position of Guido Mantega, minister of finance, and of a major part of the petistas. But it is also the opinion of former exponents of the Brazilian conservative thought, as is the case of former federal deputy Delfim Netto, the economy’s czar during the military governments,.

At the center of the polemic is the interest-rate policy. The Brazilian Central Bank has been pursuing, since the Fernando Henrique government, a policy of high interest rates. Though reduced during the Lula administration, Brazil’s real interest rates (adjusted for inflation) are still among the highest in the world. Since 2005, the Central Bank started to reduce the nominal rate (and to a lesser extent, the real interest rate). Now, not only did the Central Bank interrupt that downward trend, but decided to raise the rate by half a percentage point.

The argument in favor of the raise is inflation. In the opinion of critics, including Delfim Netto, this is an argument with no empirical basis. All evidence leads us to conclude that the Central Bank uses the interest-rate policy as an anti-cyclical policy, both to contain growth and to contain more public investments (directly productive and in social policies).

In the weeks of April 2008 that preceded the meeting convened by the COPOM (Council for Monetary Policy) that decided for raising the interest rate, there was a somewhat orchestrated attack, involving actors as diverse as leftist parties and business associations, against the policy implemented by Henrique Meirelles.

Still, the Central Bank of Brazil decided to raise the interest rate by half a percentage point, defying an explicit signal by the President of the Republic, Lula, who had said that a raise by 25 percentage points would not cause much damage.

This raise works as a brake that disrupts government policies and further worsens the country’s foreign exchange dilemma, plus seriously impacting on Brazil’s trade balance and balance of payments. More, it rekindles pressure by business sectors in favor of neoliberal driven “structural reforms” –that is, a reduction in social investments and in the cost of the workforce–, as a way to offset the high rate.

Bickering over Brazil’s sustained growth is combined with another question: Is this growth combined with a reduction in inequalities?

On this issue, there is broad consensus: During the Lula administration, employment, income and consumption for wide sectors of the Brazilian population have increased significantly. Veja magazine, a tireless opponent of the Lula government, celebrated this growth by dedicating a cover story to the “new ruling class of Brazil, class C”.

The theme of the “middle-class country” is also present in government circles, as in, for instance, the speech of Mangabeira Unger, Secretary for Long-Term Affairs of the Presidency of the Republic.

However, the consensus above acquires distinct hues as other issues are considered. For example, the dengue epidemic that plagues Rio de Janeiro – revealing of the fact that the same country that is increasing consumption levels still exhibits highly serious flaws when it comes to supplying public services– renders it plain to see that the structural combat against social inequality is just beginning.

There are huge discussions, in Brazil, in the government and in leftist parties about growth and equality. Yet the fact is that the federal government and President Lula are well assessed by the population, which finds the results obtained so far to be positive.

Nonetheless, the fact is that this positive assessment does not benefit, automatically or naturally, either the Workers’ Party or the other leftist, democratic and popular forces that form the federal administration.

In this regard, it is clearer by the day that the PT and the other organizations in the democratic-popular camp are before a disjunction: Either they present themselves divided in the next presidential elections, thus strengthening our adversaries, or they prepare a strong candidacy of the democratic-popular camp to contest and win the 2010 elections.

The so-called democratic-popular camp has as its partisan core the Workers’ Party, the Communist Party of Brazil (PcdoB), the Brazilian Socialist Party (PSB) and the Labor-Democratic Party (PDT), and as its social core the Single Central of Workers (CUT), the students’ national body (UNE), the Landless Workers Movement (MST) and the Center for Popular Movements (CMP). Electorally, this camp debuted in the 1989 presidential elections.

In the elections that ensued (1990, 1992, 1994, 1996, 1998 and 2000), there was a progressive enlargement of the coalition alliance. Yet, among the main leftist forces, there was no doubt as to who the strategic allies were.

Since the period that preceded the 2002 victory and the inauguration of the Lula government, tensions arose in the midst of the democratic-popular camp, both within and between parties, and between social movements, political parties and the government.

Many sectors started to advocate the thesis that the “governability” of the Lula administration (and analogously the sustainability of the left’s strategic project) would depend on significantly broadening the ruling party’s coalition alliance.

In the domain of partisan alliances, there were those who advocated getting closer to the PSDB, the PMDB and the small center-right parties.

The polemic over broadening the ruling party’s allied coalition was interrupted during the 2005 crisis, when, assaulted by the economic elite, the media and the political right, the PT and the government sought the support of the forces constituting the democratic-popular camp.

The 2005 crisis had very negative repercussions for the PT, including for the Party’s prospective candidates to succeed Lula in the presidency. Both PT adversaries and allies started to believe that the Workers Party would not have the stamina, or a candidacy, to run for the Presidency of the Republic in 2010.

This assessment set the backdrop for the election of the speaker of the federal Chamber of Deputies, especially in the runoff election between Aldo Rebelo (PCdoB) and Arlindo Chinaglia (PT), won by the second.

After this contest, a “leftist bloc” was formed, centered on the PSB, the PDT and the PcdoB. Since then, a schism of the leftist parties has deepened, including in the labour movement, with the creation of the Workers Central of Brazil (CTB), supported by the PCdoB.

This process whereby the left is dividing itself is already present in the 2008 mayoral elections, generally favoring the opposition represented by the PSDB, the DEM (formerly the PFL) and the PMDB as well.

The novelty of the past weeks is that the Brazilian political right, which was betting on the non-existence of a strong Workers’ Party candidate for 2010, gave an involuntary contribution to project the name of Lula’s chief-of-staff, Minister Dilma Rousseff.

Dilma, pointed by the press as one of Lula’s alternatives, was summoned by the Senate to testify in a hearing designed to wear out the government and the minister herself. To start, an opposition senator questioned the minister’s commitment to the truth by arguing that Dilma herself had told the press that, when she was arrested and tortured [during the military dictatorship], she had lied to her captors.

The opposition senator, himself one of the supporters of the Brazilian military dictatorship (1964-1985), had to listen in silence to Minister Dilma Rousseff explain the difference between democracy and dictatorship, as well as to how much pride she took in having lied to torturers, saving thus the life and the freedom of brothers and sisters.

The opposition’s maneuver ended right then and there, and served to demonstrate that the Workers’ Party has many women and men with the valor and political clarity needed to continue the work of the incumbent government.