A victory for the PT (Workers’ Party) and coalition backing Lula’s government in the 2004 local elections seems a real possibility, paving the political path to overcome neo-liberalism.
by Juarez Guimarães

Any political forecast is subject to certain conditions, based on available evidence and obvious future occurrences, often unrelated to politicians’ wishful thinking. Within those general parameters, some broad predictions can be made.

The results of local elections in 2004 will now be defined by political disputes in each town. However, it is likely to be strongly influenced by people’s perception of Lula’s government and will largely reflect the Federal Government’s performance.

The opposite is also true—a negative or a weak PT performance in these elections will signal the breakdown of an ambitious policy initiated in the 2000 elections, increase the power of the opposition party and reposition it for the presidential election in 2006.

The purpose of this article is to show a PT electoral victory is possible and Lula and his government’s political decisions can pave the political path to overcome neo-liberalism.

There are three areas which fall beyond Lula’s government, the PT or its supporters—the first is international political and economic relations, the second is what we could call the power of the opposition and the third is the politically unforeseeable and indefinable.

Most international economists agree that during 2004, a financial crisis leading to a dramatic adjustment in the exchange rate is unlikely to happen in the most-developed developing countries, particularly Brazil. This country, despite being structurally vulnerable to such a crisis has marginally improved economic indices—a record trade surplus in 2003 and higher reserves. In a US election year, the Federal Reserve is unlikely to raise interest rates far enough to prompt a flight of high risk capital in Brazil.

In the second place, the opposition is deeply weakened. PSDB leaders’ disunity has crippled its manifesto, the PFL is divided and opposition parliamentary representatives weak. What is left—and not to be underestimated—is the active sympathy of the media, especially the main national newspapers, which despite their differences have often acted in concert at crucial moments.

Another factor is chance, the random and unforeseeable. But the corrosive action of these influences can be counteracted in part, as taught by Machiavelli, by the skill and wisdom of the political leadership.

If this is true, the 2004 elections could be, fundamentally, a time of creative action for Lula’s government, of initiative and public expansion for the PT and social movements that form its traditional support. The year 2004 will be what we are able to build, in particular, our government and public’s ability to overcome the legacy of historic constraints on the PT’s transformation project.

The Drama of Hope

This positive broad vision of political possibilities should be qualified by understanding the present and real state of relations within Lula’s government and with the Brazilian people. Analyzing national historical trends and converging aspects of three leading opinion polls, the CNI-Ibope, CHT-Sensus and Datafolha, we can produce a pretty accurate prediction. These indicate the dramatic development of Brazilian people’s hope.

Despite high marks for Lula’s personal performance as President (65.3 percent by CNT-Sensus, February; 60 percent by Datafolha from March) and reasonable marks for his government (39.9 percent by CNT- Sensus and 38 percent by Datafolha), these indices have been in sharp decline since August 2003 due to economic recession and insufficient changes in the social arena. The government’s performance in fighting corruption was also regarded as poor.

Results of most recent surveys indicate a huge differential between Lula’s performance and his government’s—25.4 percent according to CNT-Sensus and 22 percent by Datafolha. To a great extent this difference is explained by Lula’s continuous promises to create new jobs, increase income, carry out agrarian reform and change social policies.

It is reasonable to assume the persistent gap between promise and reality will result in a gradual merger of the President’s personal approval ratings and public perception of his government. This tendency was expressed by February CNT-Sensus which showed a decrease in people’s approval of the President’s performance, bringing it much closer to the government’s approval index. Of even more concern, are the indications regarding the President`s credibility—48 percent think promises made during the campaign are being met, whereas 42 percent say they are not..

If this coupled tendency—decreasing popularity and growing disillusion—is not reverted in the next months, the PT and its supporters will face the next elections in a chronically negative, discredited and suspicious or even hostile atmosphere. It is not just an election issue, although this dimension is fundamental.

It is a potential conflict between the PT and traditional supporters—the workers and underprivileged. What is more, it is a threat to the PT’s political integrity and government coalition it leads. How to explain the continuation of policies which so deeply hurt the life style, already so dramatically difficult, of most Brazilian people while bankers and speculators, who gained so much in recent years, keep stacking up record profits?

Attribute it to a choice without options, the product of inherited restraints? But then, the party which legitimately represents, by conquest and right, the hope of change, would be confirming that the adventure is over, that fundamental continuity must prevail?

Toward the Transition

During the last month of 2003, a series of important decisions showed the Lula government was gaining strength and conditions emerging for a new standard in relations between economy and State, preparing the ground for a sustained cycle of economic growth with increasing distribution of income.

In the power sector, where the damage caused by privatization and deregulation continues, new regulatory powers have been approved that permit the ministry of Mines and Energy to assume key functions. Other regulatory agencies are moving in the same direction, redefining more responsible positions.

The replacement of the president of Anatel and president of the National Health Agency were, certainly, movements in a similar direction. Rumors persist of the replacement of Carlos Lessa of the BNDES, whose administration operated a strategic turnaround in the functions of the biggest Brazilian development bank.

On March 2, for example, new operational policies were announced that favor loans to the public sector. Strategic financial plans have been defined for financing housing and sanitation infrastructure, areas practically abandoned by the Fernando Henrique government and particularly punished during 2003. These moves clearly signal a departure from the policies of Malan (Minister of Finance in the Fernando Henrique government) and herald a new industrial policy actively directed at key technology sectors.

Sovereign leadership in foreign policy was confirmed with the hiring of a Director at the Ministry of Finance, who publicly attacked the negotiations for the FTAA. The management of pension funds, a strategic sector for public sector financing, continue to provide consistent indications of a change from the 1990s financing rationale to one more engaged with infrastructure investments, defining new private-public partnership patterns

Lula announced massive hiring in the public sector, by recruiting civil servants through a process involving an examination and called this hiring “the dismantling of dismantling of the Brazilian State”. By that he meant to criticize the outsourcing of services to private enterprises during the 1990s.

More important still, he prevailed upon the government to bet on the biggest plan of agrarian reform in the country’s history, surpassing the strict limitations of 2003 and strategically realigning the Ministry of Agricultural Development with the countryside’s social movements. The public pressure demanding a reduction in the fiscal adjustments was incorporated into the parliamentary work of the PT, via the mediation of Jorge Bittar with the provision of 12 billion reals (US$ 4 billion) of investment by the Federal government in 2004.

Finally, the inter-ministerial group which, under the direction of the MEC (Ministry of Education), elaborated a strategic plan for the University of Brazil, in contrast with the World Bank’s view, aiming to rebuild the public universities and double the availability of degrees by 2007. At the start of 2003, against the expressed opinion of the Finance Minister, the minister José Dirceu and Lula himself announced the project to give autonomy to the Central Bank was not a priority in 2004.

The ministerial reform reinforced the political strategy in the dynamics of transition. By publicly confirming José Dirceu as political and administrative coordinator of all ministries renewed power and legitimacy at the political core of Lula’s government.

The appointment of Patrus Ananias for the Ministry for Social Development to Fight Hunger—now encompassing the Zero Hunger and Family Allowance programs, and the Ministry of Social Assistance is part of a strategy to guarantee the implementation of social changes prioritized by Lula’s government.

Patrus may become part of the national leadership as he has acknowledged ethical and political stature. Furthermore, his ability to mobilize masses is a vital asset—he is part of and shares views of a typical local Brazilian community, where the great majority of population profess the Christian’ faith.

The choice of two ministers of PMDB—Eunício de Oliveira and Amir Lando, names unconnected to “politicians who have been linked to the Party´s traditional practice of promoting its own self-interest”—consolidates the attraction of this party for a strategic role at the center of Lula’s government.

The ministerial pact is the counterpart of the formation of a solid parliamentary majority in the Congress “Senate and House of Representatives” neutralizing PSDB and PFL attempts to built a strong center-right opposition bloc.

It was expected that for the first quarter of 2004, the Central Bank would gradually lower interest rates and the package of new direct or government-guided investment would feed the modest growth initiated in 2003’s third quarter.

Blockade to the Transition

However, this was not what happened. The Central Bank, contrary even to immediate market expectations, decided to stop lowering basic interest rates—this was based on a clearly artificial diagnosis of the danger of a return to inflation, doubted by even more orthodox economists.

In fact, increasing the real interest rate used in the economy generated expectations of maintaining the interest rate for the following months and has increased uncertainties about growth.

Since then, there has been a small speculative movement of financial capital as a result of gossip about the dismissal or resignation of Henrique Meirelles (CEO) of Central Bank and other high-ranked civil servants from the Ministry of Finance connected to Malan.

In this climate, the Minister of Finance imposed the requirement of creating a “technical reserve”, a large chunk taken from the 12 billion reals (US$ 4 billion) allocated for the current year’s expenditure by the federal government for direct investments.

This climate of uncertainty was further deepened by the exposure, video-taped and broadcast on TV, of a high-ranking civil servant from the Casa Civil, Waldomiro Diniz, who Minister José Dirceu trusted most. Waldomiro was caught on camera, while he was negotiating the laundering of money with an animal-game entrepreneur (jogo do bicho-an illegal lottery, which compared to state-run lottery offers smaller prizes) in 2002.

The shocking scenes were obviously blown out of all proportion of its political meaning. The argument for Waldomiro’s case is that the Left and other critics of Lula’s economic strategy used it to try and undermine Palocci and Dirceu, the leaders at the core of the PT government most associated with the transition strategy rather than maintaining orthodox fiscal and monetary policies (i.e. the neo-liberal paradigm).

The results of investigations carried out so far make it clear a corrupt civil servant who enjoys unlimited freedom to assist the government with its strategic tasks, is nothing new in Brazilian politics. Investigations proved irregular activity between the illegal animal-game entrepreneur and Gtech, services provider for Caixa Econômica Federal state-run bank had existed since 1997 (at the start of the Fernando Henrique’s second term), with the involvement of many civil servants and leaders of that institution.

The most bombastic and partial press coverage on this matter was in Folha de S. Paulo, a newspaper which has incessantly built up the idea Lula’s government is just carrying on neo-liberalism and its credibility is irreversibly damaged (“Lost illusions,” editorial of 22/2).

But even weekly newsmagazine Veja, in its March 3 issue, stated: “To say that the PT or the government commitment for administrative morality and ethics went down the drain” is not only an exaggeration but stupidity. However, the government has lost an excellent opportunity to show its practices are different and its ethical discourse, so insistently repeated, by the opposition, was not only for outsiders.”

A much more balanced editorial was printed by the conservatives—O Estado de S. Paulo, Veja, the newspaper O Globo and the magazine Época, who clearly support the continuation of economic directions inherited from Malan’s period. Whereas O Estado was demanding the dismissal of José Dirceu, the March 3 issue of Veja gave its long editorial the title “José Dirceu, the Minister who shrunk “.

Republican Ethic

The episode surrounding Waldomiro Diniz was not, until now, a government political crisis. Calls for an inquiry because of a big public outcry and media hype was not even commonly shared by the leaders of PFL and the PSDB. The provisional measure to outlaw bingo outflanked calls for an inquiry and won the support of the majority of the population ending suspicions that the PT have or had relations with illegal gambling. But it is fair to suppose public exposure of the episode, has badly damaged the PT’s image of integrity.

This is surely where Lula’s government has made history, progress and devised a solid program with which to build a strong public identity to fight systematic corruption.

It should be remembered that it was during federal deputy José Dirceu’s mandate that “Instituto Cidadania” promoted several international seminars with major leaders and organizations which led to a permanent program to identify and solve problems to restore ethics in politics.

From the beginning, the government has attacked systematic corruption on two main fronts. The Federal Auditing Institute (Controladoria Geral do país) under Waldir Pires, audited federal funds transferred to municipalities—showing irregularities in 75 percent of cases.

The Ministry of Justice and Federal Police are being equipped and taking action against money laundering networks linked to organized crime and corruption. But more action is needed and possible.

There are three areas where systematic actions could be implemented in the short term. In the first place, the neo-liberal period was characterized precisely by increased private lobbies in institutions and State-run sectors. It is therefore important to give transparency by defining what is public and private, renew the democratic sense of control of the Brazilian State and common good.

Budgetary transparency, accountability, inclusion of civil society representatives, consistency of regulatory norms and public control of bidding for state services—Lula’s government needs to give ample publicity of what has been done and what it will do in this area.

In second place, the negotiation among political parties is vital—as indicated recently by the PT president, the definition of operational procedures as well as penalties to control illegal expenditures. Finally it is essential to institutionalize—as discussed in 2002 by the OAB (Brazil’s Bar Association)—an entity comprising three main sectors—the public ministries, the Treasury and representatives of civil society to coordinate the work for corruption prevention.

Hour of Hope

Fernando Henrique Cardoso in a comprehensive interview to O Globo on 15 February stated his position against the PT manifesto—”to bet only on economic growth is to fall in a trap. Lula has been falling into a trap, which is to judge his government on its growth”, and elaborates further: “Economic growth nowadays depends more on the market than national public policies”.

It is not what the Brazilians think, as was shown by CNI-Ibope December 2003. Sixty six percent thought Lula’s main task was to look after economic growth and create jobs.

Brazilian people’s hope cannot be at mercy of financial markets. To govern confronting openly the financial markets is in Brazil’s present political and economical conditions an adventure with unpredictable results. To ignore the power and strength of these markets is unrealistic but to govern the main economic variables on a market rationale would be political suicide for a party like the PT.

Last December, Lula cried emotionally in a meeting with the street sweepers (garis) in São Paulo and promised a “good year” for 2004. A year with strong economic growth, supported by policies to create jobs, would align the government with the Brazilian working class’s highest hopes—it will bring efficiency in social policies for emergency, increase tax revenue, decrease the debt, and bring confidence for a new cycle of investment.

In the third month of 2004 it is clear that the interests of financial capital conspire against economic growth—they do not have the legitimacy of the Malan period and only have the power of blackmail—against this blackmail the political will of the Brazilian people, PT, coalition and social movements must be imposed—these have a vital task at the crossroads of hope. Those who have waited and trusted have had their moments of agony and deception. Hope now claims the right for joy in this moment.

*Juarez Guimarães is a political scientist, professor at Federal University of Minas Gerais, editor of Periscópio, monthly bulletin from the Perseu Abramo Foundation. – http://www.fpa.org.br/periscopio/