Petras lula bad


Published on

Published in: Technology, News & Politics
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Petras lula bad

  1. 1. This article was downloaded by: [University of Arizona] On: 01 December 2013, At: 14:32 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK The Journal of Peasant Studies Publication details, including instructions for authors and subscription information: Whither Lula's Brazil? Neoliberalism and ‘Third Way’ Ideology a James Petras Professor Emeritus in Sociology & Henry Veltmeyer Professor of Sociology and International Development a b Binghamton University , New York, USA b St Mary's University , Halifax, Nova Scotia, Canada Published online: 05 Aug 2006. To cite this article: James Petras Professor Emeritus in Sociology & Henry Veltmeyer Professor of Sociology and International Development (2003) Whither Lula's Brazil? Neoliberalism and ‘Third Way’ Ideology, The Journal of Peasant Studies, 31:1, 1-44, DOI: 10.1080/0306615031000169116 To link to this article: PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis.
  2. 2. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content. Downloaded by [University of Arizona] at 14:32 01 December 2013 This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. Terms & Conditions of access and use can be found at
  3. 3. Whither Lula’s Brazil? Neoliberalism and ‘Third Way’ Ideology Downloaded by [University of Arizona] at 14:32 01 December 2013 JA ME S PE T R A S a nd H E N RY VE LT ME YE R This article critically examines the strategy and policies of President Luiz Inacio ‘Lula’ da Silva’s regime in Brazil. A combination of economic liberalization, political ‘redemocratization’, and ‘Third Way’ ideology, his theoretical framework serves to justify a market-led and imperial-centred model of capital accumulation. Lula’s embrace of the free marketIMF structural adjustment policies has led to the evisceration of agrarian reform policies, a decline in employment and real wages, the slashing of pension benefits and negative per capita economic growth – the worst socio-economic performance of any civilian regime since the military dictatorship. Agrarian policy at the centre of this model consists for the most part of the jailing (or worse) of rural activists, and the promotion of the agribusiness sector as part of the export strategy. ‘We need US leadership for many things we need to do in this world’ – Brazilian Foreign Minister Celso Amorin, 16 March 2003. ‘We are going to war’ – US President George W. Bush, 17 March 2003. INT R ODUC T ION Those engaged in the study of progressive political transformation in Latin America, its possibilities and obstacles, are confronted by two striking and contrasting images of leftist politicians in power. The first is of the Chilean president, Salvador Allende, in Santiago on 11 September 1973, surrounded by armed bodyguards and looking defiantly skywards, as the James Petras is Professor Emeritus in Sociology, Binghamton University, New York, USA, and Henry Veltmeyer is Professor of Sociology and International Development, St Mary’s University, Halifax, Nova Scotia, Canada. The Journal of Peasant Studies, Vol.31, No.1, October 2003, pp.1–44 ISSN 0306-6150 DOI: 10.1080/0306615031000169116 © 2003 Taylor & Francis Ltd.
  4. 4. Downloaded by [University of Arizona] at 14:32 01 December 2013 2 T HE JOUR NAL OF PE ASANT ST UDIE S US-aided/instigated military coup unfolded.1 The second is of another embattled Latin American president some 30 years later, Luiz Inacio ‘Lula’ da Silva, sitting down with other besuited (and centre-right) politicians in very comfortable surroundings at a conference held in London during July 2003 to celebrate the ‘Third Way’.2 In an important sense, these two very different images symbolize and accurately encapsulate the dilemma of leftist politics in the new millennium: whether or not a left-in-power actually is ‘in power’, and – if not – what then is the point of a left being ‘in power’.3 The lesson – about the capture and retention of political power – is both inescapable and salutary. Throughout the latter part of the twentieth century, much of the debate on the left concerned the different routes to political power, and their respective efficacy. On the one hand, advocates of a nonparliamentary road to Latin American socialism argued for the necessity of armed struggle (either in the countryside or in the city) with the object of capturing state power.4 Advocates of a parliamentary road to Latin American socialism, by contrast, eschewed armed struggle, and emphasized instead the necessity of complying with the existing formal electoral/constitutional procedures of bourgeois democracy.5 In retrospect, it is clear that the more important political distinction is not that between a non-parliamentary and a parliamentary road to socialism, as is frequently claimed in debates on the left, but rather a willingness both to uphold socialist beliefs and – if necessary – defend democratic socialism, in whatever manner state power has been achieved. The election of Lula in 2002 raised great expectations among those on the centre-left.6 For most of the latter, his election heralded a new epoch of progressive changes which, while not revolutionary, defined the ‘end of neo-liberalism’.7 Noted progressive religious figures, like Leonardo Boff, had earlier announced that any future election of Lula would signal imminent ‘change’ that would challenge US hegemony and lead to greater popular participation.8 Frei Betto, a close associate of Lula, launched a vitriolic attack on critics who questioned some of Lula’s appointments, citing his popular roots as a former metalworker and union leader a quarter of a century earlier.9 Olivo Dutra and Tarso Genero, left-wing members of the Workers Party (Partido Trabalhista, or PT) appointed to minor ministerial positions in Lula’s cabinet, called for the ‘disciplining’ (= expulsion or silencing) of dissident PT Senator Heloisa who objected to the PT’s support for right-wing Senator Jose Sarney as President of the Senate. European, US and Latin American progressives and leftists, together with their movements, NGOs, parties and journals, all joined the celebration of the Lula Presidency, his ‘progressive agenda’, and his ‘leadership in the fight against neoliberalism and globalization’.10 While over 100,000 at the
  5. 5. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 3 World Social Forum in January 2003 at Porto Alegre cheered Lula as a hero of the Left and precursor of a new wave of leftist regimes (along with President Lucio Gutierrez of Ecuador and President Hugo Chavez of Venezuela), some of Lula’s intellectual supporters (for example, Emir Sader) attempted to dissuade Lula from going to Davos to plead his case for foreign investment by the world’s most rapacious speculators and richest investors. Ominously, other voices – much less progressive, and with a radically different political and economic agenda – were lining up to hail Lula as ‘their man’. In addition to the great majority of the left intellectuals, NGOs and politicians who aggressively and unquestioningly support Lula as a new progressive force, therefore, the Brazilian and foreign financial media, international financial institutions (IMF, World Bank, Wall Street, City of London) and prominent right-wing political leaders (the British Prime Minister Tony Blair and US President Bush) also praised Lula as a statesman and ‘pragmatic leader’.11 In other words, big business, bankers and right-wing political leaders see Lula as an ally in defence of their interests against the left and the mass popular movements. The central question thus becomes: now that Lula is president of Brazil, whose political and economic interests does he actually represent, and why? Accordingly, this article will attempt to answer this question, by analyzing and evaluating the expectations of the left and capitalist perceptions in light of political and economic realities. The object of the analysis which follows is to show how what is and what is not happening in the agrarian sector of Brazil, is consistent with (and, indeed, part of) a much broader socio-economic project, one whereby Lula is extending and consolidating the neoliberal agenda of his predecessor – Fernando Henrique Cardoso.12 The first section investigates the political transformation of Lula, and outlines why the celebration by him of the ‘Third Way’ is not anomalous, either theoretically or politically, but much rather accurately reflects his current approach. The second part of the article examines the changed nature of the party which supported Lula’s rise to power, in terms of the contrast between its historical dynamic/membership and grassroots control, and the current – very different – leadership control and party democracy. The third section looks at the policies inaugurated by Lula once in power, with particular reference to his agrarian reform programme. Also considered is the way he has managed to silence or co-opt grassroots opposition to these policies. The conclusion considers the prospects for a regenerated leftwing opposition to Lula’s project of economic liberalization.
  6. 6. 4 T HE JOUR NAL OF PE ASANT ST UDIE S Downloaded by [University of Arizona] at 14:32 01 December 2013 L UL A AND T HE ‘T HIR D WAY’ The degree to which policy initiatives adhering to – and, indeed, framed in – unambiguously neoliberal language has generated unthinking support on the part of those who these days pass for opponents of global capitalism is evident from, for example, the uncritical endorsement of Lula and the PT by Naomi Klein.13 At the time of the World Social Forum in Porto Alegre, therefore, she endorsed the participatory budget scheme put forward by the PT simply because it amounted to a process of decentralization that in her view was the ‘other’ of globalization. Her enthusiasm, and also her naivety, is evident from the following: much of the appeal of the [World Social Forum] is that its host city, Porto Alegre, has come to represent a challenge to [globalization]. The city is part of a growing political movement in Brazil that is systematically delegating power back to people at the municipal level rather than hoarding it at the national and international levels. The party that has been the architect of this decentralization in Brazil is the Workers Party (the PT)… Many PT cities have adopted the ‘participatory budget’, a system that allows direct citizen participation in the allocation of scarce resources. …. In Porto Alegre, this devolution of power has brought results that are the mirror opposite of global economic trends. (emphasis added) This, she continues in much the same vein, underlines the fact that under the PT ‘democratic participation increases every year’. Her conclusion is symptomatic: [the participatory budget] is part of a pattern of a rejection of what Portuguese political scientist Boaventura dos Santos calls ‘low-intensity democracy’ in favour of higher-impact democracies, from independent media activists creating new models of participatory media to landless farmers occupying and planting unused land all over Brazil… Maybe change isn’t really about what is said and done in the centres, it’s about the seams, the in-between spaces with their hidden strength. About this suggested ‘democratic participation’ involving self-help by those at the rural grassroots, two rather obvious shortcomings can be mentioned. First, ‘higher-impact democracies’ at the grassroots face serious difficulties where, as in Klein’s schema, no attempt is made to address the class instrumentality of the state. By fetishizing ‘redemocratization’ in this manner, therefore, Klein – like so many other populists – fails to problematize either class or state power, in effect leaving the state and the capitalist class intact, which is precisely what neoliberals advocate.14 What Klein (and others)
  7. 7. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 5 forget, therefore, is that neoliberals too are in favour of decentralization, not least because it disperses mass opposition to their policies and thus organizationally and politically disempowers poor peasants and workers.15 And second, operating within the capitalist system also has economic effects. Hence there is no attempt by Klein (and others) to challenge the concept ‘scarce resources’ – itself a central theoretical emplacement of marginalist economic analysis. In contrast, Marxists would draw attention to the fact that resources are only scarce in the first place because members of a capitalist class own them. Unless this latter fact is itself confronted, any solution proposed (no matter how well-intentioned) is bound to fail. Without expropriation of existing property, therefore, all that poor peasants and landless workers actually participate in is their own continuing poverty.16 By itself, grassroots ‘redemocratization’ is not – and cannot be – a solution to current impoverishment and underdevelopment in Brazil. The main problem lies with the seemingly progressive – but in reality ambiguous, not to say theoretically slippery – concept, ‘redemocratization’.17 The latter is central to many recent and current attempts by liberal (and neoliberal) theorists to reinvent/reassert the validity of a ‘kinder/caring’ capitalism in the aftermath both of the military regimes that plagued Latin America throughout the 1970s and 1980s, and of the ending of socialism in the USSR and Eastern Europe in 1989.18 One influential reincarnation – of which Lula himself is an adherent – takes the form of what is termed the ‘Third Way’, an approach claimed by its exponents to transcend both leftist and rightist politics.19 An advocate of ‘Third Way’ politics in Brazil [BresserPereira, 2001] not only categorizes this analytical framework – incorrectly – as a ‘new left’ and a form of ‘modern social democracy’ but also reveals (inadvertently, one suspects) the extent of its complicity with the neoliberal project. Accordingly, he endorses both its pro-market, pro-choice, proindividual approach, plus its acceptability to ‘progressive capitalists’ in Brazil, and also the opposition of the ‘Third Way’ to Marxist politics (= ‘the old left’), further taxation, the state, and bureaucratization.20 In short, a political discourse/programme that is indistinguishable from neoliberalism.21 Unger Marches along the Third Way Despite, or rather because of, its profoundly disempowering implications for the rural (and, indeed, urban) grassroots, in Brazil and elsewhere, the ‘Third Way’ is clothed in the language of plebeian advantage: specifically, the claim that its programme corresponds to a process of ‘redemocratization’.22 Hence the stated intention of ‘democratizing democracy’, a political objective that involves neither transforming existing property relations nor the redistribution of income/power, but rather the offer of palliatives to offset the continuing effects of capitalism.23
  8. 8. Downloaded by [University of Arizona] at 14:32 01 December 2013 6 T HE JOUR NAL OF PE ASANT ST UDIE S Another variant of the ‘Third Way’ is ‘communitarianism’, one of whose most influential exponents is Roberto Mangabeira Unger [1987a; 1996; 1998], a Brazilian academic based in the United States.24 His ‘marketfriendly’ alternative to socialism is encapsulated in the slogan ‘democratize the market, deepen democracy’, and – like the ‘Third Way’ approach – transformation is limited to institutional change within actually-existing capitalism. In essence, this amounts to no more than the political incorporation (= equality-as-inclusion) of peasants and workers in an otherwise unequal system, or the exercise of hegemony-from-above.25 Consequently, the economic and class structures, or those elements that reproduce the systemic inequalities/oppression/vulnerabilities to which he objects, remain intact.26 Like exponents of the ‘Third Way’, Unger privileges what might be termed the politics of voluntarism, in his case recycling earlier theory about the durability of demographically determined models of subsistence-oriented peasant economy.27 As is clear from Unger’s [1987b] analysis of ‘the plasticity of social relationships’ he claims informs the historical dynamic of peasant economy (= the ‘reversion cycle’), he maintains that in the past those at the rural grassroots were in effect able to change social relationships how and when they wanted.28 The corollary is obvious: if this has been done before, why not now? It comes as no surprise, therefore, to learn that in 2002 Unger declared his strong support for the presidential candidacy of Lula.29 Because both the ‘Third Way’ and ‘communitarianism’ are pro-market and anti-Marxist/antistate, each offers nothing more radical than a programme of ‘redemocratization’. In essence, this amounts to palliatives that, it is claimed, will offset the negative economic impact on those at the rural grassroots of neoliberalism. Given that in the latter context even this modest attempt at amelioration will be opposed by capitalists, theoreticians such as Unger maintain that such obstacles will dissolve in the face of the willingness/ability of ‘those below’ to adapt to change, thereby establishing political ‘community’.30 Simply put, for the ‘Third Way’ and ‘communitarianism’ the process of ‘redemocratization’ means a capacity of those at the rural grassroots – workers and peasants, in other words – to seek and be satisfied with political and ideological empowerment inside not just capitalism but its neoliberal form.31 This seemingly contradictory objective is to be effected without systemic transformation, let alone a ‘destabilizing’ transcendence involving revolution. ‘Redemocratization’ as Political Incorporation Why the conceptually empty term ‘redemocratization’ is so acceptable to conservatives is not difficult to discern. Although it implies a process of ‘from below’ empowerment, in reality it involves much rather the opposite:
  9. 9. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 7 a process of ‘from above’ empowerment, albeit projected in terms of and dressed up in the language of grassroots political interests and/or advantage. Political control passed to the urban and rural working classes and peasants is in reality negated by those such as Lula, populists who campaign and are elected to power on the basis of an ideology promising radical transformation. Not the least problematic outcome is that, ideologically, the disempowerment that ‘redemocratization’ ultimately turns out to be necessarily generates among erstwhile grassroots supporters a disillusion/frustration with all democratic politics. This view, that the ruler/ruled distinction is innate and permanent, has two interrelated consequences. First, it seemingly confirms the veracity of pessimistic claims made by conservative theoreticians such as Mosca [1939], Lippmann [1922; 1937; 1955] and Burnham [1941], that elites are ‘natural’, an outcome being that the existing socio-economic structure cannot be transformed. Perhaps the most influential variant of this argument is that advanced by Mosca. In contrast to Marx, for whom historically specific classes engaged in struggle and either occupied or departed from the political stage – Mosca insisted that a ruling class (= political class) perpetuated its dominance by a dual process of renewal: expulsion from combined with induction into its membership (= exosmosis/endomosis).32 On the one hand, therefore, expelling those elements that – for whatever reason (loss of material resources, ideologically expendable/redundant) – are no longer necessary to its reproduction. On the other, constantly replenishing itself through the recruitment of what might be termed ‘plebeian talent’, or the incorporation of potentially dangerous grassroots leaders.33 Although the actual composition of a ruling class changed, therefore, its rule and power continued. Lippmann, who in an important sense provided conservatives with the reason as to why elites are ‘natural’, neatly complemented this view. His objection to democracy was based on the argument that the masses were too ill-informed to govern (= ‘a sovereign but incompetent people’), a claim that seemingly justifies the exercise of power by a ruling class, particularly where the latter periodically incorporates grassroots (= plebeian) leaders.34 And second, the grassroots depoliticization that follows this process of disempowerment is itself fertile ground for the growth of the political right. The emergence of the latter takes the form of a strong leader who, because he claims to be ‘a-political’/’above politics’, is able to persuade a politically disillusioned grassroots (including workers and peasants) that he represents the ‘small man’, on whose behalf he undertakes to rein in the power of the existing elite. Since this cannot be either accomplished or sustained by democratic means, the anti-democratic utterances of the political right are
  10. 10. Downloaded by [University of Arizona] at 14:32 01 December 2013 8 T HE JOUR NAL OF PE ASANT ST UDIE S imbued with ideological acceptability, and – in the eyes of those at the grassroots alienated by the incapacity of (bourgeois) democracy to change anything – its strategy becomes therefore not just compelling but necessary. Significantly, the term used by Mosca – ‘the political class’ – is now once again much in vogue amongst journalists and academics, the inference being that historically and contemporaneously there is a category of people who rule ‘naturally’.35 The latter claim fuses with that of Burnham, who in the early 1940s maintained similarly that the capitalist system, large enterprises and the state would henceforth all be ‘managed’ by experts/technicians, thereby conceptually updating Mosca’s ‘political class’ as a ‘natural’ ruling class. These ‘managers’ would, like new members of the existing ruling class, be recruited from below, thereby harnessing plebeian talent to the survival of capitalism in the manner identified by Mosca.36 Masquerading behind the term ‘redemocratization’, therefore, is just such a process of neutralization, since the element of ‘from below’ political control implied in the election of Lula is in effect negated by his continuation of the existing neoliberal project. Although this is obviously not the first time that such a betrayal has occurred, it is for leftist opinion in Brazil and Latin America (and elsewhere) a particular bitter experience, not least because of the heightened expectations generated by Lula’s election to the presidency. T HE W OR KE R S ’ PART Y Most contemporary observers refer to the Workers’ Party as a party composed of and thus reflecting the interest of the Brazilian working class, both rural and urban. This perceived correspondence between party, grassroots social composition and political programme derives in turn both from the historical link between on the one hand the PT and social movements, and on the other its deep involvement in class and social struggles. This was certainly the case when the PT was founded, over two decades ago. The most significant fact about the PT, however, is its qualitative transformation over the past quarter of a century. Several essential changes have taken place in the party: these are its relation to the social movements and their struggles; the internal structure of the party and the composition of the delegates to its Party Congress; and its programme and political alliances. Lula and the Workers’ Party When it was founded, the PT was a party with a strong component of what are nowadays described as social movements: that is, an heterogeneous membership that included landless workers, urban favelados (slum dwellers), ecologists, feminists, cultural and artistic groups, progressive
  11. 11. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 9 religious and human rights activists, plus the major new trade unions (metalworkers, teachers, banking and public sector employees).37 The growth in its membership and influence stemmed from its direct involvement in the struggles conducted by social movements, and in the beginning the electoral campaigns it undertook largely complemented such extra-parliamentary struggles. Over time, and with increased electoral successes, however, those within the PT who favoured a parliamentary road gained control of the party, and slowly redefined its role as basically an electoral apparatus, giving lip service to the social struggle while concentrating its efforts inside the apparatus and institutions of the state, and forming de facto alliances with bourgeois organizations. A left-wing minority within what was increasingly an ‘electoral party’ continued to support the grassroots movements, albeit from within official institutions, providing them with legal defence, denouncing state repression, and providing help and encouragement at mass gatherings. What is clear, however, is that all tendencies of the electoral party – left, centre and right – were no longer engaged in day-to-day mass organizing, except prior to and in connection with election campaigns. The second important change was in the composition of the party, the party congresses, and the relationship between party and leader. By the mid1990s, therefore, the great majority of the party apparatus was made up of full-time functionaries, professionals, lawyers, public employees, university professors and other middle and lower middle class employees. The ‘voluntary activists’ from the rural and urban grassroots disappeared and/or were marginalized, as the PT turned from mass struggles to office-seeking and wheeling and dealing with business groups and a diverse array of centre-left to centre-right parties. The last Congress of the PT prior to Lula’s election was overwhelmingly (75%) middle class, mostly functionaries, with a sprinkling of trade union, MST and human rights leaders. Clearly the PT was no longer a ‘workers’ party’, either in its composition, in its delegate Congress, in its relation to grassroots social movements (election time apart), or in its style of leadership. Moreover, many of the elected officials of the PT at the municipal and state level were engaged in the same kind of cross-class alliances with business groups and bourgeois parties, a path that the PT itself would follow in the presidential campaign of 2002. In other words, the right turn of the PT at the national level was preceded by a similar pattern at the state and municipal level during the decade of the 1990s. Significantly, many of the key party leaders and subsequent advisers to Lula were office holders already implementing economic liberalization, even while the national party programme still spoke of socialism, anti-imperialism and repudiation of the foreign debt. As the 2002 elections approached, the national leadership of the PT, with Lula
  12. 12. 10 T HE JOUR NAL OF PE ASANT ST UDIE S Downloaded by [University of Arizona] at 14:32 01 December 2013 leading the way, eliminated all the programmatic references to socialism and anti-imperialism, in line with the practices of the neoliberal officeholders in the party and with the majority support of the now numerically dominant middle class party delegates. (Electoral) Politics and the Conquest of (Presidential) Power The third fundamental change in the PT concerns the evolution of its programme, a transformation that took place in four stages. During the 1980s, the PT stood for a socialist society based on assembly-style democracy, linked to the social movements.38 The party called for a repudiation of the foreign debt, the socialization of banking, foreign trade and national industrialization (with some sectors calling for the expropriation of large industries and others for worker co-management). Most crucially, its programme included sweeping land redistribution, backed up with state financial, technical and marketing support. These radical positions were debated openly and freely by all the tendencies (from Marxists to social democrats), dissent and/or agreement frequently being published in their own newspapers. Beginning in the late 1980s, however, the PT moved to the right, and by the late 1990s the axis of power had shifted toward a ‘social-democratic position’ (support for a welfare state) while the Marxist-left continued as a strong minority tendency. The social democrats controlled the increasingly middle class party apparatus, while the Marxists organized their opposition from within the same apparatus: few – if any – of the latter turned to mass organization so as to counter a growing weakness in the party machinery.39 Although at a formal level the programme of the PT still retained its earlier radical demands, in practice most of the newly elected governors and mayors did not challenge existing property relations. The radical wing of the elected officials in Porto Alegre introduced the notion of a ‘participatory budget’, involving neighbourhood committees, but failed to municipalize any essential services, including transport. Crucially, no attempt was made by them to stimulate land occupations or encourage/support the demands made by landless workers for an agrarian reform programme. The fact that the participatory budget was based on the funds allocated by state and municipal regimes, which established the overall budget priorities, meant that politically even the radical elements within the ranks of the PT soon learned to co-exist and cooperate with the established banking, industrial and real estate elites. Debate between the minority Marxist and dominant social democratic wings of the PT was confined to programmatic language, the differences of practice between them being in fact quite narrow.40 The third phase of the PT, roughly between the end of the 1990s and the
  13. 13. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 11 run-up to the elections, saw a further shift to the right in programmatic terms.41 In the course of this period, therefore, even the rhetorical references to Marxism, socialism and foreign debt repudiation disappeared. It was a conjuncture at which the party leadership was in full transition to social liberalism – combining anti-poverty populist rhetoric with the pursuit of alliances with neoliberal business, banking and agro-export elites. During the election campaign, Lula repudiated the referendum on free trade policies (ALCA) organized by the MST, sectors of the progressive church and other leftist groups.42 Instead, the PT called for ‘negotiations’ to improve ACLA. The PT embraced a pact (June 2002) with the IMF and acceded to its dictates on fiscal austerity, a budget surplus to pay bondholders, reductions in public spending and respect for all privatized enterprises. The social dimension of this economic liberalization programme was the declaration in favour of a gradual agrarian reform (of unspecified dimensions), a ‘zero poverty’ agenda, providing family food subsidies, and land titles for urban squatters.43 The final phase in the evolution of the PT’s programme begins in 2003, when it becomes in effect a presidential party, and its government embraces an orthodox neoliberal project.44 Despite promises of increased social spending, the Lula regime has slashed budgets, imposed fiscal austerity, raised interest rates to attract speculative capital and is negotiating with the United States to lower Brazilian trade barriers. In other words, for the Lula regime its differences with the United States centre on whether or not Washington adheres to its free-market economic philosophy. Most of the leftists around the world who see the victory of the PT and Lula as the advent of basic – or at least important – social changes benefiting the urban and rural poor by redistributing wealth and land, base their views on longoutdated images of political reality. Over the past few years the militants who built the party through grassroots movements have been replaced by ‘neo-Lulistas’, upwardly mobile functionaries, professionals with no history of class politics, who have joined the party to secure the perks of office and to facilitate business liaisons.45 A small inner circle of campaign advisers, long known for their neoliberal credentials, has played the major role in shaping Lula’s presidential campaign. Of these the most influential were Antonio Palocci, Jose Dirceu, and Marcos Lisboa.46 What remains of the older reform social democrats have been shunted to marginal ministries; if they dare to question the neo-Lulista hegemony, they are subject to punitive measures for ‘violating party discipline’.47 The PT’s programme was a clear continuation of the outgoing President Cardoso’s disastrous neoliberal policies and in some cases even an extension and/or intensification of his economic liberalization agenda.48 In order to demonstrate their liberal orthodoxy to the bankers and
  14. 14. Downloaded by [University of Arizona] at 14:32 01 December 2013 12 T HE JOUR NAL OF PE ASANT ST UDIE S industrialists, Lula’s team signed a pact with the IMF only a few weeks after his electoral victory. In exchange for securing a US$30 billion loan over a four-year period, Lula agreed to a strict adherence to all the typical retrograde conditions set forth by the IMF.49 Once in office Lula went beyond even these harsh measures.50 The IMF agreement included the typical recessionary measures maintaining inflationary control by withholding large injections of fresh capital to stimulate growth, acquiescence in the privatization programme unleashed by outgoing President Cardoso and a budget surplus target (beyond what is paid in interest payments) of 3.75 per cent of gross domestic product, thus guaranteeing in advance that little or no funds would be available for any of the promises Lula made about ‘zero poverty’, let alone financing comprehensive agrarian reform. Lula’s inner team of Palocci, Dirceu and their economic advisers also moved quickly to demonstrate their allegiance to US imperialism.51 To this end, Lula also publicly criticized Presidents Chavez of Venezuela and Fidel Castro of Cuba prior to his inaugural address. His inauguration speech was a masterpiece of duplicity – a double discourse to set his working class supporters dancing in the street whilst assuring foreign bankers that his regime was their regime. Accordingly, the speech referred to ‘changes’, ‘new roads’, and the ‘exhaustion of a [neoliberal] model’ which Lula then qualified by speaking of a ‘gradual and continuous process’ based on ‘patience and perseverance.’ He then spoke of ‘zero hunger’ as the priority of his government. Most significantly, although agrarian reform and developing the internal market were both mentioned, Lula then proceeded to criticize protectionism and subsidies and endorse agro-export elites and free trade. In other words, in terms of agrarian policy he voiced support for the interests and objectives of poor peasants and rural workers, while simultaneously approving measures and/or interests opposed to them. This contradictory agrarian policy was, of course, entirely consistent with his overall approach. After having appointed the most rigid neoliberals to every key economic post, he could not possibly claim in all seriousness to be taking a ‘new road.’ Equally, after signing on to the IMF austerity budget there was no way he could finance either new employment measures or a policy of ‘zero hunger.’52 Similarly, by prioritizing anti-inflationary measures designed by and acceptable to the IMF, there was no way Lula could lower interest rates to promote the internal market. In keeping with the ‘Third Way’ approach, this double discourse belied a single practice: to continue and deepen the model that he denounced as leading to stagnation and hunger. Once in office Lula very early on demonstrated the vacuity of his promises regarding social welfare and agrarian reform. Contrary to the claims made by most of the neo-Lulistas, therefore, the
  15. 15. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 13 PT is currently a party that aspires to represent an alliance between domestic big industrialists and agribusiness interests and overseas bankers. It nevertheless hopes to retain the loyalty of labour via ‘social pacts’ based on business/trade union agreements which will allow business to reorganize the workplace, fire workers to lower costs and to increase part-time and shortterm workers, in exchange for which trade union bosses will receive symbolic and monetary remuneration.53 The appointment of left-wing PT members to the Agrarian Reform and Labour Ministries is designed to pacify the unions and the MST with symbolic, not substantive, representation. The job of the left PT ministers is both to preach ‘patience’ and to make empty but radical speeches at industrial workers’ and landless workers’ meetings. All the left-wing ministers are faced with limited budgets and a pro-business economic strategy that will undermine any substantial reform programmes. They have to plead with the dominant neoliberal economic ministers for any residual financial outlays, an undertaking with few prospects of success. Some leftist ministers may resign, most will adapt to the liberal orthodoxy and argue for what they will call ‘new realism’ or ‘possibilism’. In short, the PT as a dynamic movement based on the support of peasants and workers, whose political interests it represents, is dead.54 L UL A I N P O W E R : PUSHING NE OL IB E R AL ISM TO T HE L IM IT S What is important in analyzing a political leader is not where he comes from, but where he is going; not his reference group in the past, but his present and future reference groups. Political observers have been wrong in their analysis of Lula because they focus on his distant past, his former trade union comrades, not his present neoliberal banker, businessmen and imperialist allies. When Lula proposed a social pact between labour, business and the government, purportedly to work for the betterment of Brazil as a whole, he set up a Social Economic Development Council to formulate policy recommendations. The composition and agenda of the Council revealed Lula’s pro-business, anti-working class bias. Of the 82 members of the Council, 41 are businessmen and 13 are trade unionists, a better than three to one proportion favouring the bosses. The purpose is to discuss tax reform – reduce business taxes, in other words – and social security reform, decrease payments to workers, pensioners and other state beneficiaries. When Lula was confronted with the preponderance of the business elite among his inner circle, he roundly defended his proindustrial/agribusiness bias, embellishing his choices with an apolitical, meritocratic varnish and accusing his critics of nepotism.55 Lula conveniently forgets that his businessmen’s ‘disinterested talent for thinking
  16. 16. Downloaded by [University of Arizona] at 14:32 01 December 2013 14 T HE JOUR NAL OF PE ASANT ST UDIE S for the country’ has resulted in the greatest social inequalities in the world. Like his ‘Third Way’ counterparts elsewhere in the world, Lula deliberately overlooks the class interests of the business elite precisely because they are his strategic allies in the pursuit of a neoliberal project. Lula’s neoliberal appointees to economically strategic positions established the parameters for the formulation of macro- and microeconomic and social policy. To understand what has transpired since Lula took office it is essential both to understand the underlying philosophy which guides his regime – economic liberalization – and to set aside his populist rhetoric in the public arena, the object of which is to pacify the rural and urban poor, the rank-and-file membership of the social movements, and dissident members of the PT. Taken together, the elements structuring the neoliberal philosophical assumptions guiding Lula’s economic policy provide the basis both for analysis and criticism, and also a background to his agrarian reform programme (see below). One thing that can be said about Lula’s economic team is that its members have lost no time in fulfilling their pre-inauguration promises – about the budget, the market, prices, pensions, taxes, wages and employment – made to the international financial institutions, international bankers and the local industrial elites. Few ex-leftist governments have moved as rapidly and decisively to embrace and implement a right-wing agenda as has the Lula regime. The operating philosophy of Lula and his PT regime has four key postulates. First, that Brazil is in a crisis which can only be solved by implementing austerity policies promoted by the international financial institutions in order to secure new flows of loans and foreign investment, identified by Lula as the principal vehicles for development.56 Second, that Brazil will grow economically only by providing incentives to domestic big business, agribusiness enterprises and foreign multinationals.57 These incentives include lower taxes, reducing labour welfare provisions and strengthening business positions in labour/management negotiations. Third, that in Brazil the free market, with minimum state intervention, regulation and control is essential for solving the problems of domestic economic growth, unemployment and inequality. The priority of Lula’s economic team is thus to promote Brazilian exports to overseas markets – over and against domestic markets – and to pressure the United States and Europe to liberalize their markets.58 And fourth, economic growth in Brazil 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 repayments, and to control inflation. Once stability (the ‘bitter medicine’) is achieved, so the argument goes, the Brazilian economy will ‘take off’ into market-driven export growth,
  17. 17. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 15 financing those domestic poverty programmes designed to alleviate hunger.59 In order to meet the conditions laid down by the IMF, and in keeping with the interests of newly acquired allies among the economic elites, the Lula regime slashed the budget by US$3.9 billion.60 Included in the budget cuts was a reduction in the promised minimum wage from US$69 to US$67 per month, to take effect in May 2003, five months after taking office. Given the sharp rise in inflation, this will reduce the minimum below the miserable level of the previous Cardoso regime. Over US$1.4 billion of the US$3.9 billion cut will come out of the social budget. A closer analysis of the budget cuts reveals that reductions will affect food programmes, education, social security, labour, agricultural development, and social promotion. Altogether, social cuts amount to 35.4 per cent of the budget reduction.61 Even Lula’s much publicized pet project Fome Zero (‘zero hunger’) was slashed by US$10 million, leaving a paltry US$492 million to meet the needs of 40 million malnourished Brazilians. The budget cuts mean the funds budgeted for the hungry amount to US$10 annually, or US$0.85 a month – a princely sum of 2.5 cents per day. The major reason for the social and other budget cuts was to increase the budget surplus to meet IMF and debt payments, and to this end Lula increased the surplus to 4.25 per cent in February 2003. In other words, the budget allocation to meet debt obligations has expanded from US$17 billion to US$19.4 billion, an increase of nearly 14 per cent. This corresponds to a direct budgetary transfer, taken from the social funds, of an additional US$2.4 billion from the very poorest, the working and middle class to the very rich.62 Lula and his Finance Minister Palocci, a former Trotskyist, and Chief of Staff José Durceu, a former student leader who trained as a guerrilla fighter, reject any protectionist role for the Brazilian state, opting instead for supply-side economic policies and an extension of Cardoso’s privatization policy. Defending international regulations (World Trade Organization policies) as a means to attract foreign investment, rejecting protectionism for local industries, and privileging foreign capital competing for public tenders (state contracts), Palocci argues: ‘Brazil doesn’t want to close itself. We want to sail the open seas of the global market’.63 He has rejected any state intervention as ‘artificial mechanisms’ of public financing to stimulate consumer demand among millions of impoverished Brazilians, adding that ‘generating the right conditions, market forces will increase income and corporate productivity’.64 Such an assertion ignores the fact that it was precisely the ‘market forces’ in Brazil which created the mass poverty and the worst inequalities in the world over the last 100 years of capitalist expansion. In keeping with this neoliberal approach, the Lula regime approved new price rises by privately owned utilities – thus increasing the
  18. 18. Downloaded by [University of Arizona] at 14:32 01 December 2013 16 T HE JOUR NAL OF PE ASANT ST UDIE S burden on the poor in general, and the rural poor in particular.65 Given the price/wage squeeze on those who sell their labour-power for a living, and the potential for discontent, Lula is ensuring the loyalty of the police – he granted them a 10 per cent salary increase. Since he has identified pensions as the source of fiscal deficits, ignoring thereby mass tax evasion by the rich, the long-term tax concessions and incentives to the multinational corporations, Lula proposes a massive reduction in pensions, especially those of public employees. Citing a handful of generous pensions paid to some top officials, the intention is to reduce public employee pensions to the low levels of employees in the private sector. In line with the ‘Third Way’ discourse, which labels all neoliberal policy as ‘reform’, Lula presents his pension reduction as a battle for equality. This overlooks the fact that lowering public pensions to the level of private ones is equalizing misery, whereas progressive egalitarian measures would seek to do the opposite: raise the lower pensions to the level of the higher. The savings generated by these cuts in public sector pensions will not only fund tax cuts for the industrial and agribusiness elites in Brazil, but are also likely to further aggravate class inequalities, particularly in the countryside. Accordingly, the Lula regime is to reduce taxation paid by employers, particularly industrialists; by contrast, he has increased the taxes paid by salaried employees and wage workers by some 27 per cent since coming to power. Lula justifies his regressive tax policies where employers and industrialists are concerned by insisting on the necessity of maintaining capitalist ‘competitiveness’, while defending increased taxation on employees and workers because of the fiscal deficit. Unemployment is increasing, consumer purchasing power declines, increasing interest rates preclude new investments, and high budget surpluses allocated for debt repayments undermine public investments.66 Whereas early in his regime Lula and his economic team predicted upward of 3 per cent growth, by the end of February 2003 most economists were talking about zero per capita growth.67 The aim of Lula’s labour reform strategy is to weaken the trade unions by undermining constitutional guarantees of labour rights, thereby lowering labour costs to increase profits for employers, with the object of making exporters more competitive. One piece of legislation proposes both to eliminate payments made by private sector capitalists to trade union funds and to abolish obligatory payments of union dues. Another proposes to allow capitalist enterprises to impose labour contracts that override legally established workers’ benefits.68 Any opposition to this from the main trade union organization – the Central Unica dos Trabalhadores (or CUT) – has been circumvented by the simple expedient of co-opting the bureaucratic bosses of the CUT by offering them positions and stipends as advisers to
  19. 19. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 17 Lula’s regime.69 Decapitating the leadership of the trade union movement in this fashion has been effective, since co-opted union bosses either endorse or do not criticize his anti-labour policy. Thus, for example, CUT president Joao Felicio, one of the co-opted bureaucrats, has stated: ‘We have a certain sympathy for the reforms, but they have to be negotiated and imposed gradually.’ In a similar vein, the trade union national secretary of the PT, Hergurberto Guiba Navarro bluntly stated the purpose of labour reform: ‘We are going to undertake a grand reform and many unions will disappear’.70 Given Lula’s neoliberal policies where labour is concerned, plus his hitherto successful co-optation of the CUT leadership, it is not really surprising that the main working class opposition now comes from the moderate right-wing trade union confederation Forza Sindical (FS). In March 2003, the metal workers affiliated with FS went on strike over declining real wages. FS is now leading the fight to reduce the working week from 44 to 40 hours, to increase severance pay, to extend unemployment benefits (to increase coverage from 5 to 12 months), and for legal recognition of workers’ representation on the shop floor. Needless to say, the Lula government is adamantly opposed to all of FS demands, claiming they are inflationary and threatening repressive measures against what government spokespersons label as ‘political demands’, an old ploy used by all previous right-wing regimes, not only in Brazil but globally. The combined impact of economic liberalization policies, co-opting the CUT, and a deliberate manipulation by Lula of his working class origins in order to promote a big business agenda was – and is – much appreciated by the shrewd financiers on both sides of the Atlantic. Little wonder, therefore, that he received such thunderous applause from the super rich in Davos. As Caio Koch Weser, German’s State Secretary of Finance, said of Lula: ‘The key is that the reform [= neoliberal] momentum gets the benefit of the enormous credibility that the president brings’.71 Lula’s appeal to the Davos billionaires for ‘a new world order’ and contributions to an anti-poverty fund, however, drew scepticism and most probably discreet and cynical smiles. ‘Why’, asked a commentator in the financial press, ‘should the billionaires support a new order when they are doing so well with the existing order?’72 It is a sentiment with which it is impossible to disagree. Agrarian Reform, Free Trade and US Imperialism Currently, some of the worst poverty, hunger and under- or unemployment worldwide is found in rural Brazil [CEPAL, 1998; ILO, 2000].73 The principal problem is the concentration of landownership in the hands of a small (mainly agribusiness) elite, the ‘other’ of which is the presence of millions landless peasants and rural labourers. Until the late 1990s Lula promised peasants and agricultural workers comprehensive land reform if
  20. 20. Downloaded by [University of Arizona] at 14:32 01 December 2013 18 T HE JOUR NAL OF PE ASANT ST UDIE S he were elected. On the question of the scope and extent of this agrarian reform, however, Lula was strangely silent. Once he was inaugurated, he announced that for 2003, the agrarian reform target was to settle some 5,500 families on 200,000 hectares of land. Lula’s target was a mere one-tenth the number of families settled under the previous neoliberal regime of President Cardoso, and only one-twentieth what the MST was expecting from the ‘people’s president’. At the rate of settlement Lula was proposing it would take a thousand years to provide the currently landless families with adequate holdings, while those who came after would remain landless. Once in office, Lula continued the old reactionary policy of violently evicting land squatters from unproductive land. His nominally left-wing Minister for Agrarian Reform announced new plans, to be unveiled in the second half of 2003. Significantly, agrarian reform is equated by Lula not just with what might be termed a social (or humanitarian) programme, but also with political ‘redemocratization’ and economic development.74 Hence the interrelated nature of what he calls ‘a new economic model’:75 Fighting hunger includes both structural measures – in support of small farmers… – and emergency relief to those suffering from malnutrition. The social and political conditions are now in place to launch a sustainable cycle of development. That will require the enlargement of the internal market, particularly for mass consumer goods, by integrating into it millions of excluded citizens. Agrarian reform is also fundamental if the Brazilian economy is to be rebuilt. And it will play a crucial role in making the country fully democratic. Ironically, this agrarian policy hearkens back in part to the development theory advocated by the United Nations Economic Commission for Latin America (ECLA) during the late 1950s and early 1960s. Like ECLA (nowadays ECLAC, reflecting the addition of ‘the Caribbean’), Lula sees in the expansion of the internal market the key to economic growth in Brazil, and – again like ECLAC – he allocates a central role in this process to the peasantry.76 There is, however, a crucial difference. ECLA advocated an agrarian reform programme in order to generate domestic industrial growth. Its idea was to take land away from unproductive and parasitic landlords and redistribute it among peasants and/or landless agricultural labourers who would cultivate it, and thus make productive use of this resource. The rural poor would thus secure the purchasing power necessary to generate demand for consumer goods, a demand that would be met in turn by domestic capitalists. This would prevent expenditure on the import of foreign consumer goods, making such savings available for infrastructural investment, thereby contributing to industrialization. The latter could then
  21. 21. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 19 be realized without borrowing from international banks, thus solving the interrelated problems of inflation, balance-of-payments deficits, and the consequent lack of national economic sovereignty. In a neoliberal model, however, many of these same policy initiatives have both a different meaning and – more importantly – a different outcome. That economic liberalization will be central to Brazilian agrarian policy is clear from the appointment by Lula of Robert Rodriguez, president of the Brazilian Agribusiness Association and strong advocate of genetically modified crops, as Minister of Agriculture.77 This appointment sits ill with the Keynesian demand management of ECLAC, which required state intervention both to expropriate large rural properties and to redistribute the holdings thus acquired among peasants and landless labourers. Lula has shown no inclination to do this, much rather the opposite: his government has assured national and international capitalists that existing property rights ‘will be respected’. ECLAC policy also required a strong state, willing to provide smallholders with credit and other inputs, as well as to undertake planning (low-interest loans, etc.) that would contribute to the development process. Such a role is the antithesis of Lula’s neoliberal laissez-faire state.78 Under the latter regime, it is likely that peasants and workers will increasingly be required to migrate to the shantytowns, there to provide cheap labour-power for multinational corporations fleeing higher labour-cost areas by relocating to Brazil. Several points are clear. Lula’s agrarian policies are a huge step backwards from the point of view of Brazilian politics. From the perspective of agricultural policy, his regime is fully committed to supporting economic growth generated by the better-off: large landlords in Brazil, and in particular agribusiness export elites.79 His policies will greatly enhance the already profound inequalities in the Brazilian countryside and lead inevitably to greater rural discontent. The most likely result will be bloody clashes between the landless peasants seeking land and the military police implementing Lula’s law and order legislation. No doubt Lula will ask for forgiveness and shed a few tears for the dead peasants as he proceeds to embrace his new allies among the big bourgeoisie, both national and foreign. An example of the latter are those connected with ALCA, a freetrade policy favourable to US imperialism. ALCA is a radical comprehensive trade agreement which, if implemented, would transfer all trade, investment and other economic policies to a US-dominated economic commission, probably located in the US, which would oversee the privatization and a US takeover of the remaining lucrative state-owned public utilities, petroleum, gas and other strategic industries. Throughout Latin America mass popular movements have taken to the streets in protest against ALCA, and millions of peasants
  22. 22. Downloaded by [University of Arizona] at 14:32 01 December 2013 20 T HE JOUR NAL OF PE ASANT ST UDIE S in Mexico, Ecuador, Colombia, Bolivia, Paraguay and Brazil have blocked highways and demanded that their governments reject it. However, the main objection of Lula and his economic team to the implementation of ALCA is that it must reduce trade barriers for Brazil’s big agribusiness exporters. As many critical economists have demonstrated, it is ALCA that will in the end destroy family farmers and peasant agriculture, increase the number of landless peasants, hunger and mass migration to the urban slums, making a mockery of Lula’s ‘zero hunger’ programme. Lula’s derisory handouts of temporary food relief will not compensate for the millions of new poor and destitute resulting from his neoliberal agrarian policies. Recently Lula has claimed that his ‘zero hunger’ scheme was ‘much more than an emergency donation of food. We need to attack the causes of hunger, to give fish and to teach how to fish’.80 Instead, with ALCA, Lula will be attacking the poor, not hunger, and strengthening and deepening the causes of hunger, not lessening them. There are some 25 million landless Brazilians in the countryside, 95 per cent of whom will not be the beneficiaries of any land reform, but who will be further marginalized by Lula’s promotion of the agro-export strategies. There are 40 million un- and under-employed who have no future employment prospects, given Lula’s budget cuts and high interest rates. Hundreds of thousands of small and medium sized enterprises (and not a few large national firms) face bankruptcy from the high cost of credit (26.5 per cent interest in March 2003), and the free trade policies promoted by Lula’s regime. Rather than generate domestic demand, therefore, Lula’s agrarian policy will suck in imported consumer goods, dumped by advanced metropolitan capitalist nations in so-called Third World countries the economic liberalization of which means they are no longer defended by tariff barriers. Unlike ECLA, Lula’s agrarian policy will in all likelihood generate economic growth only outside Brazil, as multinational corporations repatriate earnings and profits at an estimated rate of return of 22–34 per cent on capital invested.81 Rural Grassroots Opposition to Economic Liberalization? Long before Lula’s electoral campaign of 2002, the main source of grassroots opposition to agribusiness interests and landlordism in rural Brazil was the MST. Since 1983, the latter organization has – through great sacrifice and discipline – occupied large landed estates and settled over 350,000 families on close to 25,600 hectares of land belonging to large proprietors – a rate of 345 occupations a year, involving up to 1,200 rural families [Dataluta, 2002; INCRA, 2000]. During his election campaign, however, Lula demanded that the MST cease to engage in land occupations – it complied, and undertook no land occupation or resettlement for the first
  23. 23. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 21 time in its history.82 In his campaign speeches, by contrast, Lula sought the support of right-wing pro-landlord parties by promising to apply the full force of the law against ‘illegal land occupations’ – those outside the bounds of his proposed agrarian reform. Prior to the presidential elections, there had been intense political discussion within the MST regarding the future direction of the movement. The rank-and-file membership was concerned that the PT was turning into a conservative or social democratic electoral party, that many of the state and locally elected PT leadership were hostile to agrarian reform, and in some cases actually repressed those who occupied land. In the light of these considerations, three discernable tendencies emerged inside the MST. Rankand-file members who composed the first of these concluded that the MST should form its own party, and unite with other social movements and leftist groups. A second group within the MST conceded that the PT was becoming more conservative, and similarly repudiated the right-wing PT governors and mayors, but argued for a different political strategy. Namely, that the MST should run its own candidates within the PT, or at least work more actively inside the party so as to influence it to follow a more progressive direction. The third strand of opinion within the rank-and-file membership, and the most influential, at least among the national leadership, tried to bridge the differences between the first two. This tendency agreed to work outside the PT, and to try to build a common platform with the progressive church, human rights groups and left intellectuals, the object being to elaborate an alternative programme and organization. Thus was born the Consulta Popular (CP), which began with great fanfare and then rapidly decayed. This was because combined with this new tactic of a turn ‘to the left’ was the old tactic of influencing the PT from within. In effect, the CP was neither a new movement nor a new electoral party. It was squeezed between direct action and electoral politics and was unable to attract any sizeable trade union or urban support. Unfortunately, most of the MST leaders cling to a misplaced optimism, and continued to pin their hopes for a positive outcome not so much on Lula himself as on the Minister of Agrarian Reform and other left functionaries in the same ministry. Miguel Rossetto, the Agrarian Reform Minister and member of the left Socialist Democracy tendency of the PT, argued he would do everything in his power to comply with the agrarian reform promises, but that he would have to do this within the extremely limited budget constraints imposed by his government – a clever piece of demagoguery. In the light of this inactivity over the agrarian reform programme, tensions mounted within the MST, as rank-and-file activists and over 60,000 land squatters who were camped out under plastic tents (suffering from heat, cold, and food shortages) became increasingly restless.
  24. 24. Downloaded by [University of Arizona] at 14:32 01 December 2013 22 T HE JOUR NAL OF PE ASANT ST UDIE S No emergency measures were forthcoming from the Lula regime, and a small number of land takeovers began to take place. As it became clear that even the limited agrarian reform programme was being relegated to the back burner, along with ‘zero hunger’ and other electoral promises made by Lula, the recommendation by some of the MST leadership to work to change things from within began to wear increasingly thin. Some national and regional leaders publicly expressed their discontent with the government’s unresponsiveness.83 For example, Joao Paulo Rodríguez, the national coordinator of the MST, demanded that the government provide a time schedule within which to realize the agrarian reform, expressing worries over the inaction – some 40 days after Lula’s inauguration. Rodríguez warned the Lula regime that the MST rank-and-file members could not continue to wait, stating that there were 60,000 families waiting for settlement.84 The government has appointed several progressives sympathetic to the MST and other groups to the Agrarian Reform Institute (INCRA) – but, somewhat predictably, with few resources. More importantly, Lula has taken an extremely rigid and hostile position toward the traditional land occupation tactics of the MST, promising to apply the full repressive force of the law to curb the movement.85 Unleashing the government’s repressive apparatus, including the jailing of activists, forceful evictions,86 frameups by the judiciary, murders carried out by paramilitary groups that are allowed to run free and act with impunity,87 infiltration of the movement by the intelligence services, and – in August – the use of 800 military police to violently dislodge a group of homeless people from an unused lot in a Sao Paulo suburb, Lula has pushed the agrarian reform movement back to the early 1980s, beyond the ‘new republic’ of constitutionally established civilian regimes. He continues to insist that any agrarian reform measures will not respond to direct collective action but will have to be part of a regime-sponsored programme, which in the context of the post-election budget promises to be totally insignificant. In August 2003, Lula was still talking about his ‘project’ to settle 60,000 families on the land in 2003 but noted that progress would depend on the government’s ability to reach an agreement with the IMF to reduce the latter’s target for applying the mandated budget surplus to payment of the external debt.88 In this and other contexts Lula continues to play on the unavoidable constraints that his government has to work under. In early July the Minister of Agricultural Development stated that the government only had sufficient funds to buy land for 11,300 families (as against Lula’s declared target of 60,000).89 This represents about a quarter of Cardoso’s land reform programme, and one-tenth of what the MST had anticipated and was demanding. In January the federal budget had allocated 462 million reais for the purchase of expropriated land under the government’s ‘land
  25. 25. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 23 reform’ programme but after ‘adjustment’ it was reduced to 249 million reais and in June INCRA’s budget was reduced to 162 million reais [Zibechi, 2003]. Under these constraints INCRA did ‘settle’ some 9,500 families on their land between January and June but 7,000 of these families had had their plots assigned to them under the previous Cardoso regime. In effect, Folha de Sao Paulo (3 July 2003) points out, Lula has managed to reach less than 5 per cent of his target of 60,000 settled families, and this under conditions of growing violence (13 killings in land conflicts) and 128 occupations – more than those that occurred in the whole of 2002. All appearances aside, says Lula, informing anyone and everyone who might be concerned (and many are) ‘the agrarian reform will be accomplished in the adequate (sic) moment and in the measure that it is possible’ (La Jornada, 18 August 2003).90 The MST faces a profound dilemma: after years of building a successful mass independent socio-political movement that settled landless families on unproductive land via direct action (land occupations), it has in effect been immobilized. Its role has become instead a purely electoral one, campaigning on behalf of Lula in the hope of securing agrarian reform legislation after his election. In the past, MST successes were based on its capacity to initiate and then undertake independent mass action, a programme of direct action combined with electoral support for some of the more progressive candidates put forward by the PT. Having relied on Lula’s election as the fulcrum for a comprehensive agrarian reform, however, the MST is now faced with a regime that has repudiated every one of the MST/PT ‘shared reforms’. Sooner or later the MST will have to recognize that the landless rural workers have no future with the Lula regime, that the movement will have to part ways and return to the tried and proven method of mass direct action or suffer splits, decline and co-option. C ONC L USION: PR OSPE C T S FOR C HANGE One of the great political myths, and for those on the left a disabling one, has been and remains that the global demise of explicitly neoliberal regimes – such as those of Margaret Thatcher in the UK, Ronald Reagan and (the first) George Bush in the US, and Augusto Pinochet in Chile – signalled either the end or at least a move away from the economically dominant neoliberal project. In fact, the opposite has been the case, since in each instance the successor regime (Blair in the UK, Clinton in the US, and Aylwin in Chile) either continued with or did not challenge the project of its predecessor. Although political labels changed, therefore, the economic content of the policies did not. Insofar as he continues implementing in Brazil the neoliberal agenda of Cardoso, Lula adheres closely to this pattern.
  26. 26. Downloaded by [University of Arizona] at 14:32 01 December 2013 24 T HE JOUR NAL OF PE ASANT ST UDIE S The electoral programme of the PT spoke to all of the major concerns of the financial, industrial and agribusiness elites. Private property and privatized enterprises would be respected. Foreign debt repayments would continue. Tight fiscal policies would be rigidly adhered to. Labour and pension ‘reform’ would be at the top of the agenda. In keeping with ‘Third Way’ idology, however, ‘reform’ signals weakened trade union rights, anti-labour legislation, and reductions in public sector pensions. There would be – and there has been – no indexation of wages and salaries, but there would be for bonds and debt payments. Land occupation by poor peasants and agricultural workers would be – and is – discouraged, and where it does occur it is repressed. Fitting neatly within this neoliberal programme, the agrarian reform would be minimal, underfunded, and remain ‘real’ only at the level of rhetoric. Accordingly, the case of Lula and the PT represents a break not between a new political leadership and an existing systemic project, but rather between a new political leadership and the majority of its grassroots support. As such, the volte face on the part of the Lula regime poses three immediate dangers. First, it threatens to undermine the living standards and working conditions of the vast majority of Brazilians who depend on a waged income, especially those on the bottom rungs of the socio-economic ladder – peasants and workers. The threat is all the more acute because it comes from political parties (or a coalition of parties and social organizations) that were the prime defenders of the urban and rural working classes, and who have now joined their enemies, thereby leaving peasants and workers temporarily defenceless. Second, in addition to this process of socio-economic disempowerment, the right turn on the part of the Lula regime will also generate mass political disillusion and alienation. Peasants and workers in Brazil will accordingly become disenchanted not only with the PT regime and its public functionaries, but also with the whole spectrum of parties, trade unions and social movements which promoted Lula as the ‘people’s president’. It is precisely this kind of depoliticization that creates a fertile ground for reactionary movements of the political right, which – as the events in Europe during the 1920s and 1930s underline – are not slow to recruit disaffected plebeian opinion in town and countryside alike. Such a process is further fuelled by PT ideologues, like Sader and Frei Betto, who justify Lula’s politics as ‘realistic’ and/or ‘pragmatic’, thereby reinforcing the idea that no alternatives exist to the present reactionary policies.91 And third, the international left, which by joining the chorus praising Lula, is reinforcing its own movement toward political debacle. The endorsement of Lula’s electoral victory in Brazil as the greatest revolutionary change since the 1959 Cuban revolution, the election of Allende as Chilean president in
  27. 27. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 25 1971, or the 1979 Sandinista revolution in Nicaragua, is likely to generate a similar kind of disillusion among the international political left. Among the possible outcomes, two are as follows. On the one hand, a part of the Latin American left will take Lula’s right-wing path as a model, and abandon historical demands for policies/programmes that reflect the interests of peasants and workers at the rural grassroots (domestic economic planning, collective/cooperative land reform, income redistribution measures, anti-imperialist foreign policy initiatives, etc.). This will be done by invoking the ‘constraints’ facing Lula, and other such rationalizations. On the other hand, some left-wing movements will be compelled to rethink the entire electoral strategy, particularly the relation between party and movement. From a practical and historical perspective, therefore, it is clear that the divorce of the PT from the mass movement and mass struggle early on laid the groundwork both for its current devotion to class collaboration and eventually for its pro-imperialist policies. In other words, the palpable bankruptcy of the parliamentary road to bourgeois ‘redemocratization’, let alone anything resembling socialism, may give an impetus once more to the non-parliamentary alternative. In the case of Brazil, the dynamics of class struggle and the emergence of direct action mass movements like the MST were instrumental in creating a challenge to the prevailing neoliberal orthodoxy. Although the failure of the neoliberal project – economic stagnation, deepening inequalities, ballooning external debt – together with a leftist critique, created the basis for the decline of the traditional right, this combination was not of itself a sufficient condition for the rise of radical or even reformist alternatives. What happened instead was the adoption of a stereotypically populist strategy, whereby the neoliberal project continued under a different political banner, based now on an incorporated plebeian – and petit-bourgeois – leadership drawing support from a socio-economically heterogeneous base. In short, a multi-class alliance composed of workers, elements of the bourgeoisie, poor peasants and landless agricultural labourers, all led by exleftists, but directed and subordinated to the interests/objectives of international capital. The effectiveness of this populist ‘Third Way’ strategy derived from a dual process: the retention of an oppositional rhetoric (= radical discourse) about the desirability/achievement of grassroots empowerment that was nevertheless combined with what was actually a disempowering economic project. Hence the break by the PT with its leftist past was made possible because of the plebeian nature of the leaders, the manipulation of popular imagery and the hierarchical, personalistic and authoritarian nature of the party leadership. The grassroots origins of the leadership neutralized internal leftwing opposition (= ‘I/we understand your situation because it
  28. 28. Downloaded by [University of Arizona] at 14:32 01 December 2013 26 T HE JOUR NAL OF PE ASANT ST UDIE S was my/our experience as well’), which enabled it to proceed along a rightwing path, claiming that this was in conformity with grassroots opinion. Consequently, no dissenting voice from the ranks of pragmatic ideologues in the ‘people’s movement’ was raised against the ‘people’s president’ when Lula embraced George W. Bush, calling him an ‘ally of Brazil’. Lula has a clear, coherent neoliberal strategy based on an alliance with the IMF, Washington, overseas investors and creditors, and an internal alliance with key elements of the dominant class, including the agro-export elite. The harsh budget cuts, the decline in pension payments, the real reduction in the minimum wage, and the deterioration of social services will all reduce living standards below current levels. These policies will have an especially deleterious impact in the Brazilian countryside, on poor peasants and workers. Payments to wealthy bond-holders, subsidies to big agroexporters and inflation will all widen the existing inequalities. Although Lula is still seen by some as ‘the Brazilian workers’…last chance to make a humane country out of their grotesquely unfair society’ [Cooper and Frasca, 2003], his neoliberal policies will lead to a more profound social, financial and economic crisis than that which affected the Cardoso regime. High interest rates, budget cuts and the payment of the debt (the equivalent to 65 per cent of GDP) will undermine productive investments, weaken the domestic market and increase future debt obligations, leading to a deepening recession. In short, the economic conditions generating opposition are already in place: all that remains is the organization of a coherent opposition to Lula’s continuation of the neoliberal project, and it is precisely over this process that he still exercises some power. The prognosis for the emergence of a coherent opposition from within the part or regime is therefore not good. Together with his advisers, Lula has put in place an effective strategy to limit internal party opposition, using the carrot (= offering ministries and secretariats) and the stick (= persistent critics threatened with censure and/or expulsion). Through state patronage and party discipline, he has converted PT mayors and congress people into transmission belts for his harsh austerity programmes. There are exceptions, of course; a handful of PT elected officials who still uphold the traditional social democratic, reformist programme, but they have been marginalized, abandoned in large part by their former comrades with a voracious appetite for the spoils of office and small fiefdoms of state power. Bluntly stated, having enforced compliance within the party, the regime now has both the will and the power to impose harsh neoliberal policies on the nation generally, and especially on the rural poor. Having put all their efforts into supporting Lula, the opposition – the left PT and the social movements – continue the hopeless task of working within the elite, hierarchical party apparatus, where they
  29. 29. Downloaded by [University of Arizona] at 14:32 01 December 2013 NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ 27 have no future prospect of changing the political course of the regime. Accordingly, the main source of potential opposition to Lula is currently to be found outside his government and the existing party hierarchy. This underlines the extent to which it is perhaps necessary to rephrase the question contained in the title: from ‘Whither Lula’s Brazil?’ to ‘Is Brazil Lula’s?’ The small but disciplined United Socialist Workers Party (PSTU) has been gaining a following among trade union militants in the CUT and currently influences about ten per cent of the Confederation. The PSTU has potential for growth, but will become a formidable opposition only if it allies itself with other larger and more significant social movements, political opponents, church dissidents and trade union forces. One such configuration could find left-wing MST leaders, a sector of the CUT, progressive Catholic clergy and dissident left PT leaders (about one third) and the PSTU coming together to form an alternative opposition coalition or political party, one which focuses on mass direct action over and against electoral politics.92 This possible formation has tremendous possibilities in taking up the banners of anti-ALCA mobilization, debt repudiation, opposing internal market development, and arguing instead for an agrarian reform programme plus re-nationalization of strategic industries and banks. Strategically this opposition should be in a powerful position.93 The right turn of the Lula regime, the precipitous decline in living standards and the deepening recession will put at risk his initial high popularity ratings, and grassroots disenchantment is growing, leading to open expressions of discontent. Strikes among metalworkers started within two months of his taking office, and land occupations by landless workers have spread. Despite the favourable strategic objective and even subjective conditions for the re-emergence of a new left-wing formation, however, there are serious political obstacles militating against the emergence of a united and powerful opposition. First is the absence of a political party with a national following that is capable of serving as a focus for regrouping. A new leading political party has therefore to be created in the course of the social struggle which will, in the beginning, be led by social and political fragments of the rural and urban working class. At the moment the MST constitutes the main organized form of opposition to the neoliberal model and the Lula regime, but it has not managed effectively to move into the cities, linking up with forces of resistance there; nor has it managed to elude the trap set for it by Lula and the PT. The leadership has to distance itself from Lula and return to its roots, but even so it is unlikely to constitute a political formation that can contest the impending struggle for state power. Second, the new political formation will have to engage in a fierce ideological struggle to counteract the label ‘people’s president’ and its spurious claim to empower grassroots Brazilians. This will be a lengthy
  30. 30. Downloaded by [University of Arizona] at 14:32 01 December 2013 28 T HE JOUR NAL OF PE ASANT ST UDIE S struggle, not least because of the politically entrenched position of those defending Lula (the mass media, ex-leftists). Third, any new political formation will have to avoid being linked to right-wing criticisms of the regime, though there is plenty of room for possible tactical alliances with the moderate trade union, Forza Sindical, on issues of wage, salaried and labour legislation. And fourth, any political formation will have to develop theoretical and programmatic clarity about a series of interrelated political issues: not just the major contradictions undermining the viability of Lula’s economic model, but also the nature of the neoliberal crisis, and the aggressive new imperialism of the US. Any new political formation will also be faced with a major organizational task. There are over 90 million Brazilians living in poverty, most of whom are not organized and will be impoverished further by Lula’s policies, the so-called zero-poverty programme notwithstanding. This is especially true of the countryside, where the diversity of relational forms and regional/locational interests threaten to fragment any attempt at national unity. In both urban and rural Brazil, therefore, the political opposition is confronted by a formidable challenge of organizing not just the unorganized but the disorganized.94 Without such organization, any mobilization will amount to nothing more than spontaneous and local protests, easily and harshly repressed by the state, as Lula has promised the transnational capitalist class. The danger is that this will lead to disenchantment, favouring recruitment by right-wing parties. Finally, any new political formation, whilst appealing to the discontented voters abandoning Lula, must also make a thorough and complete break with the PT, a party that – like many others in Europe and Latin America – began on the left and has finished on the right. AC R ONYMS ALCA Area de Libre Comercio de las Américas [Free Trade Area of the Americas – FTAA] CP Consulta Popular [Popular Consultation] CUT Central Unica dos Trabalhadores [All Workers Central] ECLAC Economic Commission for Latin America and the Caribbean [Comisión Económica para América Latina y el Caríbe – CEPAL] FS Força Sindical [Unionized Force] Fome Zero Zero-Hunger programme INCRA Instituto Nacional de Colonização e Reforma Agrária [National Institute of Colonization and Agrarian reform] MST Movimiento dos Trabalhadores Rurais Sem Terra [Movement
  31. 31. NE OL IB E R AL IS M AND T HE ‘ T HI R D WAY’ PC do B PSTU PT 29 of Rural Landless Workers] Partido Comunista do Brasil [Communist Party of Brazil] Partido Socialista dos Trabalhadores Unificado [United Socialist Workers Party] Partido dos Trabalhadores [Workers Party] NOTES Downloaded by [University of Arizona] at 14:32 01 December 2013 1. 2. 3. 4. 5. 6. It is of course true that the iconic date 11 September is now associated wholly with the events which occurred in New York in the year 2001. For inhabitants of and those with an interest in Latin America, however, that same date – equally iconic – is ineradicably linked to an event that took place three decades earlier, the military coup in Santiago de Chile in 1973. For ‘Third Way’ politics, and significance of the participation by Lula in the celebration of this approach, see below. In the words of one of its exponents [Giddens, 1998: 26, 70], the ‘Third Way’ is described politically as ‘the radical centre’, and is said to constitute ‘an attempt to transcend old style social democracy and neo-liberalism’. This dilemma is rather obviously an old one, and evokes some longstanding debates on the left about the nature of power, its political capture and retention. Not the least of the many ironies here is that Allende regarded himself, and was regarded by many others in Latin America, as the embodiment of a constitutional (= ‘moderate’) socialist politics, working to realize the latter objective within and through the existing state apparatus. His approach to political power was accordingly regarded as the antithesis of revolutionary socialist agency (= guerrilla activity) designed forcibly to capture and overturn the state, a position represented at that conjuncture by Fidel Castro and Ernesto Ché Guevara. Indeed, in an interview with Régis Debray [1971: 74] Allende drew attention to precisely this distinction, observing: ‘there is something else I want to show you, something which has inestimable value for me. Something exceptional, which I guard as a treasure: The Guerrilla War [the book about the 1959 Cuban revolution written by Ernesto Ché Guevara]. This copy was on Ché’s desk; it must have been the second or third copy, since I imagine the first was given to Fidel. And here is a dedication which reads: “To Salvador Allende, who is trying to obtain the same result by other means. Affectionately, Ché.”’ Advocates of a non-parliamentary road to Latin American socialism included not just the Tupamaros in Uruguay (on which see Labrousse [1973]) but also Debray [1967; 1970; 1975], whose theory of ‘the Long March in Latin America’ popularized the strategy of the guerrilla vanguard (= foco), as applied by Castro to Cuba and Guevara to Bolivia [Peredo, 1970]. The influential views of Debray were discussed critically in Huberman and Sweezy [1968], Ramm [1978], and also by their author [Debray, 1973: 40ff.; 1977]. In the category of those who advocated following a parliamentary road to socialism come most, if not all, Moscow-affiliated Latin American communist parties. Compared to the cautious conservatism of the latter, for whom the political objective remained always the realization not of socialism but rather of bourgeois nationalism, the Popular Unity coalition of leftist groupings headed by Allende [1973] attempted to put into practice a socialist programme, albeit within the context of a bourgeois polity. As many have argued [Payró et al., 1971; Palacios, 1979] this was always going to fail, given that the capitalist class would be unwilling to surrender its ownership/control of the means of production (mines, industry, land) to any president, regardless of any popular mandate to do so. Some 52 million Brazilians voted for Lula, and a crowd of 200,000 cheered him at his inauguration. Six months later Lula would receive the Prince of Asturias Prize for International Cooperation in Oviedo, Spain. The award was given for his ‘admirable record of fighting for justice’, his status as a ‘symbol of hope’ and his role as ‘the promoter of political attitudes marked by good sense’. He received this prize at a time when, as Sylvie Duchamp, writing for the liberal magazine Revista Cambio in Bogota, puts it: ‘Every day it is clearer
  32. 32. 30 Downloaded by [University of Arizona] at 14:32 01 December 2013 7. 8. 9. 10. 11. 12. T HE JOUR NAL OF PE ASANT ST UDIE S that, even though he won office with his left hand, he is now governing with his right. Those who accused him of being a dogmatic socialist have been forced to eat their words … just when observers closed their eyes so they would not have to watch the disaster hit, Lula chose to continue his predecessor’s economic orthodoxy and followed the recipe to the letter.’ According to Candido Grzybowski, head of a social policy thinktank in Rio de Janeiro, Lula’s victory represents a ‘new stage of the national project, where the poor, the marginalized, the workers become the driving force in the rebuilding of the nation’. Citing the Italian socialist Antonio Gramsci, he says, ‘there are times when an individual becomes himself the project. This is one of those times.’ Bello [2002], another leftist critic of the anti-globalization project, opines that ‘over the last 22 years, the PT under Lula’s leadership has developed a distinctive elan, one that combines the fervor of an insurgent movement with the hardnosed pragmatism of an electoral party’. The PT, he adds, ‘is perceived as a non-traditional party that is solidly rooted in the masses … uncorrupt … [and] innovative’. Unlike other parties on the left, Bello [2003] continues, ‘the PT [can be] seen as non-doctrinaire and flexible’. In this connection he quotes Kjeld Jacobson, head of the international relations department of CUT (the Workers’ Confederation), to the effect that ‘the party started out quite sectarian but it soon learned that to win elections it had to make alliances. Without these alliances, the most you could get was only one third of the vote, so if you wanted to win elections, you had to win the centre.’ It transpires that ‘you’ – Lula – also have to win the support of those on the far right. Leonardo Boff, a Brazilian priest who was in the forefront of the Theology of Liberation movement in Latin America, opposed the power of the institutional Roman Catholic church, and was considered by much progressive political opinion – in Brazil and Europe – as someone who could genuinely be said to be a voice of the poor in Brazil [Boff, 1985, 1992; Boff and Boff, 1987; Boff and Elizondo, 1995]. Starting out as an impoverished migrant from the Brazilian Northeast, Lula entered political life as the feisty head of a metalworkers’ union in San Bernardo de Ocampo, one of the proletarian strongholds in the vast Sao Paulo industrial belt. Persecuted by the military government, he came to prominence as a mass leader at a time when social struggles were gathering the momentum that would eventually displace the military dictatorship (1964–85) and establish the social movements as a key actor in Brazilian political life. The PT, which Lula helped found in 1980, was one of the points of confluence of the struggles involving workers, peasants, urban poor, the progressive intelligentsia, and Church activists [Bello, 2002]. Among the many texts that fall into the category of over-optimistic interpretations of Lula are those by Gurgel [1989], Meneguello [1989], Sader and Silverstein [1991], Keck [1992], Lemanski-Valente [2001], Branford and Kucinski [2003], and Saad-Filho [2003]. Late in 2003 it is still possible to encounter the following inaccurate assessment, this time in an article by Wallerstein [2003: 23]: ‘The currency devaluations of the 1990s in East and Southeast Asia and Brazil brought to power a series of leaders – Roh in South Korea, Putin in Russia, Megawati in Indonesia, Lula in Brazil – whose electoral platforms or performance in office have not always followed Washington’s prescriptions’. Kenneth Maxwell, Director of the Latin America Programme at the Council on Foreign Relations, represents a somewhat ‘sober voice’ in this cacophony of unbridled support for Lula’s wholehearted, if unanticipated, adoption of the neoliberal agenda. Like others, Maxwell admires the way in which the PT has consolidated its hold on government by catering to powerful foreign investors and the domestic political and economic elite without losing the allegiance of the overwhelming majority of Brazilians, who have been persuaded to set aside promised improvements to living conditions pending a resolution of the state’s fiscal crisis. At a meeting in Washington on 20 June 2003 with George W. Bush, Lula is reported to have agreed that the negotiations on ALCA (see below) would be concluded successfully by January 2005, a date fixed by the US (see La Jornada, 21 June 2003). On Cardoso’s neoliberal agenda and policies see Petras and Veltmeyer [2003a; 2003b]. According to University of Rio de Janeiro economist Reinaldo Gonçalves, a comprehensive index that takes into account key items like the public debt, external debt, inflation, inequality, and unemployment would ‘unambiguously show that the economic record of Cardoso is the worst among all of the country’s 24 chiefs of state’ [Bello, 2002]. We concur with this view –