"Nobody has the moral authority to discuss ethics with me"
President Lula da Silva
Corruption has devastated the Lula regime in Brazil. Every sector of Lula's
"Workers Party"(PT) has been implicated in bribery, fraud, vote buying,
theft of public funds, failure to report illicit campaign financing and a host
of other felonious behavior, revealed almost daily between May-July 2005. All
of Lula's closest and most important advisers, congressional leaders and party
bosses have been forced to resign and are under congressional investigation
for illegal large-scale transfers of funds into electoral campaigns, private
enrichment, and financing full time functionaries. So far the only officials
not implicated in felony investigations are Lula and the millionaire ministers
who direct the regime's neo-liberal policies. Even here Lula's president of
the Central Bank--Mireiles--is under investigation for tax evasion and fraud
from the time he was the director of the Bank of Boston. Apparently the millionaire
cabinet members, unlike the upwardly mobile arrivistes of the Workers Part have
no need to rob the public treasury--they earn plenty speculating on the market
or exploiting workers and peasants.
What are the politics of the pervasive corruption endemic in the PT? Why has
a party which began a quarter of a century ago as a vibrant, democratic, participatory
parter, based on social struggles and movements degenerated into a corrupt elite
party backed by financial speculators and agro-mineral interests and run by
greedy upwardly mobile professionals?
In the early 1990's the PT expelled militants, converted the party from a 'movement-party'
to an electoral party and transferred decision-making from popular assemblies
to parliamentary and state officials. The PT turned to professional electoral
advisers, paid electoral campaigners, and increased dependence on the mass media.
The predominance of electoral politics and mass media campaigning required greater
financing at a time when fewer militants were willing to contribute to the electoral
machine. The party and parliamentary elite increasingly developed ties with
private sector contractors to secure contributions in exchange for public contracts.
With the rise of Lula to the Presidency these practices multiplied, as thousands
of PT functionaries occupied posts and began to develop their own private sources
of financing. Lula's neo-liberal agenda and appointment of big businessmen and
bankers to the key economic posts was based on securing the support of the right-wing
parties in Congress, as it adversely affected popular social movements, trade
unions and especially public sector unions.
The political problem that Lula faced in securing the support of the rightwing
congress-people was two fold: most of the political offices were taken by the
PT officials, hungry to capitalize on their electoral victory, hence Lula could
not compensate the right with offers of office; secondly while the right was
completely in accord with Lula's policy, they were political rivals, they competed
for support of big business. In order to secure their votes Lula's closest advisers
then resorted to bribing the rightwing parliamentarians--with payments reputed
to be $12,000 (USD) a month per congress-person, paid via a public relations
firm which worked with the Lula regime.
The PT was no longer an ideological party of the left, having adopted a program
of promoting agro-business, (receiving 90 per cent of agricultural credits),
finance capital ($90 billion paid out in debt payments in 30 months--more spent
in debt payments in one month than for education, health and agrarian reform
in a year) and mining and petroleum. What held the PT together was the "patronage
of office"--corruption, co-option, enrichment and clientelism. Political
power and the values of neo-liberal 'individual enrichment' became the dominant
motive for seeking influential positions.
The opposition from the right--from the Social Democratic Party and the Liberal
Front Party, is not over programmatic differences. The opposition is attempting
to recapture the big business base, the support of the IMF, World Bank and international
financiers whom Lula has attracted to his government.
The principle groups "crying for Lula" are not the urban workers
or rural dispossessed, but the bankers, foreign investors, millionaires and
speculators who have gained billions during his reign of office. The Financial
Times and the Wall Street Journal are greatly disturbed that the corruption
investigations will prevent Lula from carrying out the rest of his reactionary
neo-liberal agenda. As the FT (July 22, 2005,) states "The corruption scandal
seems likely to postpone any further reforms of the sort that have bolstered
Mr. Lula da Silva's reputation on Wall Street. Day-to-day government has been
paralyzed by the scandalmeasures to introduce a public-private financing initiative
will go on the back burner, as well as a proposal to grant autonomy to the Central
Thanks to the corruption investigation and the "paralysis" of Congress,
Lula will not be able to privatize the remaining public services and infrastructure
and hand over the Central Bank to the financiers (the more autonomy from Congress,
the greater the integration into the financial sector). The actual workers in
the public sector scheduled for "public-privatization" have had their
jobs, salaries and pensions preserved, thanks to the corruption scandal of the
While Lula has lost key allies for his neo-liberal transformation of Brazil,
he has moved further to the right--replacing PT cabinet ministers with officials
from the Conservative Party and PMDB -- the Brazilian Democratic Movement Party--and
Because of Lula's support of Wall Street, the City of London and the IMF prescriptions
there is absolutely no chance of a coup. As the saying goes, military coups
never happen against the IMF. The biggest loser in the debacle of Lula's regime
has been the Landless Workers Movement, which has continued to support the government
even as scores of peasant activists have been killed, tens of thousands of land
squatters have been forcibly evicted and Lula has continually reneged on every
promise of agrarian reform. During the height of the corruption scandal, even
as Lula made more explicit his widening coalition with the right wing parties
of landlords and speculators, the MST joined the co-opted trade union bureaucrats
in organizing a pro-Lula demonstration against "destabilization" and
corruption. The pro-Lula policies of the MST has not only severely weakened
the struggles of the landless peasants but has divided the opposition and strengthened
the "old right", Social Democratic and Liberal Front parties. While
some speculators have reduced their exposure in the Brazilian stock market,
the big investment houses are still rushing to secure profits from the high-yielding
Brazilian assets, paying the highest interests rates in the world--between 18per
cent and 25per cent.
The speculative bubble, which spurred 5 per cent growth in 2004, has come to
an end. Brazil is expected to grow at approximately 2 per cent in 2005, with
manufacturing entering into a recession, thanks to the free market policies,
which have inundated the Brazilian market with cheap Asian industrial goods.
While the opposition parties and mass media pursue the deepening corruption
scandal up to the innermost circle of the Lula regime, big business and banking
interests are not in favor of replacing Lula prior to the elections of 2006.
The Financial Times (July 25, 2005) in an editorial continues to praise Lula's
free market performance but advises him to "take more responsibility for
have allowed (corruption) to happen" and "to re-organize his government
around a programme to secure stability". In the meantime with the cooling
off of the commodity boom, the Brazilian currency overvalued by 20 per cent,
manufacturers are hoping that Lula will be replaced by Vice President Alencar
of the Liberal Party, a major textile owner and defender of state promoted industrial
policy and lower interest rates.
Whether Lula remains in office or is ultimately forced to resign depends not
so much on how closely he is implicated in the corruption scandals, as is the
impact of his departure on the financial markets. In either case, whether Lula
resigns (or is impeached) or remains, the major investment consultants expect
the opposition to continue the monetarist neo-liberal policies, which Lula promoted
so ardently, even to the point of buying congressional votes to reduce pensions,
freeze minimum wages and subsidize agro-business exporters. It is the supreme
irony that the once independent militant Landless Workers Movement joins Wall
Street in defending a regime immersed in corruption. At least the bankers have
harvested $100 billion in interest and principle, the MST has over 40,000 displaced
land squatters to add to the 200,000 families living in plastic tents by the
side of highways. "Don't cry for Lula", a banker told me, "he
spoke for them but he worked for us."
When Lula is no longer able to buy, convince, co-opt or corrupt congress-people,
or manipulate the populace and is no longer effective in pursuing neo-liberal
reforms, the ruling elite will toss him aside.
The Lula regime has accomplished many "firsts" in Brazilian history
during its first 30 months in office.
No government has moved so far and so fast to the right.
No government party has had more top party leaders, congress-people and ministers
and functionaries under investigation for fraud in such a brief period.
No government has paid more in foreign debt interest and principle in such
a short time.
No government has created more multi-millionaires in 30 months.
No government has disillusioned more poor voters in such a brief period.