Land has become the crucial issue in Brazil, as social movements and conservative forces fight over the direction of the government of Luiz Inacio "Lula" da Silva. The conflict highlights Lula's difficulties as he struggles to find a non-violent way forward for Brazil after a decade of market-oriented policies that have left the economy mired in recession and dangerously dependent on foreign finance.
The president is now facing the Herculean task of responding to the huge expectations among the poor and the landless, while also honouring his promise to respect both the country's democratic procedures and the contracts made by earlier governments with the International Monetary Fund and private creditors.
The Pontal is one of the areas where the land conflict is turning nasty. Originally inhabited by Kaingang and Guarani-Kaiowa Indians, the region was illegally occupied in the early 20th century by landowners presenting fraudulent documents. Sociologist Zander Navarrro explains its importance: "The MST knew it could occupy these estates without being accused of invading legitimate private properties. It organised scores of occupations for landless peasants. The occupations were in the country's most important state, so the national press had to pay attention."
For some years the Pontal has been a beacon for Sao Paulo families looking for land. Four years ago Ercelina Mendonca and her four sons fled there from a poor neighbourhood in the Sao Paulo suburb of Osasco. Since then the family has been living in a black polythene tent in an MST road camp, getting by on seasonal agricultural jobs. "It was impossible to bring up the children properly in the place we lived, with all its violence," Mendonca told the O Estado de S Paulo newspaper. "Now that Lula is president, I"m sure I"ll get my own plot of land before the end of the year."
Since Lula was elected the flow of people to Brazil's road camps has intensified. In total, there are around 650 such camps. Together they house about 600,000 people. Alarmed, landowners are using their age-old control of the state apparatus to repress the MST. At the end of July a Pontal judge connived with them to sentence MST leader Jose Rainha to a 32-month prison term. Nilmario Miranda, the president's special adviser on human rights, called the ruling "absurd". "This is the wrong path," he said. "To criminalise a social movement will only radicalise it, make it lose its trust in the state of law."
Mobilisation for land reform is happening all over the country. Researcher Nina Simoes recently visited Brazil's smallest state, Sergipe. "Lots of people travelled to Sergipe to work on a hydroelectric power station," she said. "Now the project's finished, they"ve lost their jobs. There's a lot of despair. But people believe that Lula will deliver. I visited a new road camp in April; it had 400 people. A few weeks later it had 1,500 people."
Fearful that they can no longer rely on the authorities, some landowners are organising private militias. When the government recently warned that it would disband these illegal armies the landowners turned to security firms, which are legal. In July a leading farmers" association said it had contracted US firm American Security to "coordinate the defensive actions" of 10,000 farmers.
Some landowners seem to be planning more than defensive actions. In June an anonymous pamphlet recommending three ways of assassinating MST members - burning, poisoning and shooting - was distributed in the small town of Sao Gabriel in the state of Rio Grande do Sul. The pamphlet said: "These rats need to be exterminated. It will be painful, but strong medicine is needed for such a serious disease. We need to shed blood to show our courage."
These events received scant attention from the media. Yet when Lula donned a red MST cap before the TV cameras while receiving 30 MST leaders in the presidential palace on 2 July, the event became a top news item. Commentators bitterly attacked him for endorsing the "illegal" actions of a "violent" movement.
The press reaction was even more frenzied when, in an unguarded moment while addressing a rally, MST leader Joao Pedro Stedile referred to the landless and their allies as "an army of 23 million people" that "will not sleep until it has put an end" to the 27,000 big landowners. The media reacted as if Stedile was calling for an armed insurrection. It seems clear that the landowners are deliberately attempting to create a mood of hysteria in which it will become much easier to blackmail the government into clamping down on the MST.
Lula is a skilful politician and may well be able to avoid the traps set by the landowners, even though many on the left fear he will make too many concessions to the rural lobby. It will be far more difficult for him to resolve the profound contradiction at the heart of his government.
All over Brazil there are signs of a deepening social crisis, one that is affecting many other people besides the landless. Unemployment is rising in all the main cities. "I have lost all hope," said former beer salesman Eduardo Tavares de Menezes to the Folha de S Paulo newspaper. He has given up looking for a job, because he can"t afford the bus fare to the centre of Rio de Janeiro. "Two months ago I gave up my only leisure activity, which was to take my wife and three children to have lunch with my mother on Sundays. You have to catch two buses to get to her house, and we can"t afford the fares." On the outskirts of Rio wood fires for cooking are reappearing; people can no longer afford bottled gas.
The growing poverty is a direct result of Lula's decision at the beginning of his presidency to impose even tougher monetary policies than those adopted by his predecessor. His intention, understandable enough, was to avert a financial crisis resulting from investors and speculators pulling billions of dollars out of Brazil. "[That] would have spelt disaster for the whole term," commented Lula adviser Luis Dulci. The tough policies reassured investors (though Brazil's credit rating has started to decline once again, as bankers increasingly doubt Lula's ability to be quite tough enough). But the economy was forced into recession as a consequence.
Today there is a groundswell of opinion that economic policy must change. Tarso Genro, the coordinator of the Social and Economic Development Council (the body set up by the government to help build consensus on reforms), recently consulted different sectors of society for their views on the issue. He found a consensus for the need to reduce interest rates and increase public investment in infrastructure.
Many ministers are buzzing with new ideas - employment programmes, anti-corruption drives, environment protection, and so on - but all want more money. Agrarian reform minister Miguel Rossetto told Lula bluntly at the end of July that he needed a threefold increase in his budget to settle 60,000 families on land this year - something that Lula himself had already promised the MST.
Even Lula's own advisers have drawn up a confidential report asking for the fiscal policy to be subordinated to the demands of national development, job generation and social policies geared to reducing violence.
The clamour for more expansionary policies is getting louder. Yet, such a shift would almost inevitably lead to some kind of rescheduling of the country's debt, which has become a voracious monster devouring larger and larger sums of public money.
Brazil's most famous economist, 83-year-old Celso Frutado, recently declared that sooner or later Brazil will have to declare a moratorium on its foreign debt as a means of regaining some bargaining power. Yet finance minister Antonio Palocci fears that a conflict with creditors would inflict serious damage on the economy, particularly as Brazil is still heavily dependent on foreign finance.
The options are becoming stark: either the government will have to dash the hopes of millions, or it risks confrontation with creditors - domestic and foreign - who could catapult Brazil into economic chaos. For all Lula's skill, it is a difficult circle to square.Sue Branford is co-author, with Bernardo Kucinski and Hilary Wainwright of Politics Transformed: Lula and the Workers" Party in Brazil (Latin America Bureau, £6.99)