Sue Branford is a War on Want trustee. For a fuller account of War on Want’s history, see Waging the War on Want – 50 years of campaigning against world poverty by Mark Luetchford and Peter Burns (2003), available from waronwant.org/shop

Now, almost eight years later, Lula is a different person. Relaxed and self-assured, he is clearly very happy with his achievements. Indeed, the numbers speak for themselves. The purchasing power of the monthly minimum wage, the benchmark by which all wages are set, has increased by more than half. Some 12 million new jobs have been created. About 20 million Brazilians have been lifted out of absolute poverty. The country’s foreign reserves have risen to the very comfortable level of US$239 billion, compared with its position in December 2002, when Brazil had to ask the IMF for the largest stand-by credit it had ever supplied, US$30 billion, to avoid default.

Lula is scarcely able to contain his delight that all this has happened on his watch. ‘Just think of it’, he joked last year. ‘Brazil used to be in debt to the IMF (International Monetary Fund) and we had to adhere to all those conditions they imposed. But now it’s us who are bailing them out with a ten billion dollar loan!’

Back in 1941 the Austrian author Stefan Zweig, who was living in Rio de Janeiro, wrote a book praising Brazil as ‘the country of the future’. This led Brazilians (who, like the British, are good at laughing at themselves) to joke that ‘Brazil is the country of the future and always will be.’ Not any more, it seems. Brazil’s time has come.

Poverty, inequality and violence

But what, from the point of view of the left, does this mean? The Lula government has not changed fundamentally the model of development. Brazil’s obscenely high level of income inequality has declined somewhat (from 0.53 to 0.49 on the Gini index) but this is not because wealth has been redistributed from the rich to the poor. Instead, the Lula government has introduced social welfare policies that have meant that, while incomes for all Brazilians have grown, those of the very poor have grown the fastest.

Even so, the poverty, inequality and violence encountered daily in Brazil’s mega-cities, where 40,000 people are murdered each year, mostly by the police, remain the country’s most serious problems. Yet these issues have scarcely been discussed in the electoral campaign, not even by the Workers’ Party (PT) candidate, Dilma Rousseff, who, with Lula’s explicit backing, is expected to win the election, possibly in the first round.

The concentration of land ownership, one of the most extreme in the world, has actually increased under Lula. It is now worse than it was back in the 1920s, just three decades after slavery was abolished. With generous government support, agribusiness has flourished, with a massive expansion in soya and sugar-cane plantations. More than ever, Brazil’s global success stems from its export of commodities, above all to China.

The share of primary products in exports has leapt from 23 per cent in the first half of 2000 to 43 per cent in the same period in 2010, with a concomitant decline in the share of manufactured goods, from 74 per cent to 54 per cent. Many economists are worried that this return to heavy dependence on primary products bodes badly for Brazil’s long-term future, but the Lula government is confident that food crops, minerals and renewable energy (particularly ethanol from sugar-cane) are fast emerging as some of the hottest tradable goods on the world market.

What is clear, however, is that agrarian reform, strongly promoted by Lula before he gained office, has taken a back seat. His government has not settled any more families on the land than his predecessors, and three-quarters of the land given to landless families is located in the remote (and often ecologically fragile) Amazon region. Indeed, the government has pushed ahead with disastrous old-style development policies in the Amazon basin, with the continued destruction of the rainforest to build roads and hydroelectric power stations that will largely benefit big companies and agribusiness. It is refusing to listen to the growing number of scientists who are warning that such devastation will do irreversible damage to Brazil’s rainfall patterns (and thus to the much-acclaimed agricultural exports).

Combating neoliberalism

Yet it would be mistaken to see Lula’s programme as the mere continuation, with a more humane face, of the neoliberal policies implemented by his predecessor, Fernando Henrique Cardoso. Credit must be given to Lula and his foreign minister, Celso Amorim, for their fierce opposition to the US attempt to turn the whole of the Americas into a single free trade area – the Free Trade Area of the Americas (FTAA) – by 2005. Without their determined stance, this might have actually happened, and one only has to look at Mexico today to realise what a disaster this would have been for the whole region.

Since Mexico joined NAFTA (the North American Free Trade Agreement) in 1994, the country has been reeling. Its family farms have been all but wiped out by the unceremonious ‘dumping’ of surplus US crops, particularly maize, on its market; there has seen a substantial increase in social inequality, with the country having the dubious honour of being the first developing country in the world to produce the world’s richest man (Carlos Slim, the telecoms tycoon); and there has been a big rise in violence, much of it drug-related. Mexico is fast becoming a ‘failed state’. Even President Felipe Calderon said earlier this year that his current ferocious crackdown on crime was necessary to defend ‘the very authority of the state’.

Lula has also been clear-sighted in his determination to reverse the extraordinary wave of privatisations carried out by Cardoso, under which many large and viable state companies were sold for a song to multinationals. To head the country’s powerful development bank, BNDES, Lula appointed the economist Luciano Coutinho, who favours the development of ‘Brazilian champions’ – powerful national companies, the equivalent to South Korean chaebols and Japanese keiretsu. Disbursing over the past two years a huge amount of money – RS$189 billion (£66 billion), more than the combined amount lent during the period by the World Bank, the Inter-American Development Bank and the US Eximbank – the BNDES has funded mergers and takeovers, as well as investing heavily in roads, railways and hydroelectric power stations, all seen as crucial for national development.

Under BNDES stewardship, JBS-Friboi, the largest Brazilian multinational in the food industry, has taken over all of Argentina’s largest beef producers and the beef division of Smithfield, the world’s largest pork producer and processor. It is now the world’s largest producer of beef. Companies such as Odebrecht, Camargo Correa and Andrade Gutierrez, which used to be large domestic construction firms, have grown into gigantic, diversified conglomerates, with investments in a whole range of activities in many countries.

Because of this massive consolidation, big Brazilian companies are no longer vulnerable to old-style takeovers by multinationals. Royal Dutch Shell, the world’s largest private sector oil company, will shortly be announcing a tie-up with Cosan, Brazil’s largest sugar and ethanol producer. And because Cosan is so clearly a world leader in its own right, this is a marriage of convenience between partners of comparable clout, each with separate areas of expertise.

Concern on the left

But what does this add up to? There is concern on the left in Brazil. Fernando Cardim, from the Universidade Federal do Rio de Janeiro, said recently that, while it was true that the Lula government had brought back the old concern for development, something that had been abandoned by Cardoso, it was not development for the people but to strengthen large national monopoly conglomerates.

This is clearest of all perhaps in the Amazon basin. Local hamlets, such as the fishing communities in Mangabal along the Tapajos river, which have been there for a hundred years, are being evicted to make way for a hydroelectric power station to provide energy at highly subsidised prices for smelters to produce aluminium for export. And the BNDES is funding giant plantations of genetically modified eucalyptus in eastern Amazonia, instead of helping the region’s small rural communities to farm the land sustainably. Others fear that Brazil is turning into a regional superpower, just as ruthless and exploitative as the old imperial powers.

However, this seems a partial and inadequate interpretation of what has been happening.

Under Lula the Brazilian state has gained greater control over the country’s destiny. It is clearest of all in foreign policy where, without Lula’s firm stance, the Israelis would have encouraged the resource-rich east of Bolivia to secede and the US would probably have dared to intervene more openly to overthrow Hugo Chávez. With Brazil’s support, Unasul (Union of South American Nations) and CELAC (Community of Latin American and Caribbean States) were born, both autonomous regional organisations without the participation of the US and Canada. Together, they spell the end of the OAS, the old regional body that has long been an arm of US foreign policy.

According to João Pedro Stedile, from Brazil’s Landless Movement (MST) and a leading political analyst: ‘The Lula government adopted a progressive foreign policy. Compared with Cardoso’s neoliberal policies, which were totally subservient to the interests of imperialism, this is an enormous advance, because we now have a sovereign policy, decided by us.’

It is for this reason that Stedile sees a crucial difference between the two front-runners in the Brazilian election, José Serra and Dilma Rousseff. ‘Serra represents the interests of the international bourgeoisie, the financial bourgeoisie, the industries of São Paulo, the backward landowners and sectors of the ethanol agri-business. Dilma represents the sectors of the Brazilian bourgeoisie that decided to ally themselves with Lula, the most independent-minded sectors of agribusiness, the most aware sectors of the middle class and almost all the forces of the organised working class.’

Stedile has no illusions as to what can be expected over the next few years: ‘The world is dominated by 500 big internationalised companies that control 52 per cent of the global GNP and employ only 8 per cent of the working class. The consequences on a global level are disastrous, because all national populations and governments have to be subordinate to these interests.’ There is no sign yet, he says, of an end to the prolonged crisis that has affected the global left. ‘We are living through a period of ideological and political defeat. It is a period of reflux for mass movements. But it is a period, a wave. Soon we will be entering a new phase.’

Within this fairly gloomy prognosis, he is cautiously optimistic about what can be achieved under Dilma Rousseff, perhaps because of her past as a committed left-winger. ‘In this situation we think that a Dilma victory will allow a more favourable correlation of forces for us to make social conquests, including changes in agricultural and agrarian policies.’

A few weeks earlier South Korea acquired 700,000 hectares of land in Sudan, also for rice cultivation. India is funding a large group of private companies to buy 350,000 hectares in as-yet unspecified countries in Africa. A group of South African businessmen is negotiating an 8 million hectare deal in the Democratic Republic of Congo. And so it goes on. The United Nations believes that at least 30 million hectares (about 74 million acres, well over the size of the UK) were acquired by outside investors in the developing world during the first half of this year alone.

The land grab was indirectly spawned by the international financial crisis. It’s interesting to trace the investors’ train of thought because it says a lot about the kind of world we’re heading towards. Some two years ago many financial players – the investment houses that manage workers’ pensions, private equity funds, hedge funds, big grain traders and so on – saw that the sub-prime mortgage bubble was about to burst and moved money into the safer commodities market. Although there was no real shortage of food, food prices (especially of cereals, but also of dairy and meat) rose dramatically.

Countries dependent on food imports were badly hit, with a big increase in the domestic price of some food staples, particularly rice. People coped by changing their eating habits, in many cases cutting back on meals, but they also took to the streets to demand government action. By early 2008 riots had broken out in nearly 40 countries, instilling fear among the world’s political elite. Panic-stricken governments rushed to increase their food imports, leading several food-producing nations to restrict exports, fearful that they too could be hit by shortages.

The big winners from the crisis were not the farmers, as one might have expected. They enjoyed a big increase in the prices they were paid at the farm gate, but all their potential income gains were gobbled up by higher production costs. The people who made a real killing were the suppliers of agricultural inputs. With their quasi-monopoly control over seeds, pesticides, fertilisers and machinery, these giant companies made obscene profits out of the higher prices squeezed out of largely poor populations (see box).

Close on their heels in the ranking of the profiteers came the world’s largest grain traders. These companies played a role in artificially creating the food scare in the first place, so they made sure they were well placed to profit from it. Cargill, the world’s largest grain trader, reported an increase in profits in 2008 of nearly 70 per cent over 2007, a 157 per cent rise in profits since 2006. Profits for ADM, the world’s second largest grain trader, showed a lower rate of increase in 2008, partly because of its heavy investments in the sinking ethanol market, but the company’s profits were still more than 200 per cent higher than they were in 2006 (see tables, right).

Going abroad

The crisis eventually eased, at least temporarily, but by then its impact on rich, food-insecure nations had been profound. Take Saudi Arabia. Since the late 1970s the country had been seeking to become self-sufficient in some foods, particularly wheat. But just before the food crisis erupted, the government reluctantly decided that this strategy was doomed, largely because the country simply didn’t have enough water to irrigate crops.

In a radical change of tack, it decided that it would cover all of its grain consumption through imports by 2015. But this, of course, left the country completely reliant on the world market, just at a time that this market was showing itself to be alarmingly unreliable. Not surprisingly, a rather panic-stricken government sent out a directive to private businessmen instructing them to invest in agricultural production abroad. Adnan al-Naiem, secretary general of the Asharqia Chamber in the Eastern Province, put it succinctly in a briefing: ‘The objective is to achieve long-term food security for Saudi Arabia and to secure a continuous supply of food to the kingdom at low and fair prices.’

China is another example. While self-sufficient in food at the moment, it has a huge population, its agricultural lands have been disappearing to industrial development and its water supplies are under serious stress. With 40 per cent of the world’s farmers but only 9 per cent of the world’s farmland, it should surprise no one that food security is high on the Chinese government’s agenda. And with more than $1.8 trillion in foreign exchange reserves, China has deep pockets from which to invest in its own food security abroad.

As many farmers’ leaders and activists in south-east Asia know, Beijing has been gradually outsourcing part of its food production since well before the global food crisis broke in 2007. Through China’s new geopolitical diplomacy, and the government’s aggressive ‘Go Abroad’ outward investment strategy, some 30 agricultural cooperation deals have been sealed in recent years to give Chinese firms access to ‘friendly country’ farmland in exchange for Chinese technology, training and infrastructure development funds.

Other countries, such as South Korea, Egypt, Libya, Kuwait, India and Japan, have also decided for their own reasons that, faced with the prospect of a world shortage of food in the future, it makes sense to find reliable sources outside their own borders for at least part of their food supply. This is what is driving the current land grab, comparable in a way to the ‘scramble for Africa’ in the late 19th century. Huge areas of the world are being taken over by foreign powers, but they are no longer using military force – they are waving chequebooks, which in today’s world can be an even more powerful weapon.

Although land is being grabbed in many different parts of the world, Africa is under heavy assault. Many impoverished governments in sub-Saharan Africa are sorely tempted by the offer of money up-front, and the foreign investors know that if the deals go sour in the future the weak governments will find it hard to expel them. Not that the foreign investors are leaving much to chance. There have already been reports of some of the leased land being protected by private security firms.

There is much to worry us about the new carve-up. Some of the world’s poorest countries are letting go of land that they need to feed their own populations. The Sudanese government has sold a 99-year lease on 1.5 million hectares of prime farmland to the Gulf states, Egypt and South Korea. But Sudan is also the world’s largest recipient of foreign aid, with 5.6 million of its citizens dependent on food packages from abroad. All principles of basic justice tell us that Sudan should be using this land to feed its own people.

At the moment, the foreign investors speak of a win-win situation, in which both occupying and occupied countries benefit. Take the 7x7x7 Saudi project mentioned earlier. ‘West Africa has an annual deficit of about 2 million tonnes of rice,’ according to the Foras International Investment Company, one of the partners in the scheme. ‘Our project will confront the food shortage crisis, increase agricultural output and improve rice productivity.’ In other words, there will be enough rice to feed the local population and to send abroad. Yet the day may come when there isn’t enough rice for both Arabs and West Africans. It is hard to imagine that the investors will put the needs of impoverished African families before the needs of their own, much richer, more powerful people.

The day the food runs out

The day that the food starts to run out in the world may come far more quickly than most of us imagine. At present, there are more than a billion people going hungry even though there is no shortage of food. The very poor don’t eat enough because they don’t have enough money. The underlying problem is one of social inequality, of the highly skewed distribution of financial resources in the world.

Over the next century much worse food shortages may emerge. The climate crisis is already arriving far more quickly than scientists expected and proving far more dangerous. For a while, many scientists believed that the increase in carbon dioxide in the atmosphere would be partly compensated for by an increase in plant growth, caused by the greater availability of CO2. But now it seems that carbon fertilisation, as it is called, will not happen or will happen far less reliably than was once imagined.

One of the most comprehensive models of the impact of climate change, carried out in 2007 by William R Cline, predicts that, without carbon fertilisation, crop productivity in the developing world is likely to decline drastically, by 21 per cent over the next 80 years. And these predictions may also be underestimates, as they haven’t taken into account all the so-called ‘positive feedbacks’ – the melting of the ice sheets in the Arctic and the Antarctic, the melting of the glaciers, the much greater frequency of forest fires, the growing water shortage and so on – which will make everything worse. Indeed, many of the nations that are scouring the world for arable land will have been warned by their own scientists that a world of dire shortages lies ahead.

Yet, in this dog-eat-dog world, the very actions that the rich countries are taking will increase the likelihood of a global food shortage. The land being grabbed by outside powers has its own precious ecosystems and much of it is used, at least for parts of the year, by local people. Even though governments say that they are only selling ‘empty’ or ‘marginal’ land, such a concept simply does not exist for many of the traditional peasant and indigenous communities in Africa, Asia and Latin America.

And the world destroys its biodiversity at its peril, for it is hugely important to have genetically varied populations and species-rich natural and agricultural ecosystems, particularly at times of environmental stress. Biodiversity plays a crucial role in supplying the raw materials and the genes that make possible the emergence of the new plant varieties on which we all depend. Such new varieties will be urgently required as the world heats up.

The outside investors, however, working with large private companies, are destroying existing ecosystems and creating huge areas of monoculture crops dependent on chemical fertilisers and pesticides. With the destruction of the ecosystems comes the dispersal of the peasantry and other traditional communities of farmers and herders, who have a profound knowledge of the local biodiversity. These communities could play a crucial role in combating climate change.

To give just a single example, with adequate financial support they could be linked together in a vast network of seed markets, stretching across the whole of the African continent, that would help plants to ‘migrate’ as climatic conditions change. They are perhaps mankind’s greatest hope of coping with the climatic cataclysms that lie ahead. Yet the current breakneck land grab is destroying the very basis of their livelihoods. And it is all of us, throughout the world, who will pay the price.

Although many of us who went out into the streets to celebrate Lula’s election in October 2002 find it painful to admit it, nearly all of Brazil’s social movements and trade unions are weaker today than they were then. The clearest example is the Central Unica dos Trabalhadores (CUT), the left-wing trade union body that, like Lula’s Partido dos Trabalhadores (PT, the Workers’ Party), was founded in the late 1970s, as the country mobilised to force the military government to step down.

Since those early days the CUT has always been closely linked to the PT, so it was no surprise when Lula, who has always felt more at ease with trade unionists than with left-wing intellectuals, invited leading members of the CUT to become ministers or top aides in his government. Unfortunately, this has meant that the CUT has become, in practice, little more than the labour arm of the government, and has even supported Lula when he has taken measures that have weakened the labour movement.

A similar fate has befallen the country’s main rural workers trade union, Contag. Members of Contag have administered the country’s timid land settlement programme and have occupied top positions within the ministry for rural development. This has meant that Contag no longer campaigns for radical agrarian reform and limits itself to lobbying for piecemeal advances for rural workers and peasant families.

From blind trust to disillusion

The main exception to this depressing story of co-option has been the MST, not that the movement has escaped scot-free. The rural poor were jubilant when Lula was elected president. Tens of thousands of families joined the movement and squatted on the verges of federal highways, confident that Lula would honour his earlier pledge to the MST ‘to give you so much land that you will not know what to do with it’. The MST leadership, however, was wary from the start, turning down Lula’s repeated offers of top jobs for MST leaders.

For a few years, the blind trust that many rural families felt in Lula caused problems for the MST. On several occasions militants organised marches in support of the movement’s radical demands, only to have Lula come down from the presidential palace and speak directly to the marchers in his charismatic way. On one memorable occasion, Lula doffed the MST’s characteristic red cap and spoke to the march. ‘You have waited for 500 years to see a working-class man in the presidency of Brazil,’ he said. ‘But I can’t achieve everything you want in just a few years. And I beg you to be patient.’ Lula was applauded at the end of his address, to the evident discomfort of some of the militants.

However, as time has passed, it has become increasingly clear to the grassroots that the leaders were right not to align the movement too closely with the Lula administration. The grassroots know now that the government will not deliver the kind of agrarian reform that they want and they have become disillusioned. Lula no longer comes to speak to the marches and MST leaders have become more open in their criticisms.

In a typical statement, João Pedro Stédile, one of the main MST leaders, said earlier this year: ‘Our analysis of the Lula government’s policies shows that Lula has favoured the agribusiness sector much more than family-owned agriculture. The general guidelines of his economic and agricultural policy have always given priority to export-oriented agribusiness. And agrarian reform, the most important measure to alter the status quo, is in fact paralysed or restricted to a few cases of token social compensation.’

Along with more radical rhetoric, the MST is carrying on with its former strategy – which was never entirely abandoned, even in the early years of the Lula administration – of occupying latifúndios (landed estates). Even though the Lula administration is not repressing the occupations with the same ferocity as earlier governments, MST members are still dying in the ensuing conflicts.

Avoiding co-option

So how is it that the MST has managed so successfully to avoid co-option? The MST is, after all, a movement drawn from landless peasants and rural labourers, the sectors of society that throughout Brazil’s history have suffered most from patronage and clientelismo?

It is perhaps this very history that has made the MST different. From the beginning, MST leaders were suspicious of the authorities, which were always seen as allies of the landowners. It was a lesson that was driven home during the MST’s first national congress back in January 1985. The politician Tancredo Neves – already selected to become Brazil’s first civilian president after 21 years of military rule (even though, in the event, he died before he could take office) – had promised to attend. But, despite his repeated pledge to carry out wide-ranging agrarian reform, he never turned up and the organisers left an empty chair on the podium as a chill warning to the plenary that, just like the seat, the new government’s lofty promises might also prove empty.

It was a presentiment that proved all too accurate. Brazil’s new constitution in 1988 brought important advances in the many areas – personal freedom, labour legislation, rights of ethnic minorities and children, and so on – but it dashed the hopes of the landless. Even though progressive organisations, including the MST, collected over one million signatures for a petition calling for agrarian reform, landowners lobbied Congress and the clauses dealing with land distribution were watered down into almost meaningless generalities. This was not a temporary setback: one after another Brazil’s civilian rulers backed away from confrontation with Brazil’s powerful rural elites.

Abandoned by the authorities, the MST coined one of its most powerful and enduring slogans: occupation is the only solution. MST leaders told the movement that they would only win land through grass-roots mobilisation and the organisation of daring and dangerous land occupations. Today MST activists often boast (not altogether accurately) that every hectare of the seven million or so they farm today was conquered through land occupations.
This mentality that goals can only be achieved through struggle has permeated the movement, even affecting the internal balance of power. Even though rural trade unions only allowed heads of household (which generally meant men) to affiliate, the MST decided from the beginning to permit women and young people to become full members. It was an important advance but not, by itself, sufficient to guarantee gender equality: women members found that within the movement they were expected to conform to a patriarchal culture dominated by sexist peasant values. So, as one woman leader confided to me, ‘We decided to “occupy” the MST.’ And indeed they did, filling all the available political space and gradually opening up the movement to full participation by women. ‘It’s an ongoing struggle,’ another activist said recently. ‘But we’re getting there.’

Today self-reliance has become one of the main characteristics of the MST. This does not mean that the MST sees itself as isolated from the rest of society. On the contrary, it believes it is involved in a broad struggle to ‘democratise’ the state, in the sense of making the state break its age-old links with the ruling elites and respond to the needs of the mass of poor Brazilians. To do this, the MST must maintain its own independence from government.

The MST and PT

There has traditionally been a certain mistrust between the MST and the PT, partly because petistas have resented the MST’s wariness of them, along with all politicians. But today some petistas realise that perhaps they might have done better to follow some of the MST’s precepts. When Lula became president, he demanded total loyalty from all petistas, with some federal deputies being expelled from the party for failing to support a key government bill on social welfare reform. But from the beginning this was a dangerous tactic: Lula was elected by an alliance of parties and formed a coalition government. As a result, Lula frequently adopted policies that ran counter to the PT’s programme.

If the PT had retained some degree of independence and turned down Lula’s demand for blind loyalty, the party would be in a stronger position. It is not the PT but the MST that is today a beacon for the left worldwide. No one within the MST expects the future to be easy, partly because it will take a decade, at least, to rebuild the left in Brazil. But the MST has remained faithful to its principles and will be able to seize opportunities, whenever they arise.

Far from cleaning up the notoriously dirty political system, as he had promised during his electoral campaign in 2002, Lula had shrugged his shoulders, saying that politics is a dirty game and there’s not much the PT can do about it.

Few Brazilians on the left will be particularly happy to see Lula carrying on for another term. I have been following the Brazilian political scene for over three decades and I have never before encountered the country so depressed and so lacklustre. Even when I first arrived in the early 1970s, when political dissent was being violently repressed by the generals then in power, Brazilians on the left were hopeful. I was repeatedly told that the country’s social inequalities were so acute and the country’s economic potential so great that sooner or later people would rise up and demand far-reaching reforms.

That old optimism has evaporated. Perhaps the most serious charge that the left today makes against Lula is that he has demobilised social movements. In January 2003 he brought into his government some of the country’s most prestigious popular leaders (particularly from the CUT, the main trade union body), seriously weakening the labour movement, and he has shamelessly exploited his own class origins to defuse social protest.

On many occasions he has appealed for patience. ‘It’s taken more than 500 years for a working-class man to be elected president, so don’t undermine me now,’ he says. ‘I am poor like you. I have known what it is like to go to bed hungry at night. Give me time and I’ll solve your problems.’ And people have listened.

It is true that Lula has brought some real benefits to the very poor. His social welfare programme, Bolsa Familia, has provided nine million families with a small monthly payment in return for their commitment to place their children in school. A recent survey showed that 37 per cent of the population were able to spend more on food than in 2002. It is these very poor families that provide Lula with his bedrock support. What is important to them is that their lives have improved.

But, together with this modest initiative to eliminate absolute poverty, the PT has carried on with orthodox neoliberal economic policies that are working in the opposite direction. A clique of right-wing, US-oriented bankers controls the finance ministry and stifles all opposition. These bankers have convinced Lula that he needs extreme orthodox anti-inflationary policies to maintain ‘foreign confidence’ in the economy. As a result, Brazil has the highest domestic interest rates in the world – a whopping 17-18 per cent. As Brazil has a huge public debt of around R$1 trillion (about £250 billion), the government is constantly issuing public bonds to raise money to pay the interest. This, in turn, feeds the debt.

The whole procedure has become a perverse mechanism for increasing social inequality. Just 20,000 Brazilian families can afford to purchase the bonds and benefit from this outrageous opportunity to make money.

According to Carlos Lessa, who was president of the country’s main development bank, the BNDES, until he was sacked by Lula, ‘This means that R$100 billion of public money goes to this tiny group of very rich people, compared with the R$7 billion going to the very poor [through Bolsa Familia]. So the government is practising the most brutal policy of wealth and income concentration on the planet. It is the greatest iniquity imaginable and, with time, it is only getting worse.’

The PT was founded in the early 1980s by hundreds of thousands of idealistic trade unionists and community activists who wanted to change Brazil. Many have been profoundly shocked by what has happened to their party. In 2003, senator Heloisa Helena and several federal deputies were expelled from the PT after voting against the government’s neoliberal policies. They formed a new socialist party, the P-Sol. Earlier this year, a left-wing faction within the PT tried to wrest back control of the party in internal elections. They failed, which led to a large number of activists leaving the party.

Yet the left has not died in Brazil. One of the surprises of the election campaign has been the surprisingly good showing in polls of Heloisa Helena, running as presidential candidate for the PSol. Like many poor Brazilians from the impoverished northeast, she has a profound Christian faith, and some of her beliefs (like her opposition to abortion) make middle-class urban socialists feel uncomfortable. But her fierce commitment to her ideals has won her widespread respect, even from right-wing quarters. It is widely thought that the main reason why Lula refused a televised debate with the other presidential candidates was his reluctance to face her impassioned attacks.

Opinion polls give Heloisa Helena 12 per cent of the vote, which may be enough to deny Lula victory in the first round. If the elections go to a second round, most activists will vote for Lula, even if through gritted teeth. The prospect of the right regaining power, with the election of Geraldo Alckmin, is just too unpleasant.

Somewhat paradoxically, Lula’s re-election will also be warmly welcomed by left-wing activists in most of Latin America. For all his shortcomings, Lula has provided solid political support to Hugo Chávez in Venezuela and Evo Morales in Bolivia. With Lula in the presidential palace in Brasilia it becomes a lot more difficult for the neo-cons installed in the White House in Washington to instigate the coups that many of them would love to see in South America’s ‘axis of evil’.

Lula had been the candidate for the progressive Workers’ Party (PT). Founded in 1978 in opposition to the military regime, the party had a promising record in local and state governments. It had been innovative, introducing new forms of popular participation such as participatory budgets, and it had been ethical.

Lula had promised change. He had told the country’s 4 million landless peasants that he would give then ‘so much land that they wouldn’t be able to occupy it’. He had asked for patience, but he also said he would deliver. ‘I cannot fail,’ he told cheering crowds in Fortaleza, capital of Ceará state in Brazil’s impoverished northeast. ‘I cannot betray the millions and millions of Brazilians who have voted for me for 10, 20 or 30 years. I am their last hope.’

But almost two years after Lula came to power, little has changed. Fearful of provoking economic meltdown, the president has cautiously stuck to orthodox neo-liberal economic policies. Although the economy has recovered somewhat and will probably grow by about 4.5 per cent this year, unemployment remains stubbornly high, at around 10 per cent officially (16 per cent if you include workers who have got so discouraged that they have given up looking for work). Far from giving the landless abundant land, the government is currently settling far fewer families than the previous Cardoso administration. Although Lula is still pleading for patience, there are signs that disillusion is setting in. In recent municipal elections in Brazil, the PT lost in two key cities that it had hoped to win: São Paulo and Pôrto Alegre.

Alfredo Saad-Filho: Lula has certainly not delivered according to the expectations of most of his voters. Even the most basic social programmes, like Zero Hunger, were mutilated by the budgetary constraints imposed by the government’s neo-liberal economic policies. Many leftists are quick to point their finger at Lula or the PT leadership around him, and claim that they have betrayed their ideals, their political programme and their voters. However, I do not think that this is a useful approach to understanding what has happened in Brazil.

The PT has shifted gradually towards the centre-left since Lula dramatically lost the presidency to Fernando Collor de Mello in 1989. That defeat triggered a shift in the party to the centre, in order to make it electable in two-round presidential elections, in which broad alliances are indispensable. But there is a lot more to the recent trajectory of the PT than the desire to win elections. This is not essentially a matter of personal ambition or treason.

The PT was created in the late 1970s through the convergence of two groups of activists. First, the democratic movement struggling against the military dictatorship, including radical left organisations, Catholic base communities, academics and social movements. They needed a broad and powerful left party to accommodate their different views, express their joint platform, and give the movement organic unity. Second, the ‘new’ trade union movement, symbolised by Lula’s metalworkers’ union, but including other segments of the working class created by Brazil’s rapid development: bank workers, public sector workers, civil servants, teachers, and so on – the skilled working class and the lower urban middle class. Their demands were often corporatist, but they were organised and vocal. The coalition between these two groups led to the emergence of the PT as a party of a new type.

However, these two pillars of the PT have collapsed. On the one hand, the restoration of democracy in 1985 was the product of an elite pact that shifted the political form of the state but brought no economic change. Civil liberties were restored, but the left was disarmed and demobilised. All political organisations were legalised; any newspaper could be published; all social movements were permitted; most political fronts and umbrella organisations collapsed; and dozens of platforms competed in the political marketplace. Paradoxically, political democracy disorganised the Brazilian left.

On the other hand, the democratic transition was followed by the transition to neo-liberalism, which disorganised the working class. Deindustrialisation led to the loss of one third of manufacturing sector jobs in Brazil, most public enterprises were privatised, the civil service suffered terribly: the social base of the PT was decimated. The party responded to these challenges by shifting to the political centre and claiming the mantle of ‘honesty’ and ‘good local administration’. The economic reforms were increasingly sidelined. Finally, in 2002, the PT leadership walked the extra mile and ditched the remainder of its reformist platform in order to seal Lula’s electoral victory. It is now clear that that victory was hollow.

SB: A lot of what you say is right, Alfredo, but the PT, like the left everywhere, has to work within the conditions it finds itself in. Outside government, it could do nothing (or very little) to prevent the loss of manufacturing jobs. If the PT had accepted that no advance was possible because the industrial working class was weakened, then it might as well have given up and disbanded. It had to adapt.

The party held a series of meetings early in 2001. Lula argued passionately that the social crisis was so dramatic that the country’s fabric was threatened with destruction. With the spread of drug trafficking into the shanty-towns, the growth in violent crime, the expansion of the media conglomerates, and the constant and relentless eviction of peasant families from the land, the situation was worsening every year. The PT needed to be in government,

Lula said, to start turning things round. Personal ambition may also have played a part: Lula was approaching 60 and he may well have been afraid that if he failed at his fourth presidential bid in 2002, he would never become president. For all these reasons Lula convinced the party in early 2001 that it should make the alliances necessary to achieve victory. He wanted to win, almost at any cost.

The left in the party went along with this strategy with considerable reluctance. It was unhappy with the alliances but convinced itself that, once in power. the PT could implement enough of its radical programme to make a real difference.

AS-F: The PT certainly had to shift its strategy, since the whole field in which it operated had changed radically. However, change did not have to take the form of pandering to the upper middle classes, domestic and international financial interests, the old oligarchs of Brazil’s northeast, and the new neo-liberal elite of the southeast.

Instead of attempting to make up for the decline of its core constituency by extending its sources of support vertically, to relatively more privileged social groups, the PT should have focused on horizontal expansion to other segments of the working class – among unorganised workers in the formal sector, informal sector workers, working class women, rural workers and the unemployed. The PT could have explored the spaces opened up by political democracy to push forward demands for economic democracy, insisting that political democracy is limited unless it is accompanied by distribution of wealth and income. It should have been less worried about winning elections in the short term, and more concerned with building alternative power structures on the ground that would challenge the monopoly of economic power in Brazil. The Landless Workers’ Movement (the MST) has done this very successfully, but the PT has increasingly distanced itself from the MST, as if it were some kind of embarrassing old relative that should be treated with respect, but which one really wishes were already dead.

Having chosen the mainstream political arena as its priority, the PT had to buy the entire package. It needed money to fight elections, and money is relatively more abundant in the pockets of the rich or in the accounts of large firms than in the hands of the poor. It needed to forge electorally viable alliances, so it was essential to moderate the party’s demands and hold its militants back from direct action.

The PT could not challenge the state it was aiming to lead. The party gradually boxed itself in and, when this strategy finally triumphed, it discovered not only that it was very difficult to come out of the box and do something radical, but also that it did not want to try.

The PT leadership is no longer in a position to rock the boat. Their jobs, reputations, personal and political prospects are all bound up with being in government. Everything hinges on their being able to manage the neo-liberal state better than the neo-liberals.

There is no question that they could help to improve the lives of the majority, but the government’s compensatory social programmes are invariably too small to counter the negative impact of neo-liberal macroeconomic policies; they will not improve significantly the lives of large numbers of people, and they will do absolutely nothing to challenge the economic policies and the power structures that have been reproducing poverty and marginality in Brazil.

Very little is going to change in what remains of Lula’s administration, and even if he is re-elected, he will not do very much. He no longer has the space to change course.

SB: What you are saying, Alfredo, is that the PT should have opted for a slower, but more solid, form of consolidation that would have permitted it to have reached power with a much stronger agenda for change. The problem with this strategy is that it would probably have failed. The groups that you say the PT needed to forge alliances with – unorganised workers in the formal sector, informal sector workers, the unemployed and so on – are notoriously difficult to reach. The PT argued that once it was in power it could use the state apparatus to organise these people and get them incorporated into the political system. It has, after all, carried out some fairly impressive experiments with direct democracy with its participatory budgets in Pôrto Alegre and other cities.

My criticism of the PT is not so much its electoral strategy but how it has used power. It is true that the party heads a coalition government, so it is constrained in the legislation it can get through Congress. But I think that, even so, it could be achieving far more.

The PT had some good plans. For instance, it originally intended to use Zero Hunger as a means of organising the poor. It was going to organise neighbourhood groups to which people would have to belong in order to qualify for the programme, and it was going to feed them with food produced in the agrarian reform settlements. It was going to implement an ambitious programme for organising socially excluded groups. This hasn’t happened; at least not to the extent the PT hoped. Even so, Zero Hunger has been relatively successful, despite efforts by the media to denigrate it. Today it is reaching more than 2 million poor families.

The party could also be doing far more to bring about agrarian reform. As PT founding member and agrarian expert Plínio de Arruda Sampaio has demonstrated, it would be possible to carry out a radical programme of agrarian reform, settling a million landless families on the land, without congressional support. But that would have cost money. Lula would have had to have taken a tougher stance with the IMF and refused to run such a high fiscal surplus. I think this would have been possible, for Lula had enormous political capital at the beginning of his government and the IMF is pretty discredited throughout Latin America.

Lula would have had to mobilise the masses, creating a new political base outside industrial workers, in order to confront the protests from the banks and the elites. I’m just back from Bolivia where an alliance of four social movements – indigenous groups, coca farmers, neighbourhood groups and anti-privatisation movements – is showing what can be achieved through organised social mobilisation.

But Lula chose not to do this. He opted for economic orthodoxy. His finance minister Antonio Palocci has tightened the purse strings. The ministry for agrarian development has completed all the procedures for expropriating land for agrarian reform, but Palocci is simply refusing to make the funds available.

Even so, the PT is making a difference in some areas. For instance, it is finally providing substantial amounts of subsidised rural credit to peasant families. This is preventing hundreds of thousands of rural families from being driven off their land through bad debts. This kind of cautious, modest reform is important. I think it is unfair (and untrue) to dismiss this and similar programmes as ‘token’.

You seem to have given up entirely with the PT, Alfredo, so where does the left in Brazil go now? Do you support Heloisa Helena, the former PT senator who has formed the Party of Socialism and Freedom (P-Sol) as an alternative?

AS-F: The reform programmes of the PT are token because they do not challenge the causes of poverty, inequality and marginalisation, and do very little to address the reproduction of these problems. In most cases they are only modest handouts, targeted to the very poor. There is no significant difference between the social programmes of the PT and those implemented by the previous administration. Of course it is better to have any social programme rather than nothing, but is this really what the PT stands for? Is this what it fought 20 years to achieve? Of course not, and in this sense the Lula administration is profoundly disappointing and does not deserve the unthinking support of the left.

It is not the case that a slower strategy might have been more successful. What was needed was a more radical strategy. The experience of the PT shows, once again, that taking over one branch of government is insufficient to transform society. What continues to be necessary in Brazil is an organised challenge from below to the way in which society reproduces itself, and the way it reproduces inequality with great efficiency. For 10 years the PT led this challenge politically. Then it decided to try to manage it and change things gradually. This may certainly be justified in some circumstances, but the PT was gobbled up by the machine.

Look at what is happening now: the federal administration has been paralysed by political disputes between the parties supporting the government. Without its allies in Congress and in the local administrations, the government cannot function. In order to secure their support, it must engage in corrupt political practices to a greater or lesser extent. All the signs indicate that the government had it easy until now, and institutional support will become more expensive in the future. And all this is for what? To better implement IMF and World Bank policies.

The left should refuse to participate in this game. It is time to take stock, ditch the illusions and stop supporting the Lula administration. To continue supporting this government is to select arbitrarily a small sample of trees, and declare that they represent the forest. The government’s progressive initiatives are mostly hollow. The left has little or no space in the administration. The government’s economic policy is wholly neo-liberal and cannot be reformed. Most of the Brazilian left has already abandoned this ship. And the left in other parts of the world should not cling to illusions that no longer make sense on the ground.

Having said this, I do not think that the P-Sol will resolve all the problems that I have outlined. The time was not right to start another party. But this is what is real – what actually exists, rather than what we may wish existed, and it deserves our support. The Brazilian left needs to be rebuilt, and the P-Sol will be one of the most important tools of this reconstruction.

SB: I don’t think it is true to say that the left has largely abandoned the PT. From what I’ve heard, most activists are demoralised but still hanging on. Indeed, there is the feeling among many that the pressure on the party to change direction is growing and will grow even more rapidly over the next two years, especially if it becomes clear that Lula, who has always taken it for granted that he will win a second term, faces the possibility of defeat in the 2006 elections.

Despite all the setbacks, the PT is still a left-wing party (far more so than today’s Labour Party) and is still the main left-wing force in Brazil. This is the paradox: there is no life for the left outside the PT, but the PT government (because its policies are under the control of financial capital) is at odds with the left. The PT has lost its way in the past but somehow, after long periods of internal agonising, got back on course. To give up on the PT now would be to throw the baby away with the bath water.

The conundrum that the PT has not solved (which party has anywhere in the world?) is how to get beyond neo-liberalism and construct peacefully a new society with greater equality and greater popular participation. Lula is not achieving this, largely because he has not dared to confront international financial capital. Perhaps we were so seduced by his charisma, his commitment, his honesty and even his life story to realise that he hadn’t got a proper strategy for doing this.

Yet the PT remains the main chance for change in Brazil. Turbulent times lie ahead. The US economy is in disarray with yawning deficits. President Bush is embroiled in an ever more disastrous war in Iraq. The IMF and the World Bank are widely discredited. Latin America, for so long the US backyard, has in the past benefited from periods of crisis for the hegemonic power. It is a moment not to give up, but to grasp the opportunities that lie ahead.

Last year average wages fell by 7 per cent. Unemployment, meanwhile, is now running as high as 28 per cent in cities such as Salvador. Yet Lula has prioritised debt repayments, which account for a colossal 10 per cent of economic output.

Inevitably, there have been protests from within the PT. They prompted the party leadership to take action in December. Three petista congressional deputies and one senator, the highly respected PT founding member Heloisa Helena, were expelled from the party. Their “crime” was opposing pension-reform legislation demanded by the IMF; the legislation was designed to open up Brazilian pension funds to privatisation and slash workers’ benefits.

Lula, who missed the meeting that voted for the expulsions, argued that the legislation provided a solid basis for the rest of his government. Helena countered that she had not spent her life working for the PT in order to cut workers’ pension rights when in power.

The government was rattled by the ensuing storm of criticism. Even Leonardo Boff, a popular, radical Franciscan friar, expressed solidarity with Helena, whom he described as “my little sister, who was not afraid”. As a result, Lula has been forced to adopt a more radical tone in public.

All over Brazil, petistas have been discussing their options, and, while most have decided to stay in the PT, they are pressing for a change in direction. “This is the year we begin to change Brazil” is the new catch phrase. There is a sense of grass-roots excitement in the air.

Forthcoming municipal elections in October give the government an incentive to act on numerous initiatives – agrarian reform, the zero-hunger programme, income support for the poorest, education. With his speech in Mexico, Lula showed that he can talk the talk. Now he must walk the walk.

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)