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.’

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.

In the face of a hostile right wing media, Lula’s election seems like a notable victory for the left. After an unexpected failure to win an outright majority in the first round, he campaigned strongly to win the support of the poor. The result was that over 60 million people, 59 per cent of the voting population, voted for a president who campaigned against privatisation and for social justice, and who stood with Evo Morales and Hugo Chavez against a free trade alliance with the US. Should Lula be considered part of the Latin American ‘axis of hope’ proposed recently by Tariq Ali, after all?

The ‘all’ includes Lula’s first-term acquiescence to everything demanded by the IMF, going along with agribusiness at the expense of land reform, and doing almost nothing to address the country’s gross inequalities. A student at the Catholic University of Sao Paulo laughed as he told me: ‘I voted for Lula, and then went to church to confess.’

I was at the university to launch a book based on interviews last summer with a wide range of petistas (supporters of the PT, the Brazilian Workers Party). The interviews took place as the petistas reeled in shock at revelations that the party’s leadership had financed Lula’s election campaign and was buying political support in Congress in the same corrupt way as all Brazilian parties (see Red Pepper, October 2005 and www.tni.org/reports/newpol/brasildossier.htm).

At the launch meeting everyone was mightily relieved that Lula had won. In other words, keeping out the right was the left’s first priority. ‘We voted for maintaining living conditions, not for Lula’s political project,’ said a post-election statement of the Co-ordination of Social Movements (CMS) – an influential body that brings together the main landless movement (the MST), perhaps the most effective social movement in the country, the more cautious trade union federation (CUT), the World March of Women and the radical student movement.

The second priority is to build up pressure on the government for such urgent needs as land reform, a significantly higher minimum wage and support for the social economy. But their efforts start with a problem. Most social movements in Brazil have been involved in some way in building or supporting the PT specifically as a means by which movements could exert pressure on political institutions. They now face the reality that this custom-built instrument stands before them bent and corroded. It’s not a complete write-off perhaps, but it’s certainly not the instrument they can use as they had intended.

Here it is it is useful to make distinctions and comparisons with our own political wreckage, the Labour Party, both in order to understand the specifics of Brazilian politics and also because this discussion of the Brazilian left in Lula’s second term could provide many insights for our own strategic thinking in Europe. Both parties were born to a significant extent out of the trade union movement, but there are several striking differences. First, the Labour Party was the result of an explicit division of responsibilities between the political and industrial ‘wings’ of the labour movement.

Moreover, it was shaped by the socially integrating experiences of war, especially the second world war.

The PT, on the other hand, was born out of a political struggle against the military dictatorship, which ruled Brazil from 1964 to 1985. The movements that formed it always saw themselves as political in the sense of a responsibility for society as a whole. When the PT was formed, this tradition of social movements as political actors, taking the initiative on every issue, remained strong. So too did a belief in the necessity of conflict as a precondition of social change. Indeed, the party’s founders saw the role of electoral politics as being in part to strengthen and legitimise social movements.

Additionally, whereas the Labour party was first and foremost about representation, more or less uncritically, in the existing state, the circumstances of the birth of the PT were those of struggling for a new, democratic constitution for which they had their own visions.

These origins gave birth to two lasting and inter-related traditions in the culture of the Brazilian left: that social movements are political actors in themselves, and that democracy has to be constructed through popular participation. As the party’s leadership has focused increasingly narrowly on electoral success within an unreformed Brazilian state, these traditions have been weakened within the party itself, but they remain strong in most of the movements (less so in the trade unions). They have three lasting manifestations of significance for the renewal of the left internationally.

First, the social movements have always had a broad vision of social change beyond their particular focus; and they are in the habit of working with other movements, rather than primarily looking to politicians for society-wide solutions. They have always had a strong sense of the importance of their autonomy and their capacity to act independently even of the PT.

Second, they possess a distinct and resilient concept of democracy as having two equally important dimensions. These are: the principle of the universal vote by which everyone, whether or not they are active or engaged in politics, has an equal say; and, as a condition for making the vote more than a formality, a principle of popular participation by which people have both a right and a responsibility to be active custodians of democracy and to build participatory forms of democracy by which they can organise themselves to exert control over public institutions.

There are no pretensions to have invented a particular model of participatory institutions. But it is clear that the struggle against the dictatorship gave birth to a strong concept of ‘active citizenship’, teaching a painful lesson that liberal democracy is too weak to defend itself against the intervention of the vested interests that any genuine democracy threatens, whether those interests are the military rulers of the past or the multinationals of the present.

The third tradition that is apparent in many social movements in Brazil, and has been a vital influence in the PT, is that of popular education. Of course, conditions of mass illiteracy made adult education an important part of any project of social change, but the influence of Paulo Freire has produced a form of education that is about people becoming conscious of their latent power to change the world rather than simply learning about it.

Formação is a common word on the left in Brazil, literally translating as ‘formation’ but in practice meaning ‘developing people’s innate potential as part of a selfconscious process of social change’. For the millions of people who helped to build the PT over the past 20 years, the first term of Lula’s presidency was a kind of formação, weakening illusions that, in the words of MST leader Gilmar Mauro, ‘a big leader would provide the solution’.

As I visited the MST school in the countryside round Sao Paulo, listened to the reflections of a shrewd activist in CUT, heard the frustration and the elation of people who campaigned for the P-SOL (Partido Socialismo e Liberdade, whose candidate won 7 per cent of the vote against Lula in the first round) and recorded the new hopes of a veteran founder of the PT, it felt as if people were renewing the core traditions that shaped the PT but putting the issue of political parties on hold.

Take the tradition of social movements as political actors. A particularly impressive example is the National Popular Assembly. It is a process based on open assemblies in over 200 towns and cities, which last year worked to prepare proposals and ideas for ‘O Brasil que queremos’, the Brazil we want.

These culminated in a national assembly and then a popular education document, which not only sums up the agreed proposals but also maps out the initiatives to make them a reality.

Bodies such as the CMS are now proposing that this work should become a common basis for mobilisation. What is impressive about it is that, by all accounts, it is the product of a self-regulated process.

No one organisation leads or ‘owns’ it. A variety of organisations facilitate the process but all those involved have accepted a transparent, shared procedure for proposing and agreeing ideas.

This commitment to create a form of self-regulating participatory democracy is widespread. It’s visible in the ‘participatory budget’ processes pioneered by the left in parts of local government in Brazil, where delegates elected by neighbour-hood assemblies negotiate priorities for new investment through a set of transparent, fine-tuned rules that are agreed annually.

But there’s a paradox in all this. Why is it that the country that has produced some of the most developed forms of democracy also places such reliance on an individual leader?

‘This reliance on leaders is the Achilles heel of the Brazilian left,’ says Geraldo Campos, a young petista who left the PT in sadness and anger. ‘There is a need for people to accept more responsibility for self-government.’ He says the experience of Lula’s first term has begun to teach people that ‘proposals and pressure depend on their effort. If they don’t take responsibility, nothing will happen.’

The early signs are that Brazil’s social movements are entering the second term with an urgent sense of responsibility. But will their initiatives gain popular support? Lula speaks two languages. The day after winning the election with a campaign stressing social justice, he disclaimed the declarations of his campaign manager that his economic policies would change in the second term. The millions who voted for him won’t be reading such statements.

They’ll just hear his television addresses, in which he expresses his commitment to the needs of the poor. They see him as one of them. And certainly he constantly stresses his memories of poverty.

But they are just memories and the danger is that, while his gestures and his sentiments keep society calm, ‘the multinationals and banks will suck the country dry’, as Marcos Arruda, one of the animators of the National Popular Assembly, put it. Lula himself is not a reliable link in an axis of hope. But the movements that put him there, if they can assert their autonomous strength, certainly are.

Thanks to Melissa Pomeroy and Evelina Dagnino, and also to the Transnational Institute for funding my trip to Brazil

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’.

We’re driving along a track in the middle of the Brazilian cerrado (savanna) attempting to get to a scattered farming community, Cana Brava, before nightfall. The subsistence farmers ahead are surrounded on all sides by eucalyptus plantations that provide the raw materials for the charcoal in the trucks. There is a chance we might be stopped by the armed guards that ‘protect’ the plantations. Between the encroaching twilight, the unpredictable trucks, the guards and the dust, nerves are beginning to fray.

Finally we arrive in the absolute darkness that can only be found in rural areas, far away from the orange glow of the city. The house we reach belongs to 48-year-old Maria Camargo Soares, whose grandmother worked the land here. Now she continues the family tradition of subsistence farming. She’s uncertain that her children can or will carry the traditions into the next generation.

Cana Brava dates from over a hundred years ago, which is a long time in the remembering of a young colonial nation like Brazil. The community is 22 kilometres from the nearest town along the aforementioned dirt road. There are over a thousand people living in the area; two thirds of the original inhabitants have now moved to the city as the encroaching plantations gobble up water and land around them.

‘They left because when the company came in 1975 the land become so little that people couldn’t support themselves. When my grandparents had their farm here there was enough land for everyone to live comfortably. Now the water has dried up and this year we didn’t harvest anything at all because of the drought and the drain on the water from the plantation,’ Dona Maria explains.

Juarez Teixeira, a local trade union worker, adds: ‘These people used to have freedom to use these lands, to come and go, to graze their cattle, to extract wood, to collect fruit and herbs. Today they are confined to this small area. One side it’s rock and on the other the armed guard of the company.’

The company in question is Vallourec & Mannesmann (V&M), a French-German steel company that uses the eucalyptus charcoal to fuel steel production. They have over 40,000 hectares of eucalyptus plantations in this region alone. In total there are five million hectares of eucalyptus in Brazil, a country where land issues are top of the political and social agenda. The history of eucalyptus is closely tied to that of the oppression of the military dictatorship, during which people were forcibly removed from their lands to make way for the ‘green revolution’.

V&M did not evict the people from the lands in Cana Brava, yet their more subtle tactics are just as effective. Dona Maria describes how the company flouts agreements by not terracing the land within the plantation, resulting in rains flooding through to her farm and causing silting. Her first home was destroyed when a V&M truck crashed into it after careering off the nearby road.

Juarez Teixeira catalogues many other problems caused by the company, such as health and safety violations where workers have been put in danger or poorly compensated for death and injury; outsourcing to small contractors who illegally log native forests so the company can not be held accountable; and breaking environmental laws by planting near to water sources. ‘The threat to workers and people here is great. Shots have been fired on people by the armed guards. They feel prisoners within their own lands.’

Perversely, an agreement designed to ameliorate climate change now adds to the burden local people face in the form of the new carbon market. In 2003, V&M announced a landmark deal with the Dutch government and Toyota to secure carbon credits as a result of their switching to wood charcoal instead of coal to fire their steelworks. At the time there were objections locally and internationally that support for the company meant new financial incentives to plant more eucalyptus, thereby increasing the pressure on the community’s water and land resources. According to Juarez Teixeira, ‘Carbon credits are just another way for V&M to make money and continue as before.’

The local people beg for intervention here, yet it seems the manner in which the international community has become involved seems only to increase pressure on an already fragile existence. The subsistence farmers of Cana Brava manage the land in an infinitely more climate-friendly way than companies like V&M. Unfortunately they don’t qualify for carbon credits.

The Brazilian left is in a state of profound shock and confusion. Over the past two decades hundreds of thousands of people have devoted their lives to creating the PT as a principled and forceful instrument of social justice against one of the most corrupt and unjust ruling elites in the world. Now they are having to come to terms with their own party’s lack of principle.

The exact details of the corruption are still being investigated. It is generally admitted that the cúpula (group at the top) of the PT bribed political parties of the right to join their alliance in Congress and gave monthly payments to congressmen of the right to support their legislation. (The Brazilian president and PT leader, Lula, won with 67 per cent of the vote but the PT only has a fifth of the seats in Congress – though it is the largest party.)

As for the legislation itself, Lula’s government pushed through neoliberal reforms of which Tony Blair would be proud. These included the reform – effectively partial privatisation – of an extremely unequal public pensions system, which nevertheless left the inequalities almost untouched; and amending Brazil’s relatively radical, albeit contradictory, 1988 constitution to facilitate the creation of an independent bank with the freedom to raise interest rates as high as it wants. There have been social reforms – for example, a basic (but very low) income for all poor families – though these are hardly adequate to the problems; and many of them, along with the relatively progressive aspects of Lula’s ambiguous foreign policy, did not need Congressional approval.

The corruption also extended to the PT’s strategy for winning the election. This, it turns out, was based on a caixa dois (literally “a second cash till” – a secret slush fund) whose sources of donations seem to have included businesses contracted by PT municipal governments, public companies and private companies seeking government contacts. The publicist responsible for Lula’s 2002 advertising campaign admitted he had received money from these PT funds through an illegal account held by the PT in the Bahamas.

There is evidence of personal corruption. The PT treasurer received a Land Rover; the finance minister and Trotskyist-turned-monetarist, Antonio Palocci, made a suspiciously vast speculative gain on a house. But far more important than corrupt individuals is the corruption of democracy and of political goals and values as a result of the political methodology of “any means necessary”. It is significant that instrumental in all this was José Dirceu, an ex-guerrilla leader, responsible indeed for kidnapping the German ambassador and a devoted party man. He had been party president since 1994 and the architect of Lula’s election campaigns from 1994 to the end of 2002.

The evidence of corroded ends is stark. The revelations of political corruption came after it had become clear that the government had moved from a supposedly tactical acceptance of the IMF terms to a wholehearted acceptance for neo-liberal orthodoxy. Interest rates are, at 19 per cent, among the highest in the world. The government continues to generate an internal surplus far higher than that demanded by the IMF, which no longer feels it has to have an agreement with Brazil. It can rely on the economists who determine policy in the Palácio do Planalto.

Perhaps the most crucial signal that the leadership had broken the bond at the heart of the original PT project – that of achieving social justice by building on the power of the popular movements to do so – was Lula’s failure to turn his electoral mandate and huge international support into a democratic counter force to drive a hard bargain with the IMF. “He could have got much better terms in order to pursue the social programme for which he was elected. At that point, the people would have been on the streets behind him,” says Plinio de Arruda Sampaio, a founder of the party with Lula and now, in his 70s, standing in the party’s presidential election, to test “for the last time” whether the party retains any integrity. It’s a widely shared belief.

It’s not just Brazilian leftists who are shocked and disoriented by what has been happening in the elegantly designed corridors of office – but patently not of power – in Oscar Niemeyer’s Brasilia. Lula and the PT are not a Soviet-style “god that failed”. But many western leftists, myself included, vested great hopes in the PT’s ability to combine, in Plinio de Arruda Sampaio’s words, “the building of popular movements with occupying spaces in the political system”.

We saw this as a strategy for socialist change more powerful than the failing parliamentarism of west European social democracy, yet building on struggles for the franchise and other liberal political rights in a way that the Leninist tradition rarely did. The disaster of the Lula government is not just a repeat of the classic scenario of a social democratic party that talks left in opposition and is pressured into compliance when it gets to office. The PT’s particular origins in mass movements resisting the military dictatorship of the 1960s, 1970s and early 1980s, along with strong traditions of popular education and self-organisation, produced something new.

One illustration of the PT’s innovative politics was its relationship, historically, with the MST landless movement – a movement that occupies the land of the rich latifúndios and then tries to use it for co-operative agriculture. The PT both critically supported this movement and was supported by it, while at the same time respecting its autonomy. Another illustration was the way that when the PT won the mayoral elections in cities such as Porto Alegre in Rio Grande do Sul, Rio Branco in the Amazon, Sao Paulo, Recife and very recently Fortaleza in the north east, it sought to “share power with the movements from whence we came”. These were the words of Celso Daniel, the mayor of Santo André, who was murdered in 2001 for trying to stop corruption. The PT did so by opening up the finances of the municipality to a transparent process of participatory decision-making through which local people had real power. One of the main driving motives behind this experiment was to expose and eliminate corruption.

How, then, could the party of participatory democracy have become the party of corruption, following the methods of every other Brazilian party before it? I went to Brazil to find out.

I had been there several times previously to write about the participatory political experiments of the PT and to engage in the World Social Forum hosted by the then PT government of Porto Alegre. What had happened to all that democratic creativity? Was the emphasis on participatory democracy really only a feature of the state of Rio Grande do Sul, with its highly developed civil society?

For a reality check, I began in Fortaleza, where a radical PT member, Luizianne Lins, had stood for mayor against the wishes of the leadership and won; Jose Dirceu had flown in from São Paulo to campaign against her. Here, 2,500 miles from Porto Alegre, I found a participatory administration that had taken the process further and deeper than its original and world famous home.

I attended meetings of citizens deciding on their priorities for the city after the mayoral election. Participation was strong, pushing municipal policies in a more egalitarian direction. The coordinator of the Office for Participatory Democracy, Neiara de Morais, explained how they were developing the politics of participation. “Popular participation is about more than the budget. We aim for it to run through every aspect of the municipality,” he said. There is also a process of training, or formaçao, explaining the workings of the government machine and “helping people to become fully conscious of the process, improving and taking control over it”.

My next stop had to be São Paulo; and then to Rio to talk with people who had sounded the alarm about signs of the leadership bypassing this grassroots radicalism at an earlier stage.

I visited Chico De Oliveira, Marxist sociologist and a founder of the PT, from Pernambuco, like Lula. He had recently written an excoriating letter of resignation from the PT over the government’s economic policy. His analysis was comprehensive. First he stressed the context of the Brazilian state, which gives greater powers of patronage to its politicians than possibly anywhere else in the world, offering huge opportunities for clientelism. The president has 25,000 jobs in his gift. The French socialist president, Francois Mitterand, by way of contrast, had 150. The electoral system, in which people tend to stand not on party lists but as individuals, also makes for weak parties. Patronage and bribery has been a normal way of getting measures through congress, and through the assemblies of regional and municipal government, which mirror the presidential system.

It was exactly this system that the participatory budget was fashioned to attack. The idea was that instead of bribery and patronage, the mayor or governor (and, it was imagined, eventually the president) would rely on a process of shared decision making. This would be underpinned by a process of direct and delegate democracy that councillors and regional deputies would be unable to ignore because their voters were part of it. A visit to Porto Alegre confirmed this. “We ruled for 16 years without bribery,” said Uribitan de Souza, one of the architects of the participatory budget, both in Porto Alegre and for the state of Rio Grande Do Sul.

The essential principle guiding Uribitan, Olivio Dutra and the other pioneers of participatory budgeting was the recognition that electoral success does not on its own bring sufficient power even to initiate a process of social transformation but that an electoral victory can be used to activate a deeper popular power. Such an approach, without immediately developing new institutions, would have led at least to the kind of mobilisation that petistas expected from Lula in dealing with the IMF and a hostile congress and Brazilian elite. Indeed, one government insider told me that bankers expected it too and were reconciled to some tough bargaining. But from Lula’s 1994 election defeat (when many had been looking forward to a PT government) to the successful campaign of 2002, the leadership of the party was not in the hands of people with a deep commitment to participatory democracy.

D’Oliveira stresses the emergence of a group of trade union leaders, including Lula, whose approach was essentially one of pragmatic negotiations. He argues that in the 1980s, when the independent trade union movement was highly political as its every action, however economic or sectional in intent, came up against the dictatorship, they appeared as radical political leaders. But as the militant trade unions, in the car industry especially, faced rising unemployment and declining influence, the influence of leaders was one of caution and pragmatism. Another group in the post 1994 leadership – for example, ex-guerrilla José Genuino – had reacted to the fall of the Berlin Wall by dropping any belief in radical change and adopting a variant of Tony Blair’s “third way”, weak social democracy. And finally there was Dirceu, whose break from the Communist Party in the 1970s had been over the armed struggle, not its instrumental, ends-justify-means methodology.

Dirceu’s end – shared by every petista – was “Lula Presidente”. For Dirceu, this was by ruthlessly playing the existing rules of the political game. For most petistas it was by also mobilising and educating the people to be ready to take actions themselves. But the difference in methodology was overwhelmed by the desire for a PT victory. People who tried openly to warn of corrupt deals with private companies, like César Benjamin, a leading official of the party until 1994, were rebuffed as disloyal.

“We believed too much in Lula,” confesses Orlando Fantasini, a deputy for São Paulo. A radical Catholic, Fantasini is part of a “Left Bloc” of around 20 deputies and a few senators that was quick to demand an investigation into the corruption revelations. Many of these are now likely to join other parties, most notably the PSOL, a party formed by PT deputies who split from the party over the pension reforms.

Throughout the 1990s, Lula personified petista hopes for social justice and popular democracy. If Dirceu and the increasingly tight cúpula demanded greater autonomy, or argued for a centralisation of the party at the expense of the local nuclei in the name of a Lula victory, their demand was granted. In election campaigns, political campaigning in the market places and street corners gave way to marketing on the conventional model, activist campaigning gave way to paid leafleteers. Meanwhile, Lula drank bottles of whisky with the bosses of Globo, Brazil’s Murdoch-like media monopoly, thinking he could get them on his side. The PT had established Brazil’s first mass political party according to its own ethics of popular democracy, but after the disappointment of 1994 – and even more so of 1998 – it accepted the rules of Brazil’s corrupt political system.

The PT’s reputation for democracy has been based partly on the rights of different political tendencies to representation at all levels of the party. But from the mid-1990s, according to César Benjamin and others, Dirceu started to use the slush fund to strengthen the position of the “Campo Maioritário” (literally, majority camp), building a network of local leaders who depended on him. This, along with the autonomy demanded and granted for Lula’s group, meant that the PT’s democracy become ineffectual as the majority tendency monopolised central control and no other mechanisms of accountability were put in place.

As I listened to party activists and ex-activists at every level, from the organisers of Fortaleza’s new-born participatory democracy to a veteran leftist advising Lula in the Palácio do Panalto, it became clear how interlinked the two scandals are. The neoliberalism of the government and the systematic corruption in the organisation of the party go hand in hand. The steady strangling of democracy – which is, after all, what corruption is about – meant that the party lost all autonomy from the government. It also meant that all the mechanisms linking the party to the social movements and therefore acting as a political channel for their expectations, their pressure and their anger had been closed down. Even Marco Aurélio Garcia, co-founder of the PT and Lula’s chief advisor on foreign affairs, felt he had no way of calling the economics minister to account.

What now? Everyone recognises that the corruption disaster is a huge defeat. “Our strategies have to be for the long term,” says José Correio Leite, from the now-divided left tendency Democratic Socialism (DS). After the party’s presidential elections, assuming the Campo Maioritário wins – and it is assumed that even now corruption is playing a part in their election campaign – he and most of those who have been supporting Plìnio de Arruda Sampaio will leave the party. Some will join the PSOL but all will be working to create a widely-based “socialist movement” that will not see electoral activity as its priority but rather will return to working with social movements.

“We must find a way of consolidating and developing the real PT traditions. We cannot let the cúpula destroy this,” says Luciano Brunét, who is supporting fellow Porto Alegren, Raul Pont, for party president on a platform of political reforms of the party and the state.

All agree “the situation is open – very open”, as a group of supporters of Plìnio de Arruda Sampaio put it. They also stressed the importance of international discussions. Across the world, there is an experimental left refusing the idea that all that remains for the left is a kind of Blairism, or an abandonment of any engagement with electoral politics. The disaster facing the PT requires us not to turn away and search elsewhere for a new political holy grail, but rather to learn with our petista or ex-petista friends from their defeat and deepen the innovative but incomplete answers they were beginning to give to questions that face us all.Hilary Wainwright’s research in Brazil was funded by the New Politics Project of the Transnational Institute www.tni.org

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.

All three had been campaigning for the removal of 7,000 settlers – rice cultivators, farmers and cattle ranchers – working in collusion with local politicians. They were taken hostage when a mob of 200 non-Indian settlers invaded their mission and ransacked a hospital and school catering for the Indian population.

Fiona Watson, Survival campaigns coordinator, said: “The Catholic Church is perceived by the local politicians and rice cultivators as being very active when it comes to the rights of indigenous peoples and they want to stop this.

-Indigenous groups are seen as obstacles to progress – the only areas left with forest cover are those belonging to them.”

And although Brazilian environment minister Marina Silva is pro-indigenous, she is fighting against a rising tide of big business; US food giant Cargill is currently involved in clear-cutting forest for the rapidly growing expansion of the GM soya crop.

Survival is also disappointed with Brazilian president Luiz Inacio “Lula” da Silva. “At the beginning of his presidency a year ago he talked of indigenous land rights but in terms of delivery nothing has been done,” said Watson.

The pan-indigenous people’s organisation COAIB, who Lula is due to meet early this year, burnt Lula’s manifesto last November.

A spokesman for the Indigenous Council of Roraima said: “Ratification of Raposa Serra do Sol is the barometer measuring the attitude of the Lula government. If it acts now, Indians throughout Brazil will take this as a sign of the government’s commitment to upholding their rights.”

In December Brazil’s minister of justice announced that Lula would ratify the area as a reserve. Although the 3.95 million acres territory has been mapped and demarcated, it still needs that presidential signature promised since 1998.

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