At a victory rally, da Silva said he would run an administration to "govern with all of Brazilian society, to build a more fair, more brotherly and more united country." He declared that the new government represented an "alternative project," and repeated his campaign promise to create millions of new jobs, end hunger in Brazil, and carry out social spending. At the same time, he vowed to honor the country’s foreign debt obligations to imperialist banks as well as the conditions demanded by them.

Da Silva’s election registered a radicalization among many in Brazil--workers, farmers, and middle-class layers that have been devastated by the effects of the worldwide depression and the outgoing regime’s austerity policies.

"A majority voted for a new economic model of growth and development," said da Silva. "But they know this cannot be done with magic." Describing what lies ahead for working people, he said that "the difficult course that Brazil will be confronting is going to demand austerity in the use of public monies and implacable combat against corruption."

The president-elect announced the creation of a new government agency to run a food program. He said that if by the end of his term each Brazilian is able to eat three times a day, he will have realized his "life mission."

Maintaining the conciliatory stance he adopted during the election campaign, he stressed that the new administration’s main priority will be to set up a "social pact" in which all society can participate in a "government of unity and national accord" to confront the crisis.

Despite reassurances by da Silva that he will stick to the terms demanded by the International Monetary Fund for a scheduled $30 billion emergency loan, imperialist investors have responded with skepticism to the new government. Foreign banks and investors have pulled billions of dollars out of the country, driving down the national currency and bond values. Capitalist commentators continue to warn about a possible default in payments toward Brazil’s ballooning debt of $260 billion.

Investors will be watching Lula closely for "reassurance that he’s not a crazy person and he’s going to follow good policies that will create stability for the Brazilian currency," said U.S. treasury secretary Paul O’Neill. The U.S. official said that he thought Lula "will follow the policies that [current president Fernando Henrique] Cardoso has been following and they will be okay."

Leading up to the elections, the PT candidate won the support of sections of Brazil’s capitalist class and disillusioned middle class that blame the policies of the current administration for the four-year-long depression. These layers criticized the Cardoso government for embracing the "Washington consensus" for economic policy--that is, the sell-off of state-owned companies, the opening of markets to foreign capital and goods, and harsh "anti-inflation" measures.

They gave support to da Silva’s calls for modest reforms in Brazil’s banking system to limit their profits and redirect capital to productive investment, and his opposition to the Free Trade Area of the Americas as it’s currently proposed by Washington. Pushed by the U.S. rulers the trade bloc is aimed at eliminating trade barriers for their exports, and reinforces unequal terms of trade with Latin American countries.

Lula also won support among middle-class layers and business owners squeezed by high interest rates on personal accounts and loans to medium-sized companies. Brazil’s interest rates are among the highest in the world, starting at 21 percent.

"It’s an affront," said Cláudio Miquelin from the São Paulo State Federation of Industry. "The country is practically dead in the water and banks are making returns of 25 percent on equity."

Lending his support to the new president, Horácio Lafer, president of the Federation of Industry, asked for the "generosity of the political opposition." Lafer asserted that "if used correctly," the social pact offered by da Silva is an instrument that will have extraordinary results.  
 
Increased expectations
The election of Lula is seen as a victory by millions of workers and peasants in the country who see this as an opportunity to push forward their demands for better living conditions.

"I always voted for him," said Perpetua Nogueira, referring to Cardoso. "But life is too expensive now, and the salaries here are poor. This is what’s most important--to increase wages. And this is something we can do."

Tens of thousands turned out for a victory celebration in the streets of São Paulo and other cities across the country. "He was once poor, he belongs to the people, said Ivanete Santos Coasta, a street vendor in São Paulo.

The Movement of Landless Rural Workers of Brazil (MST), an organization of peasants and farm workers that fights for a deep-going land reform, gave critical support to da Silva’s candidacy. MST leader João Pedro Stedile stated in a September interview that while there was very little difference in the candidates’ proposals to deal with the problems facing millions of landless peasants, "Lula is the only candidate that brings together social forces that can make changes in this country."

At the same time, capitalist commentators have expressed concern about da Silva’s ability to keep the lid on social stability in the country. "If you look throughout history at any leftist government that takes power, there is always a huge upsurge in social demands, because people have a lot of pent-up expectations and you have to deal with them," John Hopkins University professor Margaret Keck warned. "He’s going to have to control those who expect miracles, because he can’t deliver them," the big-business pundit said.  
 
 
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