The Brazilian president has been largely successful in convincing workers and farmers to look to the Workers Party (PT) government he leads as the force that can bring them out of the rising unemployment and inflation of the last six years. While promising to eliminate hunger and expand rural electrification, with limited results until now, his administration has also cut pensions of public employees and dished out other “bitter medicine,” as he calls it, that previous governments had been unable to enact in face of mass opposition.

In a test of the administration’s ability to contain the struggles of working people, thousands protested July 16 in the streets of major cities against high unemployment and the slow pace of economic recovery promised by the PT. In São Paulo, the country’s financial and industrial center, unionists, unemployed workers, and landless peasants marched down the Brazilian equivalent of Wall Street. “I voted for him, but I was expecting a quicker recovery,” Creusa Pereira Goncalves, a 44-year-old unemployed auto worker told the New York Times, referring to da Silva.

Virtually the entire middle-class left of the country has joined the PT administration, or is backing government policies, practicing class collaboration as it attempts to tie the labor movement into an alliance with the “progressive” capitalists. The Communist Party of Brazil, for example, has two ministers in the administration.

The Movement of Landless Rural Workers (MST), which endorsed da Silva in his October 2002 presidential bid, has been an exception to this social pact. After a pause in protests in early 2003, the group has resumed its strategy of organizing land occupations that have won land for hundreds of thousands of rural toilers since its founding in 1984.

Lula’s landslide election victory registered discontent among workers, farmers, and middle-class layers in Brazil who were devastated by the effects of the worldwide economic depression and the austerity policies of the previous government, headed by Fernando Enrique Cardoso. Numerous columnists warned of a possible default by a PT government on Brazil’s $260 billion debt, despite Lula’s reassurances that he would honor the terms of a $30 billion emergency loan from the International Monetary Fund (IMF).

The Brazilian president’s record since then has largely calmed Wall Street and the IMF, as his government has continued to make regular payments to the imperialist lending institutions. In a June 1 editorial, the London Financial Times expressed satisfaction with the PT government’s “determination to stick to agreements.” At the same time, the editors of the London daily warned that “Brazil’s reputation is far from secure: signs of backsliding are likely to be punished.”  
 
Businessmen plentiful in the cabinet
The Workers Party choice of Jose Alencar for vice president could only have reassured the White House that the da Silva administration would act in the interests of the employers. Alencar is the owner of Coteminas, one of the largest textile companies in Brazil, with 11 factories across the country.

Da Silva reinforced the favorable impression on big business by appointing prominent capitalist figures to his policy team, both before and after election day. They took their seats alongside the seven trade union leaders in the cabinet of 29. Luiz Fernando Furlan, president of Sadia SA, Brazil’s largest chicken- and food-processing company, was named minister of trade and industry. Roberto Rodrigues, the minister of agriculture, is a soy and sugarcane businessman and head of the Brazilian Association of Agribusiness, which includes dozens of domestic and foreign commodity giants.

Brazil’s economy, held up as a model for “emerging” capitalist countries in Latin America in the mid-1990s, entered a tailspin in 1998. The gross domestic product contracted and interest rates for credit card and other such debts shot up 150 percent. The downward spiral continued in 2002, when the value of the real, the national currency, declined by 35 percent, and unemployment climbed, reaching 20 percent in São Paulo.

Shortly after coming into office da Silva announced a “Zero Hunger” program. The plan raised monthly welfare payments to $25 per family, which the president promised would be made available to 50 million people by the end of his term in 2006. One-third of Brazilians live on less than $1 per day.

Increased welfare allotments, however, do not address the fundamental question of joblessness. Brazil’s economy contracted by 0.2 percent in 2003, its worst performance in a decade. Joblessness in the six largest cities reached an average of 13 percent in April, a three-year high. Companies cut 1 million workers from the payrolls last year in these cities alone. While the jobless rate declined to 12 percent in May, the average real wage for workers in Brazil continued to decline. It was about 866 reals ($279) per month in May—a 1.4 percent drop compared to a May 2003, and 0.7 percent lower than April of this year.

In the 2002 election Lula campaigned for doubling the minimum wage over four years. The Workers Party had also spoken out against attempts by previous governments to enact pension “reform” on the backs of retirees. The PT also maintained an alliance with the MST, and promised to carry out an agrarian reform to aid the millions of rural workers without a job or land to till.

The minimum wage is a vital question for working people, as one-third of the workforce and state pensioners live off this small monthly sum.

In June the Brazilian president won a parliamentary battle to limit the increase in the minimum wage this year by only 8 percent—to about $83 a month—against opposition parties’ efforts to enact a larger pay raise. The Brazilian Senate had voted earlier to increase the minimum wage to $90, but Lula succeeded in reducing it in a later vote in the lower house of Congress. “It is impossible to have a higher minimum wage,” he said after the vote for a lower the minimum wage hike, because of the impact it would have on the state budget. “When we discuss the minimum wage in Brazil we are really discussing pensions.”

Da Silva’s success in cutting state pensions played an important part in convincing the IMF and Wall Street that he could be counted on to carry out austerity moves that his predecessors feared to attempt in the face of popular opposition. In December 2003, the PT government won congressional approval for increasing the retirement age for federal workers, while forcing them to pay more into the pension fund. Retirees who receive above a set cap in benefits will now pay an 11 percent tax on their pensions.

The fight for land and the means to make a living at farming has been a central feature of the struggles of the toilers in Brazil, where 1 percent of the population of 175 million owns 40 percent of the land. The MST has led many of these struggles. The group reports that in the last 20 years 250,000 families have won title to 15 million acres of land through MST-organized actions.

Da Silva has spoken in favor of land reform, but has distanced himself from land occupations. Agrarian reform “will be done in the calmest, most peaceful way, because the landless understand that this country has laws, has rules,” said the Brazilian president after a wave of MST-led occupations in April that included the takeover of vacant buildings on the outskirts of São Paulo. He warned the squatters, “The bottom line is either they get out, or they get out.”

The occupations, which the MST called a “Red April,” were in response to the PT government’s refusal to act on its promises to expand the land reform. Official estimates indicated that only 11,000 families had been provided with land, far short of the 115,000 families the administration had promised would be given land this year. In mid-July the MST announced it would soon launch a new wave of protests, although a spokesperson said there would not be as many land takeovers as in April, the Miami Herald reported.  
 
Conflicts with Washington
To further advance Brazilian capitalists’ market share, Brasilia has brought cases to the World Trade Organization (WTO) against Washington and the European Union over their agricultural subsidy policies in cotton and sugar, respectively. The WTO ruled in June that U.S. subsidies of cotton growers violated trade rules. Brazil filed the suit charging that the $3 billion in U.S. subsidies cost it $600 million in sales.

Brasilia has taken the lead among semicolonial countries that have demanded more favorable terms of trade with the imperialist centers. Conflict between the two sides was at the center of the breakdown of WTO trade talks in Cancún, Mexico, in September 2003, and the failure of a Miami meeting in November of last year to make progress in establishing a U.S.-dominated Free Trade Area of the Americas (FTAA). The U.S. rulers seek to use such a pact to break down trade and investment barriers in Latin America and the Caribbean, while strengthening their edge over Washington’s European imperialist rivals.

The Brazilian president angered Washington during the 2002 presidential campaign when he described the proposed FTAA as “tantamount to annexation of Latin America by the U.S.” U.S. trade representative Robert Zoellick said, after Lula’s electoral victory, that if the new Brazilian government didn’t agree to the FTAA, then it could “take the southern route to Antarctica.”

Friction between Washington and its imperialist allies, on the one hand, and the PT government, on the other, also rose to the surface over the latter’s plans to augment the production and use of nuclear fuel to expand rural electrification. (See article in last week’s issue.)  
 
 
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