The social-democratic regime hopes to achieve capitalist stability in this semicolonial nation through an increase in wealth for Brazilian manufacturers and agricultural exporters that will supposedly produce a trickle down of jobs and improved conditions for workers and farmers, thereby heading off a social explosion.

Meanwhile, buoyed by an upturn in the business cycle and declining unemployment, industrial and other workers have recently been waging strikes and other actions to press for wage increases.

“For the first time, we saw the agenda of social justice and the agenda of trade liberalization going together,” said Brazilian foreign minister Celso Amorim, the Bloomberg news agency reported September 29. “They were always seen as opposites.” 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 September that EU and U.S. subsidies violated trade rules. Brasilia has taken the lead among semicolonial countries that have demanded more favorable terms of trade with the imperialist powers.

Lula’s landslide election victory in October 2002 registered discontent among workers, farmers, and the middle classes in Brazil who have been ground down by the worldwide capitalist crisis and the austerity policies of the previous government, headed by Fernando Henrique Cardoso.

The Workers Party government has worked overtime to convince imperialist investors and Brazilian capitalists that it can ensure them both large profit margins and a continuing flow of payments to imperialist lending institutions, such as the International Monetary Fund (IMF). Lula’s “financially principled populism,” as one businessman calls it, has brought better results for Brazilian capitalists than for workers and farmers in Latin America’s largest country.

Da Silva’s first budget proposal to Congress included $14 billion in spending cuts, which he described as “bitter medicine” for the economy that caused him to lose “a few nights’ sleep.”

The budget, and da Silva’s promise to energetically pursue cuts in the pensions of government workers, calmed financiers who felt more confident they would continue to receive monthly interest payments on the country’s debt of nearly $206 billion. The president succeeded in cutting public workers’ pensions, which the previous administration had been unable to accomplish in the face of popular opposition.

Shortly after coming into office, da Silva announced his Zero Hunger program to guarantee three meals per day to Brazilian families unable to buy enough food. The plan promised increases in monthly welfare payments to $25 per family, which the president said would be made available to 50 million people.

Brazil is the sixth-largest country in the world with 175 million people, according to official 2002 estimates. One-third of its population lives on less than $1 per day.

The Social Development Ministry the government established to put Zero Hunger into effect has failed to meet its goals, and was merged with other programs into the “Family Fund.” For the first year and a half, the program only attempted to provide funding for families in rural towns with populations under 75,000.

Only in recent months has it started to address the needs of working people in the cities. “I don’t consider it a flop,” said presidential advisor Frei Betto, while conceding that the plan will take more than twice as long to implement as originally projected.

The government is also moving to “tighten control of its benefits programs,” the Reuters news agency reported September 17. The government mandates that all recipients of the Family Fund program’s $25 monthly stipend prove they are educating and vaccinating their children as required by law.

Opposition parties have charged that fewer than half of municipalities actually grill residents on the issue. In response, Welfare Minister Patrus Ananias said all working people who apply for the stipend will be fully tested by the end of 2005.

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, with joblessness reaching 13 percent.

The government earlier this year fought to limit the size of an increase in the minimum wage, which is a vital question for working people. One-third of the workforce and state pensioners live off this small monthly sum.

“It is impossible to have a higher minimum wage,” Lula said after a vote on the question. “When we discuss the minimum wage in Brazil we are really discussing pensions.”

Cuts in pensions are a cornerstone of the administration, which has defended them as necessary in order to comply with IMF-mandated caps on spending.

The government has gotten a boost from a 5.7 percent increase in economic growth in the second quarter of this year in comparison to 2003. The unemployment rate is now down to about 11 percent. An economic expansion over the last six months has been fueled by an increase in industrial output and an ongoing export boom of agricultural and manufactured goods.

Seeking to take advantage of the economic upturn, Brazilian workers are pressing to win back some of the wages lost in the past period. “For years, the average wage earned by Brazilians has been gradually shrinking, by 12.5 percent in metropolitan regions last year,” reported the Inter Press Service news agency.

More than one-half of the 400,000 bank workers in Brazil have been on strike for nine weeks to demand a 25 percent wage raise. Minister of Labor Ricardo Berzoini, a former leader of the bank workers union, has spoken out against the strike.

The 106,000 steel and auto workers, organized by the metal workers union ABC in the industrial suburbs of São Paulo, have carried out a series of walkouts to win 9.5 percent pay raises. Dozens of companies have agreed to the demand. João Antonio Felicio, secretary-general of the CUT, the largest labor federation in Brazil, said there would be more job actions to reverse “10 years of shrinking wages.”

Inflation is running at an annual rate of more than 7 percent this year, and has fluctuated between 5 and 17 percent over the last half decade.  
 
 
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