South African farmworkers speak on issues in strike … and “S.A. an Absolutely No Consequence” Country … Vavi
South African farmworkers speak on issues in strike
By Joshua Lumet and Iqra Qalam
26 November 2012
Following a three-week long standoff with police, the militant uprising, in which two farmworkers were killed, was temporarily suspended after a meeting on November 19, involving farm workers, the Congress of South African Trade Unions (COSATU), the African National Congress (ANC) and the Democratic Alliance (DA).
COATSU and the main political parties, the ANC and the DA, are seeking to demobilize the farmworkers struggle, which follows and has been motivated by the eruption of strikes in the mining industries. Most of the farmworkers are not members of trade unions.
For their part, farmworkers have given the government until December 4 to respond to their demands for an increase in the minimum daily wage from R70 (US$7.75) to R150 ($16.70).
Agriculture Minister Tina Joemat-Pettersson said that the Employment Conditions Commission has met to decide on the basic level of pay for Western Cape farmworkers, but no decision has been made public yet.
There is a great deal of money at stake for the South African ruling class. South Africa exports R3.5 billion worth of table grapes.
The Hex River Valley—which includes De Doorns, the epicentre of worker unrest—makes up 34 percent of industry production by volume and 28 percent in value terms, according to Rhomona Gounden, manager for trade, marketing and communications at the South African Table Grape Industry.
Striking farm workers brought the table grape industry to a standstill.
Janus Goosen, owner of the Ou Stasie farm outside Wolseley, said they could not complete their harvest and that it was difficult to project damages.
“If there is another strike many farms could really suffer.
We can’t handle another strike, so we are just praying that government can come up with a solution before December 4.”
Farmworkers, who had not been paid for the duration of the strike, returned to work in anticipation of government’s decision.
The majority of farmworkers believe that, in the absence of a government decision to increase the minimum wage to R150, an even bigger confrontation lies ahead.
The situation remains extremely tense.
Nico Williams, leader of an ad hoc committee of farmworkers in Wolseley said that the initial strike “would be nothing compared to what can follow if the government does not come up with something concrete before the deadline of December 4.
We are putting our faith in this process because workers risked a lot with the original strike.”
Jacques Minnaar, a 43-year-old farmworker from the Pine Valley area of Wolseley, said that R70 per day did not even enable workers to meet their most basic needs.
He continued, “I am a temporary worker and have been for many years.
To think that earning even R150 per day would make people a lot better off is not true.
People actually really need the extra money just to buy food, because you must remember that a lot of people are not employed and they depend on those that work for their survival.”
Minnaar said that up to 10 people have to survive on one person’s earnings.
Farmworker Justice Mohlane said that workers were ready to strike again if their wage demands are not met.
He said that farmworkers continued to find inspiration from their “brothers” in the mining industry.
On 16 August, thirty-four mineworkers at the British-based Lonmin platinum mine in Marikana were massacred by the police, and another 78 were wounded.
Lonmin eventually conceded to mineworkers’ demands and gave significant salary increases.
At its height, the strike action spread across the entire mining industry, involving more than 100,000 miners in the platinum, gold and iron ore industries.
Farmworker Jan Jonathan from the Ou Stasie farm in the Wolseley area said, “I think people went on strike mainly because they want a better life.
That includes people who have been living on farms all their lives and also seasonal workers.
That is the main reason for the current situation.”
Magdalena Daniels worked for 18 years as a domestic worker for the Dicey family on the La Plaisante farm.
Magdalena is the mother of 27-year-old Michael Daniels, her only child, who was shot dead by the South African Police Services (SAPS) in Wolseley two weeks ago.
Describing the circumstances of farmworkers, Magdalena said that R70 per day was just not enough to make ends meet. “The cost of living goes up every year. And year after year it becomes more difficult for people to make ends meet.
I live in Pine Valley with many other farm labourers, and people really actually just want the money for basic daily needs like food and accommodation.
Especially young people like my son who don’t have houses suffer, because you can still buy food with R70 per day, but to try and start to even think about buying a house is impossible.”
Magdalena continued, “It is really very difficult when you lose your only child in circumstances like this. We just hope that we get the salary raise because people are still very tense in the area and there can easily be more strikes to come.”
see also: http://www.wsws.org/articles/2012/nov2012/farm-n16.shtml
South African farm workers’ strikes inspired by events at Marikana
By Joshua Lumet and Iqra Qalam
16 November 2012
Militant struggles among South Africa’s impoverished workers have spread to the Western Cape province’s farms, following on months of upheavals in the mining industry.
The farm workers’ strikes started two weeks ago in the picturesque Boland town of De Doorns, some 90 miles outside of Cape Town, prompted by a dispute on the Keurboschkloof farm.
Subsequently, the militant struggles have spread like wildfire throughout the province.
Wednesday, November 14, saw the strikes spread to the towns of Porterville, Saron and Wolseley.
Michael Daniels, a 27-year-old worker, was shot dead, allegedly in a confrontation with the South African Police Services (SAPS)….
and @ http://www.wsws.org/articles/2012/nov2012/farm-n21.shtml
South African farm workers’ strike spreads
By Joshua Lumet and Iqra Qalam
21 November 2012
The three-week-long farm workers’ strike in the fertile farmlands of the Boland area in South Africa’s Western Cape Province has now spread to 24 different areas and has led to further violent clashes with police.
The strike has hit grape and other fruit-producing areas of De Doorns, Ceres and Robertson.
At least two more workers have been killed in confrontations with the South African Police Services (SAPS).
The continued action in the Boland area is further evidence that the Congress of South African Trade Unions (COSATU) is losing its grip on South African workers.
Union membership in the agricultural sector has dropped. Human Rights Watch estimated recently that less than three percent of all farm workers were union members.
Farm workers, like their mineworker counterparts, are fed up at seeing the unions working against them and have begun to form rank-and-file committees.
The decision to form such committees was taken at a meeting in Villiersdorp on Saturday.
The South African Civil Society Information Service’s (SACSIS’s) Anna Majavu recently explained that because of the monopoly of the National Union of Mineworkers (NUM),
… “whose leaders and officials have long preferred compromise and co-determination over worker control, it has been difficult for mineworkers to strike—until the Marikana massacre.”
Pioneer Foods profits increase
November 26 2012 at 10:56am
- Pioneer Foods expects lower earnings
- Hanekom to retire as Pioneer Food MD
- Pioneer boss to retire, adjusted earnings seen to rise
Pioneer Food Group (PFG) on Monday reported a 5% rise in adjusted headline earnings per share in the year ended September 2012 to 426 cents compared with same period a year ago.
The adjusted figures exclude the impact of the black economic empowerment deal.
Including the BEE transaction‚ headline earnings declined by 17% to R606 million.
Group revenue increased by 10% to R18.6 billion‚ with volumes declining by some 5% and selling prices increasing by 15% on average from a year earlier period.
Operating profit before items of a capital nature‚ adjusted for the impact of the phase one and phase two B-BBEE transactions‚ declined by 6% to R1.162 billion.
Operating profit margin‚ after these adjustments‚ consequently declined from 7.3% to 6.2%.
The company declared a final dividend of 70 cents per share‚ up 75% from last year.
Managing director Andre Hanekom said the past year continued to be challenged by muted consumer spend in bread‚ maize‚ wheaten products and fruit juices in particular‚ as price adjustments affected affordability.
Sasko’s performance improved compared to the previous year‚ but fell short of financial targets. Operating profit improved by 8% to R948 million.
The operating profit margin contracted from 9.7% to 9.5%.
In the rice category demand continued to benefit from comparatively expensive maize meal pricing as well as the re-introduction of cheaper Indian rice imports. Volumes remained flat in this environment with Spekko being a premium branded product.
Pioneer said pasta sales volumes were improving in a lower price point environment driven by lower priced imported products.
The Agri Business underperformed‚ with a net operating loss of R49 million. Both the broiler and egg industries were negatively impacted by the inability to recover record high raw material prices in a market characterised by oversupply in final product.
Feeds volumes were stable with price increases largely recovering the higher raw material cost.
Bokomo Foods’ operating profit improved 18% to R264 million‚ driven by strong growth in retail sales with improved price realisation. This was further boosted with increased export sales into Africa.
Ceres Beverages operating profit declined 35% to R88 million‚ driven by “exceptional” increases in raw material input costs.
Looking ahead‚ the company said it remains affected by the constrained consumer environment and prices could weaken in the months ahead as supply picks up. – I-Net Bridge
Plan to ‘clean up’ fruit industry
FACING threats of an international boycott of its produce, the fruit industry has introduced a programme, the Sustainability Initiative of South Africa, to support growers and employees in the improvement of working conditions on farms.
Steps to introduce the programme have been in the making since 2008 and if all fruit farming parties had come on board earlier, some in the sector believe the De Doorns violent labour protests could have been prevented.
However, the reluctance by some organised farming bodies in the industry to support the programme on the grounds that it s benchmark s were too strict and that it was imposing international ethical codes on workers’ living standards, had prolonged its negotiations and consultation period and, subsequently, its implementation.
Fruit South Africa ethical trade co-ordinator Colleen Chennell said it was most unfortunate that the Western Cape problems started just as the industry was reaching consensus and was preparing itself to engage in a structured manner.
“We plan to launch the programme throughout the fruit farming community in a bid to support growers and employees with the continuous improvement of working conditions on farms and we will soon roll it out throughout country.
“It is timeous that the fruit industry’s ethical trade programme is being launched in a bid to support growers and employees with the continuous improvement of working conditions on farms throughout South Africa,” she said.
Agriculture, and the fruit industry in the Western Cape in particular, has faced the serious challenge of violent worker protests in the past three weeks.
Ms Chennell said the Sustainability Initiative of South Africa programme would have growers audited by independent auditors on a locally developed and internationally recognised standard, which would enable them to provide evidence of ethical compliance to all parties, including retailers, the government, nongovernmental organisations and unions.
“The formal establishment of (the programme) is the culmination of four years of industry consultations, engagement with a broad range of stakeholders and document and resource development.”
She said there was now broad support for the programme from the Department of Agriculture, Forestry and Fisheries, the Confederation of South African Workers Unions, and international and local retailers.
The fruit industry project comes almost a year after the wine industry initiated moves to clean up its tarnished international reputation after a Human Rights Watch study last year said workers were being exploited on wine farms.
Responding to criticism and threats to its international market, the industry established a seal to be used by qualifying wine producers as part of a peer-review audit system of labour-related practices in wine estates and suppliers’ farms aimed at encouraging fair labour practices.
The Sustainability Initiative of South Africa is therefore a locally driven ethical programme by the fruit industry which has aligned its social standards to South African labour law and benchmarked this against international requirements through a process managed by the Global Social Compliance Programme.
AGRICULTURE, Forestry and Fisheries Minister Tina Joemat-Pettersson on Monday morning called the farm workers’ strikes that have plagued the country for the past two months a “historic moment in South Africa”.
“If a farmer feeds his animals at a higher cost than what their farm workers can afford to feed themselves after 18 years of democracy, we cannot be proud as a nation. It’s more pronounced in the Western Cape but is not endemic to it,” she said at a TNA Business Breakfast.
The minister said the mass action at De Doorns in the Western Cape was about more than farm workers’ wages, and were also related to service delivery.
“We have been working with De Doorns for a year. I don’t think the xenophobic violence in the area gets enough attention. It is a historic problem,” she said.
“By teaming up with commercial farmers we have gone into important relationships which developed into co-operatives with the potential to bridge the divide between the rich and the poor,” she said.
Ms Joemat-Pettersson said the agriculture sector was overlooked as a generator of wealth in the South African economy, saying her department was implementing plans that would transform the country’s fisheries and aquaculture industries to the next level, and create jobs.
She said the two subsectors were crucial to addressing “dwindling” fish stocks. Big companies and smaller players needed to co-operate in growing the sector.
The world’s aquaculture production amounted to 56-million tons in 2010.
South Africa, however, has the smallest aquaculture industry in Africa. As one of the largest economies on the continent, the minister said, it was important for South Africa to develop aquaculture because the sector offered huge opportunities for the country.
The Department of Agriculture, Forestry and Fisheries has also encouraged communities living near rivers and dams to take up fish farming in an inland aquaculture and fisheries programme, a call to which the North West has recently keenly responded.
“We have come a long way but I do still think we have a long way to go,” the minister said.
Asked about the Afrikaner — the department’s research and supply vessel forced to return to shore after a mechanical breakdown — she said the fisheries industry and partners understood and supported the department.
“We are supposedly at war in the industry. This is not so. We have developed partnerships in which we have been able to disagree but also agree to promote the industry and develop an important sector in our country,” Ms Joemat-Pettersson said.
Special Insert: “LEFT TALK!”
ANC is currently the “Absolutely No Consequences” party – Zwelinzima Vavi
COSATU GS says SA in danger of becoming not only a laughing stock of the world but another basket case
COSATU general Secretary, Zwelinzima Vavi’s, address to the Daily Maverick Gathering Conference, Johannesburg, November 23 2012
Thank you very much to the Daily Maverick for inviting me to this important gathering. The Daily Maverick provides one of the best platforms we have for serious debate on the big issues of the day.
COSATU does not of course always agree with the views expressed by your contributors, but we will always defend your constitutional right to express those views.
It is unusual to be invited to make a “presentation of your choice” without any guidance as to what you would like to hear, but there is certainly no shortage of burning issues confronting us today.
The one topic which is absolutely certain to come up this morning is the ANC Conference in Mangaung, now just three weeks away.
I hope however that we will focus on the debates on policy and not personalities.
The ANC can learn from COSATU. In the run-up to our September National Congress, the media was awash with unfounded predictions of fights and splits, and even blood on the floor.
In the event the Workers’ Parliament emerged more united than ever, with a leadership returned unopposed, many excellent policy resolutions and two stirring declarations setting out how we are going to confront the challenges, which we face.
Let me briefly speak about the challenges of our moment. If you were to wake up any South African tonight and ask them what concerns them the most, I have no doubt they will rate unemployment the first, followed by poverty and inequalities.
They would also mention corruption that has become epidemic. They would also talk about a morality crisis, the leadership question, and divisions in the ANC, HIV and AIDS, the state of education and healthcare. They will however agree that most South Africans want these challenges addressed.
Yes, today is undoubtedly better than yesterday – there can be no question about that. Yes, we have made tremendous progress in many fronts.
There can be debate however that South Africa should not be where it is today.
The undisputable truth is that the working class, whilst they celebrate the political medals hanging on their necks, the reality they recognised at the point of celebrating the first decade of democracy is that the economic jewellery still resides elsewhere.
In economic terms it is the capitalist class, in particular white monopoly capital, that has most reason to celebrate real gains from a struggle that was led by the black working class.
We should not be where we are today!
Today unemployment, by the more realistic expanded figure, which includes discouraged work-seekers, has risen to the outrageous level of 36, 3%. Among Africans (sic) it is now above 40%, up from 38% in 1995.
There is a particularly severe crisis among the youth, who constitute 63% of the working population, yet make 72% of the unemployed. This makes it the worst in comparison to other middle-income countries.
The difference between the others and us is that we have become used to this as normality.
The inevitable consequence of high unemployment is poverty. 22.5-million people live on or below R10 a day. Around 14.5-million South Africans suffer from hunger.
In 2005, 17% of the South African population were recipients of social grants. In 2010 this figure increased to 28%.
This is both positive and negative – positive in that without these grants these mainly black South Africans would have starved to death, negative in that these social grants are on average R477 a month or R16 a day.
To understand fully this R16, think about the price of bread and other based foodstuffs, electricity, water, education, transport, healthcare, etc.
Poverty is a severe human tragedy for those affected but a huge impediment to economic growth. To have so many people too poor to participate in the market as consumers spells disaster for the prospects of economic growth.
Inequality has now risen to a level that has made us the most unequal society in the world. 80% of South Africans receive just 25% of the national income.
The workers’ share of national income declined from 55% in 2000 to 50% in 2011, a reverse redistribution from the poor to the rich. The Gini coefficient stood at 0.64 in 1995 and worsened to 0.68 in 2008.
The top 10% of the rich accounted for 33 times the income earned by the bottom 10% in 2000.
COSATU has been saying for many years that this cocktail of socio-economic problems has created ticking time bombs, some of which are starting to explode, in the waves of spontaneous strikes among mine and farm workers, now spreading into other sectors, and continuing community protests.
How I wish every song, every poem, every discussion in every political party and civil society formation would be about this unfolding tragedy. How I wish that the ANC delegates to its 53rd national conference in Mangaung would be preoccupied with answering the central question of today – what is to be done and how can the ‘second phase of the transition’, as they have called it, become a reality?
If we fail to mobilise every member of our society to be preoccupied not just finding answer to these questions, then I am afraid the consequences will be dire – a downward slide into a derailed revolution, with rampant corruption and incompetence and even more people plunged into poverty and despair.
Last Saturday, I was one of those privileged to hear a man who has an answer – former president of Brazil, Comrade Lula da Silva.
(see below for discussion on developments in Brazil under and after Lula!)
He inspired us not just with a vision for the future but evidence of practical steps taken by the government he led to resolve exactly the same challenges that South Africa faces today and concrete results that have been achieved in Brazil.
No one can say this is not relevant to South Africa.
The two countries have remarkable similarities. They are both former colonies, rich in natural resources but underdeveloped, with massive problems of poverty and inequality.
When President Lula took office on 1 January 2003, Brazil faced exactly the same challenges we face – inequalities, poverty, marginalisation and exclusion, a succession of corruption scandals, social distance, low morality index, etc.
So after being re-elected in 2006, he engineered a radical shift to the left. He made the government’s top priority raising the incomes of the poor.
Among many other progressive policies he implemented the following measures:
1. Introduced a new income and wage policy that ensured that the minimum wage increased by 67% between 2003 and 2010, faster than the rate of inflation, which meant real, not just monetary increases;
2. In the process of this salaries increased from 58% of GDP in 2004 to 62% in 2009;
3. He introduced Bolsa Família and recipients of which were women and attached a condition that they send kids to school, get vaccines and care.
4. He lifted 28 million out of poverty; the number living in poverty fell by 34.3%, from 61.4 million in 2003 to 41.5 million in 2008;
5. He lifted 40 million into middle class; 52% of Brazilians are now defined as middle class, a rise of 22% since 2004;
6. He introduced a micro credit policy to help people start small enterprises and small farmers;
7. He helped the poor get credit at very low interest rates, with only 30% of salaries to be used as collateral – in 8 years people with access to bank account increased to 150 million;
8. He built 3 million new houses for the poor and provided them with free electricity;
These achievements alone would be reason to rejoice.
But the even more significant lesson for South Africa is that, contrary to the predictions of pro-business economists, who always warn that higher wages and benefits will lead to runaway inflation, slower growth, business bankruptcies and higher unemployment, in Brazil these policies had exactly the opposite effect:
1. Gross Domestic Product has reached $2.5-trillion, lifting Brazil above the UK to become the world’s sixth biggest economy and expects to be the fifth largest in 2015;
2. Unemployment fell from 12.6% in 2002 to 4.7% in 2011!
3. Formal employment rose from 36.1% in 2004 to 40.9% in 2009, with the creation of 17 million formal jobs
4. Inflation, which was running at 6821.3 % in 1990, is currently 5.45%.
These hard facts shatter the false arguments we hear every day from right-wing economists and business people – that higher wages and better working conditions will inevitably lead to economic collapse.
And President Lula spelled out precisely why: once you put money in hands of poor, they start buying goods, more of which need to be produced, so the giant wheel of the economy starts turning. When the poor earn, they spend and create jobs.
South Africa suffers from exactly the same problem as Brazil – what economists call under-consumption or the low level of effective demand for goods and services. In simple terms it means too many people have no money to spend.
In their short sighted obsession with short-term profits, South African businesses, and their economic commentators cannot see that their preferred option – low wages, no collective bargaining and weak trade unions – will make our economic crisis even worse.
We need the opposite policies which President Lula has proved can work (sic – see below).
I appeal to the ANC delegates, government and business to stop listening to ‘rating agencies’, neoliberal economists and multi-national big business, all of whom try to justify the short-term interests of a small elite, but instead to do what the Brazilians did – listen to the people.
The government organised no fewer than 74 consultative conferences on all the major issues, to hear the views of the people, and rally the whole population behind them.
We need to listen to the mine and farm workers, the resident of shack settlements, and all South Africans, instead of ramming unpopular decisions like e-tolling and the demolition of houses in Lenasia down their throats.
So we hope that the ANC conference, and then government, will follow the Lula road and lead us forward.
The ANC must move away from being “Absolutely No Consequences” back to be the African National Congress – the real congress of the people.
I have no doubt in my mind that if delegates will just see this as a gathering to elect leaders based on the slates that are debated now, South Africa will continue to deteriorate, to be not only a laughing stock of the world but another basket case – another examples of a failed revolution.
One thing that was very clear from Comrade Lula’s speech, however, is that we do not just need changes in policy but a change in mindset. In South Africa we already have many excellent policies – on industrial policy, infrastructure development, a new growth path, local procurement, skills development, a green economy, etc – but are far too slow in implementing them.
Projects get bogged down in incompetence, maladministration and corruption. Brazil faced all those problems but was able to change the way in which government operated by insisting that every minister, public official and indeed every Brazilian, make the fight against poverty the number one priority. That is the challenge we face today.
Thank you very much and I wish you a highly successful gathering.
Issued by COSATU, November 23 2012
NOTE! VAVI WRONG ABOUT LULA AND BRAZIL!
The two souls of Lula’s government
Friday, 7 March 2003 / João Machado /João Machado is a member of the leadership of P-SOL and of the Enlace current within it.
Lula’s victory has been celebrated as a great popular victory in Brazil and in Latin America in general.
After all its not every day that a trade unionist and workers’ leader is elected as president, somebody who is a popular leader and the main organizer of a mass party of the left.
Lula’s victory was reinforced by the victory of the Workers’ Party (PT) in the parliamentary elections; it became the main party in the House of Representatives (91 federal deputies out of 513) and the second in the Senate. The PT also became the main party in the States Legislative Assemblies. 
The party remains far from being the majority party; even with its allies in the first and second rounds, the PT did not gain a majority in the Chamber, or the Senate).
Also, its performance in the elections for the state governorships was modest.
Nonetheless, the PT’s electoral results represent a defeat for neoliberalism and a significant shift in the relationship of forces in Brazilian society. The fundamental reason for this was the popular discontent with the results of eight years of the neoliberal government of Fernando Henrique Cardoso(FHC) along with a great desire for change, a desire with which the PT was identified.
Signals from the election campaign
The great hopes generated by the return of the new government were clearly expressed during the celebrations marking the new government’s inauguration, when thousands of people made their way to Brasilia to salute the ’comrade President’ confident this time that the hour of the people had truly arrived.
And there were plenty of reasons to celebrate.
There were however contradictions and limits within the victory which had revealed themselves during the electoral campaign.
The most important factor being that Lula had joined an alliance which included a party clearly on the right, the Liberal Party (PL), which during the same elections had supported some of the most well known faces on the Brazilian right for the state governorships, Paulo Maluf and Antonio Carlos Magalhaes.
Lula’s running mate for vice-president Jose Alencar, a member of the PL, is a major businessman who was chosen as a candidate precisely for that reason, with the objective of mollifying any resistance toward Lula on the part of big business.
Despite the fact that the PT had, at its twelfth national conference in December 2001 had approved a programme aimed at breaking with neoliberalism in favour of a return to some of the parties more historical positions (albeit in more diluted form) linking the formation of a government with a socialist programme, the manifesto presented at the election was very different.
The idea of a total break with neoliberalism was abandoned in favour of the notion a ’period of transition’, which assumed the maintenance of certain central political and economic features of the FHC government.
Throughout the campaign pledges were repeatedly made that ’the contracts’ would be honoured (including in particular the strict adherence to the servicing of the national debt).
This in turn assisted the new agreement with the IMF which was drafted during the election campaign and received Lula’s support (because it was considered as ’inevitable’).
Finally, at the end of the first round and before the second, declarations of support from the conservative camp increased.
After the election it could be said that Lula began to put in place the grand alliance with business which he had sought since the appointing of his vice-president. It should be said that the PT’s alliance with big business was the result of initiatives from the party leadership much more than from big business itself.
Whatever analysis one makes of this alliance, it should be understood as part and parcel of the strategy implemented by Lula and the PT majority. Also, its eventual consolidation will depend on concrete acts of the government, above all the way it handles social conflicts.
Whilst this great political game has received much criticism both within and without the PT Lula scarcely lost a single vote by it. The PSTU (Socialist Party of United Workers, of Morenist origin),the only party which stood clearly to the left of the PT (if we ignore the insignificant PCO [Party of the Cause of Labour] and if one believes the pretensions of Ciro Gomes and Anthony Garotinho to position themselves to the left of Lula cannot be taken seriously ) made some very small gains at the ballot box as compared to previous elections.
Lula however increased his vote from the right and the centre without losing significant votes from the left.
After the elections Lula’s support increased in a manner more than is usually accorded to victorious candidates.
The celebrations in honour of his accession, the treatment in the media, the declarations of support from the MST (Movement of Landless Workers), from the representatives of the IMF (its director, Horst Kohler said that Lula was ’the statesman of the 21st century’) only confirmed that never had a Brazilian president come to power with so much support, both in their own camp and outside it.
An excess of support naturally presents its own problems; the different sectors who identified with Lula’s government expect different things of him. Even if the president wins time to bring results – enjoying a veritable state of grace – the contradictions are only greater.
The difficulties linked to the framework inherited by the Lula government have another significant aspect. The FHC government had drastically increased the dependence of the Brazilian economy on external influences; it had become completely subordinate to the demands of the international financial markets.
During the same period the internal debt had grown making it much more difficult to manage the public purse. The sole victory of the Cardoso government – the mastering of inflation – came under threat towards the end of its term.
All this leaves doubts over the capacity of the new government to honour its commitment to transform the country in favour of popular interests.
Even under ideal conditions this task would be enormous.
The make-up of the cabinet
The success of Lula’s government will depend upon many things. some of which are beyond its control, such as:
1) the international political and economic situation and others where its influence is not as deep, such as
2) social mobilisation.
But there is no doubt that its programme (the main lines on which it seeks to face the challenges posed to it) and its composition (the political forces which make it up) will be two determinant elements.
In terms of the first aspect, the idea which dominated the election campaign was that the government would promote discussions between all classes and social groups.
The chief objective – empowerment of the citizenry – would go hand in hand with economic growth, job creation and a reduction in inequality – all of which was deemed possible without any great social or political conflict.
In relation to the actual composition of the cabinet promises were made during the election campaign that the government would be broadly based and representing not only the PT but also the various groups and coalitions who had supported Lula in the first and second rounds.
Now that we are aware of the make-up of the new government and the initial pronouncements of the president elect and his team it is possible to attempt to form a clearer picture of how the government will be.
Among the latter, 20 are affiliated to the PT (16 ministers and the 4 secretaries of state). Seven of the member parties of the second round alliance have one minister each: the PL, the Communist Party of Brazil (PCdoB), the Democratic Labour Party (PDT), The Socialist Popular Party (PPS), the Brazilian Socialist Party (PSB), the Brazilian Labour Party (PTB) and the Green Party (PV).
The new president of the Central Bank had just been elected as federal deputy for the Party of Brazilian Social Democracy (PSDB, the party of Cardoso) when he was chosen – he had to renounce his seat to assume his function.
Unexpectedly, and contrary to what Lula, had said, the Party of the Movement of Brazilian Democracy (PMDB) is not part of the government (even if the government is negotiating the support of sectors of this party in Congress, as it has attempted to do, alas, with other parties not represented in the Cabinet like the Brazilian Popular Party (PPB) of Paulo Maluf).
Seven other ministers are not members of political parties.
Two of them are lawyers: the minister of Justice, linked for many years to the PT, and the Procurator General of the Union,  another two are diplomats (the Foreign Minister and the Defence Minister) and a fifth is from the military (the head of the Cabinet of institutional security).
The two last non-party ministers are employers (the minister of development, industry and foreign trade and the agriculture minister). According to the press, the first was proposed, at Lula’s request, by the Federation of State Industries of Sao Paulo (FIESP), the main employers’ organization in Brazil.
Both supported the campaign of Jose Serra, the defeated candidate of the outgoing government. It is significant also to examine the political affiliation of the 20 ministers and secretaries who are in the PT.
Twelve of them belong to the PT majority current (which gained a little over 50% of the votes at the last congress), three others belonged to groupings that might be called ’intermediary’ between the majority camp and the left of the PT, two others are recent adherents.
The other three participated at the last congress in the lists of the left currents (the ministers for agrarian development, Cities and the secretary of state for aquaculture and fishing).
Three comments. First, the PT is much more predominant in the government than had been expected. Not only in terms of ministerial posts involved but by the importance of these positions.
The nucleus of the government (Interior, the general Secretariat of the President, the Government’s press office and the Treasury) is more or less entirely PT. Moreover, the diversity of the PT currents has been relatively respected.
Even if none of the currents which are not part of the ’majority camp’ have been included at the heart of the government, their participation is already more important than, for example, in the leadership of the electoral campaign, indeed in the team which oversaw the formation of the government.
Finally, despite the preponderance of the PT in the government, the latter is much more ’broad’ (in the sense of going beyond the alliance that supported Lula in the second round) than predicted.
The lack of ’broadness’ caused by the absence of the PMDB is largely compensated for by the inclusion of a president of the Central Bank and two ministers (both in the economic sphere) linked to the PSDB.
Continuity at the Central Bank
Since ’broadness’ is concentrated in the economic area, it is necessary to look more closely at this sector of government. Beyond the Central Bank (closely linked to the minister of the economy, but whose autonomy of functioning keeps being strengthened), it includes four ministers: the minister of the economy, the minister of planning and budget, the minister of industry and foreign trade and the minister of agriculture.
Other ministers have some effect on economic policy, but these are the most important. If one considers these five institutions, there is a division between, on the one hand, the PT and on the other what might be called the ’PSDB current’: employers identified with this party and a deputy elected under its colours.
The slight predominance of this latter bloc is strengthened by the fact that it controls the ministry of the economy and the Central Bank (by far the most important institutions in the economic sphere) and by the declarations of their leaders.
The new president of the Central Bank, Henrique Meirelles, who is close to the PSDB, is a former international president of the Boston bank.
As might be expected, the nomination of a president of the Central Bank linked to a US bank and to Cardoso’s party met with opposition from PT militants, among them senator Heloisa Helena, of the Socialist Democracy tendency, who refused to vote for his nomination (the Constitution says the president of the Central Bank should be confirmed by the Senate).
- March in support of MST (Movement of landless workers)
These critiques maintain a PT tradition; four years ago, when Meirelles’ predecessor, Arminio Fraga, was nominated, the PT was massively critical of the nomination of somebody linked to the international financial markets (Fraga worked for George Soros).
To leave no doubt as to the orientation he would take at the Bank, Meirelles told the Senate of his total identification with the policies of Arminio Fraga. Moreover, he has kept the leadership team appointed by his predecessor.
The Central Bank is now the most important institution in the conduct of economic policy: beyond steering monetary policy, it directs exchange policy, the regulation and supervision of the banking system, controls capital movements and holds a central position in discussions with the IMF.
Moreover, monetary policy prioritizes above all the definition of the price of money – which in the Brazilian case has an enormous fiscal impact; if interest rates are increased, the public debt and its servicing also go up.
The same phenomenon applies with the exchange rate policy because a great part of Brazil’s internal public debt is related to variations in the exchange rate.
It can be said that the reduction of the budget deficit introduced to control the public debt/GDP ratio (which is the touchstone of the IMF demands and those of the ’markets’) is determined in great part by the variables placed under the responsibility of the Central Bank (rates of interest and exchange).
Interest rates under the Cardoso government were always among the highest on the planet and the policy announced by Meirelles should keep them at a very high rate.
Maintaining high interest rates does not only cause greater fiscal difficulties; it transfers wealth to the holders of financial capital and tends to lower rates of profit, and hence exerts a downwards pressure on wages.
In other words, high interest rates significantly increase the concentration of wealth, which frontally contradicts the themes of Lula’s election campaign.
Monetary policy determines to a great extent the growth rates of the economy; high interest rates lead to lower growth that will ruin the government’s projects.
The Lula government defends – it is a demand of the IMF – a project of ’operational autonomy’ for the Central Bank, which had already been formulated by the team around Arminio Fraga.
This would legally formalize and give more consistency to the freedom of action the Bank benefits from already; and, as the directors have fixed terms of office, it would make it very much more difficult to replace them in the case, for example, of a change in government economic policy.
Naturally, the project of ’operational autonomy’ envisages that the Central Bank should meet objectives defined by the minister of the economy – in reference to the policy inaugurated during reign of Fraga, fixing ’inflation targets’ to anchor monetary policy.
Not content with being based on a debatable model of economic policy, the definition of inflation targets is fairly slender as an orientation; the Central Bank enjoys a total liberty in the conduct of monetary policy to meet these targets.
What has happened already since the Cardoso government will be accentuated; instead of the minister of the economy orientating the actions of the Central Bank, the latter will define the margins of liberty of the minister through its control of the fiscal framework. The PT has always been opposed to the autonomy of the Central Bank in all its variants.
It is a constitutional question, which should be approved by the two chambers of Congress. Several PT parliamentarians have already criticized the project; its approval will not in any case take place without a fight.
The risk of a total continuity with the policy that prevailed during Cardoso’s second term – implied by the plans for the Central Bank – is reinforced by the presence of two ministers close to the PSDB, those of Development and Agriculture.
To what extent will the PT ministers oppose them?
A look at the team at the economics ministry strengthens the hypothesis of continuity.
The minister, Antonio Palocci, has given key posts (secretary of federal funds, secretary of the national treasury and secretary for international questions) to men who participated in the Cardoso government and who defend the policy that prevailed then.
The most surprising – and the most significant – has been the nomination as secretary for economic policy, responsible for the general policy of the ministry, of the economist Marcos Lisboa, known as one of the most important neoliberal economists of the new generation.
The neoliberal tendencies of the main auxiliaries of minister Palocci are hardly counterbalanced by the designation as executive secretary and executive vice-secretary of two PT militants, well known party economists.
The preponderance of the neoliberal orientation is confirmed by the actions of the minister himself. Palocci has defended continuity with the main points of the macro-economic policy of the Cardoso government: his version of ’fiscal responsibility’ (privileging the reduction of the budget deficit to stabilize the public debt/GDP relationship) and a conservative monetary policy.
He also advocates the pursuit of the privatization of the state banks (which did not figure in the electoral programme of the PT).
He seems to believe that there is only one sole ’scientific’ economic policy; in his inaugural speech, he said that his team are not going to ’reinvent the basic principles of economic policy’.
He adheres in fact to the fundamental dogma of the ’single system of thought’.
- MST activists patrol
One might accept the hypothesis that this conservative orthodoxy will only be maintained for the initial phase of the government.
During the campaign there was much talk of a ’period of transition’; Palocci himself sought to clarify this concept in his inaugural speech:
’The theme of transition has raised many anxieties about what will come after the phase of transition, there has been much speculation on the end of the reduction of the budget deficit, the objectives of inflation and of the floating exchange regime as well as on the adoption of unconventional innovative measures to guide macro-economic policy.
To these legitimate questions, we reply without equivocation that the new regime has already begun; good management of the public weal requires fiscal responsibility and economic stability.
The preceding government had much merit in this respect.
Yet, this is not its exclusivity, just as it will not be for our administration…
Our conception of the transition, and that which the country expects, is the overcoming of short term difficulties’. 
There will not, according to the minister, be any transition concerning the “basic principles of economic policy”.
In his view, the “period of transition” amounts to the necessary time period for overcoming short-term difficulties.
This impression of continuity in economic policy is strengthened by the critiques Palocci addresses of the management of his predecessors, critiques that do not exclude continuity.
In another speech, Palocci criticized two aspects of the economic management of the Cardoso government.
The first related to its exchange policy, mainly on the overvaluation of the real in the early days of the government. This critique is correct: this policy was responsible for the main part of the subsequent economic problems. B
ut this policy was changed during Cardoso’s second term; and what has followed since fits in with Palocci’s position (even in the most debatable aspects, like the lack of controls over capital movements).
The main objective fixed by the new minister in this area – the stabilization of the exchange rate – is shared by Cardoso’s old team; and the basic remedy proposed then – the restoration of ’market confidence’ receives his enthusiastic support.
‘Strategic Planning’ and social policies
The second criticism is more fundamental; it is aimed at the excessive confidence in the market, the absence of a national project of mobilization, an absence of some kind of ‘strategic planning’.
It’s useful to quote the minister:
’Without this national mobilization, the basis for a new social contract, any government effort, however voluntarist, will run out of steam and in the short run fall into strictly technical formulations, as zealous as they are limited.
If the state should not fall into paternalism as in the past, it should not imagine itself to be able to define a course for the economy by distancing itself from the population and its needs.
The unity of the country around this great, eminently political objective is the sole means of exercising a salutary pressure to reduce fragmentation and deepen coordination and dialogue between the different ministries, agencies and programmes of development.
At this level, disarticulation is systematically the source of waste of resources and engenders inefficiency…
Planning has been emptied of its function of definition of an institutional project and the establishment of a system of management and coordination.
This is true not only inside the ministry of Planning, but throughout the institutions charged with articulating the development of the country.
It would not be an exaggeration to say, in relation to strategic planning, that the Brazilian state has lived though a prolonged ’breakdown’…
The outgoing government has contributed, in concert with sectors of the international community, to spreading the illusion that economic growth and the reduction of social exclusion would result naturally from the development of markets and the unrestricted use of the abundant international savings available in the early 1990s…
We are conscious that the votes for [Lula] came to correct this excessive fascination for the markets which has marked the action of the government in recent years.’
This severe critique of the Cardoso government is strengthened by the critique of its social policy: ’What we inherit today is a country which has not been able to advance towards transcending the old dichotomy between economy and society, in which social policies appear as ornaments or appendices of the effort to control the economy.
The improvisation of a series of social programmes in the last two years illustrates this original separation and perpetuates a vision which does not incorporate social inclusion as a central theme of state policy’. 
However, this discourse is coupled with references to the fact that nothing that is being proposed should oppose the ‘principles of economic policy’, which include, for Palocci, an unambiguous effort to win the ‘confidence of the markets’.
Moreover, it is explicitly affirmed that the new policy will be pleasing to them; ‘the stronger the stability of economic and social relations and the more the markets are strengthened the greater will be the wealth accumulated to be better shared out’. 
The critical posture is relative then, while the exact meaning of the accent put on the construction of a national project is not very clear.
To better examine this aspect, it is worth looking at the perspectives of the minister of Planning. The new minister, Guido Mantega, a member of the PT, was once an economic advisor to Lula.
Everything indicates that his ministry will not have a very great weight in the formulation of economic policy, in the manner of what happened under the Cardoso government.
In fact, Mantega will be reduced to the role of collaborator with Palocci. Yet his ministry will, in a certain fashion, have a central responsibility in the realization of the objective of ‘strategic planning’.
In his speech on accession to office, he threw some light on the meaning of this concept. He took up the idea of a project of development and the mobilization of society, insisted on the necessity of ‘tough measures’ in a period of transition.
He clearly underlined the novelties that the policy of the new government will involve:
‘The new economic policy is not summed up by the reduction of the budget deficit or the fight against inflation…
Simultaneously, we will implement without delay a range of policies that will be the signature of this government and will characterize a new model of development.
Those who imagine that we will practice the old economic policy are wrong. In the area of foreign trade, the government will not remain inert, at the mercy of the mechanisms of globalization, which are biased and favour the advanced countries.
We will support exports and implement a policy of import substitution…
The Lula government will have no scruples about implementing active policies, for industry, agriculture or services and all the sectors where there is a need for modern policies of stimulation of the competitivity and productivity of Brazilian industry, thus generating the millions of job the people need.
The state will be at the service of the disinherited, in a crusade against hunger, poverty, and deprivation’. 
The ‘active policies’ in the areas cited were characteristic of the so-called ‘developmentalist’ period of the Brazilian economy until the early 1980s.
This link is confirmed by a reference, made by Palocci, to one of the best known presidents of that period: ‘In the past, with great presidents like Juscelino Kubitschek, the reforming task consisted in broadening the horizons of the citizen, interiorising development and bringing out the creative capacity of people, burying any inferiority complex.
Today, the great reforming task is to supervise organization and social cohesion, encourage teamwork and manage wisely the public and private resources with adequate techniques and modern methods of planning, which give Brazilians the possibility of overcoming social disorganization.’. 
At the same time, however, Mantega poses the limits of interventionism: ‘State intervention in the economy will henceforth be much more active, without however returning to the interventionist state of the past’. 
Juscelino Kubitschek is generally congratulated for his initiatives in favour of development, while being reproached for his fiscal irresponsibility and for having been responsible for the long period of hyperinflation experienced by Brazil.
Moreover, Brazil’s ‘developmentalism’ was criticized for having maintained the social inequalities that Brazil has inherited from the time of slavery.
Already, starting from the preceding, we can sum up what seems to be the main orientation of the Lula government’s economic policy in the formula:
‘Development + fiscal responsibility and control of inflation + state intervention without interventionism + struggle against social inequalities’.
In truth, the ’active policies’ in favour of development were also a theme of the campaign of the PSDB candidate Jose Serra.
It is precisely on this point that he proposed changes in relation to the Cardoso government, justifying thus his formula of ’change in continuity’.
Thus, another way to sum up the Palocci-Mantega line could be; the line of Jose Serra plus social sensibility.
To conclude, we should mention another important body in the economic sphere, the Bank for Social and Economic Development (BNDES).
It is formally linked to the Ministry of Development, but its president, the economist Carlos Lessa, was appointed by Lula in person. Lesse belongs to the so-called progressive wing of the PMDB (he was not appointed to this post by his party), and has many friends in the PT – notably the economist Maria da Conceicao Tavares.
He has already announced a reformulation of the bank’s activity, along the lines of developmentalist ‘active policies’.
The nomination of the PT’s Jorge Mattoso as president of the Caja Economica Federale, another very important federal bank, goes in the same direction (that of the Bank of Brazil has not yet been named).
Overall, the predominance of conservative or neoliberal orientations in the economic sphere of this government is obvious.
One can ask why this has not yet led to a stronger critique from the militants of the PT.
One explanation is that the consequences of these orientations do not yet appear clearly for a great majority.
A social revolution?
What will be the profile of a social policy that will not be an ‘ornament’, to take up the expression used by Palotti to refer to the policyof Cardoso?
The big ideas seem to be those of change without precipitation, accomplished through negotiation, of a national mobilization and a social pact (essentially through an alliance between labour and ‘productive capital’), on which Lula has insisted throughout the electoral campaign and which also figures in his inaugural speech:
‘Yes, we will transform. Transform with courage and caution, humility and audacity, being conscious that change is a gradual and continuous process, and not a simple exercise of will or a voluntarist transport.
Change happens through dialogue and negotiation, without rush or precipitation, so that the result is coherent and durable…
To put Brazil on the road to growth to create the jobs we lack so much, we need an authentic social pact for change and an alliance that solidly unites labour and productive capital, generator of fundamental wealth for the Nation.
This so that Brazil comes out of its current state of stagnation and so that the country navigates anew on the great sea of economic and social development.
Such a social pact will be also decisive to render viable the reforms that Brazilian society demands and that I am committed to carrying out; reform of social security, tax reform, political reform, reform of the labour code, as well as agrarian reform.
All these reforms will impel a new cycle of national development.’ 
For his part Jose Dirceu in his accession speech to the Casa civil (the presidential cabinet), took up the same ideas with a different accent:
… “we all know that we are going to take over the government of Brazil at a difficult time internationally, with a threat of war and in an economic and financial situation which worsens the situation of our country.
However, our responsibility is immense, more precisely, we cannot surmount these tests without a real popular participation and a national mobilization.”
President Lula, in his declarations, has expressed very clearly the following commitment: as this millennium begins, Brazil can victoriously face its problems only by a social contract, a national mobilization and popular participation…
The biggest challenge that our government faces in the coming years is perhaps that Brazil occupies its place in the world.
This is possible only at the price of a great social transformation and – we have no fear of the words – a true social revolution.
We owe it to our people.
Our Brazil… has faced great tests and has overcome them all, but it has not known how to face the challenge of justice and social equality.
It is for this that as a party of the socialist left – it is good to remember it – we hold out a hand to the Brazilian entrepreneurs and offer them a pact, of which we should say that it works in two directions:
it is necessary to defend the national interest, production, the development of the country, but on the other hand it is necessary to redistribute wealth, establish social justice, eliminate poverty and misery. It can only be done with a sole road, one way.
It is not acceptable that recently, the country resolved its financial and economic problems, that it has experienced growth and that this growth is not transformed into a greater share of the national wealth for the workers.
On the contrary, their share has shrunk by half in the last 20 years. Without a distribution of wealth, without revolution in education and a combat against poverty there will be no durable and substantial economic growth.
We all know that the current concentration of wealth and social inequality will lead the country into a social, cultural and institutional impasse.” 
Thus, Dirceu speaks of the necessity of a “true social revolution” that the leaders of the PT owe to the Brazilian people, and refers to the PT as a party of the socialist left.
There has been much comment on the existence of a conflict between two orientations inside the nucleus of the government: the one, rightist, defended by Palocci and the other, leftist, incarnated by Dirceu.
However, Dirceu’s speech also contained many less radical passages. Beyond the reference to the “hand held out to the entrepreneurs” and the necessary pact with these latter, he made an emphatic declaration on his willingness to collaborate with Palocci in defence of the economic policy of the government:
“I wish to send a special message to my comrade and friend Antonio Palocci – who is not present. I want to say to the country, and him in particular, that he will be able to count, that he can already count on my support for the difficult task that will be his ministry of the economy.
Palocci, be assured that with Jose Dirceu in the Casa civil, you will have a fortress to defend the economic policy decided by president Lula.” 
This reference could of course, simply be a matter of protocol and it does not rule out the existence of deep divergences.
Nonetheless, it is difficult to know what social transformations the Lula government will carry through. The most accentuated project of the early days of his term – the programme against hunger – does not yet have a well-defined format.
Perspectives for agrarian reform
On the other hand, the advance of agrarian reform can represent an important social transformation and the conditions for this to happen are relatively more favourable.
First, thanks to the existence of the MST.
The MST is one of the most active social movements and the one with the greatest capacity for mobilization.
Second, because the designated minister for Agrarian Development, Miguel Rosseto, belongs to a left tendency of the PT – Socialist Democracy.
His nomination has been, significantly, supported by the MST and by the other sectors affected by agrarian reform (CONTAG, the rural sector of the CUT), who had been consulted, and criticized by the employers’ representatives.
From his entry into office, Rosseto has adopted a discourse linking the possibility of advancing towards agrarian reform with social mobilization.
Simultaneously, he has also defended the autonomy of the social movement, and the respect by the government of its mobilizations:
… ‘we will follow to the end this task on the basis of a broad appeal to social mobilization, we will go into dialogue with the state governors, with the mayors, we will have a dialogue with all the social movements, we are going to have a dialogue with all factions of Brazilian society who understand and are willing to collaborate in this great civilizing process in Brazil and in particular in our countryside…
We have built relations and concepts of autonomy, of independence, which separate and distinguish the political dynamics of the social movements, the elected executives and the state organizations as a whole.
It is true that the elected organs should not be put under the tutelage of the social movements. If that is true, it is also true that it is not the task of a government in a democratic state to smother the capacity for mobilization of the social movements.
The democracy we want, the Republic that we have won, loves the popular presence, loves, lives and grows stronger from the activity of the citizens.
The reconstruction of this country has as its basis this enormous capacity for mobilization, this enormous capacity to look from the side of this Brazil, to create larger and better spaces of popular and citizens’ participation, to recognize in permanence that there are names, faces, joys, sadnesses, sufferings; there is a people that wants to be respected and that will be by all of us.’ 
The main leader of the MST, Joao Pedro Stedile, commenting to the press on the nomination of Miguel Rosseto and the perspectives of agrarian reform, stressed the importance of social mobilization to render viable the transformations:
“The presence of minister Rosseto is a positive signal.
He is someone who has a historic tradition of commitment on the Brazilian left.
However, we prefer not to make judgments on persons or declarations.
What will allow advance will be the correlation of forces inside society. And it is us who will organize the people to bring the level of pressure necessary for any process of change” 
After taking office, the minister visited the Chamber of Deputies and held a meeting with the agrarian commission of the PT, which is made up of the deputies most involved in the struggle for agrarian reform.
He has announced his intention of working in liaison with them.
In spite of favourable conditions for meeting the minister’s objectives, we should remember that there are also significant difficulties.
The first is the legislation promulgated under FHS to make the MST’s mobilizations more difficult (mainly Provisional Measure 2.027 which lays down that occupied lands will not be requisitioned for two years, and that their occupants will be excluded from programmes of land distribution). The MST, naturally, expects the revocation of this measure.
A second big difficulty is shared with all the social sectors: agrarian reform requires public funds (for the requisitions and aid to peasants who have been given land), and this is difficult given the necessity of maintaining fiscal austerity to ease the deficit.
In his speech on acceding to office, Lula stressed the importance of certain reforms: pensions, taxes, political reform and the labour code as well as agrarian reform. Not one of them will be easy and that is obvious from the first days of the government.
Pension reform is particularly subject to conflicts.
From the government’s viewpoint, there are three difficult objectives: to create a fairer pensions system (the pensions for workers in the private sector are derisory; the major part of workers in the public sector have a reasonable pension; and a part of the public sector has enormous privileges); to reduce budget costs; and to respect the limits that the Constitution imposes on changes, on the basis of guaranteeing ’rights acquired’.
The ’markets’ are campaigning frenetically for a reform that reduces the budgetary cost of pensions and allows the reduction of the deficit.
This institution and its representatives in the press talk of the ’injustice’ of pensions now integrated into the wages of civil servants, without defending a decent pension for workers in the private sector and hiding the fact that the essence of the proposal for the reduction of the budget deficit is to allow the payment of exorbitant interest on the public debt.
Workers in the public sector fear, correctly, that they will be the big victims of reform. And the privileged mobilize to defend their privileges.
Caught in the crossfire, the government (especially the Pensions Minister, Ricardo Berzoini, PT and ex-trades unionist), makes incoherent speeches on their objectives.
Reform of the labour code is no less controversial.
To cite only one example, in one of his first declarations after his nomination, the minister of labour, Jacques Wagner (PT, ex-trade unionist) was favourable to one of the main employers’ demands, cancellation of the fine of 40% that employers have to pay for dismissals without motive.
Faced with the live and immediate protests of the trade union federations, he drew back. The most important theme in this area has for the moment not drawn much attention: the fact that nearly half of the Brazilian labour force has no formal employment, and thus no legal protection.
In sum, the negotiation and the eventual approval of these reforms will certainly lead to big conflicts.
International relations will be a key area for this government both in its repercussions abroad and as a source of some of the main challenges that it will face (the most dangerous being the process of negotiation of the FTAA which is underway).
Lula has said he will give priority to relations inside Latin America, which is positive.
During his accession to power, he drew attention to his meetings with Hugo Chavez and Fidel Castro – which in today’s world is very significant.
Also, the government appears to be in the process of increasing its aid to Venezuela, with the declared objective of defending the institutional order – another positive, in the face of the mobilization of the right in Venezuela to overthrow the Chavez government.
The minister, Celso Amorim, a career diplomat, had already occupied this post under president Itamar Franco, in 1992-94.
The most important question is: how will the negotiations for the FTAA be conducted (they also involve other ministers, particularly that of development)?
A very positive event has been the nomination of the ambassador Samuel Pinheiro Guimaraes to the second rank in the hierarchy of the ministry, that of secretary general.
Guimarles was one of the main critics of the FTAA project in Brazil, and that is why he was relieved of his functions and marginalized by the former minister.
This nomination could mean that the Lula government will adopt a posture of opposition to the FTAA. However, subsequently the secretariat general has lost some of its powers, and it seems that it will not participate directly in the process of negotiations for the FTAA.
Moreover, the Brazilian coordinator of the negotiations will continue to be the ambassador Clodoaldo Hugueney, the same diplomat who has held this responsibility since the beginning of 2001!
Lula, like Celso Amorim, puts forward a line which is to pursue the FTAA negotiations, while correcting certain aspects.
At his investiture, Lula said:
“The essential thing in all these forums is to preserve margins of flexibility for our policies of development in the social and regional areas, in the environment, agriculture, industry, technology.
We will not lose sight of the fact that the human being is the ultimate destiny of the outcome of negotiations. What would our participation be worth, such a vast effort on so many fronts if the outcome was not direct benefits for our people?
We will be attentive also that these negotiations, which now go well beyond simple reductions of tariffs and encompass a range of norms, do not create unacceptable restrictions on the sovereign right of the Brazilian people to decide on its model of development”. 
The current model of the FTAA, which responds to the interests of the US, creates precisely such restrictions on the “sovereign right of the Brazilian people to decide on its model of development”.
This model goes well beyond questions of free trade: it includes liberalization of capital and investment flows, restrictions on the purchasing policy of governments, along the lines proposed under the famous MAI.
In conclusion: the policy towards the FTAA is not that defended by the Brazilian left and approved at the plebiscite of 2002 – to end negotiations.
However, the chances are growing that this dangerous project will be blocked.
The objective of this article was solely to present a broadly systematic picture of the composition of the Lula government and to make a brief analysis of its early stages.
We do not propose to make an overall analysis, and still less propose an analysis for the left of the PT in relation to the government.
Thus, by way of a conclusion, we can sum up on what seem to be the basic contradictions of the initial project.
The idea that it is possible to maintain a conservative policy on fundamental aspects (monetary policy, fiscal policy, guarantee of “contracts” in general, which includes a strict guarantee of private property) and also promote changes which represent popular interests, implies that it is possible to reduce exploitation and oppression without harming the interests of the dominant classes.
It amounts then to a contradiction in terms.
This contradiction is not overcome in the ’left’ version of the same idea, defended by Jose Dirceu in his inaugural speech;
… “to extend a hand to the entrepreneurs” so that they collaborate in this objective.
Are these ideas purely tactical, or do they represent a strategic orientation of the nucleus of the government?
If we look at what those who speak on this aspect in the government’s name have said, we have to go with the second hypothesis.
As we have seen, the idea that the government begins with a ’period of transition’ is interpreted in the sense that a certain time is necessary for the country to free itself from the most onerous restrictions inherited from the previous government.
But it is hoped to do this by maintaining conservative (or neoliberal) orthodoxy on key aspects of macroeconomic policy – particularly in the fiscal and monetary areas.
Anyone with basic Marxist references would conclude without difficulty that this project is not realistic.
But what will come out of it?
The Lula government has, we would say, two souls: that of the promised changes (which justified its election) and that of the guarantees of continuity to win the confidence of the markets.
Perhaps these two souls are symbolized by Lula’s decision to participate in the WSF in Porto Alegre (he had attended the two previous forums) and in the WEF at Davos.
Some of the organizers of the WSF criticized this decision and called on Lula not to go to Davos – without effect.
At Porto Alegre, Lula will be with the ministers linked to the social area of the government’s activities; at Davos, with Meirelles (Central Bank) and Furlan (Development), both regular participants in these meetings.
The composition of the government shows that there will be internal conflicts. And more importantly: even if Lula desires and works for a ’social pact’ and national unity, what is more probable is a government of large scale class conflicts (whose dimension is hard to predict), where social mobilisation will play a fundamental role.
Another decisive question; what will be the dynamic of the PT during Lula’s term of office?
How will it behave faced with the challenges and conflicts the government will face?
It is clear that the party will be subjected to great tensions, and it could not be otherwise when it sees policies which it has long criticised being pursued.
Until now, unity has been preserved by the general expectations in the Lula government and by the force of the long trajectory of the PT’s identity with social sruggle. But, on the other hand, threats to a democratic process of discussion have already appeared.
For opposing the selection of Meirelles, senator Heloísa Helena has been threatened with sanctions by the ex- president of the PT, Jose Dirceu (in the end, the new president, Jose Genoino, allowed an agreement through which the senator absented herself for the vote on the president of the Central Bank without being sanctioned).
Although in the terms of the constitution it is up to the senators to debate and designate the president of the Central bank, the senators of the PT were prevented from doing so. Meanwhile, the position of Dirceu in the episode was criticized by diverse sectors of the party.
The limitation of debate and restrictions on democracy do not favour unity, above all when there are questions under discussion which are much more directly relevant to the social base of the party than the appointment of the president of the central bank.
For example, pension reform and labour legislation, and the formation of the FTAA.
Although of smaller popular impact, the question of the autonomy of the Central Bank is extremely controversial.
Will there be space for a broad debate on these and other questions?
The big question is: will the conservative orientation that has prevailed in the economic area be consolidated?
If it is, will the unity of the PT survive such contradictions?
Or, putting the question another way:
… can Porto Alegre and Davos coexist indefinitely within the PT?
The orientations of this government are not defined a priori.
They will be defined in the course of a process of political and social struggles, in which the defence of change will be supported by the entire trajectory of the PT, by its historical identification with the popular interests, and by the fundamental message of the election.
 Brazil is a federal republic, with 26 states and a federal district.
The president is elected by universal suffrage over 2 rounds, every four years, and can select and dismiss ministers (they are not responsible to Parliament) but cannot dissolve the assembly.
The bicameral parliament is made up of a Chamber of Federal Deputies (513 members, elected for four years) and a federal Senate (81 members, elected for 8 years). The political system in the states is similar.
 Speech, January 2, 2003.
 Speech, December 27, 2002
 Speech, December 27, 2002
 Speech, December 27, 2002
 Speech, January 7, 2003
 Speech, December 27, 2002
 Speech, January 7, 2003
 Speech by Lula, January 1, 2003
 Speech, January 2, 2003
 Speech, January 2, 2003
 Inaugural speech by Miguel Rosseto, January 2, 2003
 ’Jornal do Brasil’, January 5, 2003.
 Inaugural speech, January 1, 2003.
see also: From Lula to Dilma
From Lula to Dilma
Tuesday, 14 February 2012 / Michael Löwy /Michael Löwy, a philosopher and sociologist of Brazilian origin, is a member of the New Anti-capitalist Party in France and of the Fourth International. A Fellow of the IIRE in Amsterdam and former research director of the French National Council for Scientific Research (CNRS), he has written many books, including The Marxism of Che Guevara, Marxism and Liberation Theology, Fatherland or Mother Earth? and The War of Gods: Religion and Politics in Latin America. He is joint author (with Joel Kovel) of the International Ecosocialist Manifesto. He was also one of the organizers of the first International Ecosocialist Meeting, in Paris, in 2007.
Brazil is an immense country in terms of population (180 million in habitants), area (half of Latin America) and natural resources.
And yet it is a country where the majority of the population live in the direst poverty. In fact, in a recent United Nations international ranking, Brazil emerged as on the most unequal countries on the planet, a country where the gap between the privileged minority and the impoverished majority is one of the greatest.
According to some observers, Brazil is a kind of “SwissIndia”, where the rich live as in Switzerland while the poor live as in India.
This inequality is especially striking in the countryside, where a handful of big rural proprietors monopolise most of the land, while the mass of peasants have only minuscule holdings, or no land at all.
With the development of capitalism in the countryside, and the replacement of crop or livestock by extensive cattle ranching — for export for the MacDonald chain — the peasants are expelled from the land by the “pistoleiros”, the hired thugs of the landowners.
With the worsening of living conditions in the rural areas, notably in the north east, millions of peasants have flooded to the big cities, huge megapolises like Rio de Janeiro and Sao Paulo.
Some find work in industry or services, but the unemployment rate is very high and the majority remain excluded and trapped in the favelas, the miserable shanty towns which surround the cities, where there is neither running water nor electricity nor sewers and where survival is only possible through marginal activities (street trade, prostitution) or criminality, like the drugs trade.
There is also a veritable social apartheid in the country, reflected in the big cities by a physical separation of the houses and neighbourhoods of the rich, surrounded by walls and electrified barbed wire, and guarded by private security units who carefully control all the entries and exits.
A social discrimination which also has an implicit racial dimension, to the extent that the great majority of the poor are black or mixed race.
After twenty years of military dictatorship, Brazil has since 1985 experienced a return to democracy and to civilian governments.
This undeniable political progress has not been followed by any effective social change. All governments, of the right or of the centre, in office since 1985 have only applied neoliberal “structural adjustment” policies demanded by the International Monetary Fund:
… privatisation of public services publics, reduction of health and education expenditure, and above all payment of the foreign debt, which has reached astronomical levels and which absorbs all of the exports surplus.
This was notably the case with the centre right government led for eight years by Fernando Henrique Cardoso, a former left intellectual converted to the neoliberal religion who became one of the best pupils of the IMF in Latin America.
Thanks to Cardoso, the last existing public companies like the electricity company were privatised and sold to foreign companies; since the latter did not wish to make the necessary investment there are periodic sudden power cuts which plunge towns or entire regions into darkness.
However democratisation allowed the rise across the country of a new worker, peasant and popular movement, which organised the struggle of the poor for their rights and against the neoliberal policies of the government.
Part of this movement was the new class conscious and independent trades unionism which emerged at the end of the 1970s, and which organised in the CUT union federation around ten million employees; the MST movement of landless rural workers, which mobilised peasants for agrarian reform, taking the initiative to occupy lands which were not being used by the big landowners; finally, the Workers’ Party (PT).
The long march of the PT
How did the PT emerge?
From 1978, the year of big workers strikes in the suburbs of Sao Paulo, several “authentic” trade union leaders began to agitate for the idea of an autonomous workers’ party, probably starting from a reflection on the experience of the strike itself, of its confrontation with the military police apparatus of the state, and for some a first balance sheet of the social struggles in the recent history of the country (since 1964).
In October 1979 the first National Meeting of the PT took place in São Bernardo do Campo, a proletarian bastion of the metalworkers union, led by Luis Inacio da Silva, “Lula”; this was concretely the moment of foundation of the new party, and the election of its first provisional leadership took place.
A brief political statement was approved at this conference, clearly affirming the goal of the party:
“The PT fights so that economic and political power is directly exercised by the workers. It is the only way of ending exploitation and oppression”.
At the same time, the document called on “all democratic forces to constitute a broad mass front against the dictatorial regime”.
The PT thus proposed to fight for the formation of a single union federation, stressing that “its construction necessitates the overthrow of the current trade union structure subjected to the states”.
In April-May 1980 the big strike of 250,000 metal workers broke out in São Bernardo; following the police and military intervention — arrest of main leaders, military intervention in the union — the movement was stopped; but it revealed, by its exceptional length (42 days) and its capacity of mass organisation (daily meetings of tens of thousands of workers), the surprising force of the new unionism.
In May-June of this year a new National Conference of the PT met, with delegates from 22 states in Brazil, representing approximately 30,000 members of the party.
A Manifesto and a Programme were approved, defining the PT as “the real political expression of all those exploited by the capitalist system” and as a mass, broad, open, democratic party.
However, the PT was still far from having an elaborated “doctrine”: many programmatic questions and definitions were deliberately left open to allow a broader debate and a progressive “ripening” of the activists as a whole.
The PT candidate, Luis Inacio Lula da Silva, lost the presidential elections of 1988, 1994 and 1998, beaten by the candidates of the neoliberal bourgeoisie (Collor de Mello and then F.H. Cardoso).
Despite these defeats, the PT won several important municipalities in the country, and even some state governments.
And it implemented, in the localities it managed, forms of rank and file democracy, like the famous “participatory budget”.
However there was a certain institutionalisation of the party and starting from the mid 1990s, an increasingly strong tendency, in the majority current of the PT leadership, to pragmatism and political and programmatic “deradicalisation”.
The socialist programme of 1990 was put on the back burner, and increasingly the party leadership rallied to social democracy, despite the opposition of the left currents in the Party — notably “Socialist Democracy” the tendency of the PT affiliated to the Fourth International, led by Raul Pont, the mayor of Porto Alegre.
The electoral defeats convinced Lula to change his strategy. In 2002 he imposed on a reticent PT a broad policy of alliances with bourgeois force, taking as his candidate for vice-president an industrialist, José Alencar, leader of the right wing Liberal Party.
He was elected at the second round, with more than 61% of the vote, against José Serra, the candidate of the PSDB supported by Fernando Henrique Cardoso.
A social liberal government
The victory of Lula in the elections of 2002 provoked an immense hope of change among the poor and the oppressed in Brazil.
However, five years later the balance sheet was globally negative; rather than a big change there was continuity with the previous economic policies.
Certainly, not everything in Lula’s period of office was negative: by the programme “Zero Hunger” and other social programmes, billions of dollars were distributed to the poorest, in various forms of aid (food aid, scholarships and so on).
But in terms of neoliberal macroeconomic policies, he did not emerge from the framework established by his predecessors.
The symbol of this continuity was the president of the all powerful Central Bank, which determines the country’s interest rates and monetary policy; Henrique Meirelles, a senator from Cardoso’s PSDB party and former director of the Boston Bank.
Trusted by international financial capital, he enjoyed the unfailing support of the president, who imposed a “provisional measure” giving him the status of Minister and thus immunity certain judicial investigations for financial irregularities.
This neoliberal orthodoxy was reflected in practice by subordination to the demands of the IMF, the establishment of a huge tax surplus allowing payment of the external and internal debt, high interest rates to attract investment, neoliberal pensions reform, massive subsides of export oriented agro-business rather than family agriculture, the opening of the country to Monsanto GMOs.
Without speaking of various corruption scandals involving members of the government and the leaders or deputies of the PT.
We can define the policy of Lula and his government as social liberal.
Social liberalism is not identical to neoliberalism as such: it maintains certain social concerns, attempts to improve a little the fate of the poorest and it prefers dialogue with the social movements — or to co-opt them — rather than to repress them.
But on the essential bases of economic policy, there is no substantial difference.
And on certain questions — pensions for example — it was capable of imposing neoliberal policies that the right had not succeeded in pushing through because of PT opposition!
One example illustrates the logic of social liberalism: 10 % of the budget for agricultural aid was distributed to millions of families involved in small peasant production — responsible for most of the country’s food cultivation — while 90 % went to a handful of big proprietors in capitalist agro-business, producing for export.
In 2003, three deputies and the senator Heloísa Helena were expelled from the PT for voting against the neoliberal pensions reform.
They then formed a new Party, the P-SOL, Party of Socialism and Liberty, which identified with the PT’s original socialist and democratic programme.
It received support from groups of Trotskyist origin, Christian socialist activists (like Plinio de Arruda Sampaio, one of the best known Christian intellectuals in the country, author of an agrarian reform programme supported by the movement of the landless), and a number of well known trades unionists and left intellectuals, like Carlos Nelson Coutinho, Leandro Konder, Chico de Oliveira and Ricardo Antunes.
The PSOL activists mostly originated from left PT currents, but most of the supporters of these tendencies — notably the great majority of the “Socialist Democracy” current — remained in the PT and in government.
They were up to a point critical of Lula’s neoliberal policies, but remained prisoners of governmental solidarity.
To say that the Lula government is social-liberal means also that it did not remedy the “social fracture”, the gigantic gap which separates the oligarchy from the masses in Brazil.
The president and most of the ministers, whether from the PT or the other parties of the majority coalition, shared the conviction that there is no alternative economic policy to the neoliberal status quo, the “Washington Consensus”.
Certainly at the beginning some ministers or higher civil servants had followed a more autonomous orientation based on national development, the internal market, the defence of Brazilian industry; however the main representative of this “developmentist” tendency, Carlos Lessa, director the important National Bank for Social and Economic Development (BNDES), was forced to resign.
Criticism by Frei Betto
Among those who left the government was the liberation theologian Frei Betto, who was one of the leaders of the Zero Hunger programme.
He has drawn a lucid balance sheet of his experience and the government itself in his book “A mosca azul. Reflexâo sobre o poder” (Editora Rocco, Rio de Janeiro 2006).
A Dominican priest who was imprisoned for five years (1969-1974) under the military dictatorship for having aided revolutionary militants to hide, and a personal friend of Lula since the late 1970s, Frei Betto was a faithful “fellow traveller” of the PT, ironically stating that he did not join it because he did not want the parties to reproduce the vices of the churches.
During its early years, he says the PT had an ideological coherence and ethical principles, as well as a strategic objective: the workers to power, the construction of socialism. Imperceptibly, through the 1990s, these original colours lost their shine and the PT became distanced both from the social movements and its initial objectives, privileging instead the positions of institutional power.
Betto attributes this change in grand part to the fall of the Berlin wall, which obscured the utopian horizon of the PT and its socialist perspective.
This is the only argument in the book which strikes me as debatable: in fact most PT cadres, in various ways, did not have the countries of so called “actually existing socialism” as their central ideological reference point.
And in 1990, one year after the fall of the wall the PT Congress approved a document reaffirming in a more categorical form the anti-capitalist and socialist commitment of the Party.
In any case, Frei Betto was greatly enthused by Lula’s victory in the 2002 elections, and agreed to be one of the leaders of the “Zero Hunger” programme.
Two years later he resigned, believing that the government had essentially become the hostage of the dominant élites and financial markets.
Betto notes that while in the trade unions Lula had shown he could insert himself in an impure structure without being co-opted, he had not succeeded in doing so in government.
Shortly after Betto’s departure from government the scandal of hidden payments of the PT broke out :
… “a small leading nucleus of the PT had succeeded in a few years in doing what the right had not been able to do over several decades, even in the darkest years of the dictatorship: demoralising the left”.
But for Betto, worse still than the corruption was seeing the fear faced with the diktats of the financial market vanquish hope.
The thirst for power and the adaptation to the religion of the market led to the loss of strategic perspective and the collapse of the historic horizon.
Power ceased to be an instrument of social change and became — as predicted by Robert Michels in his classic study on mass parties — an end in itself.
As Betto observes “Politics becomes hateful when it loses the utopian horizon”.
Lula mark 2 and Dilma Roussef
What happened in the 2006 presidential elections?
Popular disappointment prevented Lula from being elected in the first round.
In the second round he steered his discourse to the left, denouncing his opponent’s privatisation plans.
He was comfortably re-elected at the second round, with around 61 % of the vote against 39 % for the candidate of the right wing coalition (PSDB-PFL), Geraldo Alckmin.
Rather than popular enthusiasm, Lula’s success resulted from the fear aroused by Alckmin, a representative of the hard neoliberal right, close to Opus Dei) known for his pro US positions, his repressive policy of criminalisation of social movements and his support for a policy of privatisation of public enterprises .
The candidate for the PSOL, Heloísa Helena (linked to the Fourth International) supported by a left coalition including the Brazilian Communist Party and the Trotskyist PSTU, received just under 7 % of the vote (more than six million votes) at the 2006 elections and the party elected three deputies to the federal parliament.
A limited but not insignificant result. The PSOL refused to take a position in the second round, but some of its leaders called for a vote for Lula to block Alckmin.
A critical vote for Lula was also the position of the MST, despite its deep disappointment with this government, which has not kept its promise to carry out real agrarian reform.
Lula’s second term was no different from the first. A single solution was proposed to Brazil’s social problems: the growth of GDP.
Thus a Growth Pact was approved, with the objective of reviving production through state aid. Among the left and centre left governments of Latin America, Lula was closest to the most moderate, like Tabaré Vazquez in Uruguay and Michèle Bachelet in Chile, rather than the anti-imperialist pole represented by Hugo Chavez (Venezuela), Evo Morales (Bolivia) or Rafael Correa (Ecuador) — even if he refused, unlike the Chilean president, to sign a Free Trade Agreement with the USA.
There was however a certain rapprochement with the Bush government around the project of replacing oil by “biofuels”: ethanol, produced from cane alcohol.
It was a dangerous project, replacing the cultivation of food products by that of sugar cane, with disastrous consequences for the food supply of the popular layers.
During this new government — where ministers form right or centre parties occupied a still more determinant place than before — there was a still greater distancing from the social movements.
Not only the radical left (PSOL, PSTU) and the MST, but also the trade union left and other social movements protested against the government’s policies.
One of the great limits of ten years of the Lula government has been the absence of a real agrarian reform, a central question for the future of Brazilian society.
According to the MST, the Lula government which had committed itself to distributing land to 450,000 peasant families has only done so for 150,000.
Millions of landless rural workers await a real reform which attacks the insolent privileges of the rural capitalist oligarchy, in increasingly precarious social conditions.
Forbidden by the Constitution from seeking a third term, Lula chose as his dauphin Dilma Roussef, who became in 2011 the PT presidential candidate.
Active in the armed resistance to the dictatorship — she organised some bank expropriations – she was arrested, tortured and imprisoned for three years.
After her release, she became an effective and pragmatic “left technocrat”, first joining the Democratic Labour Party of Leonel Brizola, and then joining the PT in 2000.
Elected in the second round against Alckmin, she then succeeded Lula.
The PSOL presented as candidate Plinio de Arruda Sampaio, who waged a good campaign but only gained 1% of the vote.
The policy of the Dilma government— shaken by several corruption scandals concerning various ministers, notably from the centre right PMDB, who have had to resign — has hardly been different from that of its predecessor.
The social programmes are maintained and even strengthened, but the general orientation remains that of the Washington Consensus”.
Some control over capital flows has been established and the situation of the economy has stabilised.
The demands of the landless for debt forgiveness have been totally rejected.
The most disappointing aspect is probably the ecological balance sheet: a law on forests which favours impunity for the destroyers of Amazonia; and the decision to build the hydro-electric dam at Belo Monte, leading to the expulsion of the inhabitants and the destruction of a vast wooded area.
The movements in defence of human rights have obtained a concession, in the form of the Truth Commission, which has presented a report on the crimes of the dictatorship, but without punishment of those responsible, covered by the military auto-amnesty of 1979.
As in previous years, only the mobilisation “from below” of the workers, landless and homeless, youth and women, environmentalists and indigenous peoples, can change the relationship of social and political forces.