Brazil: Lula government in crisis

Fraud and corruption revelations force top level resignations

PRESIDENT LULA'S government is undergoing its deepest political crisis since coming to power in January 2003. An avalanche of accusations of fraud and corruption has led to the resignation of several leading PT (Workers' Party, the party of President Lula) members, including a minister, José Dirceu (Lula's chief-of-staff - a kind of informal prime minister), and José Genoino, the PT's former president.

Marcus Kollbrunner, Brazil, Socialismo Revolucionario (CWI in Brazil)

The crisis is still growing, with new cases and more details on old ones, and is becoming the most severe since Collor de Melor was forced to resign as president in 1992, after mass protests against corruption.

The fact that Lula remains popular and not affected by the corruption charges, and that the government has the support of the leadership of CUT (Brazilian trade union federation linked to the PT), MST (Landless rural workers' movement) and UNE (National Union of Students), means that the crisis, so far, has not led to mass protests, as in other Latin American countries.

The crisis of 1992, and today's crisis, have a common figure - the MP Roberto Jefferson. Jefferson became known as Collor's defender, his 'shock trooper'. He later became party leader for the conservative PTB. In May, this year, he was accused of being responsible for a bribing scandal in the Brazilian post office.

The latest crisis came to light after an official was filmed accepting a bribe of 3,000 reals ($1,300) while saying that he had Jefferson's support for awarding contracts to private firms in exchange for kickbacks.

Roberto Jefferson has been a faithful ally of the PT government and Lula described him as a person to whom he was prepared to give a blank cheque. When Jefferson found himself under attack, he retaliated by saying he knew of a big scheme whereby bribes were allegedly used by the PT leadership to buy votes from MPs, giving them a "monthly allowance" of 30,000 reals ($13,000).

The nail in the coffin for José Genoino, who tried to cling to his post to the last minute, was when his brother's (an MP in the state parliament in Brazil's north east) assistant was caught in an airport with 200,000 reals in a briefcase - and a further $100,000!

This is not the first time that the PT leadership and government has been hit by corruption scandals. José Dirceu was weakened for a period when in 2004 it became known that an assistant of his, Waldomiro Diniz, was taking bribes from a crime boss. The government did all that was possible to stop a Parliamentary Commission of Inquiry (CPI) being set up to investigate the case.

It was also revealed earlier this year that one of the ministers in the government, Jucá (of the right-wing PMDB - Partido do Movimento Democrático Brasileiro - Party of the Brazilian Democratic Movement), made loans using fictitious estates as security. He has been sacked as a minister as a result.

System's stability threatened

So while the crisis is deepening, old cases are coming back. It is still unclear if the government will manage to survive the crisis. Lula is reshuffling the government and the PT leadership is also bringing in new names.

The right-wing opposition of the PSDB and its ally the PFL (Partido da Frente Liberal - Party of the Liberal Front), have no interest in bringing down Lula. Too deep a crisis and too many disclosures will hit them as well and threaten the stability of the system.

They are also deeply involved in corruption. Just a few days ago, a PFL MP was caught at an airport with seven cases with 10 million reals ($4.2 million)! He claimed that money belonged to the Universal Church, of which he is president. He has now been expelled from the party.

But the crisis has its own life. What will be decisive will be if a continued crisis sparks off mass protests. P-SOL, the new socialist party in which Socialismo Revolucionário (CWI in Brazil) is taking part, is arguing that the struggles for higher wages, against cuts and against the neo-liberal reforms must be linked to the struggle against corruption.

Federal civil servants have been on strike for weeks against the ridiculous wage offer of 0.1% from the government. It is not hard to show that there is much more money than that circulating - in bribes. Recently, at the congress of the UNE (Students Union), P-SOL raised the slogan "there is no money for education - but there is for the 'monthly allowances'."

It's not only about corruption - the whole political and economic system is rotten. Capitalism is driven by the hunt for profits and neo-liberal policies increase the opportunities for corruption, with public money going to private companies.

The really big theft or "monthly allowances" is the vast sums paid to the banks as interest for the public debt. The payment on interest rates for the public debt has increased 25% this year and is calculated to reach 150 billion reals ($64 billion) equivalent to 7.5% of GDP [a country's annual productive wealth].

The political parties in Brazil, traditionally, are no more than fronts for different careerists running for elections. Since 2003, there have been 205 cases of MPs changing parties (some have done it several times) out of the 513 deputies of the lower house of the congress.

'Legal' bribery

There is a 'legal' way of bribing MPs that the Lula government is not afraid of using. In the federal budget there is money allocated for special projects. That money is used in the run-up to important votes in parliament.

MPs can use this money in projects in their constituencies and in that way increase their chances of being re-elected. For example, when the government was trying to stop a parliamentary commission of inquiry on the scandal in the Post Office, one billion reals ($425 million) of funds were released - although it didn't help this time.

Roberto Jefferson has also exposed what is known as the "second cashbox". He stated that 90% of the expenses for the election campaigns of MPs are not accounted for. They come from the "second cashbox" - secret funding from companies that give them this money in return for the possibility of getting public contracts after elections. "The only party that doesn't have any 'second cashbox' is P-SOL", said Jefferson.

He has also revealed how the PT leadership promised a cash contribution to his PTB party, of 20 million reals. Four million has actually been paid over.

The PT, a party that was built out of the mass struggle of workers against the military dictatorship [1964-1985] and for social justice, was for a long time different from other corrupt parties on the Brazilian political scene. But without a programme or strategy to bring down the corrupt capitalist system, the party leaders adopted the methods of rule of other politicians which included corruption. The PT is no longer a party with an active base, it is a party of MPs, councillors, mayors, governors and their assistants.

The leaderships of CUT, MST and UNE claim, incredibly, that the crisis is a result of a 'white coup', with the support of Bush. They link demands against the corruption and for a change in the economic policies with the defence of the government. But while they sow illusions that there is now a possibility of a left turn by the government, the opposite is taking place.

Lula is bringing in more ministers from the right-wing PMDB and the position of Palocci (the finance minister) has been strengthened. Neo-liberal policies are continuing and one of Lula's priorities is to try and get the project of PPP (public-private partnership - the same method of privatisation Tony Blair has implemented) going.

Lula is still the main candidate for the president election next year, even for the capitalist class. In the polls Lula would win on the first round against all possible candidates, unless Serra (mayor of S‹o Paulo) were the candidate for the PSDB - but even then Lula, according to opinion polls, would win easily on the second round.

The crisis in the PT will lead to new splits and new groups joining the P-SOL. The real solution to the crisis lies in the struggle for a socialist alternative, against the corrupt capitalist system.

This year will be decisive for the new party. By intervening in the struggle with a fighting alternative and preparing a candidacy for the elections next year this will clearly show that the party is not about winning seats at all cost, but about making a political challenge to the capitalist system with a socialist alternative. Under these conditions the party can quickly grow into a significant force.

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In The Socialist 28 July 2005:

Workers' unity against war and terrorism