Workers’ Leader Lula Wins Brazil Presidency; US Warns Him Against Radical Changes

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By GERRY FOLEY

The second round of the Brazilian elections on Oct. 27 brought no more surprises than the first round on Oct. 6. The Workers Party candidate, Luiz Ignacio da Silva (Lula), won handily with about 61 percent of the vote to about 31 percent for the outgoing government’s candidate, Jose Serra.

As in the first round, Lula’s vote in the second was somewhat less than might have been expected. The major candidates who were eliminated in the first round claimed to be as radical or more radical than he, and their votes combined with that of Lula would have been about 75 percent.

In any case, Lula’s bandwagon was clearly unstoppable. A considerable section of the bourgeoisie itself had come to the conclusion that their best chance of riding out the economic and social turmoil facing the country was to hide behind a former radical workers’ leader who pledged to respect the rules of the world capitalist system at the same time as pledging a new deal for the poor masses of Brazil.

Some 54 million of the Brazilian population of 175 million are categorized as “poor” and “hungry.” Lula is promising to abolish hunger.

However, Lula’s bourgeois supporters were not simply a “party of fear” but capitalists whose interests are tied to the domestic market and native industry, which has been ravaged by the neoliberal regimes that have ruled the country in recent decades.

Such capitalists are called, in local parlance, the “developmentalists,” that is, those who think that within the context of the present economic crisis state intervention in the economy and state support for local capitalists are necessary. They look back to the economic nationalism that was prevalent in Latin America during the 1930s Great Depression, represented in Brazil by the regime of Getulio Vargas. Lula’s campaign rhetoric was largely, perhaps predominately, nationalist.

It was basically the failure of neoliberal economic policies to produce any benefits for the Brazilian working people that made Lula’s victory inevitable. The reaction against these policies-that is, essentially against the right-wing capitalist and pro-imperialist offensive of the last period of the 20th century-is sweeping Latin America.

One of the latest expressions of it is the plurality won in the recent elections in Ecuador by General Lucio Gutierrez, who was a leader of a mass uprising against a government that was following the dictates of the IMF.

However, Lula now has to take responsibility for running a country that has been ravaged by aggressive capitalism whose moneybags are more inclined to run than to restrain their greed, much less to try to repair some of the damage.

In the period from January to October of this year, the Brazilian central bank has registered an increase of 78 percent in the outward flow of capital. Foreign investment has shrunk by nearly a third, 32 percent.

Key international financial institutions are downgrading the country’s credit rating. Over the past year, the Brazilian currency has depreciated by 30 percent against the dollar. Since the Brazilian international debt is denominated in dollars, it has risen sharply to 250 billion dollars.

It is clear that in the normal operation of international capitalism, Brazil can never repay the debt. It just gets deeper and deeper into debt, and pays a larger and larger percentage of its national income in interest, thus losing the income needed for social spending and economic support and development.

Recently, the IMF was forced to lend Brazil $30 billion to stave off financial collapse, with most of the money being earmarked for interest payments. The hundreds of billions of dollars gathered from the privatization of public enterprises have also made mainly into payments on the debt. Interest on the national and international debt runs from 35 to 40 billion dollars a year.

Over the last year, the Sao Paulo stockmarket has lost 62 percent of its value. The national debt has increased by 10 times since 1994. Twelve million working people are officially unemployed, 12 percent of the economically active population. It is estimated that the present rate of inflation for this year is 10 to 15 percent, when the government projection was only 2 percent.

Many of the private international banks and capitalists are predicting an economic collapse under the Lula government. Wall Street circles are saying that it is inevitable that Brazil will default on its international debt. The Barclay’s Bank in Britain is predicting an economic crisis that “will probably mark the end of the Lula government.”

However, the agencies that represent imperialist capital as a whole, such as the IMF and the World Bank, as well as the U.S. government are being more cautious. If nothing else, the size of Brazil and its economy (40 percent of the economy of Latin America) means that a Brazilian economic collapse could have a profoundly destabilizing effect on the world economy.

It would be a risky business to try to bring down the Lula government by economic pressure, as the United States has done to other governments in Latin America that it considered a real or potential danger to the interests of U.S. imperialism.

Nonetheless, the U.S. authorities have made it clear that they are not ready to retreat from the neoliberal policies that the masses who voted for Lula voted against.

In The New York Times of Oct. 29, the U.S. secretary of the treasury, Paul O’Neill, was quoted as saying while he was sure that Lula meant well, business leaders were going to keep a close watch on him until he “can assure them that he is not a crazy person.”

Obviously for O’Neill “crazy” means sacrificing any of the profits of imperialist capital for the sake of the Brazilian working people. The U.S. official also made it clear that he thought sanity means continuing the economic policies of the discredited outgoing government.

“I hope they will follow the policies Cardoso had in place,” O’Neill said. “They are the key to Latin America.”

Of course, the United States was hostile to the Latin American populist regimes of the 1930s and 1940s, But in a world destabilized by the Great Depression and World War II, it had to restrain itself for a time.

In the present situation, after the collapse of the Soviet Union and the Soviet bloc, the U.S. is trying to establish an unchallengeable domination of the world. Thus, it is not likely to give Lula much maneuvering room. On the other hand, he faces the pressures of his own mass workers party and the movements associated with it, many of whose activists are far from being reformist European-type Social Democrats. A lot of them have been involved in militant mass struggles.

Lula also faces the general crisis of capitalism and the rise of mass resistance throughout Latin America, however much he may claim that Brazil is exceptional.

In these circumstances, Brazil is likely to be the focus of conflicts in the coming period that can have a critical effect on the stability of capitalism in Latin America and perhaps more widely.

Socialist Action News

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