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Lula forced into runoff election despite massive support
What's next in Brazil?

October 11, 2002 | Page 5

ERIC RUDER reports on what's next in Brazil after the October 6 presidential vote.

LEFT-WING candidate Luiz Inácio "Lula" da Silva triumphed in Brazil's October 6 presidential election, but fell just short of the 50 percent needed to win outright.

Lula--the candidate of Brazil's Workers' Party (PT)--got twice as many votes as the second-place finisher José Serra, the handpicked successor of current President Fernando Henrique Cardoso. But because Lula was stopped just short of a majority, he and Serra will face each other in a runoff October 27.

This was the result that Brazil's elite and international investors wanted. They had hoped to stop Lula, a former factory worker and union leader, from winning on the first ballot--gaining three weeks to maneuver and scheme how to beat him in a head-to-head contest with Serra.

With Serra picking up support from other conservative candidates, the former health minister and candidate of the bosses has a chance. But Lula is the odds-on favorite.

His strong support in the face of an all-out campaign against him is the latest expression of the enormous discontent with Brazil's economic and political crisis. Lula is promising real change after years of austerity conditions imposed by the Cardoso government. But he also spent much of the campaign promising business leaders that he would protect their interests, too.

The human cost of the Cardoso government's "free-market reforms"--privatization of the most profitable state industries, slashed public spending and deregulation of the economy--has been enormous.

More than 25 percent of Brazilians--about 40 million people--live below the official poverty line, while 1 percent of the population (some 400,000 families) controls 53 percent of the country's wealth.

Between 1995 and 2000, spending on education fell from 20.3 percent of government revenues to 8.9 percent--while the amount spent on servicing Brazil's ballooning public debt rose from 24.9 to 55.1 percent of revenues.

With Brazil's economy stumbling and unemployment on the rise, Lula gained more and more support leading up to the October 6 vote.

This spooked international investors, who fear that Lula's promises to raise the minimum wage, create jobs and establish a food-stamp system to relieve problems of widespread hunger would be "too costly."

Lula repeatedly tried to sooth Wall Street's fears about Brazil's debts. But speculators pulled billions of dollars out of the country in recent weeks, forcing down the value of Brazil's currency, the real--which has lost 38 percent of its value since the beginning of the year.

In August, the International Monetary Fund (IMF) approved a $30 billion loan to "stabilize" Brazil's economy. But it withheld 80 percent of the funds until January to insure that it could put maximum pressure on Lula to stick with its prescriptions--the very policies that have already hammered Brazil's economy.

Just to make sure that Lula got the message, the well-known currency speculator George Soros spelled it out in an August interview with Brazil's leading financial newspaper. "In the Roman Empire, only the Romans voted," said Soros. "In modern global capitalism, only the Americans vote. Not the Brazilians." The remark provoked such outrage that even Cardoso had to speak out in Lula's defense.

With Lula poised to win in the second round, expectations of real change will be high. But improving workers' living standards will force a confrontation with the IMF and Wall Street, which want Lula to repay the banks, not help his supporters.

Can Lula deliver on expectations?

THROUGHOUT BRAZIL, Lula has a legendary reputation as a militant trade union leader with working-class roots.

Lula began working at age 12 as a metalworker and never finished his education. His friendly relations with Cuba's Fidel Castro and Venezuela's populist leader Hugo Chavez add to his radical credentials--and provoke alarm on Wall Street.

But after losing in three previous runs for president, Lula transformed his political platform to appeal to more moderate voters--and even Brazil's elite. In addition to promising to abide by IMF dictates, he has expressed support for some version of the Free Trade Area of the Americas (FTAA)--the hemispheric free-trade zone backed by the Bush administration.

And for his running mate, he selected José Alencar, an industrialist who hates unions and made a fortune supplying companies like Wal-Mart with dirt-cheap textiles--while paying his workers a pittance.

As Lula moved to the right, a small but significant section of Brazil's business elite began to back him. In part, they were hedging their bets and looking for payback for their support in the form of tax incentives and protective tariffs for their industries.

But many also fear that worsening conditions for Brazil's workers and poor must be addressed through reforms--in order to head off a more explosive revolt. "Unless we do something about our social problems, the country won't survive," said Sergio Haberfeld, the owner of a large packaging company and a recent Lula supporter.

Lula's turn to the right has angered many of his staunchest supporters. The traditional base of support of the Workers' Party is the CUT, Brazil's militant union federation representing 9 million workers, and the MST, the movement representing millions of landless peasants.

But despite his recent concessions, a Lula victory is certain to raise expectations. In June, for example, Lula promised to redistribute land to 500,000 families over four years--a retreat from four years ago, when he promised land for 1 million families.

But in a September interview, MST leader João Pedro Stedile said he believes it will be necessary to give land to 4 million families in four years. "Lula's victory will inspire the people of Brazil and will set in motion a rising mass movement," said Stedile. "And Lula's government will need an organized mass movement to give support for the necessary changes."

Lula's victory in the runoff would set the stage for big confrontations between Brazilian workers and peasants expecting the new president to live up to his promises--and the country's rich elite.

Rejecting the madness of the market

LULA'S VICTORY is the latest sign of growing resistance to the free market spreading across Brazil--and Latin America.

At the beginning of September, 10 million Brazilians voted overwhelmingly in an unofficial referendum to reject Brazil's entry into the FTAA. "To help get the word out to all Brazilians about the negative impact of the FTAA, as many as 4 million informational flyers were distributed," explains Euclides de Agrela of the United Socialist Workers Party (PSTU). "There were nonstop activities in August, including major protests in some of Brazil's largest cities, like São Paulo and Fortaleza. The country's capital of Brasília was host to a demonstration in defense of free public education on August 13.

"Hundreds of committees were formed in labor unions, workplaces, schools and neighborhoods to get out the 'no' vote. During the last countrywide plebiscite held in 2000 on the issue of Brazil's external debt and subjugation to IMF policies, more than 6 million votes were cast to in favor of repudiating Brazil's debt and severing ties with the IMF."

Elsewhere, huge mobilizations carried the same message. In July, militant protests stopped privatization plans in Peru and Paraguay. And Mexican farmers wielding machetes stopped a government plan to build an airport near Mexico City.

At the end of October, students, workers and other activists will travel to the Ecuadorian capital of Quito to protest a meeting of government officials gathering for the next round of FTAA negotiations.

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