Lula Watch: Focusing on Latin America’s New “Axis of Evil” – Vol.3 – No.4

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“The Lula government, as we knew it, is over.” This is how an Epoca magazine editorial summarized Brazil’s current political crisis. This undeniably serious crisis raises many questions about the future of the president and his administration.

Veja magazine says that “Lula is trying to save the government and his legacy” while several members of the government are calling this time a “period of political agitation” in a climate of apprehension and instability.

Until recently, this crisis seemed to have peaked with the resignation of the president’s chief of staff, José Dirceu, usually seen as the government’s mentor and strongman. This obviously was a rude blow:

“His departure was a defeat for President Luiz Inácio and the Workers’ Party (PT), a desperate but late maneuver by a government that had, until now, weathered the wear and tear of successive scandals. Such scandals in former times with stronger values would have overthrown the president himself (Maria Lúcia Victor Barbosa, “O tamanho do problema,” Jornal do Brasil, 6-19-2005).

The crisis started nearly two months ago with the disclosure by Veja magazine of a tape in which a high-ranking official of the state-owned Brazilian Post Office was bribed and talked about a corruption scheme inside the agency. It was said to involve Deputy Roberto Jefferson, president of the Brazilian Labor Party(PTB),a government ally.

At first, Lula disregarded the denunciations and said the scandal neither affected nor concerned him. He also stated his public support of Roberto Jefferson, to whom he gave a “blank check.”

However, the growing repercussion of the recording led the opposition to set up a Parliamentary Commission of Inquiry (CPI) to investigate the case. Lula then replaced nonchalance with concern. Strangely enough, the government began to raise all kinds of obstacles to setting up the Commission, arguing that a mere investigation by Federal Police would suffice. It became increasingly clear that the government feared an investigation.

Political Bribe Schemes Denounced

Seeking to shield themselves from the scandal, the hard core of the Lula government, led by José Dirceu, tried to isolate Roberto Jefferson politically. Between the devil and the deep blue sea, he turned from an ally into the government’s worst enemy and proceeded to denounce several other bribe schemes used by the government and the PT to maintain political control of the country.

Jefferson’s accusations, first made in two interviews with the leading newspaper Folha de S. Paulo and later expanded in his testimony of several hours at the Ethics Council of the Chamber of Deputies, can be summarized thus:

– The Lula government leadership, headed by José Dirceu, in cahoots with PT leaders, organized a scheme to bribe congressmen to vote according to the government’s interests by paying them a “mensalão” (“big monthly sum”) of about $15,000;

– Jefferson said he had talked with several cabinet ministers and President Lula da Silva himself about the “mensalão” but tried to clear the President of any responsibility;

– This bribe scheme is also credited with “poaching” several deputies from their original political parties to join parties allied with the government, thus inflating their caucuses;

– Several parliamentarians from the allied base, in addition to PT, operated this bribe scheme;

– The denunciations, clearly stating names, dates and figures, also say the key men in this scheme were PT treasurer Delúbio Soares and the party secretary-general, Sílvio Pereira, who had open access to the Planalto Palace, where they negotiated, with allied parties, nominations for posts of confidence or for state-run companies;

– Jefferson admitted and then denounced the fact that money for the scheme often came from corporate businessmen who provide services to, or have contracts with, government-owned companies;

– Deputy Roberto Jefferson also confessed to have an agreement with the PT whereby the latter clandestinely gave 20 million Brazilian reals ($8 million) to his party,the PTB. The money was used to finance the party’s political campaigns during the last mayoral elections in exchange for political support. Other denunciations were later made about the PT purchasing political support from other parties.

Reactions From the PT, the Government and Lula
In spite of the government’s strenuous efforts to deny that the denunciations affected the President’s popularity, recent polls show the contrary. There is growing dissatisfaction with the government and with President Lula da Silva himself.

This is largely due to the confused and fearful reactions the government and the PT showed facing the denunciations:

“In a little while, the crisis will be two months old and the government still has been unable or unwilling to set up a good defense strategy, as if it were indefensible. The PT and government leaders react like drunken chickens, overwhelmed by events and limit themselves to general denials and attempts to put down the accusers. This is very little in comparison with the magnitude of the evidence” (Dora Kramer, “O sabor do prato servido frio,” O Estado de S. Paulo, 6-24-2005).

Lula and some of his aides tried to present the political crisis as a foretaste of the 2006 presidential campaign. They later said there were no proofs of the denunciations although they did not deny the facts as such. Finally, they started to speak of a conspiracy or “coup” by the country’s elites against the leftist workers’ government.

In another severe blow for the party, PT President José Genoíno has now also resigned because of yet another scandal. Before the resignation, he complained of “political sectors” and “conservative forces” allegedly striving to denigrate the PT and the government.

“They are taking advantage of this moment of confusion to try and render the PT unworkable as a leftist alternative. They want to block the ongoing process of transformation because they feel their historic privileges are being called into question by a democratic government” (“O Brasil está diante de uma grande mentira,” O Estado de S. Paulo, 6-18-2005).

The PT leadership has also adopted the conspiracy theory. In an official memo, the party sought to reinforce the idea of an ongoing conspiracy, a “‘white coup’ promoted by sectors of the opposition and the right.” As an editorial in the Folha de S. Paulo aptly pointed out, this attitude is another sign of the “disoriented reaction of PT leaders vis-a-vis the crisis.”

“True, the conspiracy thing is common in the rhetoric of the PT’s more radical wings, but for the party leadership to adopt this tack is a sign they are unable to face the crisis with realism” (“Fantasia conspiratória,” 6-21-2005).

In addition to showing a lack of direction and determination, Lula’s reactions to the crisis has been both vague and populist in tone with self-aggrandizing statements such as “they don’t know who they’re dealing with” and “no one in this country has greater moral and ethical authority than I to do what must be done.”

Minister Jose Diriceu Falls
Barely 48 hours after Deputy Roberto Jefferson’s accusations, the presidential chief of staff, José Dirceu, asked the president to be relieved of his post.

José Dirceu, the strongman of the PT and Lula government, was the mastermind of the electoral strategies and alliances that enabled President Lula da Silva to be elected: “Everyone here knows that I always dreamed about governing Brazil alongside President Lula,” he said in his farewell speech, surrounded by 18 cabinet ministers and PT senators and deputies.

José Dirceu left in such a hurry that he did not even indicate a name to replace him as chief of staff. He did not even resign in the context of a cabinet reshuffle which would have lessened the resignation’s significance. Many say his departure and return to the Chamber of Deputies was meant to take the Lula government away from the crisis’ epicenter.

The government’s second most powerful man resigned displaying a feisty determination to fight the imaginary coup d’état supposedly in the works against the Lula government. His speech left no room for doubt:

“I’m going to travel all over Brazil to mobilize the PT to combat those who wish to interrupt the democratic political process and destabilize the government of President Lula” (‘Não me envergonho de nada, tenho as mãos limpas,’ O Estado de S. Paulo, 6-17-2005).

José Dirceu’s political career has long been declining. Over a year ago, he took a beating when his vice chief of staff, Waldomiro Diniz, was caught red-handed on video offering bribes to the owner of a gambling business. The government managed to hush up the scandal but the former minister’s image was tarnished.

Furthermore, his centralizing and authoritarian management style was credited with policies and strategies that resulted in stinging fiascoes to President Lula’s government: defeat in the nationwide municipal elections and loss of control of the Chamber of Deputies with the defeat of the PT’s and the government’s candidate to head that assembly, Deputy Luiz Eduardo Greenhalg.

A Radical Speech and Convoking the Social Movements

One day after Jose Dirceu’s resignation, the PT organized an act of ‘reparation’ for the denunciations.

At a ceremony attended by 15 state governors and 15 cabinet ministers, including Finance Minister Antonio Palocci, Mr. Dirceu received an ovation from roughly 2,000 PT militants, who hailed him as “the guerrilla fighter for all seasons.”

He adopted a radical tone, accused “conservative and rightist political and social forces” of “playing with fire” and called on “social movements” to come out in the streets all over the country to defend Lula and his government:

“No one here will sleep with the enemy. Everyone knows who the enemy is and who the friends are. No one here has a propensity to retreat” (cf. Ana Paula Scinocca and Guilherme Evelin, “Dirceu ameaça: ‘Estão brincando com fogo,'” O Estado de S. Paulo, 6-18-2005; “Dirceu chama petistas para defender governo,” Folha de S. Paulo, 6-28-2005).

Union leaders and representatives from the main “social movements” (all in some way linked with the PT) said they were ready to heed Dirceu’s call and take to the streets. Of course they want to see in return a more radical application of the left’s ideological plan, especially against the “neoliberal” economic model.

In a press release, the Landless Rural Workers Movement (MST), which has even been called “the government’s armed arm,” endorsed the conspiracy idea of a “coup d’état by the elites.” João Pedro Stédile, the movement’s main leader, said it is “time to put the people on the offensive.” The president of the Central Workers Union (CUT) made a similar statement.

Catholic progressive currents linked with liberation theology also joined the fray. Bishop Tomás Balduíno, president of the Pastoral Commission on Land (CPT), said the initiative by the MST and other social movements to take to the streets in support of the government will necessarily come together with a bill in Congress calling for Land Reform.

“Social Movements” Demand Radicalization

Still under José Dirceu’s orchestration, a group of “social movements” issued a “Letter to the Brazilian People.” Signatories included the Landless Workers Movement (MST), the Central Workers Union (CUT) and the National Students Union (UNE). Also included were organizations linked with the so-called Catholic left such as pastoral agencies of the National Conference of Brazilian Bishops (CNBB).

The document’s authors oppose any “destabilization of the legitimately elected government by conservative and undemocratic sectors” and say the only way out for the crisis is for the Lula government to continue its project to transform society and the State, for which it was elected.

They call on the government to stay away from conservative sectors, change economic policies and implement land reform. They also propose, as crucial, an “ample democratic political reform” by implementing processes of direct democracy for exercising people’s power. This proposal reeks of the methods used by Venezuela’s Hugo Chavez who imposes his authoritarian regime under a cloak of legality:

“Some so-called social movements such as MST will ask Luiz Inácio to govern with the people, a power-grabbing idea that suggests a leftist dictatorship disguised as democracy, a version of the Venezuelan model admired in Brazil” (Maria Lúcia Victor Barbosa, O tamanho do problema, Jornal do Brazil, 6-19-2005).

President Lula received representatives of these “social movements” including MST president, João Pedro Stédile, who delivered the said letter to him.

The audience was yet another demonstration of the support and cover Lula gives such groups that openly violate the law. The President expressed joy at receiving friends and “companheiros” (the PT’s jargon for ‘comrades’) and invited representatives of the “social movements” to sit at the same table where he meets with his ministers and unfurl their flags and symbols. The televised scene was viewed as a signal that a people’s government might be installed as a possible way out of the crisis.

In an editorial, the daily O Estado de S. Paulo criticized President Lula’s reception of these believers of the imaginary “coup by the elites” and especially João Pedro Stédile, the “champion of the cause of destabilization.”

“The President sends the country an ominous signal by allowing the seat of the government ‘of all Brazilians,’ as he so frequently says, to be turned into a partisan trench for radicals to blame the opposition and the press for something they have not done” (“Alento em meio à crise,” 6-24-2005).


A few days after José Dirceu’s resignation, Lula da Silva chose a replacement. He picked Dilma Roussef, who was Minister of Mines and Energy.

The position of presidential chief of staff requires political negotiating skills. However, Dilma Roussef is a career bureaucrat known to lack political suppleness. Some believe the choice shows that Lula is running short of options and cadres to move his plans forward.

The new minister’s choice and inauguration ceremony, on the other hand, showed Lula’s intention not to abandon his politico-ideological agenda. Dilma is known for her strongly statist bent. In her inauguration speech, she referred to the “reconstruction of the Brazilian state,” the left’s motto against privatization.

Note also that on passing on his post José Dirceu made a point to address Dilma Roussef as a “comrade at arms” referring to the time when the two fought together in guerrilla groups. Asked about her friendship with José Dirceu, “Dilma said because the guerrilla war in the seventies, the country now yields a high value good which is democracy” (cf. Sheila D´Amorim, “Ministra diz que crise não atrapalha,” O Estado de S. Paulo, 6-22-2005).

The So-Called Cabinet Reshuffle Faces Difficulties

Chief of Staff José Dirceu’s departure was seen as the onset of a necessary cabinet reshuffle that many thought should “de-PT-ify” the Lula da Silva administration by dismissing many officials from cabinet ministries and secretariats with cabinet level status and drastically reducing posts of confidence.

The cabinet reshuffle, unsuccessfully attempted several times over the last ten months, was crucial for Lula da Silva’s re-election bid. Now it appears Lula is ready to settle for an instant accord that will merely allow his government to survive until the end of his mandate.

Still, this reshuffle which presumably provides the basis for a viable coalition government seems to be running into problems similar to those encountered in the past.

The Party of the Brazilian Democratic Movement (PMDB) is hesitating to either enter Lula’s Cabinet en masse or leave it entirely. The internally divided PMDB’s support is decisive for any electoral alliance.

The president of the Liberal Party (PL), of Vice-President and Defense Minister José Alencar, calls for the resignation of Finance Minister Palocci, echoing the demands of many PT members. In addition, others pressure the government to dismiss the president of the Central Bank, Henrique Meirelles.

President Lula also faces divisions within his own PT. Many PT leaders oppose a diminished presence of the party in the administration. Criticism of current economic policies is becoming ever more strident inside the party.

Furthermore, PT’s more left wing currents, which José Dirceu had driven away from party decision-making even before Lula’s election, see the current crisis as a justification of their longstanding opposition to the alliances cobbled together in order to ensure “governability.”

These radical wings, including members in Congress, say the PT is a victim of spurious alliances and demand that PT leaders under suspicion be removed until all charges against them are cleared.

Upon returning to the Party’s cadres, Dirceu reinforced the apparatus he had himself set up and prevented the firings, thus aggravating internal strife.

“Democratic” Political Reform or “Chavezization?”

Lula is calling for ample and urgent political reform in order to face the crisis. He is said to have asked Justice Minister Márcio Thomaz Bastos for a legislative proposal. The reform is supposed to make clear rules for the functioning of political parties, including party fidelity and election campaign financing. This would, of course, entail more profound transformations in the political scenario.

Political reforms rushed through in the midst of a crisis raise doubts about their effectiveness. What would it really entail? Several commentators warn of the danger of a “Chavezization” of Brazil’s politics:

“Lula will now have obstacles to overcome: put up with his own solitude and avoid the well-known depression that assails him at times …. He will have to avoid the populist and Chavezist temptation” (Arnaldo Jabor, “Houve mais uma revolução fracassada,” O Estado de S. Paulo, 6-28-2005).

Both the “Catholic left” and “social movements” are pressuring for abrupt changes in the economy and demanding that measures installing “people power” be enacted by constitutional regulations. Venezuelan President Hugo Chavez enacted similar measures to confront opposition and install his own authoritarian regime under the cloak of democracy. In a letter to President Lula da Silva, the National Conference of Brazilian Bishops, strongly influenced by the “Catholic left,” came out in favor of establishing and regulating such mechanisms.

Two Possible Scenarios for Lula
While the accusations of Deputy Roberto Jefferson explicitly spared the President, he is irremediably affected. He was either remiss by failing to stop corruption or totally misinformed and thus unfit to govern.

The deputy says he told at least five cabinet ministers and the president himself about the bribery scheme. Likewise a state governor is also said to have warned the president. Veja Magazine comments:

“It is hypocritical to claim that [Lula] has not been definitively struck in his heart by shrapnel from the scandal. Lula has only two ways out of the “mensalao” labyrinth he has been thrown into, and neither is good. The president either knew everything (and was conniving) or knew nothing (and was inept)” (“Lula em seu labirinto, André Petry,” Veja, 6-22-2005).

Lula believes the crisis will last for months and fears his image and that of his government will suffer. Hence he is said to have already told his close aides he is unwilling to stand for re-election; his aim now is said to be to save his legacy and serve out his mandate without an impeachment.

From opposition circles to the Planalto Palace, there is talk of impeachment. One important political commentator noted that no one is ashamed to talk about it. Even ministers of the Supreme Federal Tribunal have publicly vented the hypothesis. In televised statements the deputy in charge of the Post Office Parliamentary Commission of Inquiry seriously admitted the possibility.

The Lula Government: Mere Corruption of a System to Control the State?

Since his inauguration, Lula and his administration embarked on a voracious quest to take over the whole state apparatus. This often denounced maneuver of control fits into the PT’s ideological designs.

“Suspicions about Dirceu stem from his participation in the distribution of posts and canvassing of political support, but also from his Leninist concept of power that sees the party as being above the State. Lenin, the Russian Bolshevik, applied this idea successfully” (Otávio Cabral, “O assalto ao Estado,” Veja, 6-29-2005).

Such control was also needed in the political arena and above all in Congress, where the PT garnered only 18% of the votes which does not even remotely allow it to support the Lula government by itself. Only an alliance of convenience allows the PT to implement the left’s ideological agenda.

Thus, the party’s ideologues accommodated the bourgeois democratic system to make possible the implantation of socialism by other means, including bribing parliamentarians from other parties.

Referring to the PT’s die-hard conception of taking power, socialism and revolution, Prof. Denis Rosenfield comments:

“The underlying problem is the PT’s takeover of the state machinery. What we are witnessing…. are only expressions of a power-grabbing project that utilizes allies only as long as it serves the project… The ‘mensalão’ (monthly bribe) is a Leninist-style party practice according to which the ends justify the means” (“A República da safadeza,” Folha de S. Paulo,6-16-2005).

A Socialist Project Defeated by Public Opinion
As often noted in earlier issues, Lula projected himself as a moderate leftist from the beginning of his government. His “orthodox” economic policy contributed to this image. Yet, an analysis of his government’s domestic and foreign policies reveals a gradual strategy to implement a socialist and authoritarian system that insures the long term control of the State by the party.

Over the last thirty months, this strategy of progressive radicalization, led until recently by José Dirceu, often gave rise to more aggressive measures that increasingly displeased and scared public opinion. In fact, as public opinion showed a mute but effective resistance against radicalization, the government suffered several important political defeats. The fall of José Dirceu made manifest, in the eyes of public opinion, the defeat of this ideological agenda of the left:

“The strategic plan consisted of, let us say, an ideological project. To contain the high bourgeoisie by giving them the financial joys that are the goal of their lives and, in exchange, gain tranquillity and some support to lay down like roots the tentacles of power. Once internal resistance is neutralized, unfavorable reactions of foreign capital and the governments that represent it are avoided, and international connections with its counterparts are consolidated – ready! – this is what the left calls ‘objective conditions’ to give its own internal structure and the world order a new face.

“The fall of José Dirceu means the defeat of this Great Project …. The causes at this moment are irrelevant; suffice it to observe that the [Party’s] political action and its projection on society were as rudimentary as they were conceited, and that this succession of errors gave rise to the beginning and end of the Great Project, a concept of the PT and José Dirceu” (Jânio de Freitas, “A derrota,” Folha de S. Paulo, 6-19-2005).

A Riddle for the Fututre: is the Left Ready fot a Risky Adventure
Lula is now placed against the wall as he watches the whittling away of the PT design to stay in power over the long term, implant a new model of socialism, and change the face of Latin America. Will he try a desperate way out to implement radicalization? If he does, will he be able to count on the support of forces such as the MST and foreign allies like Hugo Chavez, Fidel Castro and FARC, whose presence on Brazilian territory has often been denounced?

According to some PT elements, José Dirceu’s resignation and subsequent commentary signalled the will to implement such radicalization. His fiery call to the “social movements” seems to confirm this.

According to this hypothesis, the minister’s resignation would be a gamble by the government to make radicalization viable, with a subsequent call to arms issued to the “storm troops” of the “social movements.” In this sense, the former Minister’s resignation speech is telltale:

“I will continue to govern Brazil as a deputy and PT leader. I do not consider myself outside the government, I consider myself a full-fledged part of the government,” words he emphatically repeated as he closed his speech (cf. “‘Não me envergonho de nada, tenho as mãos limpas,'” O Estado de S. Paulo, 6-17-2005).

From a political standpoint, this avenue appears to stand little chance of success. First of all, while the leaders of the “social movements” are in tune with the Lula government, how far will they be able to mobilize their own grassroots? To cater to the government’s strategic alliances policy, the firebrands of these movements will have to be contained. The president will continuously appeal for “patience.” This now makes it difficult to mobilize the grassroots to go on the offensive on behalf of a political project that seems lost.

On the other hand, if the call is fully heeded and the “social movements” do radicalize, the Lula government will end up by definitively unveiling its true ideological ends:

“The ‘reaction’ counter-offensive deputy José Dirceu proposed to his PT militants and the social movements traditionally allied with the party translates the despair of someone going for broke who is either making his last move or showing a complete absence of discernment about reality. …

“But let’s suppose PT’s traditional grassroots forget the party is today on top of the pyramid and decide to heed the call and fight against the ‘elites.’ When the confrontation takes place the government will be returning to its original cradle. But with the party alone, Lula for three times failed to be elected. …

“It does not seem logical to me that the government would consider the hypothesis of being supported by the MST without incurring the rejection of a good part of society and marching toward an isolation without return” (Dora Kramer, “A repetição do erro na crise,” O Estado de S. Paulo, 6-21-2005).

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