By Mario Osava
RIO DE JANEIRO, Jan 6 2005 (IPS)

Brazilian President Luiz Inácio Lula da Silva’s shift towards the centre of the political spectrum over the past two years and his “pragmatism” have cost him allies on the left, although he remains relatively popular thanks largely to the unexpectedly strong economic growth of around five percent for 2004.

In the latest opinion poll, carried out in mid-December by Datafolha, the government’s approval ratings stood at 45 percent, 10 percent up from August, when this giant South American country was still feeling the effects of last year’s economic stagnation.

In addition, only 13 percent described the administration’s performance as “bad or very bad”.

However, the triumph of Lula’s pragmatist side has frustrated many Brazilians who were hoping for far-reaching economic and social changes in a country that has one of the most unequal distributions of income in the world.

Long-time allies of Lula, a former metal worker and trade union leader, have shifted over to the opposition, because they feel the leftist ideals and promises of the now-governing Workers Party (PT) have been betrayed.

Three parliamentary deputies and one senator rebelled against the PT’s new orientation, and left to create the Socialism and Liberty Party (PSOL).

At the start of Lula’s four-year term, on Jan. 1, 2003, the PT held 94 of the 513 seats in the lower house of Congress and 14 of the 81 seats in the Senate.

But two small leftist parties – the Democratic Labourist Party, and the Popular Socialist Party – have pulled out of the coalition that backed Lula in the October 2002 elections, which also included the conservative Brazilian Labour and Liberal parties, the Progressive Party and the Party of the Brazilian Democratic Movement (PMDB), along with a few smaller political forces.

The PMDB also voted to pull out of the government, although the national convention that reached that decision was annulled after members of the party who form part of the ministerial cabinet filed a legal challenge.

The disillusionment has also been felt by civil society groups and activists.

The temporary authorisation of sales of genetically modified soy beans that were widely planted despite a ban on transgenic crops, the decision to maintain Brazil’s nuclear energy programme, and the failure to curb deforestation in the Amazon jungle were among the developments that have led to a sense of deception among environmentalists, for example.

The Landless Workers Movement (MST), which toned down its activism during Lula’s first year in office, began once again in 2004 to stage occupations of unproductive land and government offices to press for faster agrarian reform.

Pressure from the MST, which represents landless peasant farmers asking to work farmland that has been left to lie fallow, forced the government to set a new target: it pledged to distribute land to 430,000 rural families by 2006.

However, it failed to make the necessary progress in land reform in 2004, Joao Pedro Stédile, one of the MST leaders, told IPS.

The activist complained that agrarian reform efforts are not moving ahead as they should, and that the 200,000 landless families living in camps around the country while they wait to be settled on a plot of land have little hope for a solution to their desperate situation in the near future.

Several social movements have also distanced themselves from the government, although they have not moved into outright opposition. They include the Central Unica dos Trabalhadores (CUT), a traditional PT ally that Lula himself helped found.

Last month, the CUT, the country’s largest trade union confederation, organised a march on Brasilia, the capital, to demand a “decent minimum wage” and a reduction in the tax on wages.

Lula partially responded to the demands, announcing a 30 percent increase in the minimum wage, to go into effect in May.

Overall, activists recognise that mechanisms for popular participation have expanded under the Lula administration.

Besides the councils in which a broad range of social and business sectors have a voice, several national conferences have been held to complete local and statewide “consultation processes”, to design policies in areas like the environment and women’s and youth issues.

The most frequent criticisms have focused on the government’s macroeconomic policies, which continued and even deepened the approach taken by the previous government of Fernando Henrique Cardoso (1995-2003), that toed the International Monetary Fund (IMF) line and was the target of harsh attacks by the PT for years.

Business leaders who were courted as allies in Lula’s election campaign have also complained loudly and frequently about the Central Bank’s decision to keep Brazil’s real interest rate among the highest in the world, with the aim of curbing inflation.

The current Central Bank leadership, which inherited a basic interest rate of 25.5 percent in January 2003, lowered it to 16 percent in 2004. But since September, it has gradually raised it, to 17.75 percent as of Dec. 15.

Added to that was an unprecedented fiscal adjustment, with a primary surplus (income less expenditure, excluding debt payments) target equivalent to 4.5 percent of gross domestic product (GDP), which exceeded the IMF recommendation.

Although that goal was more than met, if interest payments are included, Brazil has a budget deficit of nearly four percent.

However, the economy grew 5.3 percent in the first three quarters of 2004, and around five percent for the entire year, and the government has used that success to try to silence its critics.

According to Finance Minister Antonio Palocci, a key figure in the government, Brazil has entered a long cycle of growth, because for the first time in 30 years, it has achieved a combination of a balanced budget, controlled inflation and favourable external accounts.

In terms of social policies, despite the limited funds available for public spending as a result of the government’s fiscal efforts, there is widespread confidence that the administration’s programmes will bring positive effects.

That is especially the case regarding the “Bolsa Familia” or family grants programme, which already benefits 6.57 million poor families with monthly payments of 15 to 95 reals (5.55 to 35 dollars). The goal is to reach 11.4 million families by 2006.

The comprehensive programme, which unified several income transfer mechanisms, forms part of the “Fome Zero” or Zero Hunger Programme that provides subsidised food to poor families while promoting education, health care coverage, family farms, microcredit, basic sanitation and other “structural” improvements, while fomenting the development of local economies.

Maintaining economic growth, expanding social programmes and generating more jobs are the objectives that Lula has announced for the coming year. Meeting them is crucial to his hopes for re-election in 2006.

To do so, the government plans to adopt measures to create a more favourable environment for investment, such as lower taxes on wages, improved public safety and faster judicial processes, as well as a reduction in the red tape involved in setting up new businesses.

Minister Palocci also announced that he would introduce a bill in Congress that would give the Central Bank operational autonomy, in order to “improve the administration of monetary policy” – a controversial idea that is likely to create new tension in the PT and the parties that still support the government.

Combining orthodox economic policies with growth and social programmes is the challenge that Lula and his government assumed, even though it has cost them allies.

But the president’s sustained popularity shows that hope remains alive in broad popular sectors, which recognise that the economy has grown and still have faith in the government’s social efforts.

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