The cabinet ministers of Luis Inacio â€œLulaâ€ da Silvaâ€™s government who have kept the Brazilian economy in a neo-liberal economic straight-jacket are coming under sustained attack from the more popular sectors of the governing Workers Party. Even Lula himself has given signs he is moving away from the budgetary and financial prescriptions imposed by the International Monetary Fund that he has adhered to during his first fifteen months in office.
Interestingly the start of the discord had nothing to do with economic policy. In mid- February Lulaâ€™s chief of staff and closest political adviser, Jose Dirceu, became embroiled in a political scandal. Waldomiro Diniz, a close friend of Dirceuâ€™s who serves as his aide on congressional affairs, was caught on video camera accepting payoffs from the head of one of the countryâ€™s major bingo parlor operators. The funds were allegedly used to back the political campaigns of candidates of the Workers Party.
Diniz was quickly fired and the opposition in Congress began calling for a full-scale investigation and the removal of Jose Dirceu from office. As Emir Sader of the Public Policy Laboratory of the State University of Rio de Janiero noted: â€œThe reactionaries are making their move. They are trying to bring down Dirceu and gut Lulaâ€™s government.â€ Dirceu however, is not an easy target, having served for years as a talented political strategist at the head of the Workers Party before becoming Lulaâ€™s most powerful aide in the government. His first line of defense to prevent Congress from opening an independent investigation was to point out that the video camera taping occurred before the 2002 election and that the bingo scandal had only taken place in
The case Dirceu presented against them was fairly straight forward. During 2003 the economy had grown at less than 1%, and unemployment in
Dirceuâ€™s attacks initially focused on the Minister of Finance, Antonio Palocci, a technocrat aligned with the head of the Central Bank, Henrique Meirelles, who formerly worked as the worldwide president of the US Fleet Boston Financial Group. The Central Bank is autonomous, but the Finance Minister is influential in its decision-making. In early March Palocci indicated that when the bank next met, interest rates would be held steady. Dirceu criticized this stance, mobilizing most of the leadership of the Workers Party along with its membership behind him. The bulk of the party had been simpering and complaining for months about Lulaâ€™s economic policies that appeared to mimic those of his predecessors and produced little of the â€œNew Brazilâ€ that Lula had promised during his election campaign. A handful of Senators and representatives from the Workers Party had even been forced out when they refused to support budgetary legislation that reduced the retirement income of public employee pensioners.
While Lula has thus far remained above the domestic fray among his ministers, he threw down the gauntlet against the IMF and other international institutions when he met with Argentine President Nestor Kirchner in
Emir Sader of the Public Policy Laboratory, who has been severely critical of Lulaâ€™s economic policies, declared that â€œin the foreign policy arena Lula is making a profound difference. He is staking out a new agenda in
Land reform has been stymied in particular by two other conservative ministers, Roberto Rodrigues the agricultural minister who served as the head of an agricultural business association representing domestic and multinational commodity giants, and the Minister of Development, Luiz Fernando Furlan, a former director of the global food processing corporation Sadia. Due in part to their influence, the process of agrarian reform has moved at a snails face, while large agribusiness exporters have witnessed a boom in their revenues.
It is doubtful if Lula will fire his conservative ministers in the short term or make any immediate dramatic shifts in his domestic policy. But many believe he may be preparing the groundwork to square his economic programs with his foreign policy initiatives. Francisco Meneses, an agricultural analyst who sits on the National Council of Food Security that advises Lula on issues related to hunger and agriculture states: â€œIt is understandable that Lula has not implemented fundamental economic changes thus far, given the clout of the international financial organizations and the power of domestic economic elites. But we may see some significant shake ups take place as the political and social caldron heats up in
*Roger Burbach has just returned from a trip to