On November 6, 2002, Luis Inácio ‘Lula’ da Silva, the ‘eternal’ Brazilian Presidential candidate for the Workers Party (PT), was ushered in to power with overwhelming popular support. In the previous three presidential elections, Lula, as he is popularly known in Brazil, failed to get elected in part because the powerful industrial and rural oligarchy successfully presented a unified front behind conservative charismatic candidates. Also, the neo-liberal fever of the 1990s was at its highest peak, and this, too, severely weakened Lula’s leftist challenge.

The 2002 presidential election, however, took place in a different political climate marked by increasing popular disenchantment with the neo-liberal program of privatization, fiscal discipline, free trade, and deregulation. The implementation of this neo-liberal agenda by the previous governments had ‘modernized’ the Brazilian economy at a tremendous human cost. Unemployment remained, and still remains, very high in the country. Lula adeptly exploited this disenchantment with the status quo. This time round, however, Lula was very careful with his message to the electorate. He promised simply mudança or change. He was vague about what kind of changes he would commit to, and carefully avoided controversies that would lead to ‘market fear’ among international investors. The trick worked and Lula handily defeated the ruling party’s candidate José Serra.

One year has passed and Lula has so far failed to explain clearly what kind of fundamental changes his government will implement to deal with Brazil’s problems of structural poverty, violence, and marginalization. Brazil has entered the 21st century remaining the world champion of social inequalities, with the richest 20% of the Brazilian population controlling more than 64% of the total income, and the poorest 20% controlling just over 2%. There are serious doubts now within the peasant, student, and worker movements, and even within the PT itself, about the Lula government’s commitment to addressing this growing income gap through progressive tax policies, pro-poor social policy, and fundamental re-orientation of the neo-liberal state.

The Brazilian left, which invested 20 years of effort into the political fortunes of the PT, is presently having second thoughts about Lula’s commitment to social justice. It appears that the fetishism of the neo-liberal development model has taken strong hold of Lula’s socioeconomic policies, effectively preventing the democratic quest for an alternative socio-economic development model that goes beyond the narrow confines of market economics. Over the last decade, it has become evident that the pursuit of social justice within the present ‘democratic’ capitalist order is not a socially or environmentally viable option. As recent data from the United Nations demonstrates, global capitalism has increasingly widened the gap among and within nation states, and intensified social exclusion, marginalization, and environmental degradation. There must be alternatives to this model.

However, in Lula’s Brazil an alternative is currently not on the table. According to PT insiders, Lula has reluctantly embraced the continuation of the neo-liberal model on the grounds that it is the best ‘pragmatic’ option to bring about economic growth and poverty reduction. He also seems to believe that the further restructuring of Brazil’s bloated bureaucracy, which started under Fernando Henrique Cardoso’s administration, will free resources to finance social programs for poverty alleviation. It was not surprising then to see Lula aggressively bring pension and social security reforms to Congress, even confronting opposition to these measures by members of his own party.

However, it is naïve to believe that the restructuring of the Brazilian State alone will free substantial resources to solve structural poverty in this country. The long-term solution to this problem requires fundamental structural changes in the social organization of society. In rural Brazil, for instance, structural poverty can be effectively alleviated via comprehensive land reform. Under tremendous pressure by the well-organized and mobilized Landless Rural Workers Movement (MST), Lula recently promised to settle one million landless peasants during the next three years. However, he has not fully explained when funds will be available for this program. Lula seems to be eager to speed up labor reform, but not land reform. It is possible that 2004 will be a decisive year for land reform in Brazil.

If Lula fails to deliver on his promise, Brazil’s landless peasants are likely to launch massive land invasions, which will have serious repercussions for Lula’s government, and the PT in general. The failure of land reform under a proclaimed socialist party, which embraced land reform as one of its fundamental tenets, would be seen as one of the greatest betrayals in modern Brazilian political history. Even in these times of uncertainty, landless peasants have demonstrated so far a good dose of faith in ‘Saint’ Lula to deliver on his promise. However, this faith is rapidly fading and is not likely to last more than two years.

To be fair, Lula’s first act in government was to initiate an ambitious program called Fome Zero, or Zero Hunger, which is aimed at providing the minimum food necessities to the poor and disenfranchised through government food vouchers and community involvement. Although well-intended, this program is rapidly becoming an effective instrument of political control aimed at disempowering the poor and disenfranchised. Lula’s Zero Hunger program presently resembles an enormous international NGO staffed by highly-motivated and dedicated humanitarian workers providing temporary relief to the desperately hungry and needy. Certainly, long-term relief of food insecurity requires macro solutions that address the root causes of poverty, hunger, violence, discrimination, and marginalization.

So far, Lula has been hesitant in dealing with these issues. He has been a cautious political player, listening to and carefully following the ‘wise’ counsel of his closest political advisers on policy decisions. His government has been praised by the international financial community for having the courage to avoid a ‘financial disaster’. Market analysts initially feared fundamental changes in policy direction that would lead to a debt moratorium. However, Lula’s advisers were keen to calm these fears by stressing the new government’s commitment to continued strict fiscal and monetary discipline through the reduction of social spending and high interests rates.

From an investor’s point of view, these measures were more than welcome. They indicated that alternative policies aimed at reducing the social deficit through public spending were not a priority for Brazil’s New Leftist government. However, the ‘collateral damage’ stemming from the continuation of these ‘responsible’ macroeconomic policies has been high. Brazil registered negative economic growth in 2003, compounded by wage reduction and an enormously high rate of unemployment, particularly in the country’s industrial heartland, Sao Paulo. The worsening employment situation has alarmed the PT’s main political supporter, the National Confederation of Workers (CUT). All indications are that in the coming years the working and non-working classes will demand action rather than caution on the social front, and this will test the PT leader’s commitment to social justice. The best way for Lula to fulfill his commitments to the poor and disenfranchised is to provide them with opportunities that enable them to enhance their political and economic capacities to improve their material welfare. This approach is also necessary to drastically transform corporatist social institutions that for so long have benefited only the affluent and powerful. And land reform must be the starting point in this process.