November 4, 2002
by Juan Blanco Prada*

Lula ran supported by a coalition of left, center-left and moderate conservative parties. In Brazil his election has been simultaneously acclaimed as a major victory for the left and met with the concern of those who criticize the alliance with the center-right Partido Liberal (PL). The reaction abroad has been similar, with the added pressure of international investors and IMF officials hailing the winner as the democratically elected new leader of the 9th largest economy of the planet, while issuing grim warnings against any deviation from the free-market orthodoxy.

If anything, the new administration will be confronted with high and often opposed expectations from everywhere. Lula's government will face demands to increase social expenditures and keep a balanced budget; to increase wages and control inflation; and to support local businesses while abiding to free-market rules.

The fact that Lula won the race by the widest margin ever registered on any presidential election in the country has been interpreted by some, particularly from the progressive public abroad, as a blank check, or a popular mandate, for change and reform. But when we take a closer look at the results of the election, this turns out to be not so evident.

Although the total results represent a landslide for Lula in the presidential election, this is far from true on the congressional front. The outstanding growth of the progressive parties, and especially of the PT, should not overshadow the fact that they started from a very small representation both in the Senate and in the Chamber. It is also important to note that the candidates of the PT lost all but one of the run-offs for state governors, and that includes what used to be their most important stronghold, Rio Grande do Sul.

The programs presented by both Gomes and Garotinho were not so different in its major aspects that of Lula's coalition. The three supported the regulation of financial markets, the re-negotiation of the terms of the agreement with the IMF, and they opposed the present design of the FTAA. Together, they gathered 77% of the vote. However, in the presidential run-off, even with the support of both the defeated major candidates, Lula picked up about the same number of additional votes as his opponent, roughly 13 million votes each. José Serra, the candidate of a government that has reached its lowest level of popularity in the last few months, managed to gather the support of almost 40% of the electorate. (See elections results tables)

Without the support of another major party, Lula's coalition does not have a sufficient majority in Congress to pass any laws. Most laws can be approved by a simple majority of 257 of the 513 deputies. Major laws, which would be necessary to carry out any in depth reform of the society, have to be written as amendments to the constitution, which requires the support of 3/5 of both houses.

The main partners in the government will be the PT and the PL -- the PL is expected to increase its representation to almost 50 deputies by picking up "opportunists" from other parties. Adding the Communist Party and other minor partners of the coalition, the government block will have at least 120 deputies, maybe 150. Even if the support of the PPS, PSB , PDT and PV was taken for granted, a which is not going to happen, they would reach a maximum of 200-210 deputies. In the Senate the situation is slightly better, with the new government counting on 18 votes of its coalition, plus 9 of the PDT and PSB, they start with a third of the 81 seats.

The strongest opposition will come from the PPB-PFL block, which together will have 20 senators and 133 deputies. PSDB and PTB will also be in the opposition, adding 14 senators and 98 deputies to that side. In this situation, the key of parliamentary control will be in the hands of the PMDB, which is already negotiating its possible participation in the new government. EXPECTATIONS AND OBSTACLES

Lula's administration will not be able to carry on its most important promises without a great amount of political bargaining. We should expect a nationalistic approach to issues of international trade which could gather support from unexpected sectors of the society, since the "free-trade" policies of the last 8 years have hurt Brazilian business as well as its workers. Even under Cardoso's presidency, Brazil was already the disruptive voice in the negotiations for the FTAA, and the new government will probably be a tougher negotiator. Increasing trade and political exchange with the European Union and rebuilding the ties within the Mercosur (trade block composed by Brazil, Argentina, Uruguay and Paraguay, with Chile and Bolivia as "special partners") may provide some relief against US pressure.

Brazil will not pull out of the FTAA, but will demand much more from the US than any government in Washington, Republican or Democrat, would be willing to give up. Two areas are of special concern: agricultural products that are heavily subsidized in the U.S. and intellectual property rights. Brazil has lead the fight against drug makers for the right of poor countries to break patents of medicines needed to fight health emergencies, such as AIDS. Other aspects of this conflict are genetically modified crops and the Brazilian ban on patents for life forms. Labor and environmental organizations, Brazilian and foreign, might have an important ally in the new government.

In the social arena, it seems that the approach will be more on an emergency assistance basis, rather than structural reform, at least for the first couple of years. Lula has already signaled that his first priority will be fighting hunger, and establish some sort of federal aid program. Food stamps have already been mentioned. Due to both the immediate needs of many and the impossibility of making major budget assignments right away this approach is the only option for now. In the other hand, PT sources have already backed off from the promise of increasing the minimum wage to $100 a month, something they had demanded for many years, while in the opposition.

The areas in which greater advances could be expected in the short term are health and education. We must credit the current government for some important advances in both areas, some of them due to policies designed by PT's legislators.

Land reform is another area in which important advances could be made. The PT has historical connections with the Landless Workers Movement (MST), although they are not to be considered partners. The least we can expect is a reversal of the policy of not granting land to those implicated in land occupations. Dialogue between government and land reform organizations will greatly improve. We may not see a great change in distribution of land and the expropriation of land under the constitutional clause of social use right away. The improvement may rather come from other aspects of the demands of the MST and other organizations, such as low-interest credits for small farmers, investment in new research, the creation of local markets for the crops grown locally, etc. Although less spectacular than land grants, those changes are not in the least way to be considered minor. The feasibility of any true reform in Brazil, agrarian or otherwise, might as well lie in its commitment to creating an agricultural base oriented to provide its domestic markets with cheap food as much as it grows export crops to pay for its financial debts.

One of the major issues will be finances and fiscal policy. The new government will have to bring some sort of sense to the fiscal system, unifying taxes and fighting evasion, if it wants to achieve its social goals while paying its international and domestic debt on time. In the long term, the economic program presented by Lula's coalition proposes a gradual reduction of the reliance on short-term investments from abroad, combined with policies to encourage productive investments.

The problem of the internal debt will keep the next administration on the edge of bankruptcy for the totality of its term. Sky high interest rates and the fact that many bonds are tied to the dollar, have brought Brazil's debt to somewhere close to 55% of its GDP. This might be the most difficult obstacle for the new government. Even if Lula manages to gather support for important measures in the Congress, his government could have its hands tied from abroad, by actions of international investors beyond his control. In the long term, even the most hard core analysts in Wall Street know that some sort of new agreement will be necessary, but nobody will say it first.

Last, there is a growing support for change on other countries of the region. Brazil's weight in Latin America might bring some positive developments. It will certainly have a huge impact in what happens in Argentina next March. Mexico's president Vicente Fox, who has been increasingly upset with the "amigos, not partners" treatment he gets from Bush, has already signaled that he is interested in developing a new relationship with Brazil. CONCLUSIONS

As much as the election of Lula has raised great expectations, in Brazil and abroad, the electoral results do not indicate a major shift in the political map of Brazil. Lula's party failed to retain important strongholds, and the electorate has created a very evenly divided congress: 1/3 to the left, 1/3 to the center. 1/3 to the right, with the far-right and far-left almost non-existent.

What the election shows is a clear rejection of free-market, neoliberal policies. Although alternatives have been discussed, implementing them won't be easy, due both to the many financial "traps" left behind by the current system, and to the lack of congressional support for them.

Initial changes will very likely be of emergency nature, and will not be noticed immediately by the majority of Brazilians. Failure to implement some important promises will certainly be explored by the opposition, and if changes are not made, an Argentina-style collapse might very well come sooner than expected.

International developments, especially in neighboring countries, may help create a better climate for change, and strong opposition from the US must be expected. An outright intervention to change the government, even a covert one, is unlikely for the time being.

The election of Lula represents the consolidation of democracy in Brazil, since it is the first time that a president who ran against both the national elite and the international capital won the presidency. However, to expect radical and deep changes from Lula's administration is not only naïve, but unfair as well. If his government succeeds in setting the stage for future changes, and addresses the most immediate and urgent problems in an honest way, the Brazilian people will find it satisfactory enough as to give him a second term. Further changes will depend on the ability of the Brazilian society to organize in order to defend its gains and to demand new ones, and continuity of support for democracy from abroad. * Juan Blanco Prada is a member of the Bay Area Friends of the MST.