While exhibiting an impressive gallery of flip-flops without so much
as blushing, the PT wishes to dramatically change economic policies
and redirect funds to social programs. The problem? There's no money.

Adhemar Altieri

Brazilian voters, including those who didn't support Luiz Inácio Lula da Silva, are sitting back and gradually accepting it, even if many are still shaking their heads. Slowly it's sinking in: Brazil is about to be governed by Lula and his supposedly reformed, currently not-so-left-wing PT (Partido dos Trabalhadores—Workers' Party.)

Lula and the PT must be lauded for successfully replacing their losing routine of the past three presidential elections, with a solid winning effort at the polls. In 1989 against Fernando Collor, 1994 and 1998 facing Fernando Henrique Cardoso, Lula held the lead in the early going, only to be overtaken and defeated as the campaign progressed. He actually made it to the second-round against Collor, but was beaten outright twice by Cardoso, without need for a runoff.

But what Lula and the PT did differently this time to hang on to the lead through to the end, while remarkably obvious, is also incredibly vague. Aside from the more visible, massive improvement in marketing and communication techniques and strategy, there's been a basic change in the PT's campaign content—and there's the rub: it amounts to no less than the most radical, yet successful about-face in the history of Brazilian politics. Party positions that for years symbolized the very existence of the PT and many of its leaders—Lula included—were abandoned just months before the election itself, or so it has been made to appear. These were replaced with, in many cases, the opposite view of what was defended so vehemently before.

Of course, the political process is dynamic and having a change of heart is fair ball. But what Lula and the PT are on the verge of accomplishing in Brazil goes far beyond that, because it involves the party's bottom line—the very foundation of what the PT was all about since it was launched in the early 1980's, and had stood for until just a few months before this election. There's a vital missing ingredient here, always present when politicians change position in a significant manner: nobody in the PT has said, at any time, that past positions were wrong, outdated or unfeasible. The "new" façade was introduced quickly and efficiently, but while Brazil witnessed the PT's "in with the new", nobody at any time in this campaign ever saw anything resembling an "out with the old"…

This, naturally, leaves the impression that the "old" isn't dead and buried at all. Which begins to explain the economic turbulence seen in Brazil in recent months. Lula and his campaign coordinators like to say the Cardoso administration should answer alone for what is going on—the currency steadily losing ground against the U.S. dollar, markets spiraling, sluggish economic activity at best, rising unemployment, falling industrial output, and analysts around the world wondering when, no longer if, Brazil will have to restructure its debt.

Throughout the campaign the PT insisted problems had nothing to do with the campaign and the possibility that Lula might win, and everything to do with Brazil's "vulnerability to external factors", caused, of course, by the current government's policies. That view is politically convenient in the middle of a campaign, but it simply doesn't hold water.

The fact is that when Brazil's economy began to seriously wobble just a few months ago, all of the country's economic indicators were in better shape than a year before. Although some indicators remain comparable or better than a year ago, generally this is no longer the case because what's been happening is taking its toll. As the currency loses value for example, and interest rates rise, the debt load grows, as does the debt to GDP ratio—and that one really makes analysts sweat bullets. A devalued currency helps exports, but puts pressure on internal prices and leads to higher inflation, so interest rates move up, which further restrains economic activity… and on and on rolls the snowball.

The Lula Factor

The Brazilian economy wasn't exactly booming before things began to deteriorate, but very clearly, the downward spiral began as one distinct variable was introduced—the one that could affect perceptions about Brazil, and negatively impact its economy in the way that it has. That variable was the growing possibility that, this time, Lula and the PT could actually win Brazil's highest political seat.

For those who still have any doubts whatsoever that this was "the" factor, newsmagazine Veja dated October 23, 2002, describes as "mesmerizing" the pace of money transfers out of Brazil in recent months. No figures are mentioned, but the magazine does say that in September alone, the total amount sent abroad from Brazil was six times greater than what went out in all of 2001, with no signs of a slowdown. Enough said.

Along with shunning the discomfort caused by Lula's imminent victory as a major reason for economic turbulence, the PT has also argued that some sort of resistance exists in Brazil to different parties and political tendencies alternating in power. But the PT itself exemplifies the absence of that type of concern in Brazil. The party has reached power at all levels throughout the country, in both wealthy and poor states, major and smaller cities, with mixed results.

The unavoidable fact is clear and obvious. As Lula and the PT inched ever closer to winning the presidency, the party's 20-year history of siding with radical "solutions" simply didn't—and couldn't possibly—jive with what the party and its most emblematic icon and founder, Lula, are now saying. The difference is so profound that it almost seems like the PT have adopted an entirely new language, along with the new image taken on by Lula. Beard neatly clipped, Armani suits and silk ties are now the norm, with Lula at times referred to as "little Lula peace and love"…

Then and Now

To better illustrate where things are and where they've been, and why it's enough to wreak havoc with anyone's notion of what makes sense—politically or otherwise—here are a few "then and now" examples—the PT and Lula have moved:

* From backing unilateral default on Brazil's foreign an internal debts, to stating that a PT government will "fulfill all existing commitments". Before this change of heart, the PT had gone so far as to support a plebiscite organized earlier this year by the Catholic church, asking Brazilians if they thought the debt should be paid at all;

* From constantly demonizing the World Bank and the IMF as institutions at the service of big capital and directly responsible for the miserable existence of so many in Brazil, to declaring a willingness to deal with and accept terms negotiated with these institutions;

* From stating frequently that Brazil has "no need" for foreign investment, to declaring a future PT government open to foreign capital, which is now "welcome";

* From explicitly backing the MST, the extreme left-wing landless peasant movement known for often violent land invasions on the Brazilian countryside, to pledging that land reform will be violence-free and respectful of private property rights;

* From promising to revise all privatizations and reversing them where it felt the need, to no longer questioning the legitimacy of privatizations already concluded;

This is just a partial list of the sharp changes characterizing the PT's campaign discourse. When asked to explain such drastic revisions, party leaders meander into lengthy explanations about having grown politically, and gaining a better understanding of the way things are and how they work.

A newly acquired grasp of the need to negotiate, and never shut the door on those who think differently, is also front-row center these days—which, of course, explains the hodgepodge of unlikely allies that have jumped on the PT bandwagon. These include a number of old-style political warhorses, many accused of blatant, multi-figure acts of corruption in the past. People the PT completely and loudly execrated until not that long ago…

Money Is the Object

While exhibiting this impressive list of flip-flops without so much as blushing, the PT has consistently said it defends the need to dramatically change economic policies in order to redirect funds to social initiatives. This actually matches what the PT has said throughout its existence. The trouble begins when they're asked to explain precisely how they intend to change the economic agenda once in power.

At that point, the PT and Lula provide scads of rhetoric, but no details that make any sense to anyone who can add and subtract. Attempts to explain this point usually expose an old PT wish list, which could be any party's wish list. Its basic requirement is cash, which doesn't exist.

Of course, if one is to place these new social priorities ahead of fiscal responsibility, they can certainly become reality. And it would make all kinds of sense for the PT to do just that once in power, since it strongly opposed the Fiscal Responsibility Law. This is the law that prevents Brazilian administrators at any level from spending beyond their budget limits, and leaving behind unexplained debts (not contemplated in their budgets) for the next office holder to sort out.

But, the PT insists, that was then and this is now: the PT is now all for fiscal responsibility, and its social objectives will be met without sacrificing Brazil's hard-earned fiscal restraint. How you ask? People have been trying to get an answer for that in Brazil for quite some time, to the point where the media are being considered an irritant for asking… Lula and the PT, on the other hand, are not penalized by the public for not explaining how it'll come about. Indeed, Lula is now protected by a Reagan-like Teflon coating. Nothing ever sticks…

So, is there reason to worry about what might happen in Brazil? Certainly not if Lula and the PT have in fact gone through a most incredible, detailed and thorough political repositioning, as the campaign they've just run would indicate. If what Lula and his party are now saying is indeed to be believed, Brazilians—and foreign investors—should have nothing to worry about, since all the right promises have been made, feasibility notwithstanding. But of course, in order to outright believe that, one must necessarily ignore the 20-year history of the Worker's Party and its founder, the once brash and outspoken former metalworker Luiz Inácio Lula da Silva.

Chances are it's not all smoke and mirrors, and Lula and the PT truly hope to make good on what they're now saying. And they want to do it "their way", even though they haven't told voters exactly what that is in many instances. But to make it all happen, the PT will have to work with the allies it has attracted in order to form a government and a viable support base in Congress.

And that's where it's bound to get messy, simply because Brazilian politics are what they are—through two administrations, the Cardoso government did not accomplish nearly as much as it hoped because of the heavy horse-trading involved. Numerous main objectives were shoved aside, because to go through with them and appease political interests would have meant settling for the unacceptable. The PT and Lula are about to get a taste of that bitter reality, and given the how dramatically they say they've changed, one can only wonder how they'll deal with it.

Bottom line: in order to reach power at the federal level, the PT resorted to the exact same tactics and strategies it condemned for 20 years, in one of the best-ever examples of "if you can't beat them, join them" in Brazilian political history. They threw their doors wide open, allied themselves with totally antagonistic past enemies, reversed positions and denied their own traditions.

In doing so, they disfigured the PT, the only political party in Brazil that still resembled a properly functioning political party because it stood for very clear, well-defined positions. Agree or disagree with the PT, you always knew exactly where they stood and what they were all about—until now.

This is no small loss. As someone who has been close to every election campaign in Brazil since the end of the military regime in the 1980's, I had always seen the stability and clarity of positions displayed by the PT—and the party's gradual growth on the Brazilian political scene—as a hopeful sign. Perhaps other parties would pick up on this, and begin to function like real political parties, committing to programs and ideas, identifying and attracting those who think alike, and turfing out those who are only in it for themselves. Perhaps others would realize that being focused and consistent, and sticking to your guns, does win votes… But, alas, it seems the PT's patience ran out, and instead of being copied, they, unfortunately, became like their opponents.

Adhemar Altieri is a veteran with major news outlets in Brazil, Canada and the United States. He holds a Master's Degree in Journalism from Northwestern University in Evanston, Illinois, and spent ten years with CBS News reporting from Canada and Brazil. Altieri is a member of the Virtual Intelligence Community, formed by The Greenfield Consulting Group to identify future trends for Latin America. He is also the editor of InfoBrazil  http://www.infobrazil.com), an English-language weekly e-zine with analysis and opinions on Brazilian politics and economy. You can reach the author at editors@infobrazil.com 

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