Open World Conference of Workers

In Defense of Trade Union Independence & Democratic Rights

The PT Sweeps to Power in Brazil:

Dossier from OWC

IN THIS DOSSIER:

1) Introductory Note, by Alan Benjamin

2) Declaration of the O Trabalho Current of the Workers Party: "On October 27th the Brazilian People Proclaimed -- 'We Wish to Be Masters of Our Own Destiny'!" (October 29, 2002)

3) Brazil, the Lula Victory and the Fight for Trade Union Independence by Alan Benjamin, co-coordinator of the OWC (October 29)

4) The Workers Party Electoral Victory of October 27th and the Trap of the "Participatory Budget"  by Joao Penha (October 29)

5) "What Is 'Democratic' and "Participatory' About All This [Participatory Budget]?": Interview with Lourival Pereira, president of SAGERS, union of silo and warehouse workers of Rio Grande do Sul (reprinted from O Trabalho newspaper, October 20)

6) The Record of 13 Years of Participatory Budget in Porto Alegre, by O Trabalho (reprint of earlier issue, March 2002)

7) "An Explosive Situation in the Making: Whatever Lula's intentions, international finance capital fears the Workers Party (PT) and the millions who voted for the PT," by Joao Penha (October 21)

8) Declaration of the O Trabalho Current of the Workers Party: "On October 27th, confirm and broaden the vote for a PT government that breaks with the IMF to attend our demands!" (October 8)

9) "Brazil on the Eve of Elections" by Nubia Matos Becerra (October 2)

10) "We Will Not Accept Any Accord with the IMF!" -- Statement issued by the O Trabalho current of the Brazilian Workers Party (August 10)

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1) Introductory Note

On October 27, 2002, Luis Inacio (Lula) da Silva, candidate of the Workers Party (PT), won a landslide victory in the second round of Brazil's presidential election, defeating the candidate of the ruling party, José Serra, by a 62%-to-38% margin.

We are reprinting a complete dossier on this election, with 10 separate articles, listed beginning with the most recent. Most of the articles are reprinted from -- or are otherwise based upon articles published by -- the O Trabahlo current of the Workers Party of Brazil, a current that actively supports the campaigns of the Open World Conference in Defense of Trade Union Independence and Democratic Rights (OWC). The O Trabalho current of the PT is affiliated with the International Liaison Committee for a Workers' International (ILC), which is one of the coalitions that joined with the San Francisco Labor Council and others to build the Open World Conference of February 2000. -- Alan Benjamin, OWC Continuations Committee

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2) Declaration of the O Trabalho Current of the Workers Party:

On October 27th the Brazilian People Proclaimed:
"We Wish to Be Masters of Our Own Destiny!"

On October 27th a page in our history was turned. A force of more than 52 million Brazilians, in the name of the entire nation, said in one voice "enough of the politics of FHC [Fernando Henrique Cardoso, the current president] and the IMF," as they elected Lula, the candidate of the Workers Party (PT), as president.

On October 27th, 52 million people affirmed that a sovereign Brazil wants to be master of its own destiny. These were 52 million people moved "by the pain," as one worker put it -- "[t]he pain of parents who go to hospitals and find no vacancies for their children; the pain of the landless, those who live in the slums, the street children, the workers who get laid off or are unemployed."

On October 27th a nation united to say that the people, and only the people, should decide their future, and that Brazil should be free and sovereign. And they said this could be done because 22 years ago, as the result of a massive wave of strikes that heralded the end of the dictatorship, the PT was born, followed soon after by the CUT [United Workers Federation] -- both independent organizations built by the workers to express and advance their interests. Indeed, in Brazil and throughout the entire world, the independence of workers' organizations is the principal guarantee for the exploited and oppressed to ensure that their demands can be met as they face off with their exploiters.

On the night of the 27th, the biggest rallies ever seen brought together thousands upon thousands of workers, landless peasants and youth in the four corners of the country. What did these rallies express? It was sheer enthusiasm and certainty that it is necessary to change the "economic model" of the IMF.

Clearly everything will not change overnight. We all know this. Working people understand this. But the question of questions is, in which direction will we go starting from this moment on? The 52 million say it can no longer be in the direction of FHC and his politics. The time has arrived for other politics, even if we know that things will be difficult and that obstacles will be placed in our path every step of the way.

Those who have always oppressed and exploited the people were defeated on October 27th. Yet in spite of this, they want to continue doing things the same way, trampling upon democracy and popular sovereignty as they go.

Workers, the country is facing a great danger!

The speculators, bankers and multinationals -- encouraged by Bush, the IMF, and the World Bank -- are promoting capital flight, speculating with the value of the Real [Brazil's currency], increasing the price of bread and public fees, demanding an "independent" Central Bank that would escape control by a government elected by the people. The arrogant spokespeople of the U.S. government say that if Brazil doesn't want the Free Trade Area of the Americas (FTAA), it can go trade in Antarctica. U.S. Treasury Secretary Paul O´Neill went so far as to state, "Lula has to prove he isn't crazy!"

What arrogance! When a people decides to take its destiny into its own hands, they say it is "crazy." This is unacceptable!

Talk about crazy: Aren't Bush's policies "crazy?" How else can one describe policies aimed at pushing entire peoples toward war, as in Iraq and countless other parts of the world? Aren't the policies that led our brothers and sisters in Argentina to disaster the ones that are "crazy"?

This sheer arrogance was expressed as well by the bosses of the FIESP [the most powerful employers' association in Brazil] the day after the elections when they stated that "the year 2003 will be difficult" and warned that "the workers will have to lose a little."

You, Messrs. bosses, obviously didn't get the message. You seem to be thoroughly misled: On October 27th it was not the party of the bosses, but the Workers Party that won the elections!

That 2003 will be difficult, we all know this. The years 2001 and 2002 were already difficult enough for the people. That is why they elected Lula -- so that 2003 would be less difficult for them. The people do not expect miracles, nor that everything will be resolved in one magic swoop. But the Brazilian people, who have already lost far too much, will not let go of what they have, nor will they let go of their demands!

No, Messrs. IMF, Messrs. bosses, Mr. Bush: You were not the ones who won the elections in Brazil! Nor will it be you who decide, starting now, what the priorities should be. The priorities for the overwhelming majority of the nation are:

* Land for those who work on it!
* Jobs and dignified wages for the workers and the youth!
* Recognition and respect for all workers' rights as codified in the CLT [National Labor Code]!
* A halt to all privatizations!
* The recovery of public services -- of Health, Education -- and of the stolen rights of the public workers!

We know that the enormous foreign debt can and will be used by our enemies to ensure that "everything continues as before" -- so that all the changes that would address the needs of our people do not occur. But this debt does not belong to the people of Brazil. Moreover, it was already paid back: In interest alone the country has paid in the past years US$270 billion -- and still the debt continues at US$230 billion!

Do we have to accept this blackmail?

Another arrogant voice was that of Fernando Henrique Cardoso himself. Though smashed at the polls, he intends to take advantage of his last days in Brasilia, up till the end of his term in December -- hidden behind the cover of a "transition team" and using a Congress at the end of its mandate -- to continue with his wretched work of destruction.

But it is possible that those who have no legitimacy whatsoever be allowed to move forward in the next 60 days to impose the adoption of the federal budget for 2003, imposing a minimum wage of 211 Reais and denying any wage adjustments for public workers?

Is it possible that they who have no legitimacy be allowed to approve the Postal Law, which would privatize the Post Office; that they be allowed to push through with the "counter-reform" -- that is, destruction -- of the National Healthcare and Social Security system, which is public and based on workers' solidarity?

Is it possible that they be allowed to approve the Dornelles Law regarding the "flexibilization" of workers' rights?

All of this is unacceptable! On October 27th the people said: "Enough is Enough!"

We, the O Trabalho current of the PT, count ourselves among the millions of voices of the Brazilian people who say to the world: "We want a nation that is free and sovereign! And we know that liberty and sovereignty of nations, if respected, guarantees peace among the peoples of the entire world."

We, the O Trabalho current of the PT, consider that the only guarantee to be able to move forward in this struggle -- so that we aren't forced to retreat, so that we can win our legitimate demands, so that the necessary changes can take place -- is the independent organization of the workers in their own party and the preservation of the independence of their unions, of the CUT.

What's at stake is the very existence of the Brazilian people, the future of the younger generations, and the dignity and sovereignty of the nation!

O Trabalho Current of the PT
(October 29, 2002)

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3) Brazil, the Lula Victory and the Fight for Trade Union Independence

By ALAN BENJAMIN *

On Oct. 27, more than 52 million people in Brazil voted to place a candidate of the Workers Party (or PT) in the presidency of this country of 170 million inhabitants. [See accompanying stories in this dossier.]

Everywhere across Brazil that Sunday evening -- in the favelas (or shantytowns), the working class neighborhoods of the large cities, and the smallest villages of the desolate Northeast or the Amazon basin -- hundreds of thousands of red flags with the bright star of the PT were unfurled in spontaneous street actions. The most raucous rallies occurred in the ABC Triangle, the industrial belt of Sao Paulo where the PT and the Unified Workers Federation (CUT) were born 22 years ago, signaling the end of a brutal dictatorship.

"Finally, things will change for the better! Finally there is hope!" was the pounding, syncopated cry of a people so long hammered down by a crushing foreign debt and the inhumane policies aimed at ensuring the punctual repayment of a debt that was never placed at the service of developing the Brazilian economy and improving the lot of its citizens.

Correspondents of O Trabalho, the biweekly newspaper of the O Trabalho current of the PT, captured some of the voices of the downtrodden and forgotten millions of Brazilians in reports filed from all four corners of Brazil.

In Rio de Janeiro's favela of Mare, workers from the Petrobras national oil corporation, many of them recently laid off as the company is being downsized and slated for privatization, told O Trabalho, "All of us here voted for Lula. We desperately need to put an end to the hunger, the pain, the unemployment, the violence. We want social peace -- which can only come when we have a dignified job with rights that are respected, when we have the right to healthcare and pensions and don't have to rely on handouts, when our kids can go to school."

Workers in the city of Caixas, where eight years of IMF structural adjustment plans have closed down all the textile plants, made it clear why things had to change, "They have massacred our jobs and our communities. The few who still have jobs are left to shoulder too heavy a burden. Wages must be increased immediately, and public funds must go to creating a massive public works program. The bosses and their international banker friends can wait to be repaid. It's our turn now. We the people have spoken. If they don't like it, well that's just too bad."

In the eastern suburbs of Sao Paulo, in the neighborhood of Penha, Jurandir, a worker in an auto repair shop, explained why we had rushed out into the streets to celebrate. "We're out here so that the PT, Lula himself, can see us, so that they know who put them in office, so that they make good on their promises. Lula said there'd be change, now he must deliver -- to us, and not to the powerful elite that has run our country into the ground."

In the industrial belt of Joinville in the state of Santa Catarina, 800 workers at three industrial plastics plants (Cipa, Interfibras and Profilplast) have been on strike since Oct. 24 to demand payment of eight months of back wages. They, too, took to the streets to distribute widely an Open Letter to Lula they had just written in a general assembly titled: "Now it's our turn!"

The letter states, in part, "We can no longer bear the deadly onslaught of the exploiters. ... They say our strike is illegal, but they're the ones who haven't paid us our wages for eight months; they haven't paid into our social security and retirement funds. They're the criminals!" The Open Letter concludes by calling on Lula to confiscate the companies and nationalize them under workers' control if the bosses carry through on their threat to close the plants.

Though the names and particular situations of all who celebrated that evening of Oct. 27 may differ, all expressed in the streets -- as they had done earlier in the voting booths -- the will of an entire people for change, for putting an end to IMF austerity and pillage, for popular sovereignty and democracy: "We the people have voted; our will now must be respected!"

The Employers' Blackmail

Not surprisingly, this is not how the captains of international finance capital have interpreted the results of the Brazilian election. Persisting in their refusal to listen to the clamor from those on the bottom of the heap, they have pressed relentlessly for Lula, the president-elect, to ignore the pledges he made to the Brazilian people and only make good on the pledge of "fiscal responsibility" he made to the bankers and foreign creditors.

The full-court press of the spokespersons and pundits of global capitalism has been intense. If Brazil were to default on its debt payments, they insist, this could trigger an Argentina-like scenario, with massive capital flight, widespread recession and the loss of millions of jobs. Does Lula want to take the rap for creating such chaos?

The only solution, they proclaim, is for Lula to continue in the footsteps of the discredited regime of Fernando Henrique Cardoso -- a regime that for eight years led the country to the precipice while the bankers and a tiny wealthy elite stuffed their faces in the IMF trough. In fact, they insist, Lula, with his widespread popularity, can -- and must -- go further than Cardoso in imposing the destructive agenda of the IMF and World Bank.

Such language has a name: blackmail!

But how do the bankers and their cabal expect Lula and his cabinet to quell the popular revolt that is bound to develop if Lula implements the IMF agenda and people begin to realize that their heart-felt aspirations and needs have been ignored, if not openly betrayed?

Lafer Piva, president of the most powerful employers' association in Brazil, the FIESP, has an answer. Immediately following the Lula victory he issued a public statement announcing that he and the FIESP would be willing to participate, the sooner the better, in a "National Social Pact." Piva continued, "A Social Pact is an instrument which, if implemented correctly, can have magnificent results. ... But it will only work if all sectors of civil society -- the government, the employers and the trade unions are willing to participate and make concessions for the common good. The unions must be willing to lose a little."

This call to work together toward the "common good" of the employers, the international creditors/multinational corporations, and the workers is not a new one. For eight years, all the anti-worker measures put forward by Cardoso and his finance minister, Armando Fraga, have been implemented in the name of promoting the "common good."

The Folha de Sao Paulo, the most influential mainstream newspaper in Brazil, quickly picked up and endorsed the FIESP call for a National Social Pact. It noted, however, that forging such a pact would be a mammoth task-- not insurmountable, though, if Lula and the PT leadership "cooperate" -- given the resistance by the trade union movement in the past to the signing of such a social pact. "The CUT [Brazil's mass union federation], has always been intransigent in its opposition to any idea of a Tripartite Social Pact," warned the editors of Folha de Sao Paulo (Oct. 29)

This assessment is not wrong. There have been many attempts in Brazil's recent past to institute a Social Pact -- and all basically have failed. The union movement, by and large, has stood firm in maintaining its independence, fending off all attempts to be co-opted into corporatist structures reminiscent of the pre-war Mussolini dictatorship in Italy.

The first attempt at creating such a Social Pact took place in 1979 under Delfim Neto, one of the main figures of the military dictatorship. Another attempt took place in 1980-81 at the initiative of the FIESP. In 1984, it was the turn of then President Tancredo Neves, the first civilian elected by an electoral college hand picked by the military.

The editors of Folha de Sao Paulo went on to quote, with an evident tone of disdain, what the trade union movement had stated at the time in opposition to the proposed Social Pacts. These quotations are worth reprinting here, as they embody positions which the CUT and the entire trade union movement would do well to reaffirm today if they wish to remain true to their mandate of protecting and advancing the interests of their members -- and of all Brazil's working people. The editors highlight the following statements:

* "Jaco Bittar [then an oil worker unionist in Paulina] said, 'We must oppose any attempt at instituting a Social Pact. We cannot play their game and help them administer the crisis. Unemployment is a problem of the capitalists and of the current economic system. Let them fix it'!"

* Olivio Dutra [then a leader of the Bankworkers union in Rio Grande do Sul, before he became a proponent of the "participatory budget" -- a form of Social Pact] said, 'This Social Pact strategy is aimed at coopting the unions into making the workers shoulder the hardships; its aim is to demobilize the workers and prevent them from fighting back in their own interests'."

* Joao Meneghelli [then a leader of the Metalworkers union of Sao Bernardo do Campo] said, 'Social Pact means that the workers must shut up and accept taking it on the chin. We could never accept this'."

* Lula himself, then a leader of the metalworkers union, is quoted as saying, "The bosses and the government only speak about a Social Pact with the workers and their unions when they want us on board to help them distribute their losses, when they want us to implement their policies against the workers."

These words are more relevant than ever. As the October 29th statement by the O Trabalho current put it in the aftermath of the Lula victory:

"We know that the enormous foreign debt can and will be used by our enemies to ensure that 'everything continues as before' -- so that all the changes that would address the needs of our people do not occur. ....

"[T]his is unacceptable! We cannot accept such blackmail. On October 27th the people said: 'Enough is Enough!'

"We, the O Trabalho current of the PT, count ourselves among the millions of voices of the Brazilian people who say to the world: 'We want a nation that is free and sovereign! And we know that liberty and sovereignty of nations, if respected, guarantees peace among the peoples of the entire world.'

"We, the O Trabalho current of the PT, consider that the only guarantee to be able to move forward in this struggle -- so that we aren't forced to retreat, so that we can win our legitimate demands, so that the necessary changes can take place -- is the independent organization of the workers in their own party and the preservation of the independence of their unions, of the CUT.

"What's at stake is the very existence of the Brazilian people, the future of the younger generations, and the dignity and sovereignty of the nation!"

Indeed, if the banners of the PT are to continue waving in the weeks and months ahead, the mass sentiment for change expressed on October 27 will have to become an organized force of millions in defense of the independence of the CUT and the trade union movement -- in defense of the PT itself as a workers' party. This is the necessary condition for working people to be able to push back any and all attacks by the employers and those doing their bidding.

---

(* Alan Benjamin is co-coordinator of the Open World Conference in Defense of Trade Union Independence and Democratic Rights.)

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4) The Workers Party Electoral Victory of Oct. 27th and the Trap of the "Participatory Budget"

By JOAO PENHA

SAO PAULO, Oct. 29 -- Immediately after the Oct. 27 landslide election of Workers Party (PT) presidential candidate Luis Inacio (Lula) da Silva, editorials in the world major financial daily newspapers began telling Lula, as he is known widely in Brazil, exactly what he must do in the economic arena if he is to be true to his electoral pledge of fiscal responsibility and respect for the terms of the recent US$30 billion IMF "rescue" package.

The Financial Times editorialists (Oct. 29) wrote:

"Mr. da Silva must act quickly to gain a reputation for economic responsibility. That means making the right appointments to senior economic positions, delaying pledges for social change and concentrating instead on a credible commitment to even tighter fiscal policy [than the current Cardoso government] until the debt to GDP ratio has fallen."

For his part, Kenneth Rogoff, senior economist at the International Monetary Fund, warned that any way you look at it, "structural adjustment in Brazil, which the da Silva government must pursue, cannot be implemented without pain. ... There is no other option if international economic confidence is to be maintained and Brazil's entire financial system is not be wiped out."

Herein lies the problem: If Brazil is to continue paying back the onerous foreign debt to its international creditors, it will have to earmark 3.6 billion Reais (Brazil's flagging currency) toward debt repayment each and every month. This is money that will have to be taken out of the budget for public hospitals (already on the brink of collapse), schools and wages for public workers.

The watchdogs of international finance capital -- that is, the IMF and World Bank -- are demanding tighter fiscal policies than existed even under eight years of the Cardoso government. What would this mean, for example, for public workers in Brazil?

A letter addressed to Lula prior to the election by the Federal Workers Union in Brasilia underscores the impossibility facing the Lula government of addressing the needs of the mass of Brazilian workers -- who voted for him and for the PT, seeking to put an end to eight years of fiscal austerity -- while also abiding by the dictates of the IMF and World Bank. The federal workers wrote, in part:

"During the past eight years, our wages have been frozen. We need urgently a wage increase of 89.12% just to keep afloat. This figure was sent by the National Federation of Federal, State and Municipal Employees to the current president of the republic, Fernando Henrique Cardoso. It was accompanied by an entire list of demands regarding parity between active and retired public workers, recognition of a master contract for all public workers across Brazil, the restitution of essential public services that have been wiped out through privatization and deregulation, and the recognition of 56 basic rights for public workers that have been eliminated, among others.

"Mr. Cardoso has ignored our demands. He has signed an agreement with the IMF on debt repayment that will impose a Draconian structural adjustment plan and will leave Brazil even poorer than it was before. The condition dictated by the IMF for paying back the interest on the debt in the year 2003 would require cuts of an additional 53 billions Reais in the budget for public services alone.

"At the rate things are going, with Brazil being delivered to those who are simply pillaging our country and bleeding us to death, even the payment of our current salaries and retirement payments is under threat.

"Comrade Lula. We are convinced that now is the moment to change course. It is now or never. It was for this moment that the Workers Party (PT) was built 23 years ago and that it has grown into a mass party of the Brazilian working class. Today, millions of working and oppressed people are supporting your candidacy because they see in you and in a PT electoral victory the possibility of moving toward a dignified future for the youth and for those who work for a living. They see the possibility of paving the way to the creation of a truly democratic and sovereign country, where it is up to the people -- and not the IMF -- to determine our destiny."

In his first public statement after winning the Oct. 27 election, Lula pledged swift action to reduce malnutrition and other social ills while also seeking to reassure investors that he would pursue a "moderate" and "responsible" economic course.

"Even with budgetary restrictions," Lula stated, "we are convinced that from the first day it will be possible to act fast and creatively in the social area." Lula went on to point to the example of Workers Party governments in Brazilian states, cities and towns to underscore his point that fiscal responsibility and "creativity in the social area" can go hand in hand to meet the expectations and aspirations of "all Brazilian civil society."

What "Acting Creatively" Meant in Porto Alegre

The concept of implementing fiscal responsibility while also promoting "creativity in the social area" is not a new one for the Workers Party, or at least for a certain wing of the PT.

In the city of Porto Alegre -- and then at the level of the entire state of Rio Grande do Sul -- this "creative" balancing act went under the heading of "participatory budget." The PT city government of Porto Alegre was the first to implement this "participatory budget" process 13 years ago, calling it "an innovative form of governance." Other municipalities and states governed by the PT later followed suit.

Today, many of those who, both within and outside the PT, advocate the creation a "Social Pact" among "all actors of civil society" in the aftermath of the PT landslide of Oct. 27th are pointing to the example of Porto Alegre's "participatory budget" as the way forward.

What is the "participatory budget" and why has the World Bank characterized the PT-led city government of Porto Alegre as the "best pupil" of the World Bank and IMF?

The budget of Porto Alegre, like that of all Brazil's cities, lies within a framework set by the federal government. This framework demands that each state contribute its share in servicing Brazil's crushing $250 billion foreign debt. The state government, in turn, allocates to the municipalities in its own jurisdiction the share of the foreign debt they must pay. In this way, all state and municipal governments are tied directly into payment of the foreign debt. It is not left to the federal government to take care of.

The "participatory" aspect of the state and municipal budget allocation pertains only to a relatively small percentage of the overall budget. Whether or not to pay back the foreign debt, for example, is not up for discussion -- even though this is the largest budget item. Payment of the debt is automatic, and has not -- in fact -- been questioned by the PT mayors or governors implementing this so-called "participatory" process.

In what sense is this process participatory? Associations, trade unions, NGOs -- all on an equal plane -- are called upon to define the budget priorities based on what is left over -- after the payment of the debt. In other words, they are asked to determine how to "distribute" the budgetary shortfall; that is, they are co-opted directly into the administration of poverty. This is why PT activists across Brazil who disagree with this model have dubbed it "participatory austerity."

For example, which is the priority: to repair the sewers, which break down on a regular basis, with deadly consequences in the shantytowns and poor districts -- or to pay civil servants, who sometimes go for four, five, or even eight months without pay? Should a district healthcare clinic be closed, thus depriving thousands of working-class families minimal care, in favor of installing running water? Or should the reverse be prioritized?

By enlisting organizations -- particularly trade unions -- into making these debasing choices, what really happens is that these organizations cease to defend the specific interests of their members. Instead, they are transformed into relays for the policies dictated by the IMF. [Ed. note: See article below on the 13-year record of Porto Alegre's "participatory budget."]

The World Bank's "Best Alternative"

It is therefore not surprising that the World Bank has translated, published and distributed widely a propaganda handbook written jointly by the past PT mayor of Porto Alegre, Tarso Genro, and Urbitaran de Souza under the title: "The Participatory Budget: the Porto Alegre Experience."

In this World Bank handbook we learn, for example, that during the year 2000, 140 municipalities across Brazil - 73 led by the Workers Party and 67 led by "center-right" city governments - have implemented the "participatory budget."

Likewise, the Brazilian mainstream press has devoted a great deal of attention to the "participatory budget." A full one-page interview with Victor Vergara, World Bank administrator for Brazil, published by O Estado de Sao Paulo on March 5, 2001, gives further insight into the usefulness of the "participatory budget" for the proponents of the IMF and World Bank Structural Adjustment Plans (SAPs).

Vergara answers a reporter who asks him how the World Bank assesses the "participatory budget": "It is one of the most positive and innovative administrative experiences to come on the scene in Latin America," Vergara stated. "It is a modern method of governance that has awakened great interest throughout Latin America. ... The World Bank has translated into Spanish the book by Porto Alegre Mayor Tarso Genro on the subject. We have already distributed 2,500 copies of the book in nine Latin American countries."

When asked why the World Bank views this model so positively, Vergara replied: "It is a modern form of governance in that it transforms representative democracy into participatory democracy, into decision-making by consensus."

When asked if such a model can be implemented only by "left" governments, his answer was unequivocal. "Not at all. The participatory budget has no ideological origin. It is simply a method for making decisions. ... We are not saying that it is the ideal model, but it seems to us that it is the best alternative."

Method to "Avert Social Explosions"

This "method of decision-making" is, in fact, fully in sync with World Bank policy. For many years now, World Bank President James Wolfensohn has been warning that as a result of the implementation of World Bank-IMF Structural Adjustment Policies, "the number of social conflicts and social explosions is likely to increase, the quality of our environment will be worse, and the disparities between rich and poor will be wider." (Address to the Board of Governors, Washington, DC. Sept. 28, 1999)

To avert the risk of such social explosions, Wolfensohn has argued repeatedly for the need to co-opt the trade unions and social protest movements. Addressing a meeting of NGOs in Prague on September 22, 2000, Wolfensohn declared:

"What we are trying to do in as oblique way as we can is to convince the governments that you cannot impose development on communities or groups of people, that what you need to do is to consult so that they could own the process and that we don't design something in Washington or La Paz, but that it includes the people."

The World Bank president made specific the role ahead for the NGOs and, more broadly, for "civil society." It was necessary, he said, "to give people a voice in development. ... This means giving people an opportunity to actively participate in the identification, design and implementation of World Bank projects and lending."

The World Bank's World Development Report 2000/2001: Attacking Poverty summarized this strategy: "Social fragmentation can be mitigated by bringing groups together in formal and informal forums and channeling their energies into political processes instead of open conflict."

Participatory Budget is Rebuffed at the Polls

Riding on his credentials as the PT mayor of Porto Alegre, Tarso Genro set his goals on a higher office, running for governor in the state of Rio Grande do Sul in the recent October 6 elections.

The results of this election were at odds with the results experienced across Brazil by the PT candidates for public office. Everywhere but Rio Grande do Sul, the PT vote increased dramatically over previous years. Ana, a leader of neighborhood organizations in Porto Alegre and member of the PT, explained in an interview with O Trabalho newspaper, her assessment of this electoral setback for the PT candidate for governor. She stated:

"Across the state, Tarso Genro obtained 11% fewer votes than his counterpart, Olivio Dutra, did in the 1998 election. In the case of Porto Alegre, his vote total was 16% lower than Dutra's. And this occurred at a time when in city after city across Brazil, the PT vote skyrocketed in the first round of the election. Hence, the PT, which held the governorship of the state now risks losing that post. [Note: The interview with Ana was conducted before the second round of the election, held Oct. 27. Now the results are in, and Genro ended up losing the election. The PT hence has lost the governorship of Rio Grande do Sul.--JP]

When asked if the PT's record implementing the "participatory budget" had anything to do with this loss of votes, Ana responded:

"There is no doubt in my mind. All you have to do is look at what happened to Ubiratan de Souza, budget chief for Porto Alegre and co-author, with Tarso Genro, of the World Bank's handbook showcasing the model of Porto Alegre. De Souza ran for the National Assembly under the slogan, 'I am the candidate of the participatory budget.' Everywhere he went -- on the TV, the radio, at PT rallies -- he could not stop hailing his record as the overseer of this 'participatory budget' process.

"What was his result in the first round on Oct. 6th? De Souza obtained only 8,000 votes in the entire state of Rio Grande do Sul, when he needed a minimum of 25,000 just to qualify for the second round."

The interviewer pressed on, asking how she could be so sure this vote total was, in fact, a rebuff by the voters of the consequences of this "participatory budget" process. Ana responded:

"Look. People aren't stupid. At first we believed what they were telling us -- that we would finally have a voice in determining the budget priorities of the population. And we were patient, realizing that not everything can change overnight. But then we began to see that the priorities we put forward were never selected for review and implementation by the overseers of the budget process. We were always told that others were worse off than we were, and that our issues were 'not a priority.'

"Little by little, we began to see what was going on. We came to understand that the PT municipalities working under this 'participatory' process were dutifully paying back the debt to the foreign investors -- who, we should point out, did not invest a cent to help the Brazilian people. Why should they, the rich and super-rich who have simply speculated on our resources, get paid back when we are hurting so badly? We were told that the issue of the debt could not be discussed or challenged. How democratic is this?

"We learned that they were abiding strictly by the Camata Law, which -- at the behest of the IMF -- requires that wages paid to public workers not exceed 60 percent of the budget. In fact, in Porto Alegre, they 'bested' the IMF by reducing this amount to 48 percent -- which meant massive layoffs of public workers, and, naturally, mass strikes by teachers and other categories against the architects of the 'participatory budget.'

"But most important, we saw that our basic needs were not being addressed, and that things, in fact, were getting worse and worse. ... The people saw through this "participatory budget" fraud and simply wanted nothing more to do with it."

Ana went on to recount in detail how the neighborhood organization which she leads was lied to time after time, and how the neighborhood health clinics were gradually shut down. [Ed note: Also see below the interview with Lourival Pereira, a leading trade unionist in the state of Rio Grande do Sul, for more information about the massive popular rejection of the "participatory budget" framework.]

So today, just days after the election of Lula to the presidency, Brazil's working people have served notice that they want change -- not more austerity via "responsible fiscal policy." They have also served notice that they are no longer easy prey for the promoters of "creative" and "innovative" social policies premised on "Social Pacts" and "participatory budgets."

What the Brazilian people want is a PT government that begins to address their demands and that breaks with the IMF precisely so that it can fund the jobs and social programs that are needed to put Brazil back on its feet -- free from the dictates of the multinational corporations and the international institutions of global capitalism.

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5) "What is 'Democratic' and 'Participatory' About All This?": Interview with Lourival Pereira, president of SAGERS, union of silo and warehouse workers of Rio Grande do Sul

[Note: The following interview is reprinted from O Trabalo newspaper, published by the O Trabalho current of the Brazilian Workers Party (PT).]

Q: How do you evaluate the results of the first round elections on Oct. 6th?

Lourival Pereira: It is very different from 1998. At the time what we did was wage a campaign of hope. We wanted a PT government because we thought that with this government, everything would be resolved. We thought that it would put an end to the policies of privatization initiated by the Britto government.

We elected Olivio Dutra, the first PT governor of the state. It is necessary that we remember that he did not fully correspond to our expectations. He did not know how to dialogue with the base. Maybe he was surrounded by people who thought they knew everything. We had hoped that with participatory democracy our arguments and our demands would finally be taken into account.

And our demands were nothing extraordinary: We demanded only the recuperation of the salary losses we had suffered (our salaries had not been adjusted for two years at the time) and an end to the Britto concessions to private businesses. After a few months, seeing nothing happen, we woke up -- because, in fact, we had been dreaming -- and we complained. From that moment on, we were never invited again to the "participatory budget" meetings. The previous government fired me and I have still not been rehired to this day. I say all this not to diminish the importance of this magnificent first round vote, but because the experience should serve for something. With a PT government - and I am hoping we will have one after October 27th - we must totally preserve the independence of our organizations. Things will not come from above.

Q: At the outset of the PT government in your state, your union drew up a document demonstrating how the company could be put back on its feet as a public enterprise.

Lourival Pereira: That's true. Our union is active in two companies: Cesa, which belongs to the state of Rio Grande do Sul, and Banrisul Armazens, controlled by the state bank. Cesa is in a state of advanced degradation. The Britto government favored the private sector for years. He did not dismantle Cesa, but he pushed it in the direction of bankruptcy.

When the PT took over the state government in 1998, the union sent a very detailed report, indicating everything that was necessary -- down to the smallest screw -- in order to revive the company. It would have cost R$3 million. The government sent a project to the Legislative Assembly with R$20 million allotted to "clean up" the company. Except that it did not include the renovation of equipment. Everything was to pay back debts.

We went to talk to the government representatives. Since they talked so much about participatory democracy, it was time to demonstrate what that was. We said: anyone who can pay 20 million can pay 23 million, which is what was needed. But they told us that the time to present amendments had passed, and that is how it remained. The company has no more debt, but it has no means to compete in the market with the private companies.

Q: Were you driven to strike and to demonstrate against the PT-led government to get them to hear your demands?

Lourival Pereira: We have a collective bargaining agreement, which is a conquest. But we have to renew it every year, as it has not be written into law. In six years we have accumulated a salary imbalance. The last contract is from 1996. The one from 1997 was sent, at the time, to the Labor Board, and we lost. The same thing happened with the one for 1998. In 1999, we obtained a 17.9% wage increase -- but he government (this time, it was a PT government) won an appeal, and since then our wage increase has been suspended.

In 2000-2001, we had a single contract anticipating an increase of 10%. This year, we are demanding 12.43%. We had to strike, and the government called the police. How can this be understood coming from a government that proclaimed everywhere that it practiced "participatory democracy" and that it represented the workers? We did not yield. The strike ended with a small victory. We didn't get a salary readjustment, but we obtained the renewal of our collective bargaining agreement, a substantial increase in meal tickets -- which reach up to 30% of the salary of some workers - and a guarantee of the maintenance of our retirement fund, which the government had let sink.

One thing is clear: Nothing is ever won without struggle.

Using this whole framework of "participatory democracy," the government never stopped telling us that the company is in a difficult situation and that our demands would not help them get out of it. And they kept insisting there was no money to help resolve the situation.

But, at the same time, the government granted a loan of R$200 million to a private group, Trevo, which produces fertilizers and owns silos and warehouses. If one considers that the total wage packet paid at Cesa is roughly R$500,000, the increase we were demanding would not have come to R$750,000. This is exactly 260 times less than the loan the government granted to Trevo. What is "democratic" and "participatory" in all of this?

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6) The Record of 13 Years of Participatory Budget in Porto Alegre

The O Trabalho Current of the Workers Party (PT) produced a brochure in which it provides a concrete balance sheet of the 13-year experience of the Participatory Budget in Porto Alegre.

The brochure's introduction explains O Trabalho's overall stance on the question of the Participatory Budget:

"O Trabalho fights and has always fought for the independence of the working class, independence which takes concrete forms in its organization of parties, trade unions and independent organizations. This is why we believe that it is our duty to draw the attention of workers, activists and labor organizations to the mortal danger which the Participatory Budget represents for their rights, for the free exercise of their right to demand, for democracy, and for the very existence of workers' and people's organizations."

The brochure goes on to describe the results of the Porto Alegre Participatory Budget:

1. The Union of Neighborhood Associations (UAMPA), traditional organization which regroups neighborhood associations from Porto Alegre, is today on its last legs and was not able to hold its recent congress.

Pedro Lopes, a longtime leader of UAMPA, told O Trabalho newspaper:

"UAMPA originated as a fighting organization. We were in the front ranks of the struggles for education, housing and transportation - against austerity. We fought the privatization of the public bus system.

"Then UAMPA gradually became absorbed into the governance of austerity through the Participarty Budget. We never questioned it. We even got funding for xeroxes in City Hall, a nice office space - some of which can be considered conquests, others of which were simply co-optation.

"Now, we can't even organize our own congress. We have been gradually absorbed by the forums of the Participatory Budget." (O Trabalho, May 9-23, 2001)

2. The Municipal Workers Trade Union (SIMPA) finds itself today having to compromise its positions by "arbitrating" between the demands of its union members and the demands of other organizations, in order to respect the consensus that dictates the Participatory Budget.

Echoing this frustration, Jorge Buchabqui, former Human Resources Secretary of Rio Grande do Sul state government, resigned from his post in protest of the state government's pro-IMF policies and the fraudulent character of the Participatory Budget" - which, he said, had become a "straitjacket in the hands of the government to contain all the demands of the workers." (O Trabalho, January 15-29, 2001)

3. The Participatory Budget talks a lot about democracy, but little is known about how the Participatory Budget Councilors, who ultimately make the policy decisions, are designated. In the "Bylaws: General, technical and regional criteria" edited by the municipal government in 2000, it is stated that to be elected councilor, representation is established proportionally according to the following table when there is more than one contending list:

- 24.9% of votes or less: no elected delegates;
- from 25% to 37.5% of votes: one associate;
- from 37.6% to 44.9% of votes: two associates;
- from 45% to 55% of votes: 1 seat and 1 associate.

Fine example of democracy! A slate can receive up to 25% of the vote and yet not get a single delegate. This is how "consensus" is established - by marginalizing all opposition.

4. The global Porto Alegre municipal budget shows that from 1991 to 2000, the municipality increased its tax revenues by 350%. During this same period, however, the municipality's internal and foreign debt payments (charges and depreciation) increased six-fold.

5. The Municipal Budget is subjected to a number of federal provisions that highly restrict its share of federal tax revenue. This is the case of the Kandir Law, which subtracts a part of tax revenue that should go to municipalities and channels it toward export subsidies for employers.

Another such provision is the Federal Union Revenues (DRU), which authorizes the federal government not to transfer to the municipalities all the resources received by the federal treasury. Hence, the Porto Alegre municipality implements the Participatory Budget with a budget already amputated by 38 million Reals by the federal Cardoso government.

Thirty-eight million Reals are the equivalent of 1,520 housing units (UHS) or 317 kilometers of sewer construction, the lack of which is a nightmare for the populations of lower-income neighborhoods having to bear repetitive and devastating overflows.

6. Outsourcing: These are the funds funneled through the World Bank and IMF for the purpose of sub-contracting and outsourcing public sector jobs. Indeed, the Participatory Budget functions as an instrument to generalize the outsourcing of public services. The "2001 Investment and Services Plan" synthesized the "priorities" defined by the Participatory Budget, stating:

"In the area of social assistance, there will be a 'transfer of resources to Non-Governmental Organizations which will develop these activities, with contracts with 54 organizations to carry out 4,200 projects.' (Bureau of Vocational Work: Agreements with Non-Governmental Organizations)

If you simply take the year 2000 budget, transfers out of the municipal budget toward private institutions amounted to the following:

o 6.34 million Reals in education, which represent 150% of the total investments of the municipality for the year in public municipal schools;

o 5.26 million Reals in healthcare, which represents twice the total investment of the municipality in public healthcare;

[Note: Garbage collection has been totally outsourced and privatized.]

o Through the mechanism of these agreements, the PSF (Family Health Plan) has transferred to private neighborhood health associations the hiring of doctors and nurses - a task that was previously carried out by municipal health administrators;

o The management and administration of the Community Daycare Centers has been transferred to neighborhood associations; these do not have any municipal daycare personnel or infrastructure.

7. The Porto Alegre municipality has agreed to compel the local population and the municipality to accept growing proportions of the healthcare expenses abandoned by the federal government.

From 1998 to 2000, the State transfers to the municipality for healthcare expenses (SUS) dropped from 358.81 million Reals to 299.54 million Reals. At the same time, however, healthcare expenditures increased to 415.53 million Reals. Hence, for the single year 2000, 115 million Reals were taken out of the municipal budget. With this sum, 4,560 housing units or 953 kilometers of sewer system could have been built.

8. While the Camata Law - and now the Law of Fiscal Responsibility - require the municipalities and State governments to limit to 60% of their liquidities the global value of wages and retirement of municipal public employees, the Porto Alegre town hall, which implements the Participatory Budget, proudly claims to have applied the "most rigorous criteria," limiting to 48% the pay slips of those working and retired from the Porto Alegre municipal civil service.

This difference of 12% would increase demand and create jobs. Instead, the municipal funds have been paid out for outsourcing - and hence the NGO-ization - of the public health services, education and social assistance.

These are the facts.

Contrary to what is publicly claimed by all-too-many people, the Participatory Budget is not an "innovative form of democracy." Rather, it is a major instrument of corporatist policy whose aim is to integrate and destroy independent labor and popular organizations in order to implement the measures demanded by international finance capital: debt payment, reduction of public expenses, sub-contracting/outsourcing, and privatization.

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7) "An Explosive Situation in the Making: Whatever Lula's intentions, international finance capital fears the Workers Party (PT) and the millions who voted for the PT"

By JOAO PENHA

SAO PAULO, Oct. 21 -- A specter is haunting the summits of the Bush administration and the CEOs of the U.S. multinational corporations and the Brazilian employers' associations. It is the specter of the Brazilian working class regrouping behind it all the landless peasants, the youth, the shantytown dwellers and all the oppressed in the quest for a sovereign Brazil, free from the chains of submission to the IMF and all the international institutions of global capitalism.

It is the specter of the 40 million working people in Brazil who voted for the Workers Party (PT) and its presidential candidate, Luis Inacio (Lula) da Silva, in the first round of the presidential election on Oct. 6 -- a vote that was followed soon after by a major financial backlash against Brazil's currency (the real) aimed at precipitating the country into economic chaos. To give but one example, in the week immediately following the Oct. 6 election, the price of of domestic noodles, dependent to a large extent on grain imported from the United States, shot up 60 percent.

As the Oct. 27 date for the second round of the elections approaches, a growing number of sectors of international finance capital -- such as the Financial Times of London -- have begun to issue statements noting that "investors' deep pessimism over Brazil may have been exaggerated." The Financial Times noted that Lula had pledged to pay back the foreign debt, abide by fiscal responsiblity and build a governmental coalition with some of Brazil's centrist parties in the Congress.

While Lula has in fact made such pledges -- and while the PT's record in office in cities like Porto Alegre has given notice that the PT can be called upon to implement the IMF austerity policies -- the ruling circles in Brasilia and Washington remain deeply worried about the probable outcome of Brazil's Oct. 27 election, which is slated to give Lula an overwhelming majority of the electorate, larger still than on Oct. 6th.

In a poll published in Folha de Sao Paulo one week prior to the Oct. 27 election, one of every five employers interviewed predicted that Lula would not be able to carry through on his pledges to the IMF and World Bank, and another one in five expected that Lula would suspend payment of the foreign debt.

The reason for this deep anxiety among the employer class is not difficult to figure out. The bosses understand full well that the 40 million people who voted for the PT on Oct. 6 expressed on the electoral plane a movement from below that has been unleashed across Brazil. It is a movement of workers struggling mightily to keep their jobs and return to work all those who've been laid off through the massive privatization programs. It is a movement of parents fighting to feed their children and provide them with accessible, quality public education. It is a movement of landless peasants fighting for the land, so that they don't have to starve.

O Estado de Sao Paulo, one of Brazil's major newspapers, put it this way in an editorial dated Sept. 28: "It is to his credit that Lula wants to reassure the international financial markets of his good intentions. But the markets haven't shown any confidence; they're not listening. And there's a reason for this. Behind Lula, the man, they see, the PT."

How true: The 700,000 members of the PT -- and the hundreds of thousands more who attended the PT election rallies in every corner of the country -- do not want "fiscal responsibilty," more IMF Structural Adjustment Plans, and more money to be siphoned from the public coffers to pay back a foreign debt that has been paid back many times over.

The PT members and supporters have rejected and mobilized against the government of Fernando Henrique Cardoso and its candidate in this election: José Serra. That is why they are in the PT and why they campaigned for Lula. They want a PT government that breaks with the IMF and that puts an end, once and for all, to the misery and exploitation to which millions upon millions of Brazilian working and oppressed peoples have been subjected.

A worker in a factory of the renowned ABC industrial belt of Sao Paulo, the country's largest city, reported in these terms the mood of his coworkers following the first round of the presidential election. "Brazil's working people," he said, "believe they will conquer a space for themselves with the election of the Workers Party candidate for president."

It is no wonder why, in such conditions, the bosses and their voicepieces in the media, are clamoring for the creation of a "broad unity of all Brazilian society" following the Oct. 27 election -- an election they readily admit will be won by the Workers Party. An editorial in Valor, a daily newspaper of Brazil's top financial circles, stated, "As Brazilians, we must put aside our narrow interests and band together for the sake of Brazil."

Valor and countless other mainstream publications in Brazil have called for the creation of a broad "Social Pact" with the aim of integrating the trade unions directly into the implementation of the IMF's auserity policies.

But here is the hitch: Not only would the election of a PT president in and of itself express the massive rejection by Brazil's working class of these austerity policies, in the city of Porto Alegre and in the state of Rio Grande do Sul, where the PT had gone the furthest in implementing the IMF austerity plan through an explicit Social Pact -- known as the "participatory democracy" framework -- the PT candidates identified with this fraudulent "participatory democracy" were hounded out of office by the electorate. This, in fact, was the only region in Brazil where the PT candidates did so poorly. [See articles in Part 2 of this dossier analyzing the results of the election in Porto Alegre and Rio Grande do Sul.]

There can be no doubt about it: The 40 million who voted for the PT on Oct. 6 -- and the millions more who will vote for the PT on Oct. 27 -- are demanding a change of course, immediately, for the sake of safeguarding the interests of the working class and all the oppressed of Brazil. And such demands, as the ruling circles in Brasilia and Washington know all too well, are incompatible with the dictates of the IMF -- which Lula will be called upon to carry out without delay.

This is the crux of the explosive situation that is bound to develop in the days and months ahead in Brazil.

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8) Declaration of the O Trabalho Current of the Workers Party

On October 27th, confirm and broaden the vote for a PT government that breaks with the IMF to attend our demands!

More than 39 million workers, youth, landless peasants and unemployed voted for the Workers Party, or PT, on October 6th, defeating Jose Serra, candidate of current President Fernando Henrique Cardoso (FHC), who, for eight years, has applied all of the IMF plans in Brazil.

A "PT wave" swept the country from north to south, electing 10 senators, giving the PT the largest number of federal representative seats, increasing the number of PT state representatives, putting PT candidates for governor into the runoffs in eight states and giving them a victory in the first round in two other states.

And what do the working people who voted for the PT want? We want simple things.

The landless peasants want land where they can live and produce. The workers, victims of "restructuring" plans which cause layoffs and attacks on labor rights, want employment with all their rights; they want to maintain their conquests. We all want to preserve and improve Social Security, keeping it public and based on workers' solidarity. The homeless want homes. The youth want a future, education and real jobs. The retirees want the guarantee of a decent retirement. The postal workers who, in Manaus, went to the PT assembly in uniform, want the privatization and the Postal Law to be barred. Those who met in a ghetto in Rio in order to discuss the struggle for a PT government, concluded with their demands for a Technical School and the reopening of the naval shipyards.

Working people made clear that they want an end to this "economic model" dictated by the IMF, which provokes the bleeding of the nation in order to pay the foreign debt. We want to live! We reject that our country should be leashed to Bush's politics of war -- politics aimed at splitting our nations up into pieces so they can be delivered to the appetites of the big capitalist groups, in particular those of the United States.

Everyone knows that on October 6th the Free Trade Area of the Americas (FTAA) was rejected as well, so that Brazil may be sovereign and free to define its destiny! To the millions, we say: Enough of the plunder of our nation to fill the pockets of a half dozen corporate tycoons!

Could it be that our most basic demands can be satisfied if the foreign debt continues to be paid? Who could believe such a ruse? How can that for which we voted be addressed if we must meet debt payments of US$15 billion by December and yet another $9 billion by March 2003 ?

How could it be possible for the economy to recover if the privatizations continue, creating more unemployment, increasing interest rates and disasters like the "big power blackout"?

How can the economy get back on its feet if the newly privatized corporations -- steel and iron , Vale do Rio Doce, the railroads, telephone and electricity -- are not brought back into public patrimony and re-nationalized? Its impossible!

FHC, Piva of the FIESP, Arminio Fraga of the Central Bank -- all of them know that chaos is inevitable if we continue to pay the debt. Since October 6th, they and their friends from the multinationals and privileged groups have been speculating with the strong dollar -- which has increased the cost of bread and gas, as well as interest rates, thereby paralyzing production and causing more unemployment. Their plan is to sink our people even further into misery and to repeat here what they did in Argentina. Are we going to accept all this? No. It's not possible. It's impossible to accept that those who were defeated October 6th would still push the country into disaster and chaos. They were defeated exactly for having concocted, in 20 years, 13 accords with the IMF, all of which have led Brazil to its current dire situation. And they still have the audacity and pretension to dictate what should and should not be done! It's impossible to accept their dictates!

We all know that there is no conciliation possible with those who throw millions of heads of families onto the street, who persecute and fire union leaders, who impose the "Banco de Horas" [flexibility of the workweek] in their factories, who freeze our salaries! All workers know this, and that is why they voted with the party they built to defend themselves, the Workers Party (PT)!

Democracy demands that the will of the people be respected. The workers, the youth, the landless and the unemployed, say: Only a PT government can save us from chaos; only a PT government can decide to use the country's resources, not to pay the debt to the bankers, but to attend to our demands. Only a PT government can carry out true agrarian reform; stop the bosses and government from continuing the layoffs; put a halt to the privatizations; increase wages; give more funds to education, health and housing; fight the uncontrolled speculation that takes bread from the tables of the people. It is for these reasons that all of us want a Workers Party government.

No one is unaware of the difficulties. But is it possible to continue on as before? No! Now it's our turn, the people's turn! On October 27th, by the millions, let us confirm and broaden our will for change.

Let's vote for a PT government that breaks with the IMF in order to meet our demands!

Get in contact with us!
Join us in this struggle!
Rua Caetano Pinto, 456 - Bras
São Paulo, SP 03041-000
Phone: 11-3208-8420
Email: otrabalho@uol.com.br

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9) Brazil on the Eve of Elections

By NUBIA MATOS BECERRA

SAO PAULO, October 2 -- Over 100,000 Workers Party supporters in high spirits assembled in Sao Paulo, Brazil, amid a festival-like atmosphere to hear their candidate rally strength for the last leg of the country's presidential race. With one week to go until elections, polling results indicate that Luis Inacio "Lula" da Silva, or Lula, the candidate of the Brazilian Workers Party (Partido dos Trabalhadores, or PT), is within 1 percentage point of securing a first-round win. Any candidate who wins more than 50 percent of the valid vote wins the first round, and even in second-round scenarios, Lula is anticipated a solid win over each of the other candidates. As of September 30, pollsters gave Lula 49 % of all valid votes, 28 points ahead of the current Social Democratic government's candidate, Jose Serra, and even further ahead of Anthony Garotinho, who registers only 16%.

Why the PT now?

All indications are that if it is ever going to happen, this will be the year for Lula and the PT to take the presidency. But why is this election different from the other three in which Lula was a candidate? What brought those 100,000 people, many of them young people and families with children, all waving a sea of PT flags and banners and singing the campaign songs, out to a crowded rally on a Sunday night?

One need look no further than Sao Paulo itself, where eight years of Fernando Henrique Cardoso's government has brought unemployment to over 20% for sectors of the population. And the pattern is no different in the rest of the country; in the past ten years in Brazil, work in the informal economy has doubled, unemployment has risen by 50% (for a total of 11.4 million officially unemployed) and the past five years have seen workers' real income decrease by 10%. Combine this with the skyrocketing costs of now privatized services such as electricity (up 368%) and telephone service (up 3700%), along with water and sewer (420%) and urban transportation (300%) -- and you have a recipe for a social disaster.

The results of nearly a decade of policy of cutting social spending to service the foreign debt are painfully clear, as well, in Sao Paulo's neighboring state of Rio de Janeiro. This week at least 36 neighborhoods in the city of Rio de Janeiro were literally forced to shut down, closing shops, banks and schools and detouring bus routes on the orders of narco-traffickers. The orders to close down entire districts of the city came from traffickers led from inside prison walls by two of Brazil's most notorious and powerful drug lords, Fernandinho Beira-Mar and Elias Maluco.

The state's corrupt police force has a web of ties with drug trafficking in the area, and, even if so inclined, would probably be out-gunned if it confronted the traffickers head-on. Although the current crisis is being blamed on the Workers Party governor Benedita da Silva, who took over as governor of Rio only earlier this year when presidential candidate Anthony Garotinho announced he would run, this is not a situation created over the span of a few months. As Lula himself commented in a political rally in Rio earlier in the month, "Fernandinho Beira Mar is not the 'work' of Benedita. Just as thousands of adolescents who are imprisoned today, who could become a Fernandinho, he is a product of the perverse economic model of these past years that offers no opportunities for youth. What Brazil needs is another economic policy. And if you want it, we can win now in the first round."

But what would a government led by Lula mean for Brazil?

While hopes are high for the PT to win the presidency, Brazil's post-election reality, Lula or not, is more bleak. Cardoso and his party, the Social Democrats of Brazil, will leave office having essentially destroyed prospects for meaningful social change by any future administration.

The new accord with the IMF signed by Cardoso is to be valid until 2005, which, if Lula wins, means that nearly his entire term will be dictated by its demands. Despite Lula's campaign promises to double minimum wage in four years and increase spending on education, health, housing, agrarian reform, and creating new jobs, official figures show a projected reduction in the federal budget of such proportions that fulfilling his promises will be impossible.

Along with crushing debt payments which rise with the dollar, the requirements of the new IMF accord call for a new, even higher fiscal surplus and corresponding cuts in social spending. According to 2003 budget projections, the minimum wage will decrease in real terms, going from a $200 reales a month to only $211 (making the increase less than inflation) and social spending will be cut by 11%. The plummeting devaluation of the real, which last week traded lower than the Argentinean peso and is currently trading at nearly 4 to the dollar, means that Brazil's foreign debt is increasing daily, continuing to worsen the crisis.

If the state of affairs in the country is not easy, neither is the situation in which the PT has placed itself in selecting Jose Alencar, of the right wing Liberal Party (PL), as his running mate. Alencar and his party present a polar opposite to what the PT stands for. He supports the "flexibilization" of Brazilian labor laws, maintaining the disastrous economic policies of the head of the Central Bank, and is in favor of continuing to negotiate the FTAA (Free Trade Area of the Americas), the Latin America wide expansion of NAFTA, a proven boon to multinationals at the expense of workers . A PT administration made up of parties which essentially represent the workers and the bosses respectively, is headed for a crash course, if not with the Liberal Party than unavoidably with the party's base.

What will Lula's answer be?

If the elections occur as predicted and Lula does win the presidency, what will his answer be to the situation facing him? What will he say to the more than 100,000 PT supporters who rallied for him in Sao Paulo about the new jobs or the school supplies he promised for low-income children? What will he say to those same supporters who booed Alencar and shouted "Out with Alencar, out with the IMF", throughout the nearly five-minute speech he gave at that rally?

And when President Bush calls Lula on the night of the election, as he has said he will do if the PT candidate wins, hoping to receive future assurances of cooperation in the trade arena from Brazil's new president, what will Lula say about his responsibility to the more than 10 million Brazilians who participated in the plebiscite on the FTAA, voting overwhelmingly (98%) against the Brazilian government signing the accord? What will the answer be to the 11.4 million unemployed, to the MST (landless peasants' movement), to the residents of the neighborhoods in Rio controlled by drug traffickers, to the children without access to education, or those living on the streets?

There is only one answer he can give, and it is in fact not his answer to give but the answer that will be demanded by the people of Brazil, whether it be Lula in office or another.

Only one way out

Although Lula, with all that he represents captures the hopes and aspirations of millions of working class Brazilians, what makes Lula different is first and foremost the base of his party. It is this base, and the possibilities that it holds for forcing change, that frightens investors more than any fiery speeches Lula gave as a union leader. As MST leader Joao Pedro Stedile put it when asked if Lula's watered down, more centrist campaign speeches worried the MST, "Our concern is not with the speeches of the candidates. It is with the social forces that each one represents. The only candidate who represents the social forces that want real changes in this country is Lula."

There is only one answer that will bring the change demanded by the working class which the PT represents, and that is a complete break with the economic policies of Fernando Henrique Cardoso, a break with the negotiation of the FTAA and a break with the IMF and the payment of the debt that is starving the people of Brazil today and strangling their hopes for tomorrow. It is a break with the structural adjustment policies that each day bring Brazil closer to the chaos and desperation of Argentina. The alternative is unacceptable.

When the new US$30 billion IMF accord was announced last month, Lula, to the shock and dismay of Workers Party members, pronounced it "inevitable" and agreed to abide by its terms if elected. As PT candidate for state representative Maria Jose Favarao announced at an assembly later that day, "An accord with the IMF is not inevitable. Globalization is not inevitable. Misery, hunger and poverty are not inevitable. What is inevitableŠis our resistance." And if Lula is to be the next president of Brazil, he can count on that resistance; it is up to him which side of it he will be on.

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10) We Will Not Accept Any Accord with the IMF!

(Statement issued by the O Trabalho current of the Brazilian Workers Party on August 10, 2002)

On August 8, the newspapers announced the new US$30 billion accord between the government of Fernando Henrique Cardoso (FHC) and the IMF.

What can the workers and the overwhelming majority of the Brazilian people expect from this accord?

This is the third accord that Cardoso has made with the IMF, the last two led to the country's current situation of sharp social and economic crisis, which this third will only deepen.

Allan Meltzer, former advisor to President Bush, commented on the accord: "If I were an investor in Brazil I would say: 'Hey, they gave me the chance to withdraw money in favorable conditions'." This is someone who knows what he is talking about!

In the first place, Brazil's foreign debt will increase by US$30 billion. Just the first two installments of the loan, which will be made within the remaining span of the Cardoso government, will increase it by US$6 billion dollars-which would be sufficient to construct 1.7 million low-cost housing units.

And what purpose will this money serve? Not one cent will go to improving the lives of the people, all of it will go to improve "market confidence" -- that is, it will be allocated to the payment of the debt to bankers and speculators, to guarantee the interests of foreign companies and banks -- principally American -- operating in Brazil.

In second place, it is an accord that is set to be valid until 2005 -- covering 3 of the 4 years of the term of the president yet to be elected -- and imposes as one of its conditions the maintenance of a "budget surplus" (i.e. cuts in spending in order to pay the debt) of at minimum (however, it could be more) 3.75% of the GDP.

It is an enormous quantity of money, 53 billion reales just in 2003, that will evaporate and be missing from the table of the people! In the second term alone, in order to attend to the demands of the IMF, the Cardoso government cut 142 billion reales -- the equivalent of the Health and Education budgets in the 8 years of Cardoso's government -- in spending in all social service areas, in the generation of energy (which led to blackouts in public universities) and in cuts in investments that led to the paralyzing of the economy.

And now it is more cuts and more sacrifice, all to see US$30 billion dollars enter in one door and go out the other Š to "honor foreign commitments"!

They say that this money will prevent Brazil from getting into the same situation as Argentina. However, Argentina also received successive loans to keep the debt payments rolling, and it arrived at its current state nonetheless.

Who Should Run Brazil, the Sovereign People, or the IMF?

The IMF wants to dictate the policies of the next government, which is why it demanded that the candidates be involved in the loan negotiation. Finance Minister Pedro Malan, on announcing the packet, insisted on the necessity of the presidential candidates "formally expressing commitment to the accord."

All this at a time when everyone can see, as was noted in the "Public Memo from the CUT on the Accord with the IMF" (8/8/02), that "after the presidential elections, the IMF could demand more sacrifices from the future president of the Republic. This, as opposed to lending sustainability to the growth, tends to make it unstable and to promote even more unemployment and the deterioration of living conditions for millions of workers. In order for us to find definitive solutions, profound changes must be made in the economic model of the FHC [Cardoso] era."

Yes, it is necessary to put an end to the "FHC Era", and it is necessary, therefore, to break with the politics of the IMF!

The millions of workers who are in line to be thrown into unemployment and into even more precarious living conditions so that the demands of this accord can be met are the same millions who are supporting the candidacy of Lula, because it is in his candidacy that they see the possibility of a future -- one where it is the people who decide their destiny, and not the IMF, the bankers or the speculators.

It is Impossible to Accept!

As members of the Workers Party (Partido dos Trabalhadores, or PT), side by side with thousands of other party members, we listened petrified as Lula read an official memo saying that "we accept the [IMF] packet as inevitable" and that "we understand that this accord allows for the calming of the market, and with this, the chance, if the correct measures are taken, for Brazil to return to growth."

"Calming of the market?" The strong dollar alone in the past weeks has already eliminated the fiscal surplus of the first semester, achieved at the cost of the blood and sweat of the people. The withdrawal of profits by the multinationals from the country is going to continue. One day after the announcement of the Accord, the dollar had already returned to more than 3 reales, and prices that have already risen, like bread and other essential food items, are not going to go down. Meanwhile, the "tightening" demanded by the IMF will continue to provoke layoffs that will add up to a record 1.8 million unemployed in Greater Sao Paulo in June.

All this is "inevitable" and should be accepted? Or is it not exactly the opposite that the workers and people expect from the PT?

And with whose mandate is Lula is authorizing the Cardoso-IMF packet? The position adopted just 8 months ago by the 12th National Convention of the PT (December 2001) was to "denounce the current accord with the IMF from a political and legal perspective. Š" How is it possible that -- in open contradiction with years of struggle of PT members, in the unions, in the parliament, in the streets, strikes and demonstrations against the policies of the IMF -- the PT candidate for President of the Republic adopted the position he adopted?

But there is still time to change direction!

It is necessary to mobilize widely to say No to the Accord with the IMF, to prevent it from being the IMF, and not the people, who, even before the elections, decide the policies of the next government, robbing the nation of the decision over its destiny!

Defeat Cardoso and the IMF; Nothing is More Urgent!

We, the O Trabalho current, who have taken up since March the struggle together with more than 7,000 PT member in support of the statement, for "Lula for President to Break with the IMF" and who have fought against the electoral alliance between the PT and the right-wing Liberal Party (PL), do not have interests that are different from the workers and the overwhelming majority of our people.

We want to win, we want to defeat Cardoso, the IMF and the presidential candidates who are committed up to their necks with the defense of the interests of the elites and the multinational capital that flays our country.

But in order to win, in order to conquer an authentic government of the PT that attends to the aspirations and the demands of the Brazilian people, it is necessary to defeat yet another accord with the IMF, which prepares the groundwork for the FTAA; the plans of which are to turn Brazil into a pasture for the multinationals.

No, the layoffs are not inevitable; the poverty and hunger are not inevitable; the destruction of health care, education and public services are not inevitable. The workers, the youth, the Brazilian people want to and will fight to revert the process of destruction being directed by the IMF.

This same IMF is the one that led our neighbors in Argentina and Uruguay into chaos. There, workers and youth also fight to escape the crisis. They are looking towards Brazil in the hope that we will defeat our common enemy.

What the working people of Brazil expect from the PT is that they will help in this struggle!

We do not have the right to deceive and abandon the Workers Party's own social base. We repeat: There is still time for a change in course: All together against the Accord with the IMF! For a refusal to accept the application of its measures! For an authentic government of the PT that breaks with the IMF and attends the demands of the workers! We must organize to win!

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