WHEN LULA won the presidential elections in late 2002, Brazil’s workers and poor looked forward to a new era. After a history of extreme social inequality, reinforced by long periods of military dictatorship in the 20th century, Brazil had elected as president a former metalworker and union leader raised in poverty, who became a leader on the left.

But even during the campaign, Lula signaled his direction by choosing as his vice president José Alencar, a textile industry CEO from the right-wing Liberal Party.

Once in office, Lula’s performance pleased Wall Street, Washington and Brazil’s world-class agribusiness interests. As Latin America expert and author James Petras noted, Lula’s early “achievements” included slashing pensions for public-sector workers by 30 percent, cutting spending for health and education by 5 percent, and pushing through legislation making it easier to fire workers.

Social spending now runs at $8 billion annually--a threefold increase since Lula took office, but only a fraction of the amount his government has spent on repaying Brazil’s $150 billion in foreign debt, much of which was accumulated during the military dictatorships of the 1980s.

One of the consequences is that Brazil’s Family Allowance cash subsidy for the poor has reached only about a quarter of the 40 million of Brazil’s population of 181 million who live below the poverty line. Meanwhile, high interest rates have engorged bankers’ profits.

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NEVERTHELESS, LULA did manage to boost the PT’s vote in the 2004 municipal elections from 12 million to 16 million, nearly doubling the number of mayoralities the party controls, from 187 to 300.

Much of the gains came in the impoverished, rural Northeast, an area still shaped by the enslavement of, and racism against, Afro-Brazilians. These advances for the PT were not, however, the result of long-promised land reform.

Despite Lula’s pledge that 100,000 families would receive land each year--a small enough number itself--the total has only been 25,000 annually, compared to the average of 48,000 families per year who got land under the previous neoliberal government of Fernando Henrique Cardoso.

Rather the PT’s gains in the North came by using the Family Allowance program to promote clientalism and patronage, thereby outflanking some traditional parties of the big landowners, while making alliances with others. Nevertheless, João Pedro Stedile, leader of the Landless Workers Movement (MST), continues to support Lula as a “lesser evil.”

At the same time, the PT’s traditional vote in the industrial heartlands around Sao Paolo dropped off. This disillusionment was caused not only by Lula’s conservative polices, but a series of scandals that have engulfed the heart of the PT apparatus.

In the latest episode, two PT officials were arrested with currency worth $792,000, allegedly intended for payoffs. The PT was also found to have funneled money to right-wing legislators to buy their votes in the Brazilian Congress.

Lula seems to have recovered from the scandal by distancing himself from the PT and remaining above the fray in the presidential campaign, refusing to participate in debates.

Internationally, Lula is a reliable collaborator with the U.S. While he invokes populist slogans against the Free Trade Area of the Americas proposed by the U.S., this reflects the agenda of Brazil’s corporate agricultural exporters, who want an end to U.S. farm subsidies as the precondition for any deal.

Tellingly, Brazil signed on to help lead the United Nations-authorized occupation of Haiti after the U.S.-backed coup ousted President Jean-Bertrand Aristide in 2004. More recently, Lula has curbed the ambitions of Venezuelan President Hugo Chávez to create an anti-U.S. economic bloc in South America.

And Lula has pressured Bolivian President Evo Morales to moderate his plan to nationalize Bolivia’s hydrocarbon resources, in which Brazil’s Petrobras oil company has a substantial stake--with Brazil playing a “subimperialist” role for the U.S., as radical journalist Raúl Zibechi put it.

As James Petras concludes, “The empirical data on all the key indicators demonstrate that Lula fits closer to the profile of a right-wing neoliberal politician rather than a ‘center-leftist’ president.”

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