The ongoing scandal which has dominated the news since May has undoubtedly hit the popularity of Brazilian President Luiz Inácio Lula da Silva. Instead of facing this crisis full square he has tried to wash his hands of it and, by doing so, has shown the country that he lacks qualities of leadership. He has lost much of the goodwill he gained from people who voted for him, particularly members of the middle class.

By not voting in the election for the new president of the Workers Party (PT) on September 18, he also risks losing support among its rank-and-file members. Despite these comments, Lula could still be a winning candidate in next year's presidential election. 

There are several reasons why it is too early to write Lula off, either as a candidate or even as the next President. These include a solid bedrock of support from his natural constituency, a shortage of outstanding potential opposition candidates, the question of which party will provide the running mate, the improving economy and the possibility that, in a year's time, the electorate may have forgotten this long drawn-out affair.

A recent CNI/Ibope poll showed that around 80% of those questioned had heard of the scandal and followed the details. I would like to know how the pollsters defined the depth of respondents' knowledge because I doubt if most people can truly follow the twists and turns of this unraveling case. My guess is that less than 10% of people really understand what is going on.

This includes many members of Congress. Anyone who watched the testimony of the financier Daniel Dantas to the joint Post Office/Payments investigation committee on September 21 could see that most representatives were out of their depth.  However, even if this poll is correct, its findings show that 20% of voters - one in five - know nothing about the scandal.    

No Sign of a Smoking Gun - Yet

One hard fact stands out in Lula's favor - after almost six months of investigation by a hostile press and Congress, there is still no evidence to show that he knew about or was involved in the central allegation that the PT had bribed members of other parties in return for their votes in Congress.

As far back as June 20, Veja magazine had a cover story entitled "Monthly Pay-Offs. When and How Lula was Alerted". This was based on allegations by a number of politicians that they had raised the matter with Lula on five separate occasions between February 2004 and March 2005. Despite giving dates and the names of alleged witnesses, Veja's story brought the scandal no closer to the President.

The fact that Lula has survived unscathed is quite impressive when you look at the number of high-ranking ministers and PT officials who have fallen as a result of this scandal. These include the Chief of Staff, José Dirceu, the PT president, José Genoíno, the communications minister, Luiz Gushiken, and the party's general secretary and treasurer.

Any of these could have smeared Lula had they felt like it, particularly Dirceu. This is either because they could not or would not. If the latter is the case then they are showing greater loyalty than is normal in the dog-eats-dog world of politics. Dirceu has proven to be much tougher and wilier than any of his many enemies in the media and Congress could have imagined.

He has flatly denied all knowledge of wrongdoing without offering any explanation and has successfully avoided losing his mandate as a member of the House of Representatives. He may not have persuaded many people of his innocence but he has not been found guilty. Like Dirceu, Lula is a survivor and a pragmatist who is not tied down by ideology. Brazilian politics is not short of similar characters who have bounced back from the bottom.   

This lack of evidence does not mean that it does not exist. Anyone who follows politics here knows that the country is full of skeleton-filled closets which are only opened at the opportune moment for one party or another. The PSDB party of former President Fernando Henrique Cardoso, in particular, has benefited from this kind of leaked information in the past. This could occur if Lula decides to seek re-election.    

Who Cares?

Despite the lack of evidence surveys show that many - if not most - of those interviewed believe Lula did know about the alleged scheme. If so, they seem remarkably blasé about the whole affair. Brazilians are used to being let down by their leaders, and corruption and politics go hand in hand. (The main difference is that the PT has also claimed to be morally superior to other parties and its involvement in this business has tarnished its image.)

You only have to compare the lack of popular response to this scandal to the grassroots movement which arose when President Fernando Collor de Mello was accused of corruption in 1992. There have been some demonstrations in recent months but these have generally been against corruption as such and seldom against Lula. They have also been organized by left-wing groups and even PT members.

The opposition parties, which are intent on seeing that Lula does not stand again, do not have the guts to organize anti-corruption protests. This is because no-one, except some party diehards, would support them and because the leaders of the PFL and PSDB are afraid of what any investigation of corruption might uncover among their own ranks.   

Opinion polls have shown a fall in Lula's popularity and that of his government but, in my own opinion, these are of little importance at this time. The anti-Lula media, such as the Estado de S. Paulo, has blatantly slanted its coverage of the latest CNI/Ibope poll published on September 21.

Findings such as the fact that 43% of those polled think Lula's government is better than his predecessor's and 23% think it is better than they had expected are placed at the end of an article entitled "Lula has lost half of the 52 million votes which elected him, says Ibope".

There is no doubt that Lula has lost support but what is surprising is how much support still remains. For example, the survey shows that 49% disapprove of Lula while 45% approve of him. As for the government, 44% think it is doing a good job while 51% think it is not doing a good job.

In my view, these show that Lula and his government are faring far better than one would have expected after these turbulent months. I doubt if many presidents enjoy approval ratings of 45% three years into their government and in the middle of a political scandal of this magnitude.      

Foreign Confidence in the Economy

Another factor which could favor Lula is the state of the economy which is showing signs of improving regardless of the goings-on in Brasília. The Central Bank reduced interest rates on September 14 for the first time in 18 months and the signs are that there will be further cuts, inflation is under control, unemployment in the São Paulo area has fallen for the first time in four months, and companies are increasing investment.

An impressive sign of foreign investors' confidence in Brazil was seen on September 19 when the Treasury successfully raised R$ 3.4 billion (around US$ 1.5 billion) in reais and not in foreign currency. The Treasury's original idea had been to make an issue equivalent to US$ 500 - US$ 700, but demand was so great that for the amount was increased.

The resignation on September 21 of Severino Cavalcanti, the disgraced chairman of the House of Representatives, has also lowered the pressure. Unfortunately, there is no chance of Cavalcanti being brought to trial on charges of corruption or being forced to explain his brazen denials of innocence.

However, having him out of the way should result in a more experienced, dignified person assuming this position. Although the PT is the biggest party in the House, it has wisely not put forward a candidate. The field is not yet clear but most potential candidates are heavyweights who will hopefully steer this institution back to its main role of passing legislation and not devoting most of its energies to never-ending investigations which have brought few results so far.

PT Snubbed

By refusing to vote in the PT presidential election, Lula was like a mother turning her back on her own child. That is why people in general and not just PT supporters were bewildered and surprised by his behavior. As President of the Republic he has, of course, to be above the day-to-day aspects of politics but that does not mean he should have no political views.

He is not a symbolic president. Lula founded the PT 25 years ago and stood for office four times on the PT platform. He owes a debt to its 800,000 members who have supported him over this period. He should also be showing the electorate that he still wields control over the PT which is, after all, one of the few truly national parties in this vast country.
  
It now looks as though he will vote in the second round to be held on October 9. However, according to the outgoing PT president, Tarso Genro, Lula will not be announcing which candidate he supports. Since the candidate who won most voters in the first round, Ricardo Berzoini, has held two senior ministerial posts, he must obviously be Lula's preference. It could be that Lula does not want to antagonize the other five candidates, who together gained 57.5% of the vote in the first round, by supporting Berzoini.

It is not yet clear who Berzoini's opponent will be in the run-off since the margin between the second and third placed candidates is extremely small - around 1,000 votes - with 10% of the votes still to be announced. The two possible opponents Berzoini will face are Valter Pomar and Raul Pont who both picked up around 15% each.

The Berzoini camp, which is known as the "majority" section and supports the government, is hoping that Pont wins. Not only is Pont less radical than Pomar but his wing of the party holds the Agricultural Development Ministry within the government.

The two dissident candidates have said they will support each other and present a unified front to beat Berzoini. However, left-wingers the world over are notoriously quarrelsome and it is difficult to see this coming about. Should the more radical Pomar and not Pont be the Left's candidate then Lula could enter the scene and use his influence to have Berzoini elected. Lula still wields supreme power within the party and his support could be crucial. 

Having said that, he will have to accept that the PT activists will not be as docile as they used to. All the candidates, including Berzoini, have been critical of Lula's economic policies and several have called for the Finance Minister, Antonio Palocci, to be fired.

If Lula is to intervene he will have to tread carefully. Once Berzoini is elected, Lula will be in a better position to address the PT's concerns especially if he decides to stand for re-election in 2006.

John Fitzpatrick is a Scottish writer and consultant with long experience of Brazil. He is based in São Paulo and runs his own company Celtic Comunicações. This article originally appeared on his site www.brazilpoliticalcomment.com.br. He can be contacted at jf@celt.com.br.

© John Fitzpatrick 2005

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