THE PEOPLE who head the institutions of global capitalism are nervous over the outcome of next Sunday's presidential election in Brazil. Luis Inacio Lula da Silva, known universally as Lula in the South American country, looks set to top the poll. He is a former left wing socialist and mass strike leader. Lula has soared in the polls as popular discontent has grown with the current government of President Fernando Henrique Cardoso.
'Lula is riding a wave of disillusionment with rising unemployment and inequality,' notes the Financial Times. Lula was a metal worker who became a key leader of a massive strike wave of car and engineering workers in the 1970s. This powerful movement broke the back of the military dictatorship that dominated Brazil, and paved the way for a move to parliamentary democracy. The strikes and wider social movements gave birth to a new party, the Workers Party, known as the PT from its Brazilian initials.
Lula and the Workers Party leaders have moved a long way from the militant strikes where they had their origins. But it still has a mass base among Brazil's trade unions and the poor. Through the 1980s and 1990s it won elections to run some of Brazil's states and cities.
In both 2000 and 2001 a Workers Party state government in the south of Brazil hosted the World Social Forum in the city of Porto Alegre, a gathering of anti-capitalists and social movements from across the globe. A victory next Sunday for Lula in the presidential election would be a political earthquake that would have repercussions across Latin America. Those repercussions would be intensified by the turmoil gripping much of the continent already.
Most of Brazil's neighbours - Argentina, Colombia, Venezuela, Peru, Bolivia, Paraguay and Uruguay - have seen major protests, strikes or uprisings in the last year. Brazil has by far the biggest economy in Latin America, and on some measures is the tenth biggest economy in the world.
It has vast cities like Sao Paulo and Rio de Janeiro that are home to millions. Brazil also has a massive industrial working class. Multinational car corporations like Ford, Volkswagen and General Motors have major factories around Sao Paulo. And Brazil has its own giant companies making and exporting computers, missiles and aeroplanes.
The country is also one of the world's key agricultural producers, exporting products like coffee, soya and chicken. Brazil is also one of the most unequal societies in the world. Cities with gleaming business districts and luxury developments for the rich are surrounded by shanty towns and slums. Brazil's official statistical body says that 50 million people, around a third of the population, 'do not have the financial capacity to buy the minimum level of calories considered necessary for the maintenance of basic levels of health by the World Health Organisation'.
The richest 10 percent of people get half of all income. The poorest 10 percent get less than 1 percent. Hundreds of thousands of children live on the streets in cities like Rio and Sao Paulo.
There have been repeated cases of death squads, paid by businessmen, murdering street children in a war of 'social cleansing'. In rural areas poverty can be even worse. Child labour and forms of debt bondage little better than slavery are common. The richest fifth of people own 90 percent of all land.
Inequality and rural poverty have sparked a massive social struggle centred on the MST movement of landless rural workers. It has waged a militant campaign of land occupations, often in the face of attacks and assassinations by thugs hired by landowners or by the police. Such rural struggles have fed support for Lula in some of Brazil's poorest areas.
His key base is in the cities though, where most of Brazil's people now live. The prospect of a Lula victory is worrying both Brazil's rich and world financiers. Speculators and the rich have moved money out of the country. That has added to already intense financial pressures on the country from its $250 billion debt burden.
Brazil has also been buffeted by the huge social and economic crisis in neighbouring Argentina - a crisis that led to last December's uprising there. Such pressures meant that this summer Brazil looked on the edge of defaulting on debt payments, and plunging into bankruptcy and chaos. Even the US was terrified at the social and financial upheaval that could cause. So the IMF agreed a $30 billion loan - with harsh strings attached.
The IMF also withheld 80 percent of the new loan until next year, making it conditional on a new president sticking to the austerity plans. The result will be more cuts to already poor welfare provision, less hospitals and schools, and wage and pension cuts for workers. Lula is caught between the hopes of the mass of workers and the poor, and the demands of Brazil's rich and the world's bankers.
As the PT has won control of local councils and states over the last 20 years they have more and more worked within the system, instead of challenging it. The Workers Party has a far more active and mass membership than Labour-type parties in Europe, but it has become more like those parties. It still supports many social struggles and strikes, and many of the most active people in those movements are linked to the party.
But it has also pushed through cuts in services in the councils it runs as the central government has held spending down. And as the prospect of winning the presidential election has grown, Lula has moved the party towards even greater compromise with the system. In the past Lula has railed against the IMF and threatened to default on Brazil's foreign debt.
Now he says he will honour the debt. That has caused real bitterness among those from Brazil's Jubilee 2000 debt campaign.
In the past the Workers Party also called itself 'the party without bosses'. Now Lula has appointed the leader of a small right wing party, Jose Alencar, as his vice-presidential running mate.
Alencar is one the country's biggest capitalists, a textile magnate worth $500 million and the former head of Brazil's national bosses' organisation. Lula also says he will now 'respect the country's contracts and obligations' with bodies like the IMF.
Yet Brazil's rich and the world's bankers still fear that a victory for Lula will raise expectations among workers and the poor. He is winning votes by attacking social inequality, promising better welfare and wages. His manifesto talks of a 'a break from the current economic model' and challenging 'globalised financial capital'. Millions of Brazilians would see a victory for Lula as a signal that those promises will be met.
How Lula and his government will react faced with the contradictory pressures is one factor that will shape whether those hopes will be met. The decisive factor, however, will be whether Brazil's workers and poor fight to realise them, whatever the government's stance.
President's support slumps
FERNANDO HENRIQUE Cardoso, Brazil's current president, came to office eight years ago. He was a left wing critic of global capitalism, but in office he abandoned his rhetoric in favour of neo-liberalism and privatisation. In 1998 Brazil was plunged into crisis as financial speculators targeted the country.
Cardoso was forced to turn to the IMF for a massive rescue loan which came with the usual conditions attached - more austerity, more privatisation. Brazil has been one of the few Latin American economies to at least partly recover from the 1998 crisis, but ordinary Brazilians have not seen much benefit.
Cardoso cannot stand again for president and is backing his former health minister Jose Serra in the election. Serra has been trailing far behind Lula in polls. The BBC correspondent in Sao Paulo comments, 'President Cardoso and Mr Serra are anointed by the international financial institutions as proponents of orthodox financial policies. These policies have almost bankrupted neighbouring Argentina, damaging most of the rest of Latin America in the process.
'Voting for more of the same, amid recent statistics which demonstrate that the gaping inequality in Brazilian society has grown much worse under Cardoso, might seem somewhat suicidal.'