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Federal Deputy Ricardo Berzoini will be the new President of the Workers’ Party, having defeated Raul Pont in the run-off of the elections that took place last week. What does Berzoini’s victory represent? Very simply, it represents continuity with the party’s previous administration, deeply involved in the current corruption scandal. Like the victory of Aldo Rebelo for President of the Chamber of Deputies, the victory of Berzoini is further proof that the Workers’ Party and the government’s strategy is to stick with its current policies and its approach to the corruption scandal. The medium term goal of both the Workers’ Party and the current administration is obviously to invest in the reelection strategy, avoiding any deep restructuring of the party. The PT and the Lula administration hope to promote its achievements while in power as well as vehemently denying the involvement of its top leaders in the scandal. Reelection is the goal, and dealing with the scandal is but a component in the strategy of achieving electoral success.

The question then is, what are Lula’s and the PT’s chances in the 2006 elections? It has become common place to see Brazilian political analysts being asked to estimate Lula’s chances. Instead of engaging in a guessing game of speculating the probability of Lula’s success in 2006, we will instead list some of the current administration’s achievements and failures and leave it up to the reader to judge what Lula’s chances are. Comparisons with the Cardoso administration are unavoidable simply because the main competition Lula will face will come from a candidate backed by the PSDB/PFL coalition that is strongly restructuring itself.

####Failures

Distrital Deputy Augusto Carvalho has recently demonstrated, using the Federal Government’s System of Fiscal Accounting (SIAFI) (published in the Jornal do Brasil) that the Lula administration total investment in its three years in power is smaller than the last two years of the Fernando Henrique Cardoso administration. Furthermore, the Lula administration has invested less than Cardoso in health, education, transportation, agriculture, among others. The results are clear in Brazilian’s everyday life: the enrolment in public schools has diminished and in private schools increased; most Brazilian highways are rated as “poor”; the public security system continues stretched thin, with a deficiency in the number of prisons, personnel and equipment. However, the greatest challenge for the Lula Administration is to overcome the massive and generalized corruption scandal it is involved in. The flag of ethical politics that the PT waived high is no more. The reputation of the party has been tainted for ever.

####Achievements

The main achievements of the Lula administration come from the economy. In addition to maintaining macro-economic stability, data made public by the Jornal do Brasil indicates that the government has tremendously increased its exports and has a huge surplus in its balance of commerce, much greater than in the last two years than the Cardoso administration. The macro-economic stability has also been maintained with an increase in jobs. Lula has created three-fold the number of jobs as did Cardoso in the last three years of his second term. Lula has also increased tremendously the investment in social policies in comparison to Cardoso.

####Final thoughts

In order to be successful, Lula will have to dissociate himself from the corruption scandal and argue that the country has moved ahead in a path of sustainable development, which combines growth, employment and macroeconomic stability. For its adversaries, the main argument is corruption and the current administration will have to bend over backwards to proof its innocence.

Whatever happens, we think that the Lula experience will put in the academic and pundits agenda a long overdue reanalysis of the role of the left in poor countries. The economic strategy of the current government, put simply, is to create conditions for long term growth and mechanisms for transfer of income to the poorest parts of the population. How? By squeezing the investment budget as much as they can, thereby reducing the deficit and the perceptions of risk, keeping inflation low and transfering whatever is left as (basically) cash to the poor. The Brazilian voters will judge next year if that will be enough to overcome all that has gone (very) wrong so far as outlined above.