The international situation was haunted by threats and uncertainties, but the struggle for peace and sovereignty and a multipolar world kept growing.
The war against Iraq and its occupation–by means of a coup de force against the UN, an obstacle to the United States’ aggressive and belligerent escalade–demonstrated that the imperialist superpower was the most powerful country and also revealed the signs of a decline in its leadership.

Today the United States has won the war and is unable to secure peace. The fragility of Washington’s position was made clear in a lonely war burdened by great impasses in the formation of the occupation government. The Iraqi resistance builds up among the people, imposing a hard setback to the foreign occupation. The evolving scenario indicates a trend towards the international isolation of the United States, resulting in important fissures in its alliance system. Its peace plan to the Middle East, the “road map”, is not being supported. The occupation, first in Afghanistan and now in Iraq, has placed the North American superpower in greater difficulties, causing a standstill in its war plan this year, which consisted in investing against other countries viewed as components of the “axis of evil”, such as Syria, Iran and North Korea. President Lula’s recent visit to Arabian countries–with a view to tighten political and economic relations, beginning with Syria, with which he emitted a joint statement defending the creation of an Iraqi government without occupation troops–turns out as a great step taken by the Brazilian diplomacy, a sovereign affirmation of the current Brazilian foreign policy.

A new political situation is unfolding, where the Bush doctrine–consisting in prioritizing the hegemonic interests of the United States, what means an unprecedented militarization project–creates contradictions that oppose in different ways the vast majority of the countries of the world. Disagreements with France and Germany, leaders of the European Union, arose to intensify the contradictions in the inter-imperialist camp. Above all, there are increasing contrasts and disagreements with developing countries and countries with nuclear power that aspire to peace and a fairer world order. That contradiction between the United States’ imperialism and the majority of the countries of the world is an important factor that acts like a counter-tendency to that superpower’s hegemonism.

In that sense, it is necessary to highlight a new process that consists in the struggle of developing countries within the realm of the World Trade Organization, the alliance of the so-called G-20, under the leadership of Brazil, China and India, with a view to face the protectionism of wealthy capitalist countries, something different from the long struggle of the movement of non aligned countries. That new current, along with the formation of “regional poles”—which are aimed at strengthening the economic and political cooperation of countries in a given area, in a search for greater competitiveness—may characterize the evolution of the international situation from now on and strengthen the trend towards a multipolar world. In that year, it is also necessary to highlight the affirmation of socialist China’s role as an emerging power, with greater relevance in the international scene.

In 2003 war eventually sparked a broad movement for peace involving hundreds of million people in February 15 and March 15. Such pacifist demonstration was something unseen since the late 40’s. Although that movement was not able to prevent war and went through a period of retraction later on, something that is an objective reality that characterizes all mass movements, the grounds against the imperialist war-mongering designs were launched, something that may evolve in the people’s minds.

In Latin America, which now undergoes a structural crisis deepened by the still effective neoliberal policies introduced throughout the 90’s, there is a situation marked by important political changes, especially in the South American continent, allowing the victory of administrations that are contrary to the neoliberal legacy, such as Brazil, where Lula reached the Presidency of the Republic; in Argentina, involving the vast and radical participation of the people; in Bolivia, in the recent episode when the president of the Republic was unseated by a true insurrectional popular movement; in Venezuela, where the course of events is taking a high level of political radicalization.

The struggle for change spreads all over the continent. The objective conditions aggravate, despite the political limits of the main forces that lead the process of change and the prevalence of the interests of great financial circles and multinational groups in Latin America. The search for a national economic alternative to the effective neoliberal orientation in that continent still did not find a successful course and faces great obstacles produced by powerful interests deeply rooted in the processes of economic liberalization and financial deregulation that were put into practice during the 90’s.

In the economic field, the year was marked by the course of a synchronic recession in the three centers of world capitalism—the United States, Japan and the European Union—though a certain trend towards recuperation is expected for 2004, especially in the United States. Asia is becoming the most dynamic pole of the world’s economic development. One may say also that there are signs of a certain exhaustion of the “general system” of the world’s economic balance, based on great volumes of imports made by the United States—the “world’s economic lever”. The large fiscal, trade and current account deficits of that country is leading to the fall of the dollar and the relative valorization of the Euro, something that already causes important results in the world’s economic and commercial situation. In general terms, the trend towards instability and uncertainties in the world’s economic sphere still persists; the situation of foreign vulnerability of dependent countries is still mostly unchanged and the economic gap that separates those from the dominant countries is broadening.

One year of the Lula administration: he overcame the immediate crisis, restored confidence in the country and lives in a state of duality.

In Brazil, the Lula administration completes one year. All sorts of countless evaluations of that period, ranging from optimistic to pessimistic, are already being forged. It is too short a period to allow a conclusive definition of the new government, but it is already an important length in a four-year mandate. The new government’s character, its impasses, dilemmas and limitations, which were already approached in the Party’s Resolution for the 9th National Conference, held in late June, were confirmed throughout 2003.

The dimension of the political change, its historical sense, as it occurred with new political and social forces—popular, democratic and progressive ones—reaching the center of national power, forces that have not reached the government of the Republic before, was something that was grasped by our Party. Lula’s victory achieved great repercussion internationally and also became a great hope to the world’s progressive peoples and countries.

Likewise, the Party was not misguided by the circumstances that led to the victory in November 2002 and the somber legacy that the new administration inherited—a deep juncture related structural crisis that was prone to turn into an institutional crisis and insolvency. Brazil, apart from being submitted to an unprecedented foreign passive, was accumulating two decades of stagnation, going through greater foreign vulnerability, with an infrastructure on the verge of collapse and a certain level of deindustrialization, with high levels of unemployment and a heavily decreasing per capita income. It became then a hostage to the IMF, successively submitted to heavy conditions imposed by the Fund. A terribly bitter social and economic legacy.

In such an adverse context, the victory of Lula, who represented new forces, was made possible only due to the wear and tear of the dominant liberalizing model and the crisis of its political system, hence his commitment to changing that situation. But, on the other hand, given the structure of the winning framework, he and the Workers Party had to accept commitments made with the dominant economic order with a view to ensure the agreements and contracts imposed by the dominant financial circles and the IMF. Those two commitments, an expression of the level of the battle being waged, resulted in a government characterized by a duality translated in the struggle between continuity and change that marked the first year of the administration.

In face of such a correlation of forces, despite a significant victory with more than 60% of the valid votes and the growth of the left-wing currents, the new forces, which do not constitute majority in the National Congress and among the elected state governors, had to broaden the political coalition with other trends interested in supporting the government, under the leadership of the Workers Party, in order to grant conditions of governability. That implied the difficult task of forming a political majority in the National Congress and demanded constant negotiations with governors.

The new administration assumed a democratic character and tried to constitute several consultation forums for the society, while the president himself took part in events of the social movement, reaffirming his commitment to the change, congregating all renovating and left-wing forces in the government. Two processes of contradictory meaning resulted from the body of forces after the constitution of the government: on the one side, the government chose the defense and the application of a foreign policy that, from the diplomatic, economic and commercial point of view, has meant the affirmation of national sovereignty; it paralyzed the process of privatization, turned the National Bank of Economic and Social Development into a bank aimed at development, adopting a policy based on heavy investments in infrastructure; the Multi-Year Program considers the State as something that is irreplaceable in the strategic planning and conduction of development. Moreover, several sectors of the government are trying to establish an energy plan for development in which the State plays an important role; they are also trying to define a massive and sustainable plan of agrarian reform as the organizations of regional development (SUDENE and SUDAM) are being recomposed and investments are made in relevant technologies, while an advanced bio-security law was presented. On the other hand, the government was forced to maintain an orthodox macroeconomic policy, which was based exclusively on fiscal and inflation aims, in order to restore the threatened confidence of the international financial market, meeting the agreement made with the IMF and stabilizing the economy, concentrating efforts in cutting public expenditure, further increasing the primary surplus and basic interest rates.

As a consequence of such a contradictory dynamics, a policy of heavy fiscal adjustment and high interest rates prevailed, restoring the economic stability, refraining the inflationary impulse, recomposing the confidence of the financial market, sustaining a record trade surplus, resulting in the first positive balance in the current account transactions since 1994. Foreign debt was reestablished, taking the São Paulo stock exchange to an unprecedented level. In return, added to the cumulative effect of the previous administrations, public and private investment decreased even more, reaching lest than 18% of the GDP (the lowest result in the recent years), the unemployment rate reached alarming levels, nearing 13% in the country’s six most important metropolitan regions according to the Brazilian Institute of Geography and Statistics, and the GDP is expected to present a growth of nearly zero in 2003. The administration, by means of the position taken by the Ministry of Finance and the Central Bank, decided to renew the agreement made with the IMF according to the currently effective standards—refraining state expenditure—for 15 months.

In contrast, an affirmative and sovereign foreign policy prevailed abroad with the formation of a new mentality centered in the presidency of the Republic and the Ministry of Foreign Relations. In applying that policy, Brazil refused the belligerent line of the North American imperialism, embracing the defense of peace and strengthening multilateral bodies in the collective defense and the celebration of strategic partnerships with other great developing countries. Brazil is becoming the leader of Latin America, relaunching Mercosur, achieving a positive situation in the FTAA negotiations up till now, despite the adversity in the correlation of forces, being able to restrict the breadth and change the objectives intended by the United States.

Inside the WTO, the country conducted the formation of an alliance of developing countries against the protectionism of wealthy countries. President Lula’s recent visit to the Middle East has made him stand out as a world leader and was a remarkable demonstration of the Brazilian government’s gesture in defining the new foreign policy, what contributed to reinforce the national identity and our policy of developing the country.

Such contrasting reality is reflected in the society, where the organized social movement—workers in the cities and farms, the movements of the landless and homeless—took its first steps in defending its unrequited interests and frustrated expectations, despite its great trust in the Lula administration. In the National Congress, especially in the House of Representatives, the process of negotiation between the administration’s purposes and society’s desires is being developed. The projects of the Executive Power are being changed and the government has adopted an attitude different from those practiced by its predecessors regarding the popular and parliamentary demands, such as in the cases of the budgetary resources for Health, the provisional measure of the Associations of Parents and Friends of Handicapped and the unpopular measures of the Ministry of Social Security, apart form the exhaustive process of negotiating the reforms presented by the government, resulting in important modifications.

However, that polarization expressed in different ways in the government—where, domestically, a conservative macroeconomic policy prevails, making evident the existence of a superpower centered in the Central Bank and the Ministry of Finance, and, abroad, a progressive policy and the prevalence of a sovereign and advanced policy are defended by several important governmental sectors—is being reflected by an increasing debate in the media, political parties, associations and unions, and universities. The media and representatives of conservatism are for continuity both domestically and abroad, interpreting the existent polarization as the “struggle between good judgment in the Ministry of Finance and the state-owning heterodoxy of the National Bank of Economic and Social Development”. The struggle for the agrarian reform is reduced to the fight against private property and capitalism with the intent of provoking political radicalization. The energy plan is considered, beforehand, as the “return of state-owned enterprises”.

The use of national technology for large-scale uranium enrichment is viewed as an “adventurous policy”. The foreign policy and its formulating and executive center, the Ministry of Foreign Relations, are under the aim of conservative forces and the United States. The conservative opposition is being reorganized and the Brazilian Social Democratic Party—the new right—is taking the lead as the structuring party.

In short, a certain political stabilization was reached in the first year of the administration, the financial crisis was curbed, the country retakes its sovereignty in the foreign policies, the privatization process is refrained, but there is still a duality in the path to be followed.

A lesson learned in the first year of the administration: the trends interested in strengthening sovereignty, democracy and national development must be developed.

It is important to highlight that the debate on the urgent need for retaking development, its crucial moment, strengthens the sectors both inside and outside the administration that are committed to a democratic national project of development, sectors that are nearing a consensus according to which even the use of an orthodox macroeconomic policy was acceptable, although in an initial moment, before the legacy of crisis inherited and the level of the existing forces, such orientation cannot be permanent. Its maintenance and consolidation is critical, what leads to a repressed development, therefore refraining the national productive capacity from thriving, as the high unemployment rate is not reverted, what may take the country to another crisis. It results in the opinion according to which the change and redirection in the macroeconomic policy involves the need for the irreplaceable role of the State as the inducer of growth, unlocking productive investments, increasing public credit and expenditure along with the substantial reduction of the real interest rates an a competitive exchange rate, with a view to increase public investments in the economic infrastructure and grant universal access to education, health, social security, sanitation, the fulfillment of public-private partnerships, the increase of the commercial surplus and the mass domestic market. In that sense, with the intent of contributing to the debate, our Party presented in July 2003 some propositions in the document titled “Union for development, employment and valorization of labor”.

In its last meeting of the National Office, the Workers Party assumed the position of “advancing the application of a new development model”. Realizing how low investments were, the Workers Party proposed to the government what it calls “a greater inflexion in the economic policy in order to prioritize the tasks and measures aimed at retaking investment with the generation of labor posts and distribution of income”. It proposes the investment of a high volume of resources in material infrastructure, fulfilling an industrial policy, making the public-private partnerships become a reality, putting into practice the strategic projects contained in the Multi-Year Project, democratizing and amplifying credit, suggesting “a broad managerial reform of the State”. It recognizes that the government must give a “sense of a strategic project”–with marks and goals–to all its actions.

It is important to understand those ideas and the proposals presented by the Workers Party on the national project. However, it is clear, according to its logic, that retaking development with social progress is possible with the maintenance of the orthodox macroeconomic policy, although allowing a certain flexibility, therefore searching for the harmonization or balance between the current economic policy and a progressive development policy.

It is so because the Workers Party declares that the fiscal policy applied by the government “represents a new stage” in the fiscal adjustment in Brazil, a “rupture” with the fiscal policy practiced before, which was based on “increasing the tributary burden”. Now the “quality” of the orientation is something different, since its based on “cutting public expenditure”. In fact, it means that almost nothing has changed. Moreover, it affirms that “the policy of fiscal austerity adopted by the administration opens the way to promoting a structural adjustment in public debts, what is essential to grant long term solvency”. Therefore, its application is certain on the long term.
Affirming that the policy of fiscal adjustment is the engine of development contradicts our recent history. The crux of the matter in the economic policy presented by the Ministry of Finance and the Central Bank is that, in fact, such orientation delegates to the market the purposes of development, while the control of debt, the relation debt-DGP, must be the concentrated in the fiscal adjustment and the cut of state public expenditure (state investment being also considered as expenditure), by means of a heavy fiscal surplus.

Therefore, the heart of the matter would not be recapitalizing the state and advancing development.

From our point of view, we understand that the very control of debt is only effective by means of growth. Creditors who keep investing in Treasury bonds do so because the economy is paralyzed, what closes a vicious circle—bonds plus interest, more bonds plus interest—avoiding production and increasingly indebting the State. The real fact is that, even at the expense of high primary surpluses, the relation debt-DGP is growing again—1.2% when compared to December 2002, especially because the DGP, denominator in the fraction, is stagnated, but also because the numerator, public debt, is growing.

We may say that, after one year in the government, considering the definition of the transition for the application of a new project for Brazil, in general terms, four trends are becoming clear: the dominant trend, which is the current macroeconomic policy based on heavy fiscal adjustment (cut of state public expenditure) during the medium and long terms (ten years, according to Minister of Finance); the main trend in the Workers Party, which intends to harmonize the dominant policy of heavy fiscal adjustment (“the new stage”) with a policy of heavy investment in the economic and social infrastructure; the trend the gathers parties and leaderships committed to a national project of development based on a macroeconomic policy that prioritizes growth, unlocking productive investment and broadening the domestic market; and the trend of the “left-wing” sectors, which defend a program with an anti-capitalist democratic and popular character.

We understand that the outcome of the present situation and the government’s policy for 2004 is related to the evolution of the international situation, to the political conditions in South America and the affirmation of Mercosur, to the conclusion of the negotiations for the FTAA, to the advance in the foreign commercial diversification and to strategic partnerships.

Domestically, the probable scenario is one of overcoming recession with the maintenance of an orthodox macroeconomic policy, the increase of pressure put by the government’s supporters for making that policy flexible and for further investments, combined with an important ingredient: the Lula administration and his party have been able to respond to the political demands and pressures for change, which are related to the forces interested in rapidly retaking growth and to the level reached by the mobilization of the social movement. That situation as a whole—overcoming recession, the dimension of the political pressure for change and the level of popular mobilization, either in a favorable international juncture or not—is what will make clear the degree of change in the second year of the administration.

The present political reality: the change goes through the Lula administration, since there is not another alternative.

The present political reality does not offer another way to the left: the change must go through the Lula administration. Its success depends on the fulfillment of a democratic project of national development. Its failure would mean a huge political defeat to the left-wing forces and our Party. Therefore, PCdoB reiterates its support and participation in the administration, assuming part of the responsibility for its destiny, acting constructively and also critically. In face of the experience gathered in the first year of the administration, the Party must improve its role as a consequent force in defining and applying an alternative national project, that is, supporting and increasing the new foreign policy of affirming national sovereignty; gathering forces to strengthen the patriotic and progressive core, concentrating the center of the political specter and neutralizing irresolute sectors with a view to redirect the economic policy towards development, unlocking productive investments, especially those aimed at infrastructure as the engine for retaking development and a sustainable growth.

The Party must concentrate efforts for a new agenda, where retaking growth is priority, articulated with the social movement, whose banners are mainly labor, income, land and housing. The reorganization of the social movement in the context of new political conditions has deserved the prioritized and constant attention of the Party. The formation of a Coordination of Social Movements with a broad, national character was headed by our Party and is something that corresponds to the new reality. Nevertheless, it is still in its formation stage and, in order to thrive, it depends on the capacity of mobilization and autonomy of the organizations that are part of it and of the disposition of the masses, which characterizes the objective laws of any social movement. The scope and unity of the social movement in the new political conditions constitute a fundamental means to succeed and opens a new path to Brazil.

The role of PCdoB: it is not a self-centered or willful force, but a force that defends a democratic project of national development aimed at the specific Brazilian reality.

PCdoB’s role and place before the Lula administration in those twelve months consisted in defining the new party tactics, the Party’s political link with the new government and the people based on its Program. The task of the 9th Conference was to set that basic defining function in a timely fashion.

In face of the constitution of the new administration, the Party was able to grasp the character of the political project that could be defined and applied according to the level of the achieved correlation of forces and its greatest strategic objectives. The nature of the project, due to the level of the present struggle and the singularity of the transition—a “bland” one, characterized by gradual changes—did not allow, on the one hand, the application of our greatest program, the transition towards socialism, with a popular and democratic character. On the other hand, it was necessary to define a project of overcoming the dominant neoliberal model. Therefore, the project defended by the Party involved the centralization of the national issue in its relation to democracy and social progress as a leverage to overcome the sort of dependence imposed by the standard of neoliberal globalization to the so-called “emerging” countries, breaking the logic of a 20-year period of stagnation, retaking development with the democratization of income distribution.

Therefore, we immediately defend a democratic project of national development with a progressive character that may objectively gather workers, intermediary social strata and sectors of the dominant class connected to the maintenance of the neoliberal economic model, with its orthodox economic policy, or a hybrid solution, since we also oppose the illusions of a capitalist rupture at the present moment. That understanding is being essential so that we do not lose our way in that new stage of the Brazilian political reality, as that is the way we may tread in order to assume our role of an advanced and respected force, avoiding inconsequence and continuity, contributing to the possible success of the change.

Based on such understanding and with a strategic sense, in the first year of the administration we are standing out as a force that, from the political and ideological point of view, did not turned neither to centralism nor to passivity, neither to voluntarism nor to adventures, despite some eventual certain excess incurred by one or other leader. The episode of the Party’s position in face of the Social Security reform contributed to a clear discernment of our relation with the Lula administration and of the Party’s behavior, which is part of the situation and not opposition, a participant of the administration in conditions where the divergence between the Party program and the administration program were deepened; it also helped relive and elevate our fair party conception to all militants.

The lesson contained in our practice in that first period of the administration is the following: first, we must make a greater effort to be up to the debate of ideas, with a more active intervention in that sense both inside and outside the government, defending our points of view, developing and improving the party press, relaunching the Mauricio Grabois Institute to a higher level, creating conditions to broadly concentrate the opinion in defense of the project of national development; secondly, we must be the political force that is able to improve its relation with the social movement and is permanently politically and organically prepared to intervene in the mass actions as an essential means to the success of the project of change.
In our responsibility in the government, the communists are giving signs of competence and ability. We are structuring the new Ministry of Sports, defining programs that are already being put into practice with success. The President himself highlighted the positive work of Minister Agnelo Queiroz. Aldo Rebelo has performed with great success the hard and complex task—especially in that first year—of leading the government in the House of Representatives. That task helped the administration in the important work of granting support, also elevating the political influence of the Party and opening possibilities of a greater democratic relation with the currents that are part of the governmental base. Today, the government leader in the House of Representatives enjoys great prestige and is respected by influent leaders in the political scene and by parties that work in the National Congress.

Finally, the communist congressmen in the House of Representatives, being in the political front that enjoys greater exposition in the Party, assumed the role of a force in the government for the first time in our history, under the leadership of Inácio Arruda. Under those new conditions of greater political demands, the Party’s congressmen kept their historical performance, being engaged in the search for the most correct ways for the government to follow, based in the defense of our national project. Due to their initiative, several seminars destined to address issues of national interest were held, contributing to the search for an alternative for change, with great repercussion, as in the theme “The government of change and the new development model”. Our congressmen produced amendments to the reforms, elaborated projects that favor the workers’ interests and assumed the command in issues of great interest to the country, such as the provisional measure regarding the Contribution for the Financing of Social Security and the Bio-security Law. A reflex of the unprecedented reality lived by the communist congressmen, we also experienced for the first time dissident votes among our congressmen in the process of voting the Social Security reform. That event eroded the prestige of our congressmen’s unity and their performance in the parliament. Despite that mishap, the Central Committee, in an almost unanimous decision (only two abstentions), decided to defend the party unity, contributing to strengthen the convictions of our political line and the party conception.

Finally, as a result of our fair politics and our performance, the Party is presently enjoying a period of increasing political prestige both domestically and abroad, going through a stage of intense growth and expansion all over the country. The Party is undergoing a growth crisis. Our Party’s challenge is to form and structure, in a timely fashion, the thousands of new members that are now part of the Party, especially influent leaders in several media, so that they assimilate the importance of our principles and the fairness of our politics, working in a party organization.