Luiz Dulci
“Two Years of Lula's Government:
Progress and Challenges”

March 14, 2005

Minister Luiz Dulci speaks in the Morrison Room on March 14.

Two Years of Lula's Government: Progress and Challenges
By Meg Stalcup

The first two years of the presidency of Luiz Inácio Lula da Silva and his Partido dos Trabalhadores (PT, the Workers’ Party) have been indelibly intertwined with the decades of struggle to achieve power. The experience provided invaluable lessons and continue to shape the Lula administration’s innovative and progressive approaches to democracy, economic policy and social improvement, believes Brazil’s Chief Minister, Luiz Dulci. A long-time colleague of President Lula and a founding member of both the PT and the Central Única dos Trabalhadores (CUT, the Unified Trade Union Federation of Brazil), Minister Dulci used his CLAS invitation to give an account that was both personal and analytical of the Lula government’s progress to date and future challenges.

Lessons Learned

President Lula’s victory was neither accidental nor unexpected. It was the fruit of a long process involving the development of a “culture of governing and management,” said Minister Dulci. Founded in 1980, the PT acquired important experience during its decades in opposition. It won local elections throughout the country and gained expertise in the practicalities of regional and municipal management. During the years before winning the presidency, PT politicians learned to build alliances and developed specific programs. Innovative policies for health care now being implemented nationally were first developed at the municipal level. The participatory budgeting system involving communities in resource allocation also began in the municipalities

“It is impossible,” Dulci declared, “to have transformation in society if civil society is not an active player in the process.” The Lula administration has therefore developed a new relationship between government and civil society. While traditionally the Presidency’s General Secretariat acted as a liaison to business and industry, today under Minister Dulci it coordinates dialogue with a much wider social spectrum, including numerous civil society actors. Two to three times per month he meets with CUT and other national labor federations as well as the leaders of the Movimento sem Terra (MST, the landless peasant movement), intellectuals, churches and various pastoral groups. This networking with civil society carries into foreign affairs. When abroad, President Lula meets not just with heads of government but also with labor leaders. Minister Dulci, smiling, underscored that his visit to UC Berkeley was itself an enactment of this policy.

An Alternative View of Democracy

The electoral act is sufficient to choose a government, Minister Dulci pointed out, but not to build one. The PT has never wanted to replace representative democracy. It has, however, attempted to move beyond the systemic crisis produced by reducing democracy to a single poll taken every four years. In multiple ways, President Lula and the PT have worked at creating a government of the people.

Through participatory democracy, people come to understand how government works. At the same time, it provides a pathway for public oversight of state performance. Based on the possibility of this new kind of relationship between the electorate and elected officials, Lula and Dulci decided, during the presidential campaign, to draft a contract with the Brazilian people. The country was experiencing a crisis and would have to undergo an uncomfortable transition phase. In order to build the conditions necessary to return to growth, they developed several lines of action and presented these to the public. Civil society exercised its appropriate role of questioning and challenging through a series of intense discussions.

Dulci cautioned that the executive does not have a monopoly of power. The legislative and judicial branches, along with society, are also players. Countering criticisms that the Lula administration has failed to implement its campaign platform of structural reform, the Minister reminded listeners that the PT had attained the presidency by means of “a social alliance and with a political party coalition.” There are 14 parties in the Brazilian congress, and Lula’s vice-president, José Alencar, hails from industry. The point, stressed Dulci, is that the PT does not have a majority; it has to build one for each and every vote.

Minister Dulci and audience in the Morrison Room.

The New Equation: Growth With Stability

Before and immediately after Lula’s electoral triumph, critics contended that there was no crisis, simply fear on the part of investors. Emphatically, Minister Dulci described how real the crisis had been. Inflation was projected at 40 percent. Brazilian capitalization bonds (C-bonds) were worth 40 percent of their value and the exchange rate was four reais per dollar. International credit lines had been reduced to zero, and with no credit lines, the country’s export capacity was critically affected. It was imperative to confront the situation. For years, Brazil had been trapped between a rock and a hard place. Stability was equated with low inflation, and the common wisdom was that there could be growth without stability or stability without growth but not both. Lula’s administration, Minister Dulci asserted, proposed a new equation — growth with stability. While this meant limited social investment for the first year, the priority was to overcome the economic crisis. According to Minister Dulci, Latin America has a history of electing leaders who confound dreams with reality and ultimately set their countries back.

But President Lula was determined to build the conditions for sustainable growth.
The strategy was to “make the institutional environment more favorable” to investment. Because there was no regulatory framework for investment in place, the Lula administration developed its own version of PPP — public-private partnerships for the creation of infrastructure. What Lula’s team sought in doing this was to use fiscal reform to stimulate protective rather than speculative investment. They developed a system in which short-term investments are subject to higher taxes, medium-term investments have intermediate level taxes and long-term investors actually receive a credit. In this manner, financial speculation was rendered productive. Brazil’s exports are currently at record levels, and this infrastructure is vitally necessary. With evident gratification, Dulci reported that in 2004, the Brazilian economy grew 5.2 percent and generated two million new jobs.

Imports to Brazil have been growing too. However, according to the minister, this rise is not led by luxury items; rather, it evidences demand for essential manufacturing components. Another positive indicator is that the economy is growing across the country, beyond the traditionally strong southern states. The Amazon, for example, is a new productivity nexus. Minister Dulci spoke proudly of Brazil’s internationally competitive economic sectors such as aeronautics and agriculture.

The challenges which must be taken up now are social inclusion and growth with equitable income distribution. Forty percent of Brazil’s population lives below the poverty line as defined by the United Nations. Social spending is already three times what it was in 2003. Yet while the economy must continue to grow, further reductions in inequality continue to be policy goals.

Minister Dulci with Professor Harley Shaiken, the Chair of the Center for Latin American Studies, at the Free Speech Marker in Sproul Plaza.

Distribution and Inclusion: Advances in the Social Agenda

President Lula has vowed to end hunger in Brazil. It might not seem like much ideologically, and Lula has also been careful to insist that he cannot rectify four centuries of inequality, but in Brazil this would be “a revolution.” At the end of Lula’s first two years, 28 million extremely poor Brazilians are receiving a new stipend. Additionally, two million seniors have been guaranteed a minimum income. Higher education reform is now taking place. Thirteen new public universities, in underserved regions, have been founded and affirmative action is being instituted by some states. Lula has above a 60 percent approval rating, Minister Dulci observed, and this clearly shows the support of the population.

Agrarian reform, however, traditionally dear to the PT, is one area in which there has been no progress so far. Why? Minister Dulci highlighted two basic reasons. First, Lula’s government inherited a legacy of 400,000 families who were inadequately settled on land without electricity, schools or roads, far from markets where they could sell the products of their labor. Lula’s government made the decision to help these 400,000 first and then move on agrarian reform. The administration did not, Dulci argued, lie or hide this fact. Additionally, what has impeded reform is a crippling lack of qualified personnel. Although critics accused the Lula administration of inflating bureaucracy, Minister Dulci insisted that there were simply not enough agronomists and lawyers, and these are specializations fundamental for land appropriation.

Closing Remarks

Concluding his speech, Minister Dulci affirmed that his government is indeed dedicated to reform, and he addressed the appalling murder of the naturalized Brazilian, Sister Dorothy Stang in the state of Pará on February 12. The Ohio native, resident in Brazil since the 1970s, had been working with the agrarian reform ministry to help people file land claims. She was the target of ruthless private interests attempting to thwart change and government presence through intimidation and violence. In response, however, President Lula opened new federal police stations in the region and renewed efforts aimed at land appropriation.

Minister Dulci with students after his public talk.

Ever the Portuguese and adult literacy teacher of his first career, Minister Dulci characterized the long time leading up to his party taking federal power as an opportunity, one that permitted PT politicians “a deeper reading of Brazilian society.” Looking back to the early 1980s, Dulci recounted how journalists would ask Lula: “Are you a social democrat, a socialist, a communist, a Marxist?” “No,” Lula would reply: “I am a lathe operator.” He spoke to all Brazil as a member of the working class.

Now that the PT is in power, albeit as part of an alliance, Dulci insisted that the party had not “changed sides of the fence.” It was, and is, a social democratic party. While there must be new responses to new issues, he added, the PT remains “inspired in the same values” that guided its foundation and years of political action.

Luiz Dulci, Chief Minister of the General Secretariat of the Presidency of the Republic of Brazil, gave a talk at UC Berkeley on March 14, 2005.

Meg Stalcup is a doctoral student in UC Berkeley and UC San Francisco’s joint program in Medical Anthropology.


As Chief Minister of the General Secretariat of the Presidency of the Republic of Brazil, Luiz Dulci is one of the closest advisors to Brazilian President Luiz Inácio “Lula” da Silva. Minister Dulci is also among the founders of the PT, the Brazilian Worker’s Party, and the CUT, Brazil’s leading national labor confederation. Since the foundation of the PT, he has held several important roles both within the party and for the party’s administrative governments, including work with Fundação Perseu Abramo, the PT’s political research foundation, and with the municipal government of Belo Horizonte.

-Article by Minister Dulci on social justice, from the PT website (in Portuguese)
-Interview with Minister Dulci (in Portuguese)

Minister Dulci with Professor Candace Slater, the Director of the Townsend Center for the Humanities, at a reception following his public talk.


CLAS Events
by semester

© 2012, The Regents of the University of California, Last Updated - May 2, 2005