MercoPress. South Atlantic News Agency

A testing week for Mr. Lula da Silva

A testing week full of tension, uncertainty and turbulence has begun for President Luiz Inacio Lula da Silva and his seven months administration that took office full of optimism and hope for millions of Brazilians who granted his a landslide victory.

President Lula da Silva was forced to postpone a much publicized tour of African countries and appeal to his charisma in an attempt to give the controversial pensions and fiscal reviews a final thrust in Congress and appease the social upheaval caused by his very orthodox financial policies.

Many popular and social movements that supported the Workers Party victory feel frustrated and let down by the Lula da Silva administration.

Among the long list of allies that have turned into acid critics are the unions complaining about the additional 460,000 jobless since last January; businessmen and industry leaders who blame recessive policies (to combat inflation) for the current stagnation of the economy; the impatient Landless and Homeless movements that have resumed illegal occupations of farms and city properties; the civil service that fiercely rejects the pensions review which cuts deep into their privileges.

And two other unexpected fronts have appeared threatening the Congressional approval of these reforms considered crucial by the Lula da Silva administration: the Judiciary branch that is anticipating a national magistrates strike if their pensions are reduced, and governors and businessmen who disagree with the fiscal reforms complaining they will mean less state revenue and more taxes for trade and industry.

However, if the Brazilian president negotiates with the strong and entrenched corporations he will then have to face the reaction of financial markets he has been wooing since taking office and who have responded with a stronger local currency, a dramatic drop in country risk and an end to the turbulence that forced Brazil to seek a last September a 30 billion US dollars stand-by support credit.

Markets also sent anticipating signals: the US dollar crossed the 3 Reales benchmark for the first time in several months, the country risk started to climb again and the renewal of a 3 billion US dollars credit didn't have sufficient interested investors.

In spite of his still strong personal popularity in public opinion polls, political analysts in Sao Paulo believe that Mr. Lula da Silva's honeymoon is over.

If he managed to please supporters and the establishment in his first few months, left wing supporters now have began calling him "traitor" and the conservatives blame him for the lack of order to contain the ever growing social protests.

Furthermore Mr. Lula's cabinet is not proving homogeneous, at least publicly. Some ministers justify a strong hand against lawfulness acts from the Landless and Homeless, others justify them; the all powerful Finance Minister Antonio Palocci justifies a stringent monetary policy, vice-president Jose Alencar openly condemns high interest rates, lack of credit and stagnation of the economy.

Indeed a testing week for Mr. Lula da Silva and his promises.