MercoPress. South Atlantic News Agency

Crucial Congressional victory for Lula da Silva.

Brazilian president Luiz Inacio Lula da Silva finally achieved a crucial piece of his administration's program when last week the Senate approved 51-24 a sweeping reform of the deficit ridden pension system.

Mr. Lula da Silva's impressive victory, after almost a year of debate in the Senate and the Chamber of Deputies, will represent significant savings for the Treasury, an important message for investors and confirms his administration's orthodox policies in spite of a deep division in his ruling Workers Party.

Actually the greatest resistance to the bill came from the civil service, who went on strike for several weeks and the most radical Marxist inspired members of his own party who openly protested and called Mr. Lula da Silva a "traitor" for having pushed through Congress bills that his right wing predecessor Fernando Henrique Cardoso had sponsored but failed.

However President Lula da Silva using his predecessor's arguments appealed to sound economics and warned about the ever increasing shortfalls of the current system (ten billion US dollars only in 2003) and the need to free funds for social welfare programs to combat poverty.

Under the reformed pension system retirement age was increased by seven years to 60 for men and 55 for women. It also imposes a tax with an 11% cap on government employees' pensions to help finance the gradual reduction of the system's deficit.

But even with the reform that imposes ceilings on pensions, former judges and high government officials who enjoyed full salaries on retirement will equally be entitled to substantial payments. This was part of the political agreement between the Executive and the other branched of government, Congress and the Judicial.

This weekend a Workers Party, PT, extraordinary meeting decided the expulsion of four of the party's Congress members, a Senator and three Deputies, who have consistently voted against many of the Lula da Silva's orthodox reforms and accused the former union leader of having forgotten his roots and electoral commitments.

"This has been an intolerable breach of party discipline", said the PT president Jose Genoino on announcing the decision.

One of the Deputies fired, Luciana Genro, is the daughter of Tarso Genro one of the founders of the PT and chairman of the Social and Economic Development Council of the Lula da Silva administration.

In Brasilia's political circles it was rumoured that the four could end joining the Unified Socialist Workers Party, a Marxist grouping born in 1990 after one of the many PT's purges since the party was first founded two decades ago by Sao Paulo metal workers.