MercoPress. South Atlantic News Agency

Lula celebrates party's anniversary.

Luiz Inácio Lula da Silva, Brazil's president, has much to commemorate during Thursday's anniversary of the governing Workers' party, which he helped found as a union leader 25 years ago.

Born out of a loose alliance of unionists, leftwing intellectuals and progressive clergymen fighting military dictatorship, the PT has become Latin America's most popular political party and rules its largest country.

Yet behind the public show of unity in today's festivities, the PT and its governing alliance are as deeply divided as when they came to power in January 2003.

While Mr Lula da Silva's shift from left to centre in recent years has pleased Wall Street, it continues to upset many of his leftwing supporters. During the World Social Forum in Brazil early last week hardliners heckled Mr Lula da Silva and demanded the resignation of his finance minister.

A group of 112 PT members, including union leaders and a renowned leftwing economist, abandoned the party in protest, saying it had "replaced the interests of labour with those of capital" and had abandoned grassroots democracy.

Party leaders had hoped that protests by leftwing hardliners over the government's orthodox economic policies would ease following the best performance of Brazil's economy in a decade last year, with more than 5 per cent growth. In 2003 the PT ousted several dissident congressmen for voting against a social security reform that cut civil servants' generous benefits. While the PT has imposed party discipline in voting on most of its key legislative proposals, internal discord has led to delays and even contradictions in government policies, critics say.

"The cost of ambiguity in public policy" was evident in several areas, the Brasília-based Góes consulting firm said. José Genoino, the PT president, admits the party has grown distant from its traditional base and needs to re-evaluate its strategy. "We need to rescue the PT's traditional values and its historic project, which goes beyond the Lula government. We need to rethink our proposals on the economy, the state, foreign policy and the very path of the left." Indeed, this week Mr Genoino has been less concerned with celebrations than containing the fallout of an intense power struggle among his colleagues ahead of next week's election for congressional leaders.

Indicative of the internal divisions, there are two rival PT candidates for the presidency of the lower house of Congress. Driven by a game of musical chairs among congressmen with an eye on the 2006 general elections, the race has further divided government allies such as the centrist PMDB, the largest party in the governing coalition. "If the PT can't agree on a candidate, how should we?" asked one PMDB deputy.