MercoPress. South Atlantic News Agency

Crucial ruling party meeting in Brazil

Brazil's ruling Workers Party, WP, is holding this Tuesday an Executive emergency meeting to address the ever expanding bribes and money skimming scandal which now admittedly directly involves the party structure and president, Jose Genoino another crucial man in president Lula da Silva's administration.

After having publicly insisted there was no such bribes scheme, Mr. Genoino was forced to apologize and blamed the party's Treasurer Delubio Soares for having kept him in the dark, when Brazil's largest circulation magazine Veja revealed in detail WT financial dealings.

Marcos Valerio, a publicist holding several contracts with government companies, "a close and longstanding WT link", was responsible for collecting skimmed money from those government companies and taking bank loans which were then paid out among Congress members to ensure support for the Lula da Silva's administration legislative agenda.

"I gave the wrong information because the party's Finance Secretary told me Mr. Valerio was not involved in financial operations with the party", admitted Mr. Genoino.

Finance Secretary Soares then confided that in February 2003, a month after president Lula da Silva took office, a million US dollar loan was requested from a bank, "with the endorsement of Genoino, the Financial Secretary and publicist Mr. Valerio", since the bank was demanding collateral.

"These revelations make Mr. Genoino's situation untenable since they directly involve the party in the money operation" said Deputy Ivan Valente and a member of the Workers Party leftwing.

Since the scandal burst to light in early June, Mr. Valente and his faction have been demanding the ousting of the leading members of the Workers Party executive including Mr. Genoino, Mr. Soares and chairman Silvio Pereira, the iron structure that has kept the party faithful to President Lula da Silva and his policies in spite of growing criticism about economic orthodoxy and political alliance with right wing parties.

"So far, nothing indicates that President Lula da Silva was directly involved", but given the expansion of accusations, "his responsibility increases", wrote former president Fernando Henrique Cardoso in one of Brazil's main newspapers 0'Globo.

Mr. Cardoso's column comes amid growing voices that President Lula da Silva should consider giving up his re-election ambitions in October 2006.

However political analyst Bolivar Lamounier wrote in O Estado de Sao Paulo that the crisis so far has been "circumscribed to Congress", but warns that it stands in the lobby of an "institutional situation".

President Lula da Silva has promised to be "implacable with adversaries and allies who think they can go on taking advantage of public funds to become rich".

Apparently the Brazilian president has demanded that the whole WP executive resign and is preparing a political alliance with the centre right PMBD to ensure a working Congressional majority.

But financial analysts already anticipate that a post-crisis Lula da Silva administration "won't be too effective".

"The political wing has been decapitated, but technocrats won't have the political support to advance with reforms", says Latinamerica HSBC chief economist Paulo Vieira da Cunha.

However since the Brazilian economy under orthodox policies has been successful, in spite of criticism from the party's radical groups, Mr. Vieira da Cunha estimates that a pragmatic President Lula da Silva will stand by Finance Minister Antonio Palocci, promising long term development without inflation, and wooing the moderate centrist vote, if he can stand the opposition flak and really wants to have another four years in October 2006.