“When there is such an overwhelming disaster and you see yourself as part of this disaster, you begin to question your whole life. Why so many years of sacrifice and struggle?” Congressman Fernando Gabeira expresses the feelings of many petistas — members or supporters of the Brazilian Partido dos Trabalhadores (PT) — when they heard that the party they built or supported as an instrument of democratic, ethical politics, was governing on the basis of systematic corruption.

The Brazilian left is in a state of profound shock and confusion. Over the past two decades hundreds of thousands of people have devoted their lives to creating the PT as a principled and forceful instrument of social justice against one of the most corrupt and unjust ruling élites in the world. Now they are having to come to terms with their own party’s lack of principle.

The exact details of the corruption are still being investigated. It is generally admitted that the cúpula (group at the top) of the PT bribed political parties of the right to join their alliance in Congress and gave monthly payments to congressmen of the right to support their legislation. (The Brazilian president and PT leader, Lula, won with 67 per cent of the vote but the PT only has a fifth of the seats in Congress — though it is the largest party.)

As for the legislation itself, Lula’s government pushed through neoliberal reforms of which Tony Blair would be proud. These included the reform — effectively partial privatization — of an extremely unequal public pensions system, which nevertheless left the inequalities almost untouched; and amending Brazil’s relatively radical, albeit contradictory, 1988 constitution to facilitate the creation of an independent bank with the freedom to raise interest rates as high as it wants.

There have been social reforms — for example, a basic (but very low) income for all poor families — though these are hardly adequate to the problems; and many of them, along with the relatively progressive aspects of Lula’s ambiguous foreign policy, did not need Congressional approval.

The corruption also extended to the PT’s strategy for winning the election. This, it turns out, was based on a caixa dois (literally “a second cash till” — a secret slush fund) whose sources of donations seem to have included businesses contracted by PT municipal governments, public companies and private companies seeking government contacts. The publicist responsible for Lula’s 2002 advertising campaign admitted he had received money from these PT funds through an illegal account held by the PT in the Bahamas.

There is evidence of personal corruption. The PT treasurer received a Land Rover; the finance minister and Trotskyist-turned-monetarist, Antonio Palocci, made a suspiciously vast speculative gain on a house. But far more important than corrupt individuals is the corruption of democracy and of political goals and values as a result of the political methodology of “any means necessary.” It is significant that instrumental in all this was José Dirceu, an ex-guerrilla leader, responsible indeed for kidnapping the German ambassador and a devoted party man. He had been party president since 1994 and the architect of Lula’s election campaigns from 1994 to the end of 2002.

The evidence of corroded ends is stark. The revelations of political corruption came after it had become clear that the government had moved from a supposedly tactical acceptance of the IMF terms to a wholehearted acceptance for neo-liberal orthodoxy. Interest rates are, at 19 per cent, among the highest in the world. The government continues to generate an internal surplus far higher than that demanded by the IMF, which no longer feels it has to have an agreement with Brazil. It can rely on the economists who determine policy in the Palácio do Planalto.

Perhaps the most crucial signal that the leadership had broken the bond at the heart of the original PT project — that of achieving social justice by building on the power of the popular movements to do so — was Lula’s failure to turn his electoral mandate and huge international support into a democratic counter force to drive a hard bargain with the IMF. “He could have got much better terms in order to pursue the social program for which he was elected. At that point, the people would have been on the streets behind him,” says Plinio de Arruda Sampaio, a founder of the party with Lula and now, in his 70s, standing in the party’s presidential election, to test “for the last time” whether the party retains any integrity. It’s a widely shared belief.

It’s not just Brazilian leftists who are shocked and disoriented by what has been happening in the elegantly designed corridors of office — but patently not of power — in Oscar Niemeyer’s Brasilia. Lula and the PT are not a Soviet-style “god that failed.” But many western leftists, myself included, vested great hopes in the PT’s ability to combine, in Plinio de Arruda Sampaio’s words, “the building of popular movements with occupying spaces in the political system.”

We saw this as a strategy for socialist change more powerful than the failing parliamentarism of west European social democracy, yet building on struggles for the franchise and other liberal political rights in a way that the Leninist tradition rarely did. The disaster of the Lula government is not just a repeat of the classic scenario of a social democratic party that talks left in opposition and is pressured into compliance when it gets to office. The PT’s particular origins in mass movements resisting the military dictatorship of the 1960s, 1970s and early 1980s, along with strong traditions of popular education and self-organization, produced something new.

One illustration of the PT’s innovative politics was its relationship, historically, with the MST landless movement — a movement that occupies the land of the rich latifúndios and then tries to use it for co-operative agriculture. The PT both critically supported this movement and was supported by it, while at the same time respecting its autonomy.

Another illustration was the way that when the PT won the mayoral elections in cities such as Porto Alegre in Rio Grande do Sul, Rio Branco in the Amazon, Sao Paulo, Recife and very recently Fortaleza in the north east, it sought to “share power with the movements from whence we came.” These were the words of Celso Daniel, the mayor of Santo André, who was murdered in 2001 for trying to stop corruption. The PT did so by opening up the finances of the municipality to a transparent process of participatory decision-making through which local people had real power. One of the main driving motives behind this experiment was to expose and eliminate corruption.

How, then, could the party of participatory democracy have become the party of corruption, following the methods of every other Brazilian party before it? I went to Brazil to find out. I had been there several times previously to write about the participatory political experiments of the PT and to engage in the World Social Forum hosted by the then PT government of Porto Alegre. What had happened to all that democratic creativity? Was the emphasis on participatory democracy really only a feature of the state of Rio Grande do Sul, with its highly developed civil society?

For a reality check, I began in Fortaleza, where a radical PT member, Luizianne Lins, had stood for mayor against the wishes of the leadership and won; Jose Dirceu had flown in from São Paulo to campaign against her. Here, 2,500 miles from Porto Alegre, I found a participatory administration that had taken the process further and deeper than its original and world famous home.

(Editor’s note: To continue reading this article, please visit Red Pepper magazine.)