Stormy Seas

Sep 1, 2005

Lula finally managed to convince investors that he is committed to economic growth. But a widening corruption scandal threatens to discredit his work.

Brazil is no stranger to turbulence, but the shockwaves hitting the country since the beginning of June are something out of the ordinary. President Luiz Inácio Lula da Silva's ruling Workers Party (PT) was once a byword for probity in Brazil's notoriously seedy body politic. Now PT bosses stand accused of orchestrating the systematic and widespread bribery of ruling coalition lawmakers. If it becomes clear that Lula himself knew what was going on, then his chances of reelection in October 2006 – once a given – will become remote and his government could fall.

Lula initially promised the government would "cut its own flesh" if necessary to get to the truth of the allegations. In late July, however, in what seemed an attempt to stifle investigation, he warned that Brazil's economy "is still very vulnerable" and cautioned against "playing around in this area so that we don't take...

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