Graft, economy crank up pressure on Brazil ruling party

Twelve years after surging to power in Brazil, the Workers` Party (PT) is at a crossroads, struggling to deal with a tanking economy and a ballooning graft scandal that has implicated members and close allies.

Party co-founder Luiz Inacio Lula da Silva, a former union leader, scored a historic poll win in October 2002, when he first led the PT to power, and maintained euphoric support levels throughout his eight-year tenure as the Brazilian economy boomed.

But his handpicked successor, Dilma Rousseff, has found the going much tougher.

Chief of staff under Lula, Rousseff also chaired the board of state oil giant Petrobras during much of the decade when executives are said to have colluded with construction companies to massively inflate contracts, using part of the dirty cash to bribe politicians -- mainly government allies.

Whereas Lula used charisma to win over the crowds, Rousseff is a cool technocrat.

But Brazil`s first woman president has had to call on every ounce of political savvy as the shine of the Lula years has faded.

With the Petrobras investigation drawing in a slew of politicians -- including the PT`s treasurer -- a machine that has orchestrated four back-to-back election victories has struggled to keep the wheels turning while Rousseff`s approval ratings head toward single figures.

"The party is suffering badly," said Professor Carlos Pereira of the Getulio Vargas Foundation.

"It`s not surprising that a party created under the banner of ethics loses its legitimacy when it is responsable for the worst corruption scandal in history."Created in 1980 to give workers a voice during Brazil`s military dictatorship, the PT now stands accused of devouring the spoils of a scam that siphoned off some $3.8 billion from Petrobras, the largest company in the world`s seventh-largest economy.

The stench of corruption is all the greater since allegations emerged over the weekend of a new multibillion-dollar fraud by dozens of firms that investigators say paid bribes to tax officials in a bid to have penalties reduced or waived.

High inflation, the specter of recession, a precarious investment climate, rising public debt and a slumping currency have only added to the atmosphere of crisis.

The Petrobras affair broke 12 months ago, and although Rousseff narrowly won re-election in October, her camp has come under increasing pressure, with PT treasurer Joao Vaccari facing prosecution for corruption and money laundering -- allegations he denies.

The presidents of the senate and the chamber of deputies, both Rousseff allies, are also under investigation, putting the governing coalition under strain.

Given the broad nature of the coalition, the PT has continually needed to offer its allies cabinet posts to govern smoothly.

But after more than a decade in power, the PT`s alliances are frayed, said Pereira.

"The parties outside the PT are no longer disposed to offer support for no reward. The corruption which has developed at the heart of the PT is the fruit of this new relationship with its allies," he said.Debora Messenberg, a professor of political science at the University of Brasilia, said the PT strayed from its roots in order to win power.

"After losing three elections, the core of the party changed tack, saying they must play the political game to win" by establishing broad alliances, she said.

The game has exacted a high price, with a swath of former party officials jailed in late 2013 after the revelation of a massive Congressional vote-buying scheme dubbed the "Mensalao" (monthly stipend).

But while Lula`s blue-collar charm helped him survive the darkest days of that scandal, Rousseff has not managed to shrug off the Petrobras affair.

Two weeks ago, more than a million people marched against the government and a similar number is expected to do so again on April 12.

Some want Rousseff, who is not facing questioning over the Petrobras affair, impeached -- though observers see that as unlikely.

"The problem is the model of government the PT has created," said Lincoln Secco, author of a history of the party.

Some working class voters, as they join the middle class, also demand more and "the government cannot meet expectations," he said.

Former Lula spokesman Andre Singer told Folha de Sao Paulo daily the PT must respond to the crisis robustly.

"To regain moral authority the party requires strong measures -- immediately expel those under investigation until the process is complete," he said.

Singer added that the party`s current "defensive" stance "is hurting it more with every passing day."

But Secco said there is no sign of an alternative force emerging on the left that could replace it.

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