ABSTRACT
This chapter examines how Lula’s inner circle and the hard nucleus of the party in government approached the relationship with the financial establishment as part of a strategy to secure economic governability. Scholars, public intellectuals in Brazil, and even some social and political leaders in the PT field, suggest that an ideological shift towards neoliberal positions took place during the first Lula administration, 1 or even earlier, during the 2002 presidential campaign. 2 In this chapter I contend that rather than a switch to neoliberalism (which only took place among certain groups in the PT), the continuation of the macro-economic policies implemented by the Cardoso administration was a pragmatic response to accommodate the interests of the financial establishment, particularly foreign investment banks and holders of Brazilian bonds. These dominant strategic actors, with sufficient power to generate capital flight and destabilise the main macro-economic variables, were seen by the party in public office—and Lula’s inner circle in particular—as essential to secure governability in its different dimensions.
