2000s in Brazil

In 2002, Luiz Inácio Lula da Silva, of the PT (Labour Party), won the presidency with more than 60% of the national vote. In the first months of his mandate, inflation rose perilously, reflecting the markets' uncertainty about the government's monetary policy. However, the markets' confidence in the government was promptly regained as Lula chose not to interfere with the Central Bank's task of keeping inflation down. Since then, the country underwent moderate economic growth and some employment expansion. On the other hand, Lula's mainstream economic policies disappointed his most radical leftist allies, making it harder to obtain a majority in the Parliament.

In 2005, Roberto Jefferson, chairman of the Brazilian Labour Party (PTB), was implicated in a bribery case. As a Parliamentary Commission of Inquiry was set up, Jefferson accused some MPs of being paid monthly stipends to vote for government-backed legislation. Later, in August of the same year, after further investigation, campaign manager Duda Mendonça admitted that he had used illegal undeclared money to finance the PT electoral victory of 2002. The money in both cases was found to have originated from private sources as well as the advertising budget of state-owned enterprises headed by political appointees, both laundered through an advertising agency. The collection of these incidents was dubbed the Mensalão scandal. As of 2007, criminal proceedings are still underway. [ [http://www1.folha.uol.com.br/folha/brasil/ult96u91315.shtml] ]

The loss of popularity resulting from these scandals was outweighed by the president's popularity among many voters of the lower classes, whose income per capita was raised as a consequence of both higher employment and government social welfare programs. The stable and solid economic situation of the country, which Brazil had not experienced in the last 20 years, with fast growth in production both for internal consumers and exportation as well as a soft but noticeable decrease in social inequality, may also partially explain the high popularity of Lula's administration even after the scandals of corruption involving important politicians. Hence, Lula's re-election in 2006. After almost winning in the first round, Lula won the run-off against Geraldo Alckmin of the PSDB (Brazilian Social Democracy Party), by a 20 million vote margin.

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