The situation is a mess. Roberto Jefferson is now saying that he told Lula about the scandal before it became public knowledge. Jefferson is a very skilled politician who has been in parliament for twenty-three years and is remembered for his defence of the deeply unpopular former president Fernando Collor de Mello over Collor’s impeachment hearings in 1992. Jefferson also claims that Lula’s government promised the PTB a substantial sum to fund it in the next mayoral elections in 2006, but that the money has not yet been paid.

In one sense, Jefferson represents the discontent of many congressmen with the government, something evident in the election of Severino Cavalcanti of the Progressive Party (PP) as president of the chamber of deputies, a post that tradition would have given to the PT. Cavalcanti is a populist conservative who claims to be against homosexuality and is the leader of the baixo clero (lower clergy), a group whose support of the president is conditional on Lula giving them more power, money and space to operate.

Lula’s political problems, then, were considerable even before the party-finance scandal and the loss of José Dirceu. Governing with an ever-shifting group of small parties is certainly difficult, especially when the parties themselves are survival vehicles for conglomerates of congressmen whose aim is to endure no matter who is in charge. Politicians in Brazil can switch parties freely and alliances are not strong enough to establish groups with a clear ideological position or shared projects.

In addition, there is huge fragmentation in congress and the PT does not have the numbers to govern alone. In the past, people thought that an alliance between PT and PSDB (Fernando Henrique Cardoso’s party) would be the solution. But between them they polarised the political spectrum and now both need an alliance with smaller parties to govern. The PSDB has teamed up with the Liberal Front Party (PFL), a traditional rural coronel (colonel) organisation.

In one sense, polarisation guarantees a division of power and more institutional stability. The problem is that the trend also makes it harder for the governing party to operate and invites it to send signals that its policies are for rent. Lula’s government is reacting to José Dirceu’s departure by saying that to end corruption, Brazil has to enact the long-expected political reform programme. Even were it to succeed, this will not absolve those guilty of stealing the people’s money.