As could have been expected, the presidential election of the most important trade union leader in Brazilian history, Luiz Inácio Lula da Silva, as well as his ascension to federal power as leader of the Partido dos Trabalhadores (PT, Worker’s Party), attracted worldwide attention, particularly from those who were interested in the country’s history and evolution. However, the hope that the new government would distance itself from the neo-liberal policies adopted by previous governments immediately gave way to incredulity. The new government’s decisions to uphold the Central Bank’s operational autonomy, maintain basic interest rates at very high levels, maintain the existing inflationary target policy as well as fluctuating exchange rates, together with the introduction of a reform that increased the number of years that civil servants had to contribute to the State Pension Fund and reduced their benefits, left many who placed their hopes for change in a labour government somewhat perplexed. How can one explain this change in strategy by one of the biggest and most important leftist political parties in Latin America?1