The Lula Disaster in Brazil Sungur Savran This paper discusses the reasons for the Brazilian Workers Party’s (PT) surrender to neoliberalism under Lula’s government. The determining factor behind the surrender, the author argues, is the class composition of Lula’s government. Even before the elections, Lula and the PT leadership deliberately formed an alliance with prominent sectors of the bourgeoisie and pledged allegiance to the commitments of Brazil towards the international financial markets. The outcome was total compliance with neoliberal policies, which should be seen as a political betrayal of the party leadership rather than an end-result of objective constraints. There was a long historical evolution behind this betrayal. The organisational transformation of the party from a class-based organisation to an electoral apparatus was the decisive aspect of this evolution, but the ideological-political shift of the PT leadership from socialism to left liberalism was also a factor that paved the way for its compromise with neoliberalism. A paradoxical example of this was the “participatory budget” experience in Porto Alegre, which was initially celebrated as a model of democracy, but was in fact a neoliberal model of “participatory austerity”. The author argues that the ideological-organisational shift of the PT was not inevitable and that the Marxists within the party could have struggled against it. The trouble was that major sections of the Marxists had themselves become paralysed with demoralisation and abandonment of the fundamentals of Leninist politics, in particular after the fall of the Berlin Wall and the collapse of the Soviet Union.