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Brazil caught between economic crisis, political rivalries and class struggle
Brazil, the Latin American giant with a population of more than 200 million, whose area is twice as large as that of the European Union, had risen to become the world’s sixth richest economy, according to GDP (Gross Domestic Product) figures. A few years ago, it was included in the BRICS – a journalistic category which was supposed to include the most dynamic “emerging” countries, those who sooner or later were irresistibly destined to play the first violins of the world capitalist economy and which, in the meantime, were driving forces: Brazil, Russia, India, China (to which South Africa was later added). But the global economic crisis of 2008 has reshuffled the cards; nobody speaks about the BRICS anymore, and today, Brazil, whose GDP now sits in eighth place in the world, is in its third year of recession – the longest and deepest in decades, including the 1930s. From 2014, when the crisis began at the commencement of the year, GDP fell by more than 7%, the budget deficit exploded, the official unemployment rate reached a historical high of more than 13%, which corresponds to 14 million unemployed – this official rate only decries part of the reality, real unemployment (including underemployment) is much more important.
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Over the last fifteen years, Brazil has been governed by governments from the PT (Partido dos Trabalhadores, Workers Party), the main left-wing party whose charismatic leader is the former trade unionist, Lula. Gathering trade union leaders, left-wing Christians, opportunist “far-left” currents (Trotskyist and others), etc., when the military dictatorship ended about 30 years ago the PT was born as the party of class collaboration which the democracy of the “new republic” needed in order to keep a tight rein on the workers’ struggles (1).
After steadily increasing its electoral successes (winning municipal elections in major cities and regional elections in particular), the PT ended in 2002 by winning the presidential election. In order to be elected, Lula had had to convince the bourgeoisie that he really had the stature of a “statesman” – that is, someone capable of understanding and defending capitalist interests in a responsible way, and not only as that of a demagogue gifted in deceiving the workers, and that he was going to be in the continuity of previous governments. Upon his arrival in power, Lula, allied with the bourgeois parties, took measures in the direction demanded by the capitalist circles and welcomed by the IMF: raise of the retirement age of civil servants from 55 to 60 years, market flexibility, independence of the central bank, regular pay-downs of the debt principal (which the PT claimed it once wanted to repudiate or at least renegotiate), abandonment of agrarian reform in favor of the development of agro-business, etc.
The presidency of Lula corresponded to the boom in the price of raw materials on the world market; it led to strong economic growth in Brazil, which is a major exporter of these substances. This allowed the government to finance social measures; among others, in 2005, the Bolsa familia, a state allocation of roughly 35 to 45 US dollars per month allocated to the poorest families (more than 20 million people benefit). These measures were in fact only the crumbs of Brazil's economic boom (economic growth reached 4% per year in those years), whose main beneficiary was obviously the bourgeoisie, but they explain the popularity long enjoyed and still enjoyed in part by the PT among certain proletarian strata in spite of its pro-capitalist policy.
In 2006, Lula was comfortably re-elected, despite various corruption scandals involving elected officials and PT leaders, the main one being that of mensalao (the “monthly payment” distributed to the deputies!): The government bought hundreds of parliamentarians’ votes to pass laws. To form his government Lula formed an alliance with the centrist bourgeois party PMBD, to which he entrusted important ministries.
The international economic crisis of 2008-2009 was also felt sharply in Brazil, where it was the largest since 1990, mainly marked by the decline in industrial production (-7.4% in 2009), but the recession did not last: as of 2010 the country’s economy experienced a GDP increase of 7.5%! (this surge in economic growth fell in the following year).
Since the Brazilian constitution banned more than two successive presidential terms, it was Dilma Roussef, Lula’s protégé, who run for the presidental elections and became president in 2011.
The anti-social measures of the Roussef government, combined with the economic slowdown, provoked major street protests in June 2013 against rising transport prices; the protesters were also challenging the sumptuous expenses for the football World Cup (in the country where football is king) when funding for the health system or education was chronically deficient. The petty-bourgeois political nature of this interclassist movement was seen in the banning of red flags and anything that evoked leftist orientations. After a reduction of the tariff on public transport in Sao Paulo, Rio de Janeiro and other major cities, the movement died off, just at the moment strike movements were beginning to appear.
In October 2014, as the Lava Jato (Laundromat Express) judicial investigation (2) began to reveal the extent of corruption of the politicians of the government coalition (PT, PMBD), and while Brazil was plunging back into crisis, Roussef was narrowly re-elected. During the election campaign she had multiplied social and left promises, although she had chosen Michel Temer, the leader of the PMBD, as vice-president. But from the first days of her new mandate, on the pretext of the economic crisis and under the pressure exerted by the most powerful capitalist circles, she embarked on policies of austerity which she had constantly denounced throughout her campaign!
These policies, without successfully restoring fiscal balances and reducing inflation, were undoubtedly an aggravating factor in the recession. In 2015, the GDP fell by 3.8%, industrial production by 8.3%, exports decreased by 15% and imports by 25%; inflation reached 10% as did the budget deficit, while the official unemployment rate rose from 4.84% to 8.5%. It was against the background of this growing economic crisis that the enormous corruption scandal around the Petrobras oil company (3) brought to light by Lava Jato took on its full extent, showing that the entire Brazilian political system was corrupt to the core. In a situation where the government was unable to cope with economic difficulties, the economic crisis was inevitably transformed into a political one. Discredited among the workers, confronted with massive demonstrations (4) of the petty-bourgeois layers hit hard by the crisis, paralyzed by the political rivalries fueled by the scandals, the Roussef presidency became an increasingly embarrassing burden for Brazilian capitalism. A process of impeachment of the president was therefore launched in parliament; after a lengthy procedure it eventually culminated in May 2016 (meanwhile Lula had entered the government to try to obtain immunity from corruption charges against him), and Dlima Roussef was replaced by her vice-president Michel Temer.
The government of the new president elaborated a series of austerity measures in order to redress the finances (increase of taxes, reduction of social expenses, constitutional amendment to freeze public expenditure for 20 years, etc.), while opening lines of credit to large companies and promising institutional measures to end corruption. The Temer reforms were designed to bring an early end to the crisis and restore the competitiveness and profitability of Brazilian capitalism. Whereas in 2016 the Brazilian economy continued to fall sharply on almost all levels (GDP: -3.6%, industrial production: -6.5%, budget deficit: -9%, exports: -3%, imports: -19.8%, unemployment: 12%), except for inflation which fell to 6% (due to the difficulty in selling the goods), by mid-2017 this decline seemed to have stopped: the government triumphantly announced an annualized rate of “growth” slightly above 0% ....
It was the proletarians and, in general, the laboring population, who are targeted by government policy. They are clearly destined to pay the costs of the restoration of Brazilian capitalism. In times of crisis, capitalism still considers social spending on health, education, pensions and other items, unsustainable, and measures of "protection" of workers and many social shock absorbers previously set up to buy or to consolidate social peace intolerable.
A CLASS RESPONSE OR PRE-ELECTORAL MANEUVERS?
The attack on the pension system (raising the legal retirement age to 65 for men, 62 for women, with the requirement for 49 years of contributions before retirement, etc.) was the most important measure for the bourgeoisie (5); it is therefore also the one which provoked the most reactions, with the reform of the labor code to allow more “flexibility” in labor regulation, that is to say, to bend the proletarians more to capitalist demands. In mid-March, major protest demonstrations against these “reforms” had already taken place in the big cities at the call of the trade unions. But it was at the end of April that the protests reached their maximum with the success of the general strike of 28, called by all the unions, including the “pelegas” (the ultra-collaborationist unions linked to the right), the left parties (including the PT) and many others, including religious organizations.
This unanimity was linked to the wide discontent among the proletarians and the masses aroused by the Temer “reforms”; but it was also explained by certain measures which directly affected the trade union apparatuses such as the abolition of the compulsory payment of trade union dues. Following this strike, a major march was organized in Brasilia on 24 May; the authorities responded by appealing to the army (which fired real bullets, causing dozens of wounded) to maintain order; then a new general strike was called on June 30th.
But in reality it was just a day of demonstrations, virtually the only strikes which occurred were in the banking and education sectors. In fact, the big trade unions did not call for a strike or didn’t mobilize much. This is the case of the CUT (Central Única dos Trabalhadores, Unified Workers’ Central), the largest trade union confederation in Brazil, formed about thirty years ago on the thrust of trade union struggles under the dictatorship. Since then the CUT has demonstrated its effectiveness in class collaboration, and it represents the main point of support of the PT in the working class.
At the head of the current opposition to the Temer reforms, the CUT seeks essentially to prevent this opposition from becoming a real class struggle, which is why it has in fact sabotaged the June 30th general strike that it had been constrained to convene. It obviously prefers to deflect discontent into a movement for electioneering, in other words to steer it into the impasse of the bourgeois political system. Beyond the slogans Fora Temer! (Temer Out!), Diretas já! (Direct Elections Now!) or the denunciation of the removal of Roussef as a coup against the Constitution, the CUT and the PT are in fact preparing for the presidential elections next year. Lula, who was recently sentenced to 9 years in prison for corruption, but who appealed the conviction, has already gone on the campaign trail and polls credit him with a high score (his election would also provide him with immunity!).
By skillfully playing the role of social firefighters at a time when the Temer government, weakened by the revelations of corruption (6) and breaking all records for unpopularity (7), has not yet managed to pass its attack against pensions in a divided Parliament, the CUT renders a proud service not only to the bourgeois order in general, but to the government itself: in practice it protects it from proletarian anger. The CUT is helped in its anti-proletarian work by organizations that claim to be “revolutionary” or “socialist”. We are not talking about the nationalist neo-Stalinists of the PC do B (Communist Party of Brazil) who were part of the Roussef coalition government, but about the PSOL (Party of Socialism and Freedom, a split from the PT, a heterogeneous grouping of various reformist currents, including Trotskyists), the main party to the left of the PT, which does not go beyond the demand for direct elections to eject Temer; or the PSTU (Socialist Party of Unified Workers, Trotskyist party affiliated to the LIT-IQ) which advocates a “workers’ and socialist solution for Brazil” while inter-mingling the fight against the anti-proletarian attacks of the government with the defense of “national sovereignty”(8) – truly a bourgeois demand if ever there was one!
The anti-corruption struggle has undeniably been used by bourgeois forces as part of the rivalry that is tearing the ruling class apart (the Temer government is now trying to rein on this anti- corruption struggle) (9); but the proletariat finds and will find against it a united bourgeoisie determined to increase its exploitation and accentuate the repression; it finds and will also find against it the false workers’ parties and the collaborationist trade union centers. The near future will see new onslaughts of attacks; to resist it he will have to find, against all false friends, the path of the class struggle, the way to the reconstitution of its immediate classist defense organizations, but also to the reconstitution of its class party.
This is a difficult but essential task to be able tomorrow to go on the counterattack against capitalism and to be able to give a reality to anti-reformist and anti-electoral slogans:
Fora Capitalismo !, Revolução já!
Out with Capitalism!, Revolution Now!
(1) cf “A função do PT”, Proletario No. 1 (May 1982), available on our website.
(2) Part of an investigation into money laundering, the case revealed an extensive network of bribes involving large construction groups and the Petrobras company. In June 2015 the investigation extended to the Odebrecht construction group, whose boss was sentenced to 19 years in prison. The confessions of company executives will affect the entire Brazilian political spectrum (including Lula) and extend abroad: to Venezuela, but also France where an investigation was officially opened last year for corruption during the sale of submarines to Brazil. But this French investigation is especially remarkable for its discretion...
(3) Petrobras is a state-owned oil company and one of the world’s largest companies in the industry. Like all companies of this type, it acts as a cash cow for a whole bunch of parasites, politicians, big or small companies, and so on.
(4) By March 2015, nearly two million people were demonstrating against corruption and demanding the resignation of Roussef. A year later, in March 2016, there were more than three million to demand her dismissal. The indecent corruption of the elites scandalizes the proletarians and petty-bourgeois; but corruption is the legitimate daughter of capitalism, the system where everything is bought and sold, and it is found in all countries: a clean and honest capitalism is a fairy tale. However, in some countries, corruption reaches such levels that it undermines the smooth functioning of capitalism by disproportionately increasing its operating costs. This explains the need for capitalists, not to eradicate corruption, but to maintain it within certain limits.
(5) According to the World Bank, pensions represent almost a third of Brazil's public expenditures. For a capitalism in difficulty, to cut back these expenses is therefore, according to the words of the World Bank: “necessary and urgent”. See World Bank Staff Note, 4/13/2017.
(6) The media group Globo (the main Brazilian media group) revealed in May that the investigation of corruption related to the company JBS (an agribusiness giant, the largest global meat processing company), implicated Temer. The company was paying off officials to facilitate the utilization of spoiled meat in production; its boss admitted having bribed nearly 2,000 politicians and officials.
(7) According to polls, Temer has only 5% of favorable opinions, while more than 80% of respondents are in favor of his going on trial!
(8) Editorial of Opinião Socialista nº 542 (6/9/17)
(9) At the beginning of August the parliament rejected the impeachment of Temer; in June his government decided to abolish the “Lava Jato” group of anti-corruption judges. This respite earned by Temer should allow him to push his anti-worker reforms through parliament.
International Communist Party
October, 9th 2017
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