Brazil on the edge of the cliff – By Nicolás Grimaldi
The magnitude of the Brazilian crisis seems to have no precedents and no immediate limit either. Everything seems to indicate an obscure future for Brazilian capitalism. The spiral of adjustment can only be broken by the general uprising and unity of the employed and unemployed working class.
By Nicolás Grimaldi (International Analysis Group – CEICS)
The Brazilian crisis seems endless. On top of suspicions of corruption and economic crisis, there are official fractures within PT’s alliance. Meanwhile, the streets continue to heat up and is hard to say not only if the PT will go on after 2018, but also if it will manage to reach that date.
Brazil’s current situation is far from being ideal. Until October, the inflation rate of the last twelve months was 9,77%, the highest rate since 2003. The unemployment rate is also one of the statistics that haunts Dilma’s dreams. According to official data, unemployment rose to 7,6% in September, 2,7 points above the same month in 2014, and not far from the peak of 8% in 2009. Wages, due to inflation, also fell 0,8% with respect to August, and 4,3% with respect to the year-on-year measure. Added to this is a devaluation of almost 70% in the last twelve months. With regard to GDP growth, the government predicts a 2,7% contraction, added to an expansion of 0.1% from last year. At the middle of the year the government had already reduced its surplus target from 1,1% of the GDP to 0,15%. Specifically, that meant a move from an expected positive balance of 66.300 million reales to 8.747 million. Last year Brazil accumulated a deficit of 32.536 million reales, the first negative balance in thirteen years. As we can see, the magnitude of the Brazilian crisis seems to have no precedents, and no immediate limit either. Everything seems to indicate an obscure future for Brazilian capitalism. Suffice it to note that the government decided to close and to fuse several secretaries and ministries, moving from 39 portfolios to 31. It also reduced the wages of public officials in October. With these measures the government aims to save 50 million dollars, a drop of water in the desert.
In mid-July, Eduardo Cunha (PMDB), head of the Chamber of Deputies, declared to be an opponent to Dilma. Even though it’s an “individual” breakup, he assured that he would ask, in the PMDB’s Congress, for the party to leave Dilma as well. The announcement left Rousseff in a risky position. As president of the Chamber of Deputies and a leader of PMDB, Cunha is an important chip for the control of Congress. Since he declared to be an opponent, Cunha set out to create some sort of “bomb patterns” to make things difficult for Dilma. He created a special commission to investigate the decisions of Bandes, aiming to discover if the ex president Lula did influence peddling to favor big companies. He also rushed the delayed approval of the three previous administrations public accounts so that the Chamber would go on to attentively revise the accounts of Rousseff’s first administration. However, Cunha received his first setback when the judge Luis Roberto Barroso, of the Federal Supreme Court, decided that public accounts would have to be considered by the full body of Congress, in a joint meeting of deputies and senators. Regarding “petrolao”, the Parliamentary Commission that investigated Dilma’s involvement didn’t find any proves about it. This is why the opposition presented a new request of impeachment for manipulating state spending between 2014 and 2015. For its part, the PMDB communicated that any party resolution would be announced during PMDB’s congress. However, the PMDB of Santa Catarina already decided to break its relation with the government. The PDT and the PTB also announced their break with PT.
The vice president Temer seems to remain on Dilma’s side, since he condemned Cunha’s “bomb patterns” tactic, and claimed that unity is necessary. Furthermore, he is leading the dialogue between the presidency and the Congress. Dilma’s last move was increasing the number of ministries controlled by the PMDB, growing from 6 to 7, including the Ministry of Health that has the biggest budget of all. In this way the PT gained control over 9 portfolios. With this reform also 30 secretaries and 3.000 positions directly appointed by the directors were eliminated. Another important departure was the one of Aloizio Mercadante, chief of staff and one of Dilma’s trustworthy advisors, replaced by Jacques Warner, Lula’s man. In this way, Dilma is giving ground, in exchange of trying to contain the PMDB.
Within this framework, there were protests both for and against the government. The first protest took place on 16 August, and it was the third mobilization made against the government. It is estimated that between 500 and 800 thousand people manifested in about 150 cities. The slogan was quite clear: “Dilma out, PT out”. One of the speakers was the opponent Aécio Neves, and opposition leaders like José Serra, Bolsonaro and Jarbas Vasconcelos, from the PMDB of Brazil’s northeast, also participated. The PSTU recognized that an important fraction of workers and unemployed, who see their conditions of life deteriorating, attended the protest. That is to say, the protest mobilized a sector that can potentially be attracted by the Left.
Like in March, there was a countermarch in favor of Dilma on 20 August. The mobilization was convened by fifteen organizations, the main ones being MST, MTST, CUT, and the students of UNE. The demonstration extended to nearly 25 states, and had the support of the PCB and the PSOL, which argued that a series of organizations should be gathered to create a defense agenda against adjustment. This mobilization -that was smaller than the one of the opposition-, repudiated what its participants considered a coup attempt by the opposition, but also rejected the adjustment proposed by Levy.
The PSTU and Conlutas, from its Unity of Action Space, convened to their own protest on 18 August. The protest gathered fifteen thousand people in Sao Paulo. Sectors of the PCB and PSOL participated, and also forty union sectors like post, metallurgical, construction, rural, women, students and landless workers movements. The leader of PSTU, Ze Maria, criticized the Left groups that claim to defend the government against an alleged coup attempt from the Right, because both the government and the opposition represent the same policy, and that an independent alternative of the workers had to be built. He called for the CUT and the rest of the trade unions confederations to convene a general strike against the fiscal adjustment and the government’s attacks to the working class.
Although the Federation of Industries of the State of Sao Paulo (FIESP) and of Rio de Janeiro (FIRJAN), both members and with executive positions in the CNI (National Industry Confederation, main business organization in the country), issued a statement supporting the call for unity made by Temper, they opened a front due to the tax increase the government seeks to advance. The demand is clear: to avoid the rise in the PIS-Pasep (a tax paid by companies to fund the Unemployment Insurance) and the Cofins (a tax paid by companies to finance social security), the check tax and the restoration of the Provisional Contribution on Financial Movements (CPMF). At the beginning of October, the FIESP placed a giant inflatable duck in front of the Congress with the slogan “I will not pay the Duck”. FIRJAN would join these measures, and together they would carry out acts in Sao Paulo, Brasilia and Rio in order to obtain one million signatures, to present a manifest against the measures in Congress. From this actions emerged the National Front Against Tax Rises. That is, the Brazilian bourgeoisie is asking Dilma to break with the surplus population whose maintenance from their point of view represents a burden for the State Finances.
Another point of conflict stems from seeking to abandon the MERCOSUR, a sub-regional economic bloc formed by Argentina, Brazil Paraguay and Venezuela. One of the problems for Brazilian exports is the need to sign free trade agreements with different economic blocs, among them the European Union, as a way of regaining markets. This became apparent in the tour made by Dilma, Abreu and representatives of the CNI and CNA (National Agrarian Confederation), in Brussels. The problem of the economic integration was aggravated by the creation of the Trans-Pacific agreement in October this year. Composed by twelve countries, it represents 40% of the world economy and more than 800 million inhabitants. This means that the signing of commercial agreements is a pressing need for the agrarian bourgeoisie, although it’s also a claim of the FIESP and the CNI. In this sense, the MERCOSUR is an obstacle, since Argentina and Venezuela are opposed to those agreements. Dilma had been claiming the need to sign an agreement between the MERCOSUR and the EU, although counting on being able to convince Argentina and Venezuela to accept it. Renan Calheiros took up the gauntlet and elaborated a “Brazil Agenda” that proposes breaking the MERCOSUR, striking a blow against Dilma, who had to accept it, in exchange of maintaining the support of the PMDB. In that Agenda there are also issues related with increasing outsourcing and raising the retirement age.
As we can see, the bourgeoisie, led by the agrarian fraction, asks for an adjustment. At the same time, it wants to fracture the alliance with the surplus population and to break with the MERCOSUR. But the adjustment doesn’t seem to end there. To compete with the Trans-Pacific agreement, the bourgeoisie would have to equate the labor costs of countries like Mexico, Vietnam and Malaysia that are within the pact. The spiral of the Brazilian adjustment can only be broken by the general uprising and unity of the employed and unemployed working class. The employed fraction is already starting to show its discontent, although the relative surplus population remains expectant or in favor of the government. To unify both fractions is one of the main tasks of the revolutionary left.