Adamant: Hardest metal

BRAZIL: Workers Party government pushes neoliberal austerity


Within 100 days of taking office on January 1 this year, Brazilian President Luis Inacio “Lula” da Silva's Workers Party (PT) government had demonstrated its commitment to neoliberal economic policies beyond anything Washington had expected. A joint meeting of the International Monetary Fund (IMF) and the World Bank at the end of April praised da Silva's government, and urged it to proceed with its planned pension “reform” and the partial privatisation of the country's central bank.

The PT government proposes a massive reduction in pensions, especially to public sector workers, and a partial privatisation of pension funds. In true social-democratic style, the “reform” is being promoted by a demagogic campaign against the tiny number of upper-level public servants, who the government claims can retire on amounts of up to US$16,000 a month. The real meaning of the reform is to free up billions of dollars in public savings to be redirected to tax cuts for the wealthy.

The pension reform also demonstrates the political acumen of the PT neoliberals. If they can smash opposition to this reform, which the labour movement has been particularly resistant to, then further attacks aimed at cutting workers' incomes and weakening union power will be much easier.

A big business government

In its first budget, the PT government slashed $3.9 billion from spending. This included a cut in the promised minimum wage from $69 to $67 per month which, when inflation is considered, amounts to a minimum below the level under the previous conservative government of Fernando Henrique Cardoso. In an article posted on the Rebelion web site on March 21, left-wing analyst James Petras estimated that social spending cuts amounted to 35.4% of the budget reduction.

Da Silva's much vaunted “Zero Hunger” program also had its funding reduced, leaving $492 million to tackle the problem of 40 million malnourished Brazilians. This means that the funds budgeted for the hungry amount to 2.5 cents per day.

In fact, none of the “social programs” promised by da Silva — Zero Hunger, First Employment for Youth, and public works projects — have received any significant budgetary allocations. To date, none of the 1400 million Brazilian reales in funds allocated to state governments for basic public works have been released. Neither have the 700 million reales promised for housing.

The PT government has adopted the standard principles of neoliberal policy. Protectionist measures have been rejected, with the government preferring instead to lobby Washington for “fair trade” rules.

A study by the Brazilian embassy in the US shows that 60% of Brazilian exports to the US face protectionist measures and that, while these exports pay an average tariff of 45%, US exports to Brazil pay no more than an average of 15%.

The PT government hopes that by doing all the IMF, World Bank and Washington demand, Brazil will get a better deal. More likely Brazil will be “rewarded” for its loyalty just like Argentina has been.

Brazilian finance minister Antonio Palocci has plans to privatise four state banks, including the partial privatisation of the central bank, under the pretext of securing its autonomy from elected officials.

In order to win the electoral endorsement of Brazil's domestic capitalists, the PT campaigned on promises to lower interest rates, but within days of the government's inauguration, the central bank had raised rates from 25% to 25.5% and one month later to 26.5%, privileging the profits of international financial speculators.

By February, the PT government had also eliminated price controls on 260 pharmaceutical products and promised to do so for another 3000 medicines by June this year.

The PT government has helped give cover to the US-backed campaign of the Venezuelan capitalists to oust that country's radical left-wing government by sponsoring a group of “friends” of Venezuela (including primarily the US and Spanish governments) supporting the opposition to President Hugo Chavez. When the Chavez government asked that a few actual friends of Venezuela be added to the “Friends of Venezuela” group, the whole initiative was dropped.

Bureaucratisation of PT

The brutality of the PT government's neoliberal reform package is the result of a long process of bureaucratisation of the PT. According to Brazilian intellectual and PT sympathiser Emir Sader, at the last national conference of the PT, held in Recife in November 2001, 75% of delegates were functionaries employed by PT administrative and parliamentary structures.

The PT originated as a party of militant workers, with origins in industrial and anti-dictatorship struggles in the late 1970s, located especially in the massive urban sprawls created by the industralisation wave of the 1970s. The party rapidly became a centre for opposition to Brazil's ruling elite, drawing into its ranks landless peasants, urban poor activists, ecologists, liberation theologians, feminists and many other social movement activists.

The PT's initial ideological orientation remained ill-defined, but lent toward an abstract “democratic socialism”. What was clear was that it was a party of struggle, where electoral work complemented the organisation and leadership of extra-parliamentary struggles.

Under the pressure of the retreat of the international working-class movement in the 1980s, a wing of the PT increasingly focused on electoral gains and building an electoral apparatus. This process was deepened by the reorganisation of the PT.

Initially, the PT had been organised in large part through party-nuclei within factories. These nuclei came together in regional, state and national meetings and had a critical influence on the direction of the party.

Beginning in 1983, out of the PT itself, emerged the movement to form the CUT trade union federation, a left-wing alternative to the then dominant trade union federation, the CGT. The formation of the CUT was then used by the PT right wing to get rid of the direct organisational link the PT had with the workers' movement, handing the CUT the role of “organising workers” and prioritising the building of an electoral machine.

From 1985-86, the base nuclei (branches) of the PT, both those organised on a sectoral basis and local territorial basis, began to disappear. In addition, those who argued for the PT to at least maintain some sort of trade union arm — an internal party structure for organising its labour movement work — were squashed by da Silva and the PT majority.

By failing to give any clear ideological lead within the CUT, the PT also contributed to the rightward drift of the CUT itself. This drift was confirmed and deepened by the decision at the 1988 CUT congress to henceforth only recognise delegates from established unions in each work place. Prior to this statutory change, an important part of the CUT's development as an independent and militant union federation had been its recognition (as congress delegates) of “rank-and-file union lists” from the factory floor.

As the PT became separated from the ranks of the labour movement, the left of the party became increasingly reduced to distinguishing itself from the right purely through “programmatic” statements of difference, without the benefit of providing an alternative leadership in practice. Practical leadership of the left, at least in the workers' movement, was siphoned off to the CUT bureaucracy.

In other sectors, there was not sufficient social weight to produce a counter-organising pole for the left, with the one exception being the landless peasants' movement which, organised in the framework of the MST (Movement of those Without Land), continues to be the only alternative pole of left-wing mass-based leadership to the bankrupt PT.

As the PT became an increasingly successful electoral formation, the left-right struggle in the PT was increasingly contained within the electoral sphere — the battle over “policy” and for government posts. While right and left PT administrations ran city and state governments, the “Lula” faction of the PT watched on, accumulating experience — learning from the opportunist policies and alliances of the right (e.g., from the PT administration in the city of Ribeirao Preto in Sao Paulo state), and from the mechanisms of “worker participation” developed by the left (e.g., the city of Porto Alegre and state of Rio Grande del Sul).

The latter project could just as easily be used by PT governments to demobilise and co-opt the popular movements. The “participatory budgets”, for example, were first initiated by the left PT government of the city of Porto Alegre 14 years ago. However, despite “democratic” intentions, given that city and state budgets are tied to federal government restraints, the “participatory” aspect of the budgets was only relevant to a small amount of the municipal budget.

This made the entire process susceptible to becoming an exercise in “administrating austerity”, and drawing the attention and energies of the movement away from mass action and toward government lobbying. Not surprisingly, the World Bank took to advertising the “participatory budgets”, and in the 2000, according to the bank, 143 municipalities in Brazil had implemented “participatory budgets”, among them 67 centre-right (non-PT) administrations.

Suppressing dissent

The federal PT government is now drawing on all this experience in co-opting and demobilising the social movements, combining carrot and stick to suppress opposition to its neoliberal program in and out of the party.

At the end of May, the national leadership of the PT voted 13 votes to 7 to submit three of the party's left-wing MPs — Heloisa Helena from the Democratic Socialist (DS) tendency, Luciana Genro from the Socialist Left Movement tendency and Joao Batista de Araujo from the Workers Socialist Current — to a disciplinary commission (known as the Ethics Commission) for taking public positions against various PT government measures and proposals.

Subsequently, Genro and another MP, Joao Fontes, were suspended from the PT's parliamentary bench for distributing a 1987 video showing da Silva denouncing the same measures for pension reform that he now champions. The MPs have also been removed from the parliamentary commissions they were part of.

The heavy-handed tactics of the PT leadership depend on alliances with right-wing parties, religious groups and political notables, which strengthen its hand by publicly isolating the left of the party and discrediting the popular movements against the government's neoliberal policies.

The PT leadership is willing to go as far as it takes to achieve these alliances and keep its hands on government. In late February, one of its right-wing allies — Senator Antonio Carlos de Magallaes — was proved to have tapped the telephones of at least 200 MPs and other political figures. Despite the scandal, when numerous MPs demanded congressional hearings, the PT ordered its MPs to vote against any congressional investigation.

The PT right utilises the entire power and influence of the state and big business to win its agenda. The PT left, on the other hand, confines itself to “internal” party criticisms and is rewarded for its loyalty with marginal posts in government, or worse still, with posts such as the agrarian development ministry, in which DS member Miguel Rossetto has the responsibility, as the minister, to defend the government's failure to implement agrarian reform.

Already, according the March 7 issue of the Argentinian daily newspaper Pagina/12, Rossetto has criticised the MST for resuming land occupations after the election of the PT government. This was after 500 MST women and children occupied the state offices of the Agrarian Reform Institute in Goiania, near the capital, Brasilia, earlier this year, and similar occupations in five other states demanded the government carry through its promised agrarian reform.

As the recently censured PT MP Batista de Araujo said in a May 20 interview with the Agencia de Noticias RedAccion: “The left of the PT is staying quiet, they have criticisms but they don't speak out because they occupy public offices and if they put forward differences they would be exposed.”

Such leftists in the PT may be unwillingly complicit in the government's program, but there are many ex-leftists who are consciously participating in the PT's neoliberal orgy — such as CUT president Joao Felicio — and have been co-opted into various positions as ministerial advisers. Others have been co-opted onto bodies like the Social Economic Development Council, which has 13 trade unionists working with 41 business leaders and is charged with overseeing the “national social pact” that the PT government aims to tie the trade union movement into.

According to Felicio: “We have a certain sympathy for the [neoliberal] reforms, but they have to be negotiated and imposed gradually.”

Looming crisis

Continued neoliberal “reform” is likely to have devastating effects in Brazil, along the lines that it already has had in Argentina. In the 1970s and '80s, both countries built up significant industrial infrastructure and long-term links to the world market. Now these have collapsed. Brazil is also being suffocated by foreign debt — in 1992 its debt represented 28% of GDP; in 2002 this reached 62%. According to UN figures, in 1999 debt servicing amounted to 110.9% of Brazil's exports.

While da Silva won office by promising the Brazilian capitalists a greater share of the cake at the expense of foreign investors, he has instead pursued the sort of unreconstructed neoliberal policies that can only benefit the transnational corporations, financial speculators and their Brazilian hangers-on. At some point, Brazilian manufacturing capitalists will jump ship and leave the PT government to deal with the inevitable social explosion, which may well be more powerful than that in Argentina.

Brazil may be the 11th largest economy in the world, but it's also the most socially unequal country in Latin America. Up to one-third of Brazil's population — 54 million people — live in misery, and 55% of the work force is in the informal sector.

Brazilian industrialists have already started to break ranks with the PT government. Da Silva's vice-president, textile industry capitalist Marcelo Alentar, is emerging as the leading critic of the PT nominated Central Bank president, former Bank of Boston CEO Henrique Meirelles. Alentar concurs with the president of the National Confederation of Industry, Armando Monteiro, who claims that the monetary policy being pursued by Meirelles frustrates industrialisation and favours speculators.

That the PT is already beginning to alienate Brazilian industrialists is demonstrated also by recent comments by Leonel Brizola, the historic leader of the Workers Democratic Party (PDT), one of the PT's allies in the lower house of parliament (where the PT has only 91 of 513 MPs). According to Brizola, quoted in the April 24 issue of the Stockholm Spanish-language paper Liberacion: “[Da Silva's] policy of reform is far too similar to that which ex-president Fernando Henrique Cardoso attempted, and which was thoroughly defeated at the polls.”

As the PT government continues to lose the support of its industrialist allies, it will be forced to rely more on the traditional landed oligarchy. This is why the PT government needs to keep the brakes on agrarian reform.

After his inauguration, Da Silva announced that for 2003 the agrarian reform target was to settle 5500 families on 200,000 hectares of land. According to Petras, with the PT government's agrarian policy, it would take 1000 years to settle the existing 4.5 million current landless families in Brazil.

Da Silva's policy also means that the MST must be kept in check, which is why its occupations earlier this year were met with a clear message from the government that if they continued they would be met with repression. PT president Jose Genoino made it clear that while “lobbying is legitimate … occupations are not”.

The PT left and the social movements in Brazil face the real possibility in the near future of losing a significant base of support to right-wing parties that demagogically oppose the PT regime. The opportunities for developing an independent left alternative to the PT government grow slimmer with every day that the PT left remains trapped in “policy debate” rather than shifting its energies to organising the movement's resistance.

At a meeting of the PT national leadership on March 15-16, the Left Articulation Current and the DS presented alternative policies for government and were defeated, with 54 votes approving the current policy direction of the government and only 13 votes for the Left Articulation proposal and eight for that of the DS.

The DS document demonstrates just how trapped the PT left is. It says that, “rather than question the adoption of specific measures, we want to propose a discussion about the global orientation that is being adopted”. This is exactly the trap the PT right has set — to keep the left of the party engaged in general policy debate while the PT's implements its neoliberal policies.

Meanwhile, the Brazilian working class is left without practical leadership and increasingly ideologically disarmed, as the “workers' president”, the “workers' party” and a host of left intellectuals justify the neoliberal onslaught with discourses about the humble origins of “Lula”, the complexities of the current world order, the negative relationship of forces and every other excuse known to social democracy. n<|>

From Green Left Weekly, June 25, 2003.
Visit the Green Left Weekly home page.

Hi, Hi, Brazil: Brazil's new leader takes an unlikely global role

The Monitor's View
from the June 23, 2003 edition

Brazil is too crucial to the US dream of a Western Hemisphere free-trade zone for Washington to hold a grudge for long. That's why President Bush held a fruitful summit on Friday with President Inácio Lula da Silva, despite Brazil's opposition to the war in Iraq.

"Lula," as he's known, was the first such "opposition" foreign leader to visit the White House since the war. That alone highlights Brazil's central role in Mr. Bush's continuing pre-Sept. 11 vision of a new US partnership with Latin America.

The low-key summit was designed to accentuate the positive. Brazil views itself as a Latin giant standing up to the US on many issues, and Mr. da Silva's leftist, trade-unionist past has the potential to irk the conservative Bush. But both sides stand to gain much if they can strike a deal on a Free Trade Area of the Americas (FTAA). And Da Silva has embraced conservative market economics as necessary to uplifting Brazil's poor. He'll need US support as he juggles the demands of global financiers against pressure for job growth.

The two men launched a number of joint initiatives, and seemed united in how to deal with Venezuela's political crisis. Out of such bonding the US and Brazil can eventually work through their differences.

Brazilian President says Chavez Frias will find a way out of crisis

Venezuela's Electronic News
Posted: Sunday, June 22, 2003
By: Patrick J. O'Donoghue

Brazilian President Luiz Inacio Lula da Silva says President Hugo Chavez Frias will find a way out of Venezuela's political crisis, which has been brewing for a long time. Speaking after meeting US President George W. Bush in Washington for the third time, Lula says he fully supports the recent negotiations agreement between the Venezuelan government and opposition ... "it's an important step forward ... Chavez Frias has enormous problems to solve but he also has the will to solve them."

The Brazilian President points out that Brazil played an active part in the Venezuelan mediation process through its participation in the six-nation (Chile, Mexico, Brazil, Portugal, Spain and the USA) Group of Friends.

Lula da Silva met President Chavez Frias during a meeting of the Southern Cone Economic Community (Mercosur) in Paraguay last week.

The US media has welcomed Lula's visit has positive saying he reminds then of Latin American politicians of the 50 and 60s because of his pragmatism and charismatic leadership. It would appear that the US government is coming round to seeing Brazil as its spokesman in the region, especially given the thorny problems of civil war in Colombia, Cuba, narco-trafficking, defense of democracy and of course, Venezuela's unending political crisis.

Some US analysts are suggesting more caution in US policy, alleging that Brazil has come of age and Lula will pursue greater independence as Brazil attempts to gain economic and political bargaining power in the region turning into an equal partner and possible rival with the USA ... Lula da Silva is backing President Chavez Frias and defending Brazil's economic openings in eastern Venezuela that will have a decisive knock-on effect in the poorly developed Northern Brazil.

Headline: Bush praises Brazil's Lula - BBC -- Detail Story

Hi Pakistan!
US President George W Bush and his Brazilian counterpart have emphasised their countries' common interests despite opposing each other over Iraq and some trade matters.
Luiz Inacio Lula da Silva - commonly known as Lula - was visiting the White House, the first foreign leader who opposed the US-led war on Iraq to do so.

Mr Bush said the relationship between the countries is "vital, important and growing".

The two men announced a series of joint projects ranging from energy to business development in Brazil and fighting Aids in Africa.

"Brazil is an incredibly important part of a peaceful and prosperous North and South America," Mr Bush said as he received Lula for an Oval Office meeting.

The BBC's Steve Kingstone, in Washington, says the left-wing former trade union leader is not a natural political ally of Mr Bush.

He has maintained warm relations with Cuba's Fidel Castro, long a thorn in America's side.

But since taking office, Lula has impressed Washington with a combination of economic discipline and an ambitious long-term programme to combat poverty in Brazil, our correspondent says.

Mr Bush said: "This relationship is a vital and important and growing relationship.

"On a personal prospective I am very impressed by the vision of the President of Brazil. He not only has a tremendous heart, but he has got the abilities to encourage prosperity and to end hunger."

For his part, Lula spoke of a great partnership but it should, he said, be based on sincerity and trust going beyond a few occasional photo opportunities.


The dynamic between the two men is probably the key to this relationship for the next few years, our correspondent says.

Together the two governments are chairing negotiations towards a hemisphere-wide free trade agreement scheduled to come into force in 2005.

The United States is the largest investor in Brazil, with 400 firms and investments of $30bn (£20bn), while Brazil exports some $15bn (£10bn) worth of goods to the US.

With a population approaching 175 million, Brazil is the second largest country in the Americas, after the US - and South America's largest economy.

Lula would like to ensure greater access for Brazil's huge agricultural sector to US markets before agreeing to any trade deals.

Meanwhile, American policymakers are increasingly looking to Brazil for help in resolving some of the most difficult issues between the hemispheres.

These include the confrontation between US companies and Venezuela's Hugo Chavez, and the drug-trafficking issues in the Andes states.

The Brazilian president is accompanied by no fewer than 10 cabinet ministers, in the biggest Brazil-US summit since World War II when President Frank D Roosevelt persuaded Brazil to join the war effort.

UPDATE 2-Bush, Lula agree to closer U.S.-Brazil ties

Fri June 20, 2003 07:58 PM ET
(updates with Lula, State Department official comments)

By Randall Mikkelsen

WASHINGTON, June 20 (Reuters) - U.S. President George W. Bush, the son of an ex-president, and Brazil's Luiz Inacio Lula da Silva, his country's first president from the working class, agreed on Friday to seek closer ties despite deep differences.

They issued a joint statement after their first face-to-face talks since Lula was sworn in on Jan. 1, saying their governments will have regular, high-level, consultations on issues from counter-terrorism to aid for Africa.

"The United States and Brazil resolve to create a closer and qualitatively stronger relationship," it said.

The statement made no mention of the U.S.-led war on Iraq, which Lula strongly opposed, and Brazilian officials said the matter was not discussed.

Warming ties between the two have come as a surprise, and reflect U.S. hopes Brazil can be a stabilizing influence in Latin America as its democracy movement has been strained.

Most of the region suffered a recession in 2002, with Venezuela and Argentina hard hit by economic slumps and political upheaval.

Speaking to reporters after the White House meeting, Lula said relations between the hemispheric giants were poised to enter a new era, saying, "I think this meeting can establish a new framework in Brazil-United States relations."

Lula told Bush he wanted Washington to help fund infrastructure investments in South America. He said the region needed better ports, roads and railways.

Asked if Bush was open to the idea, Lula said: "I think he is going to help."

A State Department official, who was present, said Bush and Lula hit it off well. "This meeting could not have gone any better. I can't tell you what a positive atmosphere there was," the official said.

The countries announced joint initiatives including U.S. support for Lula's anti-hunger program in Brazil, cooperation on energy and fighting AIDS in Africa.

"Without any question, I believe that we can surprise the world in terms of the relationship between Brazil and the United States," Lula told reporters in the Oval Office, Bush at his side.

Brazil and the United States co-chair the Free Trade Area of the Americas talks, seeking a hemisphere-wide free trade zone by January 2005. The joint statement reaffirmed the leaders' aim to conclude negotiations on time.

Lula sounded an optimistic note on FTAA, saying, "I am convinced that we have the conditions in place to break down all the barriers, if we are patient and perseverant."

He repeated several times his invitation to Bush to come to Brazil and Bush said: "Yeah, I really want to."

(With additional reporting by Pablo Bachelet and Jonathan Wright)

You are not logged in