Brazil: drained of its wealth

brazil prison

Brazil’s new coalition government, now shorn of any Workers Party members, has increased the maximum permitted working hours to 12 per day and sharply reduced regulations on temporary worker employment. A widespread attack is underway against the Brazilian working class which is being made to pay for the crisis of a system rooted in the drive for private profit. Meanwhile, Teori Zavascki, the Supreme Court judge running Brazil’s enormous Lava Jato (Car Wash) political corruption probe, was killed as his plane inexplicably crashed into the sea off the Rio de Janeiro state coast, conveniently stalling the investigation.

The ruling class is struggling to contain the economic and social crisis arising from the collapse of its raw material exports. Brazil’s exports declined 5% to $15.94bn in December 2016 from $16.78bn a year earlier, dragged by lower sales of primary goods. Exports have been falling since 2012. The accounts for both the current and capital payments in the national overseas accounts now being negative. The critical factor is the outflow of capital. Brazil recorded a capital and financial account deficit of $627.70m in November 2016. Over 1995 to 2016 capital outflows from Brazil averaged $309m per month, most acutely since 2010. All this goes to feed the imperialist banks.

The Central Bank says that consumer price inflation over the last year fell sharply to 6.29%, after a near 10% rate before President Rousseff’s removal in August 2016. Business claims inflation is currently 4.8%, as the worst recession on record slows prices rises. So on 11 January, the Central Bank cut its policy interest rate by 0.75% to 13%.

This year’s GDP growth is now ‘expected’ to be only 0.5%. With population growth, per capita GDP will fall, continuing the trend from 2013. At an optimistic estimate of 1% GDP growth, the government calculated a budget deficit of R$50bn (US$15.9bn) for this year. This will now be worse. Reacting, President Temer has already pushed through a constitutional amendment, freezing state spending in real terms for up to 20 years and has started weakening pension rights. All workers must pay at least 25 years of social security contributions and retire at 65, yet in 37% of the neighbourhoods of São Paulo city, people have an average life expectancy below 65 years. It is even shorter for the rural poor. Reducing the inadequate and rapidly dwindling per capita expenditure on health care, education and social security puts an entire generation at risk.

At least 794 people in Brazil died of the mosquito-borne diseases dengue, chikungunya and the Zika virus in 2016. The number of dengue cases was the second-highest recorded since 1990, when it was first reported in Brazil. This January, more than 60 cases of yellow fever have been reported, a sharp rise from just seven the previous year, with 32 deaths.

Meanwhile the ‘formal’ employment sector continues to expel labour (more than 116,000 jobs in November) and unemployment rises. On 15 December, Temer announced desperate ‘microeconomic’ reforms including an extra R$5.4bn in lending for labour intensive small businesses from the development bank, BNDES; moves to streamline imports and exports; tax relief measures for workers; and efforts to liberalise credit card rules.

Corruption trials stalled

The enormous Lava Jato corruption investigation has been paralysed for the moment by the death of Teori Zavascki on 19 January. Without his resistance to political pressure there would have been no investigation into a political bribery scheme run through state oil company Petrobras. President Temer should appoint a replacement, but he is being examined for corruption after the construction company Andrade Gutierrez deposited R$1m (£250,000) into the Brazilian Democratic Movement Party (PMDB) general campaign fund in 2014. This was then transferred the same day into Temer’s personal campaign fund. If Temer does not appoint a new judge, the most corrupt Senate since the dictatorship will have the pivotal role. Over one-third of Congress members are currently under investigation for corruption, electoral fraud and other illegal acts, though not all related to the Petrobras inquiry. There are 35 parties in Congress; most exist by milking the system in different ways. Temer’s ruling PMDB, the largest grouping in Congress, is increasingly under siege from the Petrobras investigation. Temer has lost seven officials from his cabinet, including six government ministers, in just over six months - mostly involving allegations of corruption.

The Petrobras scandal is closely linked with Odebrecht, Latin America’s largest construction group. Odebrecht channelled almost $788m to politicians and public officials across a dozen countries, in an unparalleled bribery and bid rigging scheme. This dramatically exposed Brazil’s business establishment for what it is. So far 82 Odebrecht executives (77 of whom are in prison) have struck leniency bargains and named many senators who might vote for Zavascki’s replacement. Still unpublished, that testimony is expected to name up to 200 politicians who took kickbacks, some already publicly implicated in the case. With Zavascki gone, having centralised all the evidence in his hands, the whole Lava Jato investigation could now be weakened.

In contrast to Zavaski, candidates for his post now include Alexandre de Moraes, Justice Minister, friend of President Temer and former Secretary of Public Security in São Paulo state. He used police to end a student sit-in and during 2015 his police killed 412 people in São Paulo city, by comparison more than a quarter of all killings there.

An economy held in the death grip of imperialist finance has created a ruling class determined to make the working class pay its bills so that the military police continue to treat any working class demonstrations as criminal.

Alvaro Michaels


Prison crisis

The social crisis in Brazil means that it has one of the highest murder rates in the world, with 64,357 killed in 2015. Brazil has the fourth largest prison population in the world, around 600,000, mostly men between 18 and 30 years of age, the majority black, with little formal education. With house arrest, the total prison population has reached more than 711,000, the world's third largest. The middle class and the elite are rarely in prison. There are currently 327,000 outstanding arrest warrants, and if all were arrested there would be nearly one million people behind bars.

40% of prisoners are awaiting trial. 23% of those convicted were there for non-violent crimes such as theft, robbery, drug trafficking and fraud. They are held in cruelly overcrowded conditions, with space for only 250,000, forced to take turns sleeping and generally abandoned to run their own affairs, simply walled in by the state, which abdicates any responsibility for the consequences. The absence of a political organisation among or for the prisoners - which the state could not tolerate - means that the vacuum has been filled by the criminal factions. In this way all the conflicts in the criminal world are left to play themselves out unhindered, so promoting violence. Last year in Brazil, one prisoner a day on average was killed by fellow prisoners. The current prison crisis exploded on 1 January, when 64 inmates were killed during a riot at a prison near Manaus in Amazonas. Five days later, 33 prisoners were killed at a prison in Roraima in the far north of Brazil. On 14 January Alcaçuz state penitentiary near Natal in the north-east, saw 26 prisoners killed in a riot. A few much smaller riots occurred in other states, bringing the total number of dead so far in 2017 to 137. State forces have left the prisoners to fight amongst themselves. Dozens of buses were set ablaze in Natal as the poor protested against the government’s inaction. Only after five days did the central government step in with armed force to stop the mayhem. Temer’s Youth Secretary, Bruno Julio, wrote on his personal Facebook page that it was better to let the criminals kill each other. Although he was forced to resign on 6 January, it again exposes the real thinking of the ruling class.

Alvaro Michaels