Brazil: recession and corruption

Between April and June 2015, Brazil’s economy fell into recession; GDP contracted 1.9% compared to the previous three months, the country’s worst downturn in 25 years, expected to become the worst since the 1930s. Compelled to find a way out of a deteriorating economic and social environment, the bourgeoisie are using the revelations of one of their own largest corruption scandals to hammer the Workers’ Party coalition government into moving from placating the working class to openly attacking it. Behind this stand the global investors.

To punish the government’s August proposals for a 2016 budget deficit of 0.5% of GDP ($Reals30.5bn or US$8.1bn), Standard and Poor’s aggressively downgraded Brazil’s investment grade rating to ‘junk’ on 15 September. With ‘junk’ ratings, global pension and insurance funds automatically start removing capital from a country. The ratings agency insolently demanded ‘unwavering cabinet support’ for the surplus’s planned by the former investment banker and new Finance Minister Joaquim Levy.

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Workers protest against Brazil’s sports circus /FRFI! 239 Jun/Jul 2014

Fight Racism! Fight Imperialism! 239 June/July 2014

On 15 May protests again erupted against the Brazilian state’s huge spending on the FIFA 2014 World Cup and 2016 Olympic projects. Police attacked demonstrators in 12 main cities, and teachers were joined by bus drivers and street cleaners seeking wage increases in a broader wave of strikes and protests around Brazil. The current demonstrations started on 26 January, with the Anonymous group’s ‘Operation Stop the World Cup’ campaign, when 2,500 protesters marched in Sao Paulo, of whom 100 were arrested. Then on 6 February a cameraman was killed by a police smoke canister in a separate protest in the city. On 22 February, police again fired tear gas and stun grenades at over 1,000 protesters against World Cup spending, making over 230 arrests.

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Brazil unrest: two million join protests in 100 cities

On Thursday 20 June, two million students, unemployed, lower middle class and poor workers demonstrated in 100 towns and cities throughout Brazil against poverty, for jobs, proper state health and education services. This was not simply the culmination of two weeks protests started by campaigners protesting against bus fare increases in São Paulo. Protests took place in August last year in Natal, and then this May and early June in Goiânia where buses were burned and stoned. They now grew dramatically after brutal attacks by police on peaceful protests in São Paulo. Mass demonstrations have now forced the fare rises to be dropped. President Rousseff abandoned a visit to Japan and made a public statement in response to demands for better transport, health and education spending. On 24 June, she opened up the political game by further proposing a referendum on political change. ALVARO MICHAELS reports.

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Brazil: accelerating exploitation / FRFI 218 Dec 2010 / Jan 2011

FRFI 218 December 2010/January 2011

Dilma Rousseff became Brazil’s first female president in the first elections in Brazilian history to be based on full universal suffrage. Following the votes on 3 and 31 October, her Workers’ Party now holds more state governorships than it did under former President Lula (2002-10). His designated successor won 56.05% of votes against 43.95% for Jose Serra (Party of Brazilian Democracy); winning most of the impoverished poor northern and north eastern regions. The central and southern areas voted for Serra.

The Workers’s Party has damped down protests by providing the 11 million very poorest families with the Bolsa Familia – a family allowance of $12 per month or $0.39 per day, per family – tied to attendance by their children in the abysmal state school system. This has created a political balance and social peace which allows foreign investors to buy the country’s resources on a grand scale. The boom in worldwide demand for raw materials over the last six years means more workers are being exploited and Brazil is now the world’s seventh largest capitalist economy, with an official 10% of workers destitute. A loose budgetary policy – Federal State spending is up 18% this year – is aimed at placating a strategic section of the working and small middle class.

Profits are high, the price of land relatively low, wages are low, raw materials are cheap and capital is scarce. High returns attract capital. So an enthusiastic influx of capital from ‘over-ripe’ imperialist states takes place. The inflow of currencies has pushed the Brazilian Real up 39% against the US dollar since the start of 2009. To prevent this influx of currency fuelling speculation, a 6% tax on bond inflows has been imposed, but this has not prevented the worsening of Brazil’s export competitiveness. With the US’s recent second Quantitative Easing programme more dollars have flooded into Brazil. Brazil cannot prevent the continued imposition of usury imperialism on top of the scheme of direct investments.

Despite Brazil being a major exporter of manufactured goods, engineering and technology to South America (dominating trade with Argentina, Uruguay and Paraguay) and Africa, the ratio of raw or basic products exported to its manufactured exports is the highest since 1978.

The destruction of the Amazon forest, as the infrastructure is extended to extract this wealth, is wiping out the remaining indigenous communities, regardless of a facade of legal protection given by Lula.

Continued accumulation of capital puts grandiose ideas into the heads of the national bourgeoisie. It is trying to put an economic distance between itself and the US, disturbing US imperialism, with strong ties to the ALBA nations, and its independent stances towards the Middle East, Iran and elsewhere. In 2009 China replaced the US as Brazil’s largest trading partner. Brazil’s exports to China have rocketed, agricultural products being critical. China’s Sinopec has just taken over 40% of Spanish firm Repsol’s Brazilian oil stake. These changes are eyed jealously by European financiers. The message of congratulations sent to Rousseff from EU president Barroso inevitably advocated the intensification of the 2007 Strategic Partnership between the EU and Brazil. The inter-imperialist struggle for markets of every sort in the ‘developing’ world has not been this intense for 50 years.

Alvaro Michaels