Brazil - Neo-liberalism on the rocks
Brazil is embroiled in a major political crisis. The current government of Cardoso is desperate to achieve two things – to maintain a stable neo-liberal economic policy and prevent a victory for Lula of the Workers Party (PT) in next years presidential election.
But years of comparative stability could well be coming to an end. The roots of the crisis go a long way back and relate to long term unresolved problems.
President Cardoso has been in office for seven years. He came to power on the basis of an economic recovery package which he had formulated as Finance Minister under the previous administration. This package has been largely successful and has resulted in sustained (if limited) growth for business, and affluence for the middle class.
This provided the basis for Cardoso’s clear victory over Lula in the 1998 election. A new currency had been stabilised, ending years of monetary and inflationary chaos, and regular industrial growth had been achieved.
This economic programme enabled Cardoso to hold together a parliamentary bloc of three of the four main bourgeois parties, which collectively overwhelm the legislature. The PT, the largest opposition party, has half the seats of the smallest of these parties. And some of the opposition is to the right of the government.
But now this political and economic settlement appears to be unwinding. Why? What are the pressures pulling it apart?
Firstly, there are growing regional economic problems. It could be argued that the MERCOSUR trading block of Brazil, Argentina, Uruguay, Paraguay and Bolivia has collapsed.
>From Brazil’s point of view this organisation served two main purposes. It provided a regional market as a bedrock for economic growth, and with Brazil as its leader it was adding to Brazil’s influence as regional leader.
Some economists always argued that it was never going to succeed. Be that is as may be, but the rise of the Free Trade Area of America (FTAA) as a central plank of US strategy in the region is the political fact behind MERCOSUR’s problems.
The US has been able to capitalise on Argentina’s on-going financial crisis to disrupt MERCOSUR. The Argentine currency is now tied to the US dollar and its debt crisis has been temporarily relieved by a US supported restructuring. A bilateral trade deal between the US and Chile has drawn Chile away from MERCOSUR.
The US is acutely aware that Brazil is potentially strong enough to frustrate some of its regional domination objectives. It is probably no coincidence, given the threat that the FTAA poses to European Union trade in the region, that Tony Blair is on his way to Brasilia in August.
At the same time as these regional economic problems, the Brazilian energy industry has gone into crisis. Crudely this is due to lack of water in the country’s hydro-electric schemes.
To avoid periods of power cuts, industry and domestic consumers are being given consumption targets, with financial inducements and the threat of cut offs, to induce action. If the target of between a 15% and 25% reduction for industry is to be achieved it is hard to see how a fall in economic growth can be avoided.
However, as much as there is a water shortage in the economically key south and south east, the lack of investment after the industry was deregulated is seen as the root cause of the problem and the government is taking the blame for lack of planning.
Its planned boost to energy supply, power plants driven by Bolivian gas, won’t be functioning for four years. The energy and MERCOSUR crises have caused the currency to lose 20% of its value in six months.
Additionally, the surcharge system being introduced to cut domestic consumption threatens the affluent middle class with enormous bill increases and cut offs. As these people are the basis of the political settlement this is a very dangerous strategy.
One state governor is saying he will not implement the policy, some softening has already taken place and a string of legal actions are in the courts. At present the middle class is achieving its targets but many don’t expect this to last. Cardoso will take the blame even if he is successful.
The continuing rise of the workers, peasants and indigenous movements threaten the bourgeoisie’s neo-liberal project. We are not on the verge of some pre-revolutionary crisis, but there is a high level of popular mobilisation and the PT’s electoral strategy is continuing to make progress.
The PT has been very successful recently in heading up popular revulsion at the continuing revelations of corruption at the highest levels of government, and the demand for a major parliamentary investigation.
One of the problems for this bourgeois democracy is that the workers and peasants are chronically under represented in the legislature, which in and of itself posses an extra-parliamentary threat to the existing settlement.
The PT (and its linked trades union confederation, CUT) emerged at the end of the seventies from the struggles for democracy and workers and peasants rights as the military dictatorship went into decline.
It has remained the leading left party since. Within the PT itself there are a range of different currents and strategies for change – which merit more discussion than is possible in this article.
The PT is not the only opposition party, there are a whole array of ‘left’ opposition parties including various Communist Parties and populist and socialist parties with much longer histories.
However the PT is currently the most dynamic left force and the popularity of Lula, its presidential candidate, is far wider than the party’s base. He currently heads the presidential opinion polls – though interestingly, in the Federal District, the only state he won in 1998, he is well behind the Popular Socialist Party’s (successor to the Brasilian Communist Party) candidate.
Cardoso has just made a move to contain market worries about the threat of the PT winning the presidency. He has played down the threat by saying they are very responsible in the states and municipalities which they control (which is true), and he would be willing to go into coalition with them.
While this may just be politicking, he could be working on sections of the PT. The rest of the left in Brasilia is already refusing to support the PT Senate candidate as being too far to the right, and he is talking about winning votes in the centre.
Mario Covas, recently deceased ex-governor of Sao Paulo state, and co-founder of the Social Democratic Party with Cardoso, supported the PT for the mayorality of Sao Paulo city last year
Brazil’s bourgeoisie is riddled with geographic, economic, party and personal rivalries. After the economy (and as a result of his success there) Cardoso’s greatest success has been the creating and holding together of the bourgeois bloc in the parliament.
All the bourgeois parties have their roots in the ‘official’ pro-government and opposition parties of the military regime (1964-88). Cardoso’s Social Democratic party was a split from the ‘opposition’ after the end of the dictatorship.
Ever since independence in 1823 Brasilian politics have been dominated by attempts to overcome regional rivalry and separatism and create a national politics. Barring Communists and Fascists there were no national parties until 1945.
Local bosses and their often corrupt entourages still maintain control over ‘their’ legally quite autonomous states. Transfers between political parties, as politicians follow power and money, are frequent.
Power and wealth are a lucrative chicken and egg story for those at the top. The current corruption scandals, which have prevented the Senate from functioning for months, are entirely due to rivals falling out and pointing the finger at each other. The original row was over who would chair the Senate!
While Cardoso has now been able to name his own party’s candidate for next year’s election, he is far from sure of reuniting his ruling bloc around him.
The state governor who won’t implement the energy rules might stand. The leaderships of both the other main parties are considering their own candidacies, and to put it mildly, openly hate each other.
Next year’s elections, particularly the presidential, are affecting all the current administration’s calculations. Will they be able to rectify the power supply industry in time? Can Cardoso use his weakening authority to put together a stable bourgeois succession?
The corrupt squabbling in the Senate is potentially discrediting the existing bourgeois leaders. Can new ‘honest’ faces be found?
The corrupt nature of Brasilian politics is threatening the neo-liberal project. The Liberal Front leader, in his speech announcing his enforced resignation from the Senate, accused Cardoso of accepting corruption at all levels in Government.
The vast majority of the population see honesty as the main prerequisite of any new President. Can the bourgeoisie find such a candidate? We will see.