World in View: Brazil meltdown opens a door to Right

May 18, 2016

From the May-June 2016 issue of News & Letters

by Eugene Walker

Brazil is in a dysfunctional meltdown. President Dilma Rousseff has just been impeached and will possibly face trial in May. The web of political corruption and scandal involves hundreds of companies, politicians and party functionaries. It has in one form or another existed over decades, but metastasized in the most recent period.
The state oil company Petrobras collected millions of dollars in bribes from construction companies like Odebrecht, which then obtained lucrative contracts. The money was funneled into the ruling Partido dos Trabalhadores (PT, “Workers Party”) election campaign. In the impeachment case, Rousseff is not directly facing charges of graft. She is accused of using money from public banks to cover a budget gap as the Brazilian economy imploded. However, before she was president, she headed Petrobras when the corruption was taking place.


The present impeachment upheaval has less to do with stamping out corruption than with an effort to shift power by lawmakers with questionable records themselves. Some 60% of Brazil’s 594 members of Congress face charges for bribery, electoral fraud, illegal deforestation, and even kidnapping and homicide.
In the most immediate sense the crisis is about the collapse of Brazil’s economy, including mismanagement by the ruling PT. Falling commodity prices devastated the rapid economic growth that occurred during Luiz (Lula) Inácio da Silva’s second presidential term (2006-10) and in Rousseff’s first term (2010-2014). Prices of Brazil’s main exports—iron, soya, oil—have collapsed. Millions of jobs have been lost with unemployment almost 10%.
In the Lula years, millions were lifted out of extreme poverty with the Zero Hunger welfare initiative. Now millions, including from the middle class, are returning to poverty.


The collapse of the economy combined with the corruption scandals has opened the door for the emergence of a growing right wing in Brazil. Millions have taken to the streets in protest against the Rousseff-headed PT administration. The impeachment proceeding has been called, with some justification, a neoliberal attack by politicians and corporations even though the PT administrations of Lula and Rousseff have worked hand-in-glove with private capitalism.
We must look beyond the corruption scandals and the collapse of the economy to the problematic rule of the PT. When Lula finally came to power in 2002, it was because of the power of social movements—particularly workers in trade unions as well as peasants in land seizure movements and urban dwellers. For millions, the PT was the hope of a more just society moving toward socialism. But the Party leaders had other intentions.
To his credit, Lula launched a serious and successful campaign to greatly reduce the level of poverty by increasing the minimum wage, income was transferred to the poor and credit was made available to the lower and middle class—all made possible because the Brazilian economy was taking off.
However, Lula’s economic model was no alternative to capitalism. It was neoliberalism with a large state presence: the state’s control of oil with Petrobras, its presence in huge pension plans and banking, its ability to offer close collaboration with private capital.


At the same time the social movements that had brought the PT to power were weakened, absorbed into the state’s projects or marginalized. Today, with a depressed economy and vast corruption, the social movements are faced with the challenge of beginning anew, independent of the state rule of the PT, while facing an energized reaction from the right.
Far from providing an alternative to capitalism, the present moment in Brazil demonstrates the severe limitations of a “progressive” government unwilling and unable to break free of the confines of capitalism in its private or state manifestations.



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