For those who have worked for over 20 years to build what is considered the largest left party in the world, the new Lula government in Brazil is simply frustrating.
As the new Brazilian government completes six months, many voters few betrayed by the PT, the Workers’ Party. However, some of its surprising conservative policies were very clearly announced during the electoral campaign even though most leftist voters didn’t pay attention to it, perhaps hoping that its conservatism was merely rhetorical and that the party’s leftist tradition would triumph over the new pragmatic neoliberal trend. Unfortunately that was not what happened.
More Conservative than Conservatives
The PT is a very plural left party with several internal trends it, from social-democratic to trotskists. The dominant trend today is the most moderate and it has an understanding that right now in Brazil the left and the workers do not have the strength to make radical changes, so their strategy is to make a few reforms aiming at consolidating and improving the economic and political condition of workers so in the future, bolder changes could be made.
They understand Brazil is very dependent on foreign investment (most of it of a speculative nature) and that this situation imposes limits to even mild reforms. With that in mind the very first task was to calm down the markets and gain the trust of foreign investors. For that, the PT had to adopt a very conservative agenda so as to prove to foreign investors that they were “serious”.
Actually, pressure from the market started a year ago. During the electoral campaign, the prospect of victory by the PT caused turbulence in the market and a new IMF loan had to be arranged to diminish dependence on speculative money and soften the crisis. So the government and the IMF set up a huge 30.4 billion dollar loan (the largest IMF loan ever) that had to be signed not only by the government whose office was expiring, but also by all major candidates who were running, including Lula. So, before actually wining the election, Lula committed to the IMF and its ultra-orthodox macroeconomic policies.
IMF Imposed Reforms and Policies
The International Monetary Fund imposes orthodox policies on poor countries by creating conditionalities to issuing loans. Brazil’s previous government and Lula as a running candidate accepted several conditionalities for the 30 billion dollar loan including the commitment to keep high primary surplus (to pay for public debt) and the commitment to make tax and pension reforms to diminish state expenses and “increase the flexibility of the central government’s budget”.
The need to gain trust from markets made Lula voluntarily raise the primary surplus above the value established with the IMF going from 3.75% to 4.25% of the GPD. That’s an additional 0.5% of the country’s GPD that was supposed to be spent on social issues and are paying banks to assure the trust of the markets!
Besides that, in further letters of intent to the IMF, Lula has committed to doing tax and pension reforms. The pension reform is now about to be voted in Congress and has put over 400,000 workers in the public sector on strike. The reform takes away workers’ rights, increasing the age for retirement and taxing and diminishing payment for retired workers. While workers fight pension reform, tax reform is sent to Congress quite unnoticed. The tax reform changes considerably the tax structure of the country and in accord with the IMF aims at increasing flexibility of the budget so as to reduce funds earmarked for social expenses.
While the government keeps the neoliberal agenda, social movements try to resist. About 60% of workers in the public sector are on strike despite the propelled state propaganda saying their rights are “privileges”. Besides public sector workers, landless and homeless workers are also struggling. The situation in the countryside is very tense and corporate media is making a lot of noise out of the occupations carried out by social movements, especially the MST.
The MST, the Landless Workers Movement is a movement that fights for agrarian reform by means of direct action. The MST locates and occupies unused land and pressure the government to expropriate it for agrarian reform. It is the nightmare of landowners who keep land for speculation. As occupations increased in the past two months, land owners have formed militias to fight the MST (43 people died in rural conflicts last year) the mainstream press has been doing an intense campaign to criminalize the movement saying MST actions violate the law and hurt the democratic state. Government has joined this discourse saying it will not stand groups who violate the law.
In the urban areas, several groups have also made use of occupations to pressure the government to give housing to the homeless. On July 18, three hundred workers squatted a large 42-acre urban land owned by German car company Volkswagen. Later that week, about seven thousand homeless workers joined them. The terrain was formerly public land donated by the federal government to corporations to create jobs in the 1950s. For the past four years the land now owned by Volkswagen has been unused and not only the terrain wasn’t generating any job, but Volkswagen itself was facing a workers’ strike due to job cuts in its factory.
Corporate media has turned the actions of homeless and landless workers into a serious social crisis. This has forced the government to give repeated statements saying movements shouldn’t use tactics that violate the law and that their radicalism is blocking (their) left agenda. According to the Lula government, all the movements should do is wait.
When faced with simultaneous pressure from the rich and powerful and the social movements, the Lula government has always sided with the status quo.
This has happened not only with public sector, landless and homeless workers but with consumer groups protesting abusive escalation in bills by energy and telephone companies; alternative media groups protesting the closure of two thousand free and community radio stations with the support of media corporations, and consumer and ecology groups protesting the legalizing of genetic modified crops with the support of Monsanto and big farmers. All this has allegedly been done to gain political stability and the confidence of the markets.
These conflicts are teaching social movements that they should do what the rich and powerful have always done to retain power: apply direct pressure. Quite slowly, they are learning that merely building a political party and putting it in power is not a guaranteed solution to problems and that without a powerful mobilization of civil society we will never get the radical transformation we seek.