Brazilian president Dilma Rousseff said during June’s countrywide protests: “Peaceful demonstrations are legitimate and part of the democratic process.” She ignored the fact that the country had not seen such massive mobilisation since the end of the dictatorship in 1985, except perhaps in 1992 when people took to the streets to denounce corruption in Fernando Collor de Mello’s government, hastening his resignation. The day before Rousseff’s statement, nearly 200,000 Brazilians had marched in São Paulo, Rio de Janeiro and the capital Brasília, where protesters occupied Congress for several hours. A few days later, their numbers reached nearly a million.
It all began on 11 June in São Paulo when residents started to protest against an increase in bus fares from 3 real to 3.20 ($1.40). There were soon other protests around the country, with demonstrators in Rio de Janeiro denouncing the billions spent on preparations for the World Cup and Olympic Games. The Rio demonstrators were joined by people weary of widespread corruption and struggling to provide their families with decent healthcare and education.
With just a year to go before the next presidential elections, these demonstrations, mainly led by young people born since the fall of the dictatorship, are weakening Rousseff. They are a serious warning for her Workers’ Party (PT), in power since 2003, though at present none of the other parties seem to be benefitting from the movement, which is denouncing all political forces.
For a few years after he took office, President Luis Inácio Lula da Silva could count on strong growth to gradually improve living standards, but when Rousseff was elected in 2010 on a continuity ticket, she faced a very difficult international economic situation. Today Brazil is experiencing weaker growth (0.9% in 2012 compared with 7.5% in 2010) and early-onset deindustrialisation. Exports of raw materials have risen but those of manufactured goods have fallen sharply. The world’s sixth economic power is currently facing many challenges and, despite competition from China, needs to generate a greater proportion of its growth from manufacturing while maintaining the social programmes of the last decade. These not only support domestic demand, but ensure a comfortable electoral base for the PT.
A capitalist shock?
Lula once boasted: “Never before have employers earned as much as under my mandate.” To correct the first signs of failure of this model, Rousseff opted for what the Brazilian magazine Veja has described as “a capitalist shock” to bring Brazil into “harmony with the universal law of gravity” (15 August 2012). Her $66bn programme includes the sale of concessions for ports, motorways, railways and airports, giving the Brazilian Social Democratic Party (PSDB) of former president Cardoso (1995-2002) much cause for sarcasm, since his massive privatisations were fiercely denounced by Rousseff during the 2010 presidential campaign.
Rousseff has certainly not validated the idea of a “capitalist shock” and presents her development strategy differently, claiming that by focusing on industrial production and construction she will kill speculation. She has reduced interest rates, lowered electricity prices by 20-30%, granted tax exemptions in certain sectors, increased taxation on short-term capital to encourage productive long-term investment, and installed a rule of national preference to protect industry by increasing tariffs on many imported goods.
Some of these measures, which the United States has called “protectionist”, have pleased the unions. The government is encouraging businesses to set up in Brazil using local labour. The Taiwanese electronics giant Foxconn now has eight production units there, and is already manufacturing the iPhone 4, with iPods and iPads to follow (1). Foxconn was granted considerable tax rebates and subsidised loans to set up in Brazil. After the government imposed new duties on car imports, Land Rover and BMW also decided to open plants in Brazil.
But Rousseff’s programme doesn’t stop there. She admitted to the Financial Times (3 October 2012) that she wants to deal with the “high cost of labour … and taxation.” Her plan has been influenced by major business leaders, including Marcelo Odebrecht, head of a multinational construction conglomerate, and Jorge Gerdau, chairman of a steel corporation and coordinator of the federal government’s management policies committee.
Up to now the PT could count on support from the two main trade union federations, the Unified Workers’ Central (CUT) and Força Sindical, but the recent demonstrations suggest that popular support for the government is being eroded. Artur Henrique, former president of CUT, has always backed the government but he deplores the fact that after a decade in power the PT “has still not revised the neoliberal policies that dismantled labour relations under former president Cardoso.” Valter Pomar, a member of the PT’s national bureau, said: “We had great success in improving living standards. We have increased wages to boost consumption, in line with market logic: we now earn more… so that we can pay more for private schooling. This strategy does not help in the development of stronger public services or promote political awareness about the importance of the services provided by the state.”
There were no mass demonstrations under Lula, but the economic situation is clearly less favourable to Rousseff, and her own intransigence could prove an additional disadvantage. In 2012 she did not give in to the largest civil servant strike in a decade and succeeded in imposing her readjustment plan for salaries after 107 days of uninterrupted conflict. The unions were asking for pay rises of 40-50% but got 15.8% spread over three years, despite inflation of nearly 6% in 2012. Her only concession was to open negotiations on payment for the strike days. Even so, three army corps did get a 30% pay increase.
Four of the five largest trade union federations, the rightwing Força Sindical, Nueva Central, the General Union of Workers (UGT) and the Federation of Brazilian Workers (CTB), have signed a highly critical appraisal of the government. The CUT was absent during their meeting but eventually rallied around and the unions co-organised a protest march in Brasilia on 6 March.
Is Rousseff questioning the social contract in place with the unions since 2002? And if so, will the Brazilian workers’ movement, which played a key role in the democratisation process and in drawing up the 1988 constitution, be sidelined? During Lula’s presidencies, many political and trade union leaders were appointed to office, which helped create a new government bureaucracy that ensured a social consensus. Rousseff could change her strategy by seeking to consolidate her authority with other social groups, more receptive to the requirements of what Luiz Carlos Bresser-Pereira has described as a “social developmentalist state”.
Rousseff estimates the middle classes at 105 million and wants to build a “middle-class Brazil”. The economist Paulo Kliass refutes her figures and denounces “the trickery which consists of persuading the poor that they are part of the middle class” (2). That illusion is also at variance with the thousands of young people and poor workers at demonstrations who have been shouting “We want a different Brazil”, demanding less corruption and more health and education — not extravagant spending on stadiums.