Neoliberalism Brazilian-style

November 21, 2016
Protest against PEC 241. Rio de Janeiro, October 17.

As expected, once Brazil’s October regional elections were over, the Michel Temer government launched a large-scale offensive against workers, youth and the people in general.

At the heart of this offensive is Constitutional Amendment Proposal (PEC) 241, which essentially imposes a freeze on government expenditure for the next 20 years.

Under PEC 241, primary expenses will be kept at the current level for the next two decades, independent of population changes. It will particularly affect spending in health, education, housing, transport and infrastructure. The freeze on investments will remain even if Brazil’s GDP recovers in the future.

This is occurring in a situation where 12 million Brazilians are unemployed, half of the population has no access to clean water or sewage services, hospitals are in disarray and thousands of people have no decent housing.

As politically and economically important as this “PEC from the end of the world” — as the social movements call it — is, it is just the first step of a reactionary offensive that the dominant classes and imperialism had in mind when they organised the coup that deposed democratically-elected president Dilma Rousseff and removed the Workers’ Party (PT) from power.

If the government succeeds in passing PEC 241 in parliament, its next steps will be to pass industrial relations counter-reforms to attack working conditions and trade unions, carry out privatisations and other neoliberal measures.

The PEC needs to achieve a two-thirds majority vote twice in the Chamber of Deputies and once in the Senate to be approved. So far, it has passed the Chamber of Deputies twice.

Contrary to the government’s propaganda, this constitutional amendment will not cut public debt. In reality, it is placing the budget at the service of financial and investment business.

How? The freeze only affects primary expenditure and does not touch the payment of interest and repayments on Brazil's debt, which equates to 45% of the total budget. With primary expenses frozen, any increase in government revenue will go directly to the rich via debt repayment.

PEC 241 is not the only step being taken by the Temer government.

Parliament has already adopted measures that force state governments to freeze investments in order to renegotiate debts with the federal government; introduced changes in oil exploration that benefit foreign companies; and passed education counter-reforms that have increased the casualisation of teaching positions in secondary schools and widened the gap between the level of education received by the rich and poor.

And the offensive does not end there. The government already has in mind further attacks on workers’ rights, including: lifting the age of retirement; rolling back all the gains achieved under PT governments; extending working hours; and taking away the right to overtime, 30 days paid holidays, sick days and family days.

The plan is to take Brazil back to the middle of last century.

The Temer government came to power on the basis of a deep crisis of the PT and received the complete support of the dominant classes and imperialism. Until now, it has also counted on a reasonable level of support from Brazilian society due to its lie regarding Brazil’s “economic emergency”, “uncontrollable debt” and an “unaffordable overextended social security plan”.

In reality, there are two main causes for the crisis and growing public debt. First, Brazil’s high interest rates, which means almost 50% of the budget goes to paying interest. Second, the transformation of Brazil’s economy from an industrialised country to one dependent on the exports of primary products such as minerals, energy and agricultural products.

It is also true that the offensive did not start with Dilma’s removal. The 2014 presidential election, which ended with Dilma’s re-election, featured a fierce propaganda campaign to win over Brazilians to the idea that cuts in public expenditure were essential.

After the elections, Dilma’s Ministry of Economy proposed a limit on public expenses very similar to PEC 241. Even before Dilma’s removal, PEC 241 was introduced into parliament, but the PT and Brazil’s main trade union confederation, the CUT, offered little resistance.

Brazil is witnessing the opening up of a strong reactionary offensive. The reach of the offensive will be dictated by the correlation of forces in the country.

The masses had previously relied on the PT for support in any dispute. Its support was never the best, but the PT always found some way to help.

Now the PT is in crisis, meaning not only is the party paralysed but the CUT, which has always been closely aligned to the party, has stopped doing its job.

In terms of political forces to the left of the PT, the largest is the Socialism and Freedom Party (PSOL), a group formed as a result of a split from the PT when the PT government of former President Lula started to move to the right. For a time, the PSOL seemed to be more focused on its own internal disputes than the class struggle.

Now in the new landscape, it has kept its parliamentary presence and achieved a number of good results in the regional elections. The PSOL could potentially play a key role in regrouping the left.

Another key group is the Landless Workers’ Movement (MST), with its history of resistance and permanent use of mobilisation and land occupations.

Moreover, any national resistance movement can take confidence from the fact that, despite the strong offensive, there are already multiple signs of opposition to PEC 241 throughout Brazil.

The attacks on education have been met with hundreds of occupations by students in several states. More than 1000 schools have been occupied in the state of Parana alone, along with dozens of federal universities.

For now, most of the occupations are happening outside of the political centre of the country, so there remains a need to generalise this resistance to other places. An important next step is extending the occupations to Sao Paulo, the biggest state in Brazil.

For many years, the PT and CUT were at the helm of popular struggles. This time, however, it is likely that the PT and CUT will be largely absent.

However, despite the depth of these organisations’ crises, we should expect to find PT and CUT activists involved in the struggle against Temer.

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