BRAZIL
Protests begin against IMF austerity measures
By Molly Charboneau
On Oct. 15, Indians from several nations in Brazil
demonstrated in the capital against a harsh government
austerity plan that has been imposed by the International
Monetary Fund in exchange for $30 billion in loans to the
Brazilian government.
Warriors from the Kaiapo tribe demanded that frozen federal
funds be released for essential food and medicine. "We believe
that the government cannot put Brazil's 215 Indian nations on
the negotiating table at the IMF," said Marcos Terena, a Terena
tribal leader.
The Indigenous peoples' demonstration is the first of what
will likely be many protests over some $25 billion in severe
cutbacks and layoffs demanded by international finance
capitalists to secure their Brazilian investments.
With a capitalist economic crisis sweeping the globe, the
imperialist bankers and CEOs fear Brazil's $800 billion
economy, the world's eighth largest, may be the next to crumble
due to "contagion"-foreign investor flight. The stakes are high
for U.S. finance capital. Brazil purchases nearly 20 percent of
U.S. exports, and thousands of U.S.-owned factories are located
there. So the IMF is preparing a loan package for Brazil, but
extracting a stiff price in return.
Background to financial crisis
The fifth largest country in the world, with 163 million
people, Brazil accounts for 45 percent of goods and services
produced in Latin America. Over the last four years, under
President Fernando Henrique Cardoso, the Brazilian government
lowered inflation from over 2,000 percent to about 4 percent
and introduced a new currency, the real. But all of this was
dependent on large inflows of foreign capital.
In fact, Cardoso became president by allying his Social
Democratic party with conservatives and embracing "neoliberal"
or imperialist policies. These included further opening the
country to foreign finance capital, privatizing state-owned
companies and reducing the role of "big government." In other
words, increasing exploitation and cutting social spending won
by the workers-sort of a "Contract on Brazil" like the
"Contract on America."
The world financial crisis began affecting Brazil in 1997.
The country's trade deficit rose because it could sell fewer
exports in Asia. Cardoso raised interest rates to 50 percent to
keep foreign investment in Brazil, but this brought the economy
to a standstill.
Unemployment climbed as high as 18 percent in some
industrial areas, according to Brazil's unions. Food prices
skyrocketed. Landless farmers, hard hit by drought, ransacked
food stores and liberated food shipments to avoid starvation.
The government deficit grew to $100 billion or about 8 percent
of gross domestic product. The gap between the wealthy and the
poor is now the widest in the region.
Hemorrhage of $2 billion a day
In August, Russia devalued its currency and defaulted on
foreign loans. Fearing similar losses in Brazil, finance
capital began to flow out of the country at the rate of up to
$2 billion a day-roughly $29 billion so far. Foreign reserves
were drained, threatening a devaluation of the real.
Devaluation would mean fewer U.S. goods could be bought in
Brazil, not to mention a pay cut for all Brazilian workers. And
the Brazilian government, companies and banks could not afford
dollar debts, meaning foreign debts might not be paid.
Under heavy pressure from imperialism, the Brazilian
government has been scrambling to replenish foreign reserves.
The government has auctioned off lucrative state-owned banks,
businesses and utilities-built by the labor of Brazilian
workers-for hard currency.
The government has also gone to the IMF for a bail-out
package. Lula da Silva of the Brazilian Workers Party accused
Brazil's finance minister of asking for "the IMF's blessing on
his knees." In return for the IMF loans, the Brazilian
government promises to take back billions of dollars in
educational, health and social service benefits from the
workers.
Planned "structural adjustments" include forcing civil
service workers to be evaluated and fired if they fail their
reviews; cutting and capping social security and pension
benefits, and requiring workers to contribute more to them; and
passing along more costs-including costs for health care and
locally distributed social services-to state and local
governments.
"The budget adjustment will be dramatic, definitive and
permanent," promised an aide to Brazil's central bank
president. But Brazil's workers, landless farmers, Indigenous
peoples and other oppressed, with their rich history of
struggle, will not be passive spectators to this wholesale
robbery.
This article is copyright under a Creative
Commons License.
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