Brazil After the Elections

Antonio Martins

This article first appeared in English in the November, 1994 issue of International Viewpoint, translated from a Brazilian publication Brasil Agora. It is abridged here for space. This was part of a set of articles published by IV, analyzing the reasons for the electoral results in Brazil and documenting the sharp post-election debates inside the PT.

THE NEW PRESIDENT, Fernando Henrique Cardoso (FHC), will try to ensure that no one remembers what he has said in the past. Politicians will make speeches, and the conservative press will publish articles on a daily basis, exhorting the left either to join its efforts to those of the government or to exercise”moderate opposition.”

FHC needs left-wing support if he is to carry out his program. Two year after the impeachment of former president Fernando Collor, the Brazilian ruling class still clings to the deposed president’s program. Collor tried to apply it by force, and failed; FHC, around whom has grouped a conservative coalition the like of which has rarely been seem this century, will try to apply it through consensus.

The new president, elected thanks to the fleeting stability provided by the Plan Real [the currency stabilization program developed by Cardoso while he was finance minister — ed.], will try to avoid at any cost his plan letting in water in the first few months.

To control inflation, the intention is to maintain high interest rates, which will lead to the transfer in 1995 of almost $10 billion (U.S.) from the Treasury to its creditors in the “financial markets.” As in recent years, repayment to the large monopolies will be achieved at the cost of a sharp fall in state investment in Brazil’s infrastructure, particularly in health care and social security.

Attracting Foreign Capital?

This is still not enough for FHC. Finance Minister Ciro Gomes admitted, at the International Monetary Fund annual meeting in Madrid, that the Real will not survive without “structural reforms.”

FHC and the forces which brought him to the presidency are dependent upon a large influx of foreign capital, to permit them to launch an ambitious investment and modernization program. Outside money will enter in large amounts only provided that it can swallow up the most lucrative nationalized industries.

FHC is ready to deliver them to foreign capital. He openly supports “flexibilization” (which is more advantageous for foreign investors than privatization) of the state oil and telecommunications monopolies.

He is equally ready to remove from the Constitution those Articles protecting mineral resources, and to privatize the extremely lucrative mining operation in the state of Vale do Rio Doce. Nothing of this kind, however, can be carried out without Constitutional reform.

The first two attempts to revised the Constitution in 1993-944 (the first led by Collor, the second by a coalition from the ruling class) failed in the face of the consequent mobilization by unions whose workers were most likely to be affected — particularly those representing oil and telephone workers.

Foreign capital could also enter in the form of investment by multinational companies. From the neoliberal point of view, however, Brazil is light years behind Asia and Europe and even other countries in South America where multinationals already operate.

If they are to be attracted then workers’ social rights must be swept away, by removal of rights inscribed in the labor law and in “flexibilizing” the way in which work is organized. This is a route taken some years ago by Spain, where the most visible result is an unemployment rate of around 25% of the active population. Are Brazilian workers ready to accept such “modernization”?

An Unstable Ruling Coalition

The difficulties for the forces that won the election begin with the differences which exist within the dominant sectors. The right, the center, the archaic and the “modern” sectors of big business united to beat the PT’s candidate Lula in 1989 and again in 1994.

These forces have been incapable, however, of sustaining the “Collorido” program, and it is far from certain that they will unite behind FHC. Will the big employers, who have drawn upon the postwar model of development [with its considerable state involvement — ed.], cede graciously to those who want to ride the neoliberal wave?

Are parties such as the center-right PDMB and the right-wing PPR (to which most politicians belonged during the military dictatorship), which have a significant number of parliamentary deputies, ready to share responsibility for unpopular government measures without sharing in the benefits of power?

Committed by his own program to inflicting serious defeats on workers and to complex negotiations with sectors of the ruling class, FHC needs the support of the PT and other left-wing parties, while not actually requiring their participation in government.

If it proves possible to domesticate the forces of the left, to push them into being merely a fragile and cosmetic opposition, and to convince them not to contest structural reforms, then it will be possible to give an air of legitimacy to unpopular government plans, and to force the support of the conservative parties which are not in FHC’s victorious coalition.

ATC 55, March-April 1995