The Neoliberal Coup d’Etat in Brazil

Dilma Rousseff, Brazilian president from the Worker’s Party, was suspended and replaced by her vice president Michel Temer, from the officially non-ideological Democratic Movement Party (Wikipedia). The charges that the senators levied against Rousseff is her involvement in a corruption scandal of Petrobras, the major Brazilian oil corporation. Strangely, however, she is not directly implicated in those scandals (WSJ 2016), which could mean that she lets other people do the dirty work, and she can at most be incriminated for having knowledge of corruption but not doing anything about it.

But we know that it is impossible that corruption is the main reason for the ongoing impeachment proceedings against Rousseff. The reason is that the newly appointed president Temer is not less corrupt than Rousseff. Temer is also unpopular, as only 1 or 2% of the voters are willing to support his leadership (Reuters 2016). Temer is accused of taking 1.5 million US dollars in bribes from a construction company that contracted with Petrobras. And that is just one of the dozens of allegations that are waged against the current president. Even worse, 60% of all the parliamentarians, who are supposed to prosecute president Rousseff, are also under corruption investigations, including the speaker of the House and the president of the Senate (detailed allegations can be found in FoxNews 2016). The people, who are supposed to carry out the Rousseff investigations are themselves very corrupt politicians, which reduces the credibility of the entire investigation. It can’t be corruption that these politicians are concerned about, but finding a pretext to get rid of Rousseff, a democratically elected leader of Brazil (as even the Economist 2016 argues).

I do not mean to blindly defend Rousseff, as there are many people on the streets, who are justifiably upset about corruption, a declining economy (GDP declines to 1.7 trillion in 2015 from 2.6 trillion dollars in 2011, Statista), rising inflation (over 10% in 2015 compared to 3% in 2006), growing unemployment (at nearly 11% compared to 8% in 2015) and rising budget deficits (from -3% in 2013 to -10% in 2015) and debt (from 52% in 2013 to 66% in 2015- all Trading Economics).

But it is questionable what the agenda is behind the politicians, who want to get rid of Rousseff as quick as they can. Temer is a trained lawyer with friendly ties to US corporations and acting as a spy to the US embassy (see Wikipedia and footnotes that direct to Wikileaks cables). His finance minister is Henrique Mereilles, a trained banker and former central bank chief, who has noted his preference to “not raise taxes” and emphasizing the “priority to balance public finances” (WSJ 2016), which basically means austerity for the masses. His appointment has resulted in the rallying of financial markets in Brazil (Bloomberg 2016), revealing the confidence that the investors have in him to carry out the neoliberal program of austerity for the masses and payoff to investors. Deutsche Bank already predicts that Petrobras, steel, bank and commercial property bond rating will substantially improve with the new government at the helm (Reuters 2016). The new chairman of the central bank, Ilan Goldfein, is an adviser to the IMF and the World Bank with a PhD from MIT (Ynetnews 2016), thus ensuring the continuity of anti-inflation monetary policy.

This new government consists only of old white men as opposed to the more diverse cabinet of Rousseff (RT 2016). But that is by itself not a problem as long as their policies are halfway consistent with the needs and interests of the ordinary Brazilian people. We can already see signs of that not being the case.

Rousseff’s ouster was nothing short of a neoliberal coup d’etat, because Temer was very quick in announcing measures to privatize postal services, transport, power and insurance companies that are currently held by the state to raise sufficient revenues to reduce the budget deficit. This is a move that was never contemplated by Rousseff (Fortune 2016). The selling-off of state assets during a financial crisis results in very low selling prices, which promise substantial profit for private investors, while both the state and the public users of these services lose out in the form of lower state revenues, higher consumer prices and lower quality of services. That was the experience of post-Soviet Russia, which sold highly valuable state companies for dumping prices to oligarch cronies in the 1990s.

The second part of Temer’s policy involves cuts to pensions and axing the civil service by 4,000 employees (Buenos Aires Herald 2016). It is not clear how these workers, who will lose their jobs, will be added onto the private sector payroll, when the overall unemployment rate is increasing. Some people might claim that new employment is created by reducing the tax burden on businesses. If the government was serious in its intentions to curb the budget deficit, it will not reduce taxes, and so there is no net benefit for private companies, who see no reason to hire new workers anyway. As far as pension cuts are concerned, one can only imagine what would happen to senior poverty if people had to work more years and/ or face lower pensions. Many of the gains of the previous government, including a reduction of absolute poverty by 28 million people (!) or 15% of the total population (Rio Times 2012), could be reversed if the investor-friendly austerity mantra gets implemented.

If Rousseff’s ouster were only about corruption, we could expect that the caretaker president would keep the economic policy steady, but the fact that he does not shows the neoliberal intentions of the new government. Temer is given 180 days in the constitution to rule as he desires. People are not happy about the new government, but they might still be surprised about these chaotic political events and don’t know what to expect from the new government. That is probably the reason why the new cabinet tries to enact their “painful medicine” (as if neoliberalism were a cure for anything) as quick as they can before people on the streets restore another left-leaning government.

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One Response to The Neoliberal Coup d’Etat in Brazil

  1. santoculto says:

    Your text was reasonably correct and ponderated at least here

    ”This new government consists only of old white men as opposed to the more diverse cabinet of Rousseff (RT 2016).”

    I don’t know about you, but i don’t care about this ”representativeness”, i care about honesty, kindness and intelligence, with or without so-called ”diversity” = less-white men.

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