Austerity follows
International Viewpoint 26 January 1987
BRAZIL consumer products began to become scarce, like meat and milk, and the bourgeoisie and traders argued that demand was mounting too rapidly and that costs were rising. To the official inflation rate - a little under 2% pe month - was added generalize
November elections speculation and huge queues of customers that formed immediately as meat or milk appeared in the shops.
For many, whether economic experts or trade unionists, it became obvious that the Cruzado plan was
THE NOVEMBER 15 elections in Brazil were a victory for the government and, notably, for the main ruling party, the Brazilian Demo.
cratic Party (PMDB).
The PMDB won around 260 seats out of the 487 that comprise the Chamber of Deputies, and 40 out of 49 seats in the Senate. They now hold 22 of the 23 governor's posts and the big majority of parliamentary deputies in the various states.
JOAO MACHADO
The second largest party is the
Liberal Front (PFL), also part of the ruling Democratic Alliance coalition.
opposition
The only the parties,
Democratic Labour Party (PDT) and the Workers Party (PT), together had
45 deputies and a Senate representative elected. But they didn't win any posts, the PDT losing governor's the Rio de Janeiro state government headed by its main leader, Leonel
The government immediately interpreted these results as approval for its economic programme and the Cruzado economic plan, and as a vote of conficence for the president of the republic, Jose Sarney. This was in spite of the fact that until 1984, Sarney had been the president of the party representing the former military dictatorship, the Democratic and Social Party
(PDS), and that he joined the PMDB in order to be able to become vice- president under Tancredo Neves. (1)
Boosted by the election results, the government introduced some so- called corrections in the Cruzado plan under the name of Cruzado II.
These were announced on November
21, less than a week after the elections.
Violent demonstrations broke out all over the country.
The usually calm capital, saw the biggest demonstration in its history on November 27.
Confidence in Sarney rapidly disappeared. Even many PMDB personalities, including elected gövernors, criticized the economic measures. The PFL has officially stated that it was not consulted.
Taken together, these contradictory events and sharp changes in public opinion prove that things are more complicated than Sarney thought.
There is little doubt that the main reason for the electoral victory of the PMDB and the government in general was the approval of the majority of the population for the Cruzado plan, promulgated. on February 28, 1986. What appealed above all was through a price freeze. The plan also contained measures to freeze wages, but this not seen as important, ever though it meant an "amnesty" or the wages policy of the dictatorship. Wage rises compensating for past losses were expressly forbidden after February 28.
In fact, the contents of the plan regarding wages were overshadowed by the exceptional growth of the economy (prompting businesses to give bigger wage rises than those fore. seen by the plan) and by some governmental measures - light wage increases and a sliding scale of wages to coman inflation rate that
That did not prevent the trade-union movement from fighting on the question of wages. Strikes were numerous in 1986 than in 1985. But they were more localized more scattered and, in consequence, had less social impact than previous year. Furthermore, the government and the bosses adopted a more flexible strategy consisting of giving in to local strikes that had little publicity in the national media, and cracking down hard on the larger, more important strikes. Even compared with the last period of the dictatorship, the repression of strikes was much more severe. This created the impression that there was a strong government and no alternative.
During the last quarter of 1986, things began to change. Some vital no longer working and that the govern. ment was preparing austerity measures which came into force at the end of November.
In announcing these evidently unpopular decisions after the elections, the government tried hard to find some scapegoats for the rampant shortages. They chose cattle rearers, accusing them of hiding the "fat cows". After some negotiations that came to nothing, they announced that confiscations of cattle would begin, and that this task would be carried out by the federal police. This police force, trained during the dictatorship to hunt communists and
"subversives", was not really comfortable with its new job of tracking down the big landowners. This comedy did not get a lot of meat into the shops, but it was great for the TV programmes. Government claims success of Cruzado plan
Likewise, the government made much of the benefits produced by the growth in demand, exaggerating them and saying that they were the result of the Cruzado plan.
A large part of the population therefore had every reason to believe, until the elections, that the Cruzado plan would really be able to end inflation and that all the problems were due to speculators. As for the underlying problems of the Brazilian economy - the foreign debt and the domestic public debt - people had confidence in the government, which claimed that they were under control. The government went as far as holding back the catastrophic figures on October's trade balance until after the elections.
1. Tancredo Neves, the PMDB's candidate, was elected president of the republic on January 15, 1985, thanks to the vote of the majority of an electoral college established by the dictatorship. Dying shortly after his investiture, he replaced by Jose Sarney. On the "democratic transition" in Brazil and Neves' election, see 'International Viewpoint' No. 60, October 1, 1984 and No. 71, March 11, 1985.
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RETURI AGRARIA
There are other reasons for the electoral victory of the PMDB. The most simple is that it was already party in the country large influx of politicians who were Social Party (PDS). For example, governor's posts had been members
To further reinforce these "established advantages"
PFL pushed an electoral law through the congress that was much less democratic than that at the time of the last general elections under the dictatorship in 1982. Free campaign the television and was divided according parliamentary representation. In Sao Paulo, for example, where the Workers Party (PT) had the bulk of its broadin the evening it had 2 minutes and as compared with televised election programme of one
On top of this, as in all bourgeois elections, there was the question of money. The PMDB, the PFL, the PDS and the PTB invested considerable 12 sums in electoral propaganda, out of all proportion to the amounts spent by the PT or even the PDT.
However, the extent of the victory of the PMDB should context. There increase and void votes - 10 per cent for the governor's elections and more than The PMDB has gained the majority in the Chamber without having the majority of the votes.
final factor is that these elections were marked by an overall progression of the Workers Luis Inacio de Silva, "Lula", was the candidate who gained the most votes in the country, with 651,763 votes against 590,873 for the secondplaced Ulysses Guimaraes, president of the PMDB and of the Chamber of support for the government paid off for certain extent for the PFL, the situation is very different for the parties of the left who supported the government, as it also was for the so-called left of the PMDB itself. In general these parties supported the candidates of the PMDB.
For the Brazilian Communist Party
(PCB, pro-Soviet) and the Communist Party of Brazil (PCdB, pro-Albanian), the election was a catastrophe. This isn't hard to explain.
Until 1982 these parties were in the PMDB. They used to criticize very strongly those like the PT who had an independent policy, accusing them of dividing the movement They presented the PMDB as being the guarantors of the "democratic transition". They supported President Sarney, the Cruzado plan and the governor's candidates of the PMDB.
Where the PCB and the PCdB had their own lists, where they did not have electoral coalitions with the PMDB (which did not always accept such coalitions), and where they did not have candidates on the PMDB slates themselves, not a single candidate from either of these two parties was elected. Bad results for PMDB "left"
On the other hand, in a couple of states where the PCB and the PCdB were able to make coalitions with the MDB, they managed to elect two federal deputies The PCdB had an extra candidate elected in a state where it had affiliated to the PMDB. It is probable that this also happened in the case of the PCB.
The Brazilian Socialist Party (PSB), the other lett party that the government, also obtained very practice this organization hardly exists - rather it is a grouping personalities very close to the PMDB. Where it had its own slate the PSB had elected no candidates Where it stood in a coalition with the PMDB, it won two seats, one of which was in the Senate.
In general those who claimed to represent a left within the PMDB got very bad results. It is not yet possible to make an overall assessment of those elected from this party, but what can be said is that practically all those deputies known
"the left of the PMDB" were not left the PT in 1985 to join this party.
This marginalization of the left of the PMDB is logical. It is the sign of of a patronage system in a party that lives mainly off handouts from the government, and which today harbours a large number of old servants of the dictatorship.
In Brazil, the only organizations on the left with any national influence are the PT and the PDT.
Democratic Workers (PDT), weakened by the loss of the International Viewpoint 26 January 1987
International Viewpoint 26 January 1987 government of Rio de Janeiro, still got 27 candidates elected on the federal level. The disillusionment caused by the Cruzado plan II will no doubt help to strengthen it. Finally the PDT has Brizola, or it would be more accurate to say the PDT is Brizola, one of the most charismatic political leaders of the country along with Lula.
The PDT should be considered a bourgeois party, although it is linked to the social democracy of the Second International. The PDT also enjoys a small trade union influence and supports the United Workers Confederation (CUT). But its links with sections of the bourgeoisie are much stronger. It has recruited quite well among politicians of the dictatorship. An example is the president of the PDT in Sao Paulo, Ademar de Barros Filho.
In one of its most important constituencies after Rio de Janeiro, Rio Grande do Sul, the PDT made a coalition with the PDS. This alliance, moreover, was a total failure for it. By this policy it lost many more votes than it won, all the more so because in Rio Grande do Sul the PDT is dominated by the big landowners.
In these elections, the Workers Party (PT) got rather good results, although they were less than the actual possibilities and its social weight in the country should have allowed. Nationally, the PT got around 6.5% of the vote, compared to over 3% in 1982. (2) At the time of the municipal elections in 1985, the PT had an average national vote of just over 10%, but these elections were held mostly in just the state capitals, which makes a comparison that the PT showed a clear growth outside of the state of Sao Paulo, which, in 1982 alone accounted for 71% of the party's national vote. PT's national average of 3% of the vote in 1982 covered up some major fluctuations: 10% in Sao Paulo, 3% in Rio de Janeiro and 2% in Minais Gerais - states where it won some seats. But it took less than 1% of the vote in all the other states.
In 1986, while the PT stagnated
Sao Paulo - although thanks to the rise in blank and void votes it won more seats - its strength grew in the other states. On average, outside Sao Paulo, the PT's votes were multiplied four-fold! The PT has therefore become a national party, and longer essentially just a party of Sao votes in other states in the south-east or south of the country.
strengthened itself even inside some states. It has always been strongest in the capitals and the big industrial towns, but in these elections it also got good results in the small municipalities, getting a lot of Significantly, a number of PT deputies are agricultural workers coming from the interior regions of states.
The Cruzado plan II essentially consisted of price rises, a policy of nearly daily devaluation of the cruzado in relation to the limiting the mechanisms of the sliding and changing the official price index.
The price rises - 60% for petrol, 80% for cars, between 45-120% for cigarettes, 100% for drinks, 25% for sugar and so on - were all accompanied by tax increases on the same products. The government also proficharges for public services - 35% for electricity and telephones and 80% for postal
The change in the official calculations of the price index simply meant no longer taking account of products like cigarettes whose prices had just leapt spectacularly.
explanation given by the government to justify these measures was extremely simple. It was that implementation of the first Cruzado plan, demand grew too fore to reduce it. To achieve this, the government had raised the prices on products essentially consumed by the middle classes because its aim was precisely to maintain income redistributed by the plan. Basic economic problems not tackled
However, this time the people were not so naive as the governthought. Everybody understood that the price freeze was over and inflation had returned. It is wrong only the middle layers also affected the mass of people, and it took a bit of nerve to claim that the price rise for a product such as petrol did not have an impact on everybody understood that the government was beginning a policy of cutting wages the operation sliding scale and changing the method
La common practice under the dictatorship.
could see that the big economic problems of the country were not those that the government
Along with the impossibility of having a real price freeze in the framework of a market economy, the Cruzado plan has not tackled basic problems like those of the enormous external debt, the budget deficit or the internal debt. (3)
Brazil's external debt, which has risen to more than 100,000 million US dollars, obliges the country to pay more than 10,000 million dollars each year simply in interest charges. It has been possible to pay out this amount over the past years because there has been a large surplus trade balance. But to do this the government has had to issue money, thereby aggravating inflation.
With the external debt was mixed up the question of the internal debt and the budget deficit, permanent sources of inflationist pressures. In fact, a large part of the internal debt arises simply out of the need for paying the staggering external debt.
The Cruzado II plan is in fact a recognition by the government of the failure of the first plan. , The only points that they have in common are a refusal to grapple with the problems of the external debt and other key economic questions. Cruzado II is a classic austerity plan, with price and tax rises to reduce demand, wage cuts and other measures to stimulate exports.
A very complex period is opening in Brazil. The governmental parties have complete control of the country at the institutional level, of the federal government and of the states, with an absolute majority • in the national congress, which will have constituent powers. But this government has also lost much of its prestige, and popular trade-union struggles, constant since the beginning of the "New Republic", seem to be on the rise.
Afte tion in Brasilia on November 27, a national day-long strike was called for December 12. This was relatively successful, National Information Service (SNI), nearly 10 million workers were on strike. The national trade-union federation, the CUT, claimed 25 million strikers. This was the first ever general strike in Brazil.
But if the social movement is growing, so is the repression. The police moved hard against the 24hour strike, notably making a number
Sharpress COnfrontheading for some
sharp class confrontations.
These percentages do not cor respond to the percentage of those electer because the electoral law gives advantages to the strongest parties and the most under. populated states.
One the elected camp and the results in 1982, No. March 1 1982 and No. 17, November 15, 1982.
the debt question in Latin America, see the article by Ernest Mandel in 'IV' No. 98, May 5, 1986.
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