The IMF and the Brazilian election

International Socialist Review, September/ October 2002

[A reprint of the analysis of Brazils elections by Euclides de Agrela of the Partido Socialista dos Trabalhadores Unificado (PSTU, United Socialist Workers Party) one of the largest revolutionary organizations in that country. Translated by Tom Lewis]


The new agreement between the Brazilian government and the International Monetary Fund (IMF) provides for a $30 billion loan. It also gives authorization to Brazil's Central Bank to use another $10 billion of its reserve fund-which would then drop to a floor of $5 billion-to intervene in the ongoing currency crisis, which has seen the ratio of the real to the dollar leap to more than three to one in recent weeks. Of the IMF's $30 billion, only $6 billion can be used by the present government of President Fernando Henrique Cardoso. The other $24 billion is earmarked exclusively for a future government.

The IMF released the money only because major U.S. banks pressured it to do so. The banks' profits would be jeopardized by any moratorium on the payment of Brazil's external debt. The new agreement amounts to a rope around Brazil's neck. Its purpose is to guarantee that the Brazilian government continues to pay the capitalists who speculate on the public debt, which already exceeds 60 percent of Brazil's gross domestic product. The external debt has climbed to $R 250 billion [$78 billion], while the internal debt has reached $R 750 billion [$236 billion].

In this way, Brazil is increasingly becoming part of the overall reality of Latin America and, in particular, of such countries as Argentina, Paraguay, and Uruguay-Brazil's old partners in Mercosur. These countries have seen a recession seize their economies without any end in sight. Their peoples have been plunged into the most thoroughgoing misery as their reward for following IMF-imposed plans and goals to the letter.

No matter who is elected in October, the next president will inherit the new agreement as a fait accompli-a done deal struck in the waning hours of the Cardoso government. The agreement requires Brazil to maintain a primary surplus (the difference between income and expenditures in the federal budget after deducting interest and payments on the external debt) of 3.75 percent. According to some economists, this figure could rise to 5.4 percent at the beginning of next year, thus requiring even higher spending cuts. Moreover, the IMF is demanding enactment of the last round of reductions in social services, further public sector layoffs, the end of workers' rights, and more privatizations.

There is another issue surrounding the IMF agreement of which the public is aware and which, according to the mainstream press, is one of the demands being made by U.S. Secretary of the Treasury Paul O'Neill. This involves the purchase of 12 supersonic fighters from the Swiss-British-American consortium Gripen in the amount of $700 billion.

The presidential election, in this sense, is turning into a great fraud. U.S. imperialism and the large foreign banks-by imposing the continuation of the neoliberal model on the next government, even before that government emerges from the ballot box-are transforming the electoral process into a mere formality. To the degree that Brazil no longer has the sovereignty to decide its own economic and budgetary policy, it is being converted into a mere colony of the United States-one more "economic territory" in the great empire of the Free Trade Area of the Americas (FTAA).

George Soros's statements in this regard-"there's nothing democratic about global capitalism" and "the people who elect the president of Brazil are U.S. investors"-are being confirmed in the most naked and crude fashion.

Faced with this picture, there exists only one way out that is capable of responding to the interests and needs of Brazilian working people: End payments to the big banks on the external and internal debt, and break off from the IMF and FTAA. Only on the basis of these radical measures will it be possible to establish a sovereign economic policy capable of blocking Brazil's complete transformation into a colony of the United States. This task is not one that the Brazilian ruling class is able or willing to accomplish, because it has sold out to imperialism. Brazil's working class and its poor must carry out the fight against imperialism.

The leading candidates bow their heads

Recently, President Cardoso complied with another IMF demand. The IMF wanted a prior guarantee that any new government would continue to apply its plans and follow its goals. Thus Cardoso called a meeting of the four candidates who were leading in the opinion polls: Luis Inacio da Silva ("Lula") of the Partido dos Trabalhadores (PT, Workers Party); Ciro Gomes from the Partido Popular Socialista (PPS, Socialist People's Party), Jose Serra from the Partido da Social Democracia Brasileira (PSDB, Brazilian Social Democratic Party), the party of the current president, and Antony Garotinho of the Partido Socialista Brasileiro (PSB, Brazilian Socialist Party), a group led by the least important sectors of Brazil's bourgeoisie.

At this meeting with Cardoso, all the candidates-including Lula-promised to uphold Brazil's contracts with the IMF and to pay back the external and internal debts. In other words, they accepted the new IMF agreement as inevitable. Serra, Gomes, and Garotinho are bourgeois alternatives and enjoy the support of different factions within the ruling class. They represent, therefore, variations on a single theme and do not go beyond their more or less declared role as puppets of imperialism, the big banks, and the transnational corporations. But the fact that Lula would accept the inevitability of such an agreement and give his word to abide by it is deplorable. It is the first time in history that the PT has supported an IMF agreement.

Lula's support for the IMF accord represents the crowning moment in a strategy developed years ago by the PT leadership, one which it is has been pursuing tenaciously since at least the beginning of the 1990s. This strategy seeks to "soften the social effects of neoliberalism" through so-called "compensatory social policies" (for example, a minimum wage and scholarship programs). But it accepts the political and economic foundations of neoliberalism: debt repayment, privatization of state enterprises and social services, the flexibilization of social services and worker relations, etc.

This also explains why the PT officially withdrew from the campaign for a national plebiscite on the FTAA, which the social movements have been organizing since the beginning of this year, and which will take place during the week of September 1-7. Contrary to its origin and early trajectory- one recognized even abroad as the late brilliance of a star that has now burned out-the PT openly repudiated independent working-class politics. It reneged on the fight against capitalism and imperialist domination.

The 2002 elections will bring the PT's new face to the surface for all the world to see. It has completely adapted to bourgeois institutions, authored an economic program that preserves the fundamentals of neoliberalism, and allied itself to important sectors of the ruling class. If anyone has doubts about this, one easily verified fact can dispel them: The vice-presidential candidate on Lula's ticket is Jose Alencar, who is CEO of the textile conglomerate Coteminas. Alencar is a member of the Partido Liberal and is acclaimed by the PT's leadership as "the boss that Brazil needs."

For anyone who still has a doubt, we can let Lula speak for himself. In a speech delivered in Sao Paulo designed to calm the financial markets, Lula declared: "No one represents stability as much as I do. No one has the support that I do from the labor movement, from the social and popular movements." Thus, Lula preaches that his candidacy would represent the possibility of a great pact between capital and labor and, therefore, a guaranteed anesthetic against the possibility that the working masses would rise up.

As a party that defended the historic interests of the working class and the need for independent class politics, the PT is dead. In its place there has emerged a new PT, which proposes to govern with and for the big capitalists. Taking advantage of the prestige it won during the decade of the 1980s, when it mobilized and organized workers and unions politically, the PT and Lula now offer their talents as "good negotiators" to the national bourgeoisie and imperialism.

The PSTU in the elections

The PT's current posture is even more criminal in light of the fact that workers have begun to turn their eyes toward the opposition and the left. There is a reason why Lula leads in the polls with 37 percent support, whereas Gomes receives 27 per cent and Serra (Cardoso's candidate) gets only 13 percent. Only weeks remain before the first-round of the elections.

Another expression of the leftward shift in mass consciousness is the growth of the anti-FTAA campaign, which is setting in motion a broad layer of the most militant activists in the social movements. All indications point to more than six million votes being cast in the September 1-7 plebiscite. Yet, precisely as the best militants among the working class and a significant portion of the masses are turning to the left because they are fed up with the economic and social consequences of a decade of neoliberalism, the PT and Lula are undertaking a hard right turn.

For this reason, the PSTU decided to launch the presidential candidacy of one of its own leading members, Jose Maria de Almeida (Ze Maria). But Ze Maria's candidacy was launched only after a fierce campaign to create a Workers Front ticket, headed up by Lula and a vice-presidential candidate from the Landless Rural Workers Movement (MST), with a platform of breaking with the IMF and the neoliberal model. The PT not only refused to embrace this proposal, but it chose instead a major Brazilian capitalist as its vice-presidential candidate. Moreover, it adopted a program that defends the preservation of the "gains" of neoliberalism as a "patrimony" of all the people and not just as "an achievement of the current government."

It was the convergence of these factors that led the MST, in its most recent national meeting, to vote in favor of an independent position in the elections-that is, it will not officially support Lula. There is also growing indignation among activists involved with the left wing of the Catholic church and liberation theology. They accuse Lula and the PT of betraying the project of "structural reforms," that is, of abandoning even the strategy of building a state devoted to the well-being of everyone within the limits of capitalism.

The current political process is opening up a great opportunity in Brazil for revolutionaries to connect with the masses. Significant steps toward rupture are occurring within leading sectors of the PT, a rupture which finds expression through the unions, the student movement, and the popular movements. Today, the necessity and the possibility of building a new party of the working class is openly discussed.

The PSTU is looking to provide momentum within this movement by defending a strategy of socialist revolution and an anti-capitalist, anti-imperialist program. The unity of Brazilian revolutionary socialists, who number far more than those who founded the PSTU itself, would represent a gigantic step forward. It would offer the working class of Brazil a new leadership capable of challenging the PT and its influence over the masses. The possibility of building a new revolutionary party can be posed in the next period of struggle-especially if Lula is elected president.

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