Brazil: increasing exploitation

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On 12 July, Lula, ex-President of Brazil (2003-2010), was convicted of being gifted an apartment in São Paulo valued at $300,000 by a business contractor. The use of the apartment against Lula was one of five cases prepared against him. This is another huge blow against the Workers’ Party (PT) following the expulsion of Dilma Rousseff as president, and hits its chance of winning the presidency again with Lula in 2018. The PT has called Lula's conviction and sentence ‘an attack on democracy’. Lula has denied all charges and was given leave to appeal and released.

Two weeks before Lula’s sentencing, the same judge, Moro, sentenced Antonio Palocci to 12 years in prison for corruption. He had been a minister in the Lula and Rousseff governments. Palocci was named in the giant corporation Odebrecht’s list of politicians regularly taking bribes in exchange for lucrative contracts with the state oil corporation Petrobras. This ‘Operation Car Wash’ scheme mostly developed when Lula's PT was in power, from 2003 to 2016. $10m of this was directed to Lula’s PT campaign finances.

The last three years of deep economic crisis, working class austerity and political scandals has created a situation where the candidates from the big political parties like the conservative Brazilian Social Democratic Party (PSDB) are widely detested. On 6 June police arrested the former tourism minister, Henrique Eduardo Alves, of the Brazilian Democratic Movement Party (PMDB), charged with bribery in the construction of a 2014 World Cup stadium in Natal. The previous weekend President Temer’s aide, Rodrigo Rocha Loures (PMDB), was arrested having previously been stripped of his congressional seat and consequently of parliamentary immunity, for being caught with a suitcase containing 500,000Reais (over $100,000) of alleged bribe money received from the meat packing giant corporation JBS. It is claimed that he was acting as Temer’s interlocutor with JBS to ‘resolve’ its problems. In mid-June Temer (PMDB), the current unelected replacement president, was acquitted of financial irregularities in the 2014 election campaign, when he ran as vice president, in the Superior Electoral Court by a four to three vote. The day after, he was forced to deny damaging press allegations that the country's secret security service, ABIN, had spied on the justice overseeing the ‘Operation Car Wash’ investigation. He still faces charges of corruption and obstruction of justice. He received a miserable 7% public approval rating in the June opinion polls.

The outright bourgeois parties have to find new leaders fast, but all their key candidates are either under investigation or already before the courts. To maintain their new assault on the working class, the Brazilian bourgeoisie and its imperialist backers have to prevent a resurgence of the Workers Party and are playing every dirty card they can. The present campaign against Lula started at the same time that the removal of Lula’s successor, Dilma Rousseff, was orchestrated by Temer. However, in February the pollster MDA suggested that Lula would thrash Temer if he ran for re-election by a wide margin, 42.9% versus 19.0%. The right had to block Lula, while right-wing politician Jair Bolsonaro, an apologist for Brazil's 1965-1984 dictatorship, makes gains against centrist candidates in the polarised 2018 presidential race.

The assault on workers’ rights

For the Brazilian bourgeoisie and landowners, the crisis can only be resolved at the expense of the workers; the rate of exploitation must be increased absolutely, or the accumulation of capital will continue to stagnate. Three days after Lula’s sentence, on 12 July, Brazil’s Senate approved legal changes that remove unemployment insurance from workers, extend their working hours and reduce holiday periods. The bill that passed in the lower house with 20 articles passed the Senate with more than 100 articles, many never previously even discussed. It becomes law in November. Protesters demonstrated for months in an attempt to block the changes, which will also see workers’ breaks cut to a minimum of 30 minutes instead of an hour. This attack, bourgeois ‘reforms’, also makes union participation optional, and weakens negotiating rules for collective agreements.

If the case against Lula remains open then he can still run for the presidency. On 20 July, in a candidate speech in Sao Paulo, Lula said: ‘There is only one solution for the country: direct elections and electing a president who is brave enough the look people in the face.’

President Temer currently faces corruption charges for allegedly accepting a bribe of $152,000 from J Batista, whose family owns JBS (see FRFI 258). Congress has to approve such a presidential trial. However, on 13 July, with the social ‘reforms’ safely passed the previous day, a Brazilian lower house committee voted on, and found against, putting Temer on trial for corruption. A vote still has to be held by Congress itself and two-thirds of its 513 members are needed to approve a Supreme Court trial, highly unlikely given the Congress’s corrupt and rotten history, dominated by a mix of reactionary parties. Aside from that pending vote, Temer still faces the possibility of further charges, and more incriminating testimony from others under investigation.

The crisis of accumulation

The fight against slave labour is made much more difficult under the new labour laws. The Walk Free Foundation reports some 155,000 individuals suffer slave labour conditions, despite the Labour Ministry reporting that nearly 50,000 workers have been freed from slavery in the country in the past 20 years, mostly from the mining, construction, agriculture and livestock sectors. In urban areas they are often immigrants from countries such as Bolivia, Peru, Paraguay and Haiti, trapped in the clothing and footwear businesses. Low wages are imperative for Brazil’s capitalists. A larger reserve army of labour is central to this condition. Brazil’s unemployment rate has been rising since 2014, reaching an official 13.7% in the second quarter of 2017. Consumption has fallen every year for three years, 3.3% in 2015, 4.7% in 2016 and 0.3% this year (annualised).

Credit Suisse says that the Brazilian banks’ first quarter 2017 results showed that ‘asset quality in the large corporate segment remains on a deteriorating trend’. The reaction to the economic collapse in 2014 left restructured and renegotiated loans which have simply not ‘performed’. The situation has deteriorated constantly since early 2015. Brazil’s banks have retrenched. The level of company borrowing has fallen, as profitable opportunities for investment evaporate. Fewer new loans mean more cash is standing idle and so shareholders intensify their pressure to smash every obstacle to more profitable activities. The intensification of exploitation is a life and death struggle for capital.