The crisis in Brazil and the impeachment of President Dilma Rousseff

On Oct. 24, 2014, the Workers Party (PT) candidate Dilma Rousseff was returned to office with more than 50 million votes (52 percent) in a runoff election for the presidency. In April 2016, with her popularity as low as 12 percent in some polls, Brazil’s parliament voted to begin a process of impeachment against Rousseff that culminated in her temporary removal from office a month later.

Her fate will be decided in a few months by a vote in the Senate following a trial. The outcome of all this will undoubtedly reverberate throughout the region as Brazil represents nearly half the population of South America, and its gross domestic product (the sixth largest in the world) dwarfs the combined GDP of the rest of the region. As Richard Nixon remarked in 1971, “As Brazil goes, so will go the rest of that Latin American continent.”

How did one of the shining stars of the international left, after four successive presidential election victories, find itself not only engulfed in corruption scandals and facing an impeachment process, but confronted by mass demonstrations against it on the streets?

As is generally the case, various hypotheses have been put forward to explain the current crisis. Below, I will list those that help explain the current situation in which no one factor can necessarily be said as determinate over the rest. Rather, these factors have tended to interact and feed off each other.

I will conclude by looking at the dilemmas facing the left, both inside and outside the PT. To begin though, I will seek to provide some background to the rise and fall of the PT.

Rise of the PT At its first national convention in 1981, the party’s president, Luiz Inácio Lula da Silva, explained that the PT stood for a new kind of socialism: “The socialism that we want will be defined by all of the people, as a concrete demand of the grassroots struggles … We want a society in which people are valued and where no one has the right to exploit the work of anyone else. A society in which everyone has equal opportunity to realize their potential and aspirations.” As a mass socialist party forged out of the trade union and anti-dictatorship struggles of the 1970s, this party of the Brazilian “New Left” became a hopeful model of democratic socialism for many in the region and internationally.

Rooted in the struggles of the day, the PT believed elections provided the working class with a vehicle through which to democratize the country, take power and carry out the socialist revolution. This vision was bolstered by successes early on. In Brazil’s first open elections in 1989, PT candidate Lula lost the presidential election by less than 6 percent, and at the local level, 36 PT mayors were elected across the country.

The rise of the PT over the next decade can largely be attributed to three factors. First was the ability of the PT founders — who primarily came from the trade union movement — to reach out and incorporate other popular sectors, leftist organizations, social movements, Liberation Theology circles and even segments of the middle class into the party.

A second factor was the democratic nature of the structures of the party itself, starting with local grassroots cells that were open to everyone to participate, in particular those who belonged to no existing group or organization, right through to the emphasis on seeking consensus and proportional representation of differing political tendencies on leadership bodies. These were vital characteristics that helped the party grow.

Third, and perhaps most importantly, was the PT’s ability to present itself as an alternative to the rotten state of politics in the country. The PT came to be seen by many — including some who had never supported the left — as representing a new ethical way of doing politics. This image was bolstered by the practical reality of the radical programs it implemented when in government at the local and state levels, such as participatory budgeting, that involved the local community in public decision-making.

Unlike the rise of the political left in countries like Venezuela and Ecuador, the PT’s victory in the 2002 presidential election was largely due to the patient accumulation of forces over many years (by 2000, PT mayors were running 187 cities) and not the outcome of a dramatic crisis of the political class or massive upsurge in struggle.

In fact, a strong case can be made that street politics had been in continuous decline since 1992, when street mobilizations prompted the resignation of then-president Fernando Collor de Mello. Lula’s election was preceded by eight years (two terms) of uninterrupted rule by Fernando Henrique Cardoso, something few other presidents in the region came close to achieving throughout the 1990s and beginning of the 20th century.

Lula government After obtaining 46.4 percent of the vote in the first round, Lula won the Oct. 27, 2002, presidential election with over 60 percent of the vote in the runoff.

Internationally, Brazil under Lula (and then Rousseff) has played a key role in supporting the more radical leftist governments and confronting U.S. hegemony both in the region and abroad, such as through its opposition to the Free Trade of the Americas Agreement. Breaking from its traditional role as sidekick to the United States in the region, Brazil began to strike out its own independent foreign policy, with a strong eye toward consolidating its role in the region.

Unlike Hugo Chávez, Evo Morales and Rafael Correa, Lula and Rousseff never claimed to be moving toward 21st-century socialism. In fact, to win the 2002 presidential election, Lula dropped the red star and even the word “socialist” from campaign materials, selected millionaire businessman José Alencar as his vice presidential running mate, and promised investors that he would respect the country’s financial contracts and obligations.

If socialism was not being dropped altogether, it was definitely being relegated to a distant goal — the main task became winning (and then holding) office at any cost.

PT policies have been far from groundbreaking. In the economic sphere, the PT’s strategy can be defined as (neo)developmentalist. At the heart of this strategy is an attempt to industrialize the country on the basis of greater state intervention, primarily through planning, financing and the regulation of spontaneous market forces.

Within this context, social welfare programs (alongside increased consumer credit) are seen as more than just a way to reduce poverty; they are also a means by which to help expand the internal market, a vital component of any developmentalist project.

This strategy counted on the support of the working class, the urban poor (sub-proletariat) and the industrial bourgeoisie. Its success relied on the important global commodities domestic consumption booms that Brazil benefited from throughout the Lula years from 2002 to 2008.

In the first decade of the century, this economic strategy saw the income of the poorest 20 percent grow faster than that of the top 20 percent, by 6.3 percent, and 1.7 percent, respectively. However, the wealth of the richest 1 percent of the population grew more compared to the improvement of the lower classes.

Brazilian economist Paulo Kliass explained why in 2011: “This is because during Lula’s eight years in office, the transfer of resources from the federal budget to the financial system and the Brazilian elite occurred in the form of interest payments on the debt — about $600 billion worth. That is 10 times the amount of resources allocated to programs aimed at the low-income population.”

Windfall profits to the financial sector increased the growing hold of banks and other financial institutions over the economy, while capital became further concentrated in large conglomerates.

Rousseff government Faced with having to confront weaknesses in the government’s developmentalist model — the economy was showing signs of de-industrialization — and the pressures of the global economic crisis, Rousseff resolved to turn this situation around by targeting the banks.

As a first step, the government proposed in 2011 to begin dealing with one of the highest long-term interest regimes in the world along with the bank's staggering spreads between deposits and loans, with borrowers paying anything from five to 20 times the cost of the same money to lenders. Together with slashing interest rates, the government moved to reform the electricity sector, raised tariffs, implement new controls on capital, devalued the Brazilian real and announced a new industrialization plan in which the state-owned development bank BNES would play a key role.

Although industrialists initially greeted the move with enthusiasm as they would directly benefit from lower interest rates, they soon joined forces with the financial sector to help bring Rousseff down. By the time hundreds of thousands, and then millions, were taking to the streets in June 2013 against corruption and inadequate social services, the São Paulo Employers Federation, a key representative of the Brazilian industrial bourgeoisie, was handing out flags to anti-government protesters.

In an attempt to polarize the 2014 presidential runoff, Rousseff tacked left and said a vote for her opponent was a vote for austerity and a return to the dark days of neoliberalism. This anti-neoliberal discourse was crucial to getting her over the line. Within days however, Rousseff announced her government would be implementing a number of the same austerity measures it had denounced during the election campaign.

Why did all this occur? A number of factors were at play.

Brazilian economist Guilherme Mello highlights the fact that years of high profitability in the financial sector had led to a strong intertwining of interests between industrial and financial capital, with those in the first sector having begun to invest in the second to reap the benefits. An attack on the banks was therefore, in many ways, also an attack on important sections of the industrial bourgeoisie.

Sociologist Ruy Braga emphasizes the importance of class struggle in understanding why the industrial bourgeoisie decided to break with Rousseff. In particular, he points to the important rise in the number of strikes that occurred under Rousseff, which began steady increasing in 2008, reaching 873 strikes in 2012 (a total of 87,000 lost work hours) and then more than 2,000 strikes in 2013. The inability of the PT to contain this unrest made many capitalists uneasy with the situation.

Social scientist Luiz Carlos Bresser-Pereira offers another explanation. He argues that the strong anti-state intervention campaign run primarily by the financial sector through mass media outlets that it controlled was a key factor in industrial capital swinging against Rousseff.

Criticizing the government as incompetent, authoritarian and corrupt, the campaign was able to discredit Rousseff’s developmentalist strategy. The campaign was, in many ways, aided by a sharp drop in economic growth, decline in profit rates and growth in inflation that Brazil experienced during this period.

Economist Plínio de Arruda Sampaio Jr. points to international factors in trying to explain what occurred. In order to compensate for the decline in exports, Sampaio argues that Rousseff had to push for greater control over capital and internal investment as prerequisites for stimulating the internal market. Capitalists instead preferred a strategy based on a new wave of privatization of public assets and social services.

Lastly, political scientist Andres Singer believes that having simultaneously opened multiple fronts of struggle, Rousseff not only increased the amount of conflict her government had with different sectors of capital — she helped strengthened inter-class solidarities among them on the basis that “today Rousseff is attacking them, tomorrow it could be me.”

To round out this picture, it is important to note the progressive and grave debilitation of the PT’s social base that had taken place for a number of years. Early on, the PT saw a number of smaller, leftist currents leave the party over opposition to social security reforms (in 2004) and corruption scandals involving paying opposition party deputies in return for their votes in parliament (in 2005).

But the dramatic scale of the gap that emerged between the PT and the streets was most graphically illustrated by the 2013 demonstrations.

While the PT continued to maintain support among the traditional working class and consolidated its hold over the urban poor, the 2013 mobilizations revealed that opposition to the PT was not only coming from capitalists or the traditional middle classes, most of whom never supported the PT. The streets were now also being filled by what Singer refers to as the “new proletariat” — young people who were not from middle-class families and only able to find precarious jobs with high turnover, poor working conditions and low pay.

This sector has found itself having to confront a number of the important problems facing residents in the large cities, such as expensive and inadequate public transport, the initial trigger for the June 2013 protests. While protesters may have previously demanded access to social services, these new mobilizations were focused on the quality of services that had now become available to them. Resolving these huge problems required massive investment, which in turn was only possible if changes to the taxation system or debt repayment occurred, steps the PT was not able or willing to take.

The largely decentralized and spontaneous nature of this movement, combined with the inability of the PT to grapple through its government with a movement that in many ways was demanding the same things the PT had campaigned around for many years, left a huge vacuum that the right wing was able to fill. Those social movements that continued to be part of Rousseff’s social bases – principally the trade union movement and the Landless Workers Movement (MST) – were unable to take the lead, in part because they were seen by many as being too close to or the same as the PT.

Engulfed in corruption scandals and with the right on the march, Rousseff had to choose between deepening her government’s developmentalist model or retreating. She opted for the latter, turning on her traditional base and implementing austerity measures she promised to oppose. But by now, it was too late to win back support from a capitalist class that, seeing the extreme fragility of the Rousseff government, was preparing to remove the PT from power.

Dilemmas on the left The process of impeachment allowed the right to achieve something it had been unable to do through elections: defeat the PT. It counted in its favor the low level of support for Rousseff and the PT, and the fact it had a majority in parliament, which only increased as parties previously aligned with the PT began jumping ship.

Without attempting to diminish the importance of the mobilizations that have occurred against what can rightfully be deemed a judicial or constitutional coup, it seems unlikely — at least for now — that Rousseff will be reinstated.

Faced with this scenario, different sections of the left have put forth alternative strategies for moving forward.

For the PT itself, the central task is the reinstatement of Rousseff. Anything short of this, they argue, would be tantamount to accepting the legitimacy of the coup. To achieve this, the PT has said it wants to build the broadest possible anti-coup front.

At the same time, left-wing currents within the PT have denounced attempts by the PT majority to form over 1,000 alliances at the local level with parties that voted to impeach Rousseff in anticipation of local government elections later this year.

The majority of Brazil’s largest social movements, including the MST, Unified Workers Central, the national student federation UNE and others, grouped in the Popular Brazil Front have also argued for prioritizing the demand to reinstate Rousseff.

Others, such as the PSOL and smaller social movements, have said the key demand must be for new elections, or that this demand should at least be placed side by side with the call to reinstate Rousseff, as the best way to fight the coup. They argue this is the case given Rousseff’s low popularity and polls that suggest a majority do not necessarily support an outcome that would simply see her return to office, even if they also want to see Temer removed. By differentiating themselves from both the PT and the coup government, they argue they will be in the best position to mount a challenge in any future election.

Perhaps as a sign of recognition of this prevailing sentiment, Rousseff has said that if she is reinstated, she would be willing to support early elections. It is unlikely that the right, having regained control of government, would support early elections. They would prefer to give themselves time to prepare for elections (scheduled for 2018) and prepare for any potential challenge by Lula, who continues to maintain a high level of support.

Another demand that has been raised by different sectors is the need for a referendum on the question of convening a constituent assembly as a step toward dramatically overhauling a defunct political system. It is not clear, though, whether the demand is for the current (illegitimate) government to convene this referendum or if it is envisaged as occurring after Rousseff’s reinstatement. It is also not clear how widespread support is for such a demand.

While the PT administrations have not championed the cause of the 21st century, their role in regional affairs has been crucial. Considering the size and economic strength of the country, a conservative Brazilian government would not just be another setback for the Latin America’s left turn — it would be a disaster. In this regard, the debates occurring now in Brazil and the events of the coming weeks and months should be of critical importance for the left internationally.

Federico Fuentes, assistant editor at Links International Journal of Socialist Renewal