Brazil: A powder keg on the verge of exploding

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CUT President Jair Menegueli addresses striking metalworkers on March 14, 1989.

(Part one of a two-part series)

Today, Brazil is in the midst of a tremendous upheaval such as the country has never seen.

Although Brazil is the most advanced country in Latin America in terms of industrial development—with a well-formed indigenous capitalist class and a sizable and concentrated industrial working class—its economy is in a shambles.

Inflation is worse than ever—running at a rate that could exceed 1500 percent this year. Each successive economic plan of the government has been a dismal failure. The burden of the foreign debt hangs like a noose around the neck of the country. Land for the peasantry is a burning issue.

Brazil's foreign debt—$120 billion—is the highest of all the world's underdeveloped countries, and debt-driven austerity measures. weigh heavily on the population, particularly the most exploited sectors.

Imperialism, under the guise of the International Monetary Fund (IMP), has exacted a series of economic policies designed to guarantee its continued domination. The country is on a collision course with hyperinflation, the political and social consequences of which have already been profound.

The depths to which the economy and those running the government have already sunk has caused even the Brazilian ruling class to lose almost all confidence. Banks refuse to finance the internal deficit with any long-term credits. The government is forced to roll over $60 billion on local overnight money markets everyday just to keep the country going.

Making the workers pay Brazil has an on-again, off-again policy on debt repayment, sometimes choosing to institute "technical" moratoriums, but always squeezing the Brazilian workers. President José Sarney explains that "the foreign debt payment is a logical question: if we have the money we pay, if we don't, we don't." And when they don't have the money, they put on the squeeze. This has been the driving force of all of the government's so-called "stabilization" plans.

But each of the government's plans to stabilize the cruzado (Brazil's currency) has failed. Last January, Sarney introduced the Plano Verão (the "Summer Plan") with an attack on wages, the privatization of state-run enterprises, and the decimation of public services. The plan was dubbed Plano Ladrão (the "Thieves' Plan") by the workers.

Plano Ladrão had imposed a partial freeze on wage increases, but the outcry of the workers and the inflationary facts of life in Brazil—934 percent inflation in 1988, 1500 percent in 1989—forced the Sarney government to abandon this in mid-June and reintroduce indexation. This, in theory, but hardly in practice, allows for wages to rise at the economy's overall inflation rate. It was designed by the government to avoid a social explosion like the one that rocked Argentina in the midst of its hyperinflation earlier this year.

In addition, daily mini-devaluations of the cruzado have been reintroduced to keep the exchange rate current with rising prices.

Plano Ladrão was the work of the IMP. . Its components were classic IMF-imposed m leasures, directed against the workers and designed to shore up the economy only to the degree that it doesn't collapse and thus adversely affect the bigger capitalists in the more advanced countries.

Plano Ladrão was a fiasco. It precipitated a general strike by 35 million Brazilian workers in mid-March of this year.

The March general strike in those cities not under mass political Culmination of rising strike wave The March 14-15 general strike was the culmination of an upsurge in the Brazilian class struggle that began last fall, as hundreds of thousands of workers struck the steel and petroleum industries, electrical utilities, and the municipal service sector.

In October 1988, approximately 800,000 federal employees in 17 of the 23 governmental ministries struck. In November, every oil refinery in the country was shut down. In Rio de Janeiro, municipal workers struck the bankrupt city for several weeks. But none of these struggles galvanized the Brazilian working class quite like the strike at the state-owned Volta Redonda steel mill.

On Nov. 7, over 25,000 workers at Volta Redonda (just north of Rio de Janeiro) began a sit-down strike. They were protesting wages that had declined 26 percent in purchasing power since their last pay adjustment. They were striking against conditions that had them working 10-hour shifts, with no protective clothing to guard against the extreme heat, noise, and toxic dust from the blast furnaces.

And the workers were lashing out against the Brazilian National Steel Company's refusal to implement the new constitutional provision that sets at six hours the maximum work shift for industries with uninterrupted production.

The next day, the Brazilian Army and federal police arrived, 500 strong, with tanks and machine guns. Seeking to evict the strikers, they killed at least five strikers and wounded 50 in one day. Sarney wanted to teach them a lesson about "legal" strike action.

November's municipal elections The municipal elections of November 1988 came one week after the Volta Redonda massacre. And the left scored big gains-big enough to make the U.S. rulers sit up and take notice. The Wall Street Journal described a "leftward lurch in the major centers of industrial and financial activity" in Brazil.

The working-class party that progressed the most in the elections was the Workers Party (PT), a party of 550,000 members based on the militant trade unions and peasant federations.

The PT. was born out of the social explosions and strikes against the military dictatorship in the late 1970s. It resulted from a recognition by trade-union activists of the need for an independent party that could ex(continued on next page)