Brazil: Neoliberal Decades Bring Down "Emerging Power

September 25, 2007

The historical period that began with the fall of the Soviet Union and the advent of the United States as the world’s only superpower changed Brazil’s international position. Up until then, Brazil had been one of the so-called “emerging intermediate powers.” Among these it occupied a special place because of its dynamic economy, one so well-endowed with natural resources and technological capacity that when the 1980s began, Brazil was active in all the important economic sectors, including information technology. But the following two decades were marked by a traumatic turnaround, in which Brazil’s international profile was sharply reduced, along with its possibilities for economic expansion and for playing a leading international role.

Brazil had the fastest growing economy in the world between 1930 and 1980, but the “debt crisis” of the 1980s interrupted this five decade-long expansion. Then, beginning in 1990, the productive and competitive capacity that had been built up over previous decades was substantially weakened as a succession of Brazilian governments adopted U.S.–promoted neoliberal policies. Deregulation and the brusque opening of the Brazilian economy to the international market promoted the replacement of industrial capital by finance capital as the economy’s driving force. This made the economy more fragile and in seven years increased the public debt eleven-fold. Brazil began to be strongly dependent on foreign capital in order to keep its accounts current, and it lost its sovereignty to international financial organizations in which the United States plays a preponderant role.

Mercosur, the regional customs union that might have played a key role in affirming the international power of Brazil and other nations of the region, also ended up as a victim of neoliberal policies. [See “Free Trade Area of the Americas: NAFTA Marches South”] The priority given to fiscal adjustment and monetary stability forced the region’s governments to impose artificial exchange policies. When differences between member nations’ exchange policies produced a marked economic disequilibrium between member countries instead of their integration, Mercosur’s final crisis began.

In light of this, the proposal for the Free Trade Area of the Americas (FTAA) may represent a consolidation of Brazil’s loss of sovereignty. Brazil could be the principal victim of a form of supposed integration that in reality signifies total subordination to the United States. Brazil’s natural resources, labor power and massive potential internal market are the booty to be snatched by the United States and its huge corporations.

Brazil now finds itself at a turning point: The possibilities for fiscal adjustment have been exhausted, and so have the political possibilities of the governments that were on the scene during the 1990s. The 2002 presidential elections will occur in a setting that will either permit an opposition victory or give new life to the current model. This means either a rupture with the neoliberal “Washington Consensus” economic plan which is now in effect in Brazil or a continuation of it. There would be continuity even with the victory of a “third way” candidate in the style of Argentina’s de la Rua and Mexico’s Fox. Such a government would maintain the current economic program despite promises to re-emphasize economic development, combat unemployment, and implement more social programs.

The main left opposition candidate, Luíz Inácio da Silva, known as Lula, hasn’t yet clearly defined an external or foreign policy, but if he wins, the nature of his government will certainly depend on how he chooses to act internationally. Brazil must be reintegrated into the international system, and this would mean renegotiation of the debt, because the current payment schedule would make it impossible for any popular government to implement its program, as de la Rua’s current situation in Argentina shows. It would also mean redefining international alliances in order to obtain sufficient power to carry out the renegotiation; this would imply not merely the rejection of FTAA, but also an active international policy aimed at creating diversified alliances, with priority given to closer ties with the big nations of the South: China, India and South Africa among others.

Without redefining its own relations with the United States and affirming its sovereignty, Brazil won’t be able to build a just society or again take up the task of economic and social development. It needs to do these things at home if it is to take on an international leadership role which would allow it to bring together the great majorities of the world who are today excluded from power and from access to most of the world’s goods.

Emir Sader is a Brazilian sociologist and a long-time analyst of Latin American social and political movements.

Tags: neoliberalism, Brazil, FTAA, Lula, economy

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