Argentina and Brazil in turmoil

Protest against the IMF - Argentina

By Bridget Anderson

When the left in Latin America suffered a series of electoral setbacks and other defeats in major countries on the continent, including Brazil and Argentina, the pro-imperialist media of course rushed to claim that the Latin American right was now sweeping all before it after the failure of the left – of the ‘pink tide’ which has pushed most countries in the continent to the left in the period after 2000. This was always a delusion. Both the right and the left in Latin America have very deep social roots and mass support. This is now being graphically confirmed precisely in Brazil and Argentina as the failure of right wing policies produces new mass struggles. So for success it is vital the left throughout the world both carries out solidarity with the new struggles in Latin America and understands the reasons for the previous setbacks.

Economic failure of the right in Argentina and Brazil

Political instability is rising in Argentina and Brazil as a result of economic deterioration and the unpopular policies being pursued by both countries’ right wing governments. In both countries the austerity measures are intensifying the attacks on people’s living standards. The current turmoil is likely to increase as neither government has an economic policy to turn the situation round. In the case of Argentina, the recently concluded bail out deal with the IMF will impose even greater hardship on the population.

Both President Macri in Argentina and President Temer in Brazil are pursuing policies that exacerbate the crisis that has engulfed Latin America since the 2014 crash in commodity prices.

Macri, who is less than two and a half years into his presidency, requested the IMF to bail out Argentina again, following on from its involvement during the 1990s and early 2000s. The previous IMF stipulations were deeply unpopular and an overwhelming majority of Argentines consider the new $50 billion loan out to be an act of national humiliation.

Argentina’s next Presidential election is scheduled for October 2019 and the IMF’s economic impositions will likely play a role in the outcome.

In Brazil the Presidential election is due this October, but the incumbent Temer, on an approval rating of 4 per cent, is too unpopular to run for election. The most popular candidate in the race is the PT’s former President Lula, who is currently in prison and very unlikely to be allowed to stand – which of course has been arranged by the ‘democratic right’ to stop Lula winning the election. Politically motivated bourgeois courts have ruled against him running to keep the left out of office.

When the economic crisis started four years ago, the left was in government in both Argentina and Brazil. These left governments pursued redistributive policies that over a decade bought millions of people out of poverty.

But the left did not use this period of prosperity to make economic changes to protect growth in the event of a global slowdown. There was no revolution in production, so when commodity prices fell in 2014 the economies went into crisis and dramatically slowed. In the case of Brazil the PT government actually implemented austerity policies that further cut growth. As a result the left lost the 2015 Presidential election in Argentina and in Brazil Dilma Rouseff was ousted in a parliamentary coup in 2016.

This setback showed a critical weakness of the first Latin American ‘pink tide’ – it didn’t have economic policies capable of dealing with a capitalist downturn. This lack was unnecessary as in China and Vietnam the left wing had created the most rapidly growing economies, with the fastest rise in living standards, and greatest reduction in poverty, of any countries. Failure to learn from the economic policies of China and Vietnam was therefore a critical weakness of the Latin American left. That in turn was linked to the fact that in Latin America, with the exception of Cuba, there were not Marxist/Communist organisations – simply ‘movement’ type parties of the type which existed in other Latin American countries, were not capable of articulating a coherent economic strategy against capital.

Argentina – back under IMF control

Argentinian President Macri’s policies, since being elected in December 2015, have hit the population hard. He has significantly cut social spending, reduced wages, slashed public sector jobs and privatised pensions and energy companies, whilst cutting taxes for the rich. As a result the economy effectively stagnated through 2016 and 2017 and living standards have fallen.

This year Argentina’s inflation has risen to over 25 per cent and the cost of living increased by almost 10 per cent between January and April. Following a run on the peso, where the currency lost almost a fifth of its value in a fortnight, President Macri approached the IMF for a bailout.

This decision elicited immediate and huge opposition. Polling conducted in May revealed that 75 per cent of Argentines were opposed to any sort of arrangement with the IMF and a series of large protests took place during the negotiations between the Argentine government and the IMF.

The prospects for the Argentine economy in light of this deal with the IMF are admitted to be not good. The Minister of the Treasury, Nicolas Dujovne, has already downgraded economic growth expectations from 3 per cent in both 2018 and 2019 to 1.4 per cent and 1.5-2.5 per cent respectively. Predictions for inflation this year have also been raised from 22 per cent to 27.1 per cent. At the same time Dujovne has announced $780m worth of public spending cuts, an indication of the brutality of the austerity measures accompanying the IMF deal.

The IMF’s policies imposed on Argentina in the 1990s – austerity, privatisations and pegging the peso to the dollar – led to the economic crisis of 2001. Then the peso collapsed, unemployment rose and living standards came under attack. As a result there were three governments in office during 2001. In 2003 the left’s Nestor Kirchner was elected President and dropped some of the neoliberal policies.

In the current crisis Macri’s approval ratings are the lowest since he took office, having fallen 10 per cent to less than 40 per cent.

Macri won the Presidential election of 2015 with 51 per cent of the vote in the final round. At the mid-term elections in October 2017 the right wing forces secured 41.7 per cent of the vote – whilst Cristina Fernández de Kirchner’s ‘Citizens Unity’ left coalition got 22.5 per cent and the Peronist ‘Justicialist Party’ got 10.9 per cent.

Ahead of next year’s election capital is concerned to block the re-emergence of the left, so in parallel with the attack on Lula in Brazil, there is an attempt to end Kirchner’s role in politics via a ‘constitutional coup’. She is under attack from the courts and faces a trial on the charge of treason, a crime which is punishable by 10 to 25 years in prison.

Brazil’s 2018 Presidential election

In Brazil, not only is Temer’s approval rating 4 per cent, his preferred candidate for this autumn’s Presidential election, Henrique Meirelles, is polling less than 1 per cent.

Currently Lula continues to top the polls, on 30 per cent support, despite being imprisoned on a politically motivated frameup charge. A recent convention of the Workers Party reaffirmed him as their candidate. The right wing is determined to keep Lula off the ballot paper and exclude the left from the election – because they know Lula would win the election.

The recent truckers strike paralysed Brazil and received the support of 87 per cent of the population. The government made concessions on fuel prices. The strike was strongly supported by the right wing, with Lula’s closet rival in the polling, Bolsonaro of the far right, backing it. His support has steadily risen over the past year to around 20 per cent.

Across Latin America there is a huge struggle between the left and right, in which both sides engage large social forces. The battles are likely to intensify as the Presidential elections in Brazil and Argentina approach.