I

With a population of 200 million, Brazil is one of the largest economies in Latin America. Apart from its sheer economic weight, Brazil has also gained prominence because of the vibrant anti-neoliberal movements that have gathered pace in the country in the last two decades. These popular movements won their first major victory in 2002 when a militant Leftist organisation called the Worker’s Party (PT) under the leadership of a hugely popular trade union leader, Lula, won the presidential elections. In a country where politics has been the refuge of the rich, the ascendance of the PT under the leadership of an illiterate worker was indeed a watershed moment in its history. Since that famous victory in 2002, the PT has won three consecutive elections, the most recent one being held in 2014.

In this context, the recent moves to impeach PT government’s presidential candidate, Dilma Rousseff, have come as a rude surprise to many supporters both within and outside Brazil. President Rousseff, it may be recalled, played an important role in the anti-dictatorship struggles in Brazil and was brutally tortured in military custody for her role in the guerrilla movement. More recently she took up an important role in Lula’s presidential staff and in 2011 she became the first democratically elected female president of the nation. She won her second term to the country’s highest office in 2014. Given her impeccable record and the clear political mandate of the 2014 elections, the impeachment proceedings were initially shrugged off by most as being a political gimmick by a conservative opposition attempting to remain politically relevant. But recent moves suggest that a carefully designed attack on the government is underway as the Senate has formally passed the motion for trying President Rousseff on charges of impeachment. According to rules of the Brazilian system, the incumbent president will now be suspended pending the results of an impeachment trial. In the meanwhile, the vice president Michel Temer has been sworn in to take over the reins of the government.

II

PT’s current situation stands in stark contrast with its spectacular rise a few decades ago. Like many Latin American nations, Brazil was under a repressive military dictatorship between 1964 and 1985. The opposition to the military State emerged from a variety of quarters - armed revolutionaries, peasant unions, student groups, church based communities etc. But some of the most radical and effective opposition emerged from the ranks of the industrial workers concentrated in the industrially advanced ABCD region of Brazil (Santo André, São Bernardo do Campo, São Caetano do Sul and Diadema). Braving daunting odds, workers organised themselves and led massive strikes against the government during the 1970’s. It was from within these struggles that the idea of forming a political party for the workers and by the workers emerged in the early years of the 1980’s. The establishment of the PT was a result of this aspiration.

In the post authoritarian phase, PT championed the cause of the downtrodden in Brazil and became symbol of anti-neoliberalism in the region. Its experiments in participatory governance at the city-level won it many supporters and PT soon came to be associated with a radical mode of governance the likes of which Brazilians had never experienced before. With a stated aim of ushering a socialist revolution, the party supported demands for social reforms, gender equality and consistently opposed the structural adjustment that was enforced on Brazil and other Latin American countries during the 1980’s. Over time PT’s popularity grew and much to the chagrin of the ruling oligarchy, by 2002 it emerged powerful enough to win the country’s highest political seat.

It is important to remember that despite its strong political mandate in 2002, the party did not have sufficient numbers to form the government by itself and it was forced to stitch up an alliance with a wide variety of parties, including some conservative ones. The wheelings and dealings related to coalition formation would later blow up into a full-fledged corruption scandal for the first Lula government. Perhaps the most telling evidence of the restricted mandate was the fact that in the 2002 elections PT received very little support from the most impoverished regions in Brazil (the North East) even though this should have precisely been its strongest constituency. Added to this limited mandate, the opposition to PT put up a strong and united front as well. The biggest and most hostile opposition came from the ranks of the financial oligarchy, who since the debt crisis of 1982 had enjoyed unencumbered command over the economic policies of the nation. With the help of the IMF and the World Bank, the financial sector in Brazil had successfully imposed a programme of austerity and high interest rates on the entire nation and had a complete stranglehold over major economic decisions.

Given these political exigencies, PT had very limited room to manoeuvre. It therefore adopted a cautious and gradualist approach wherein the economic structure inherited from previous regimes would be retained but the government would also try to introduce some basic alterations within it. Increasing primary commodity prices (fuelled mainly by Chinese demand) provided the government with some flexibility as the revenues generated from the primary good exports reduced pressures on the external accounts. Over time as the government garnered a larger support base, Lula took the liberty of relaxing fiscal deficit targets, lowering interest rates, pumping credit into the economy and has also used “creative” accounting techniques to bolster government spending. In addition to expanding the direct transfers linked to the Bolsa Familia, the government stepped up its spending on education and health. It helped unions obtain many wage-hike demands and was instrumental in increasing minimum wages. Since most social security provisions are tied to the government stipulated minimum wages, these increases have benefited the poorest section of Brazil the most. Brazilian wages have remained buoyant and wage shares in total national income have actually increased for most of the period. As a result of all these government policies inequalities and poverty rates have declined. In the last decade and a half the levels of hunger, as measured by IFPRI’s Global Hunger Index have shown dramatic declines. If this were not enough, under PT rule there has been the strong trend towards formalisation of the labour force and this trend is a clear reversal of what was happening in the previous decades.

III

The current situation in Brazil has to be analysed from the context that we have just outlined here. Since 2006 Brazil’s government with its experiments in creative accounting, fiscal expansion and extensive pro-labour interventions has been moving towards a head on confrontation with the financial oligarchy. Not surprisingly the first salvo against PT was launched not by its political opponents in the legislature, but by international rating agencies which sequentially lowered Brazil’s financial ratings to “junk” status. The problem, they argued, was that Brazil’s state was too interventionary, it’s developmental bank (BNDES) too lax and the fiscal deficits exceedingly high. What was required to regain investor’s confidence, according to them, was a good old dose of austerity the likes of which governments of yesteryears had faithfully implemented.

The impeachment proceedings against a democratically elected representative is the latest of the moves in this class war. The formal reason for initiating the proceedings is that President Rousseff, in her efforts to strengthen the social support programmes, is said to have circumvented a fiscal responsibility clause enshrined in the Brazilian constitution which prevents fiscal deficits from exceeding a pre-determined level. Though one might wonder why a leader is being impeached for spending on the poor and downtrodden especially when this is precisely what she has been elected to do, one has to keep in mind that fiscal responsibility is a key demand made by finance capital in economies across the world. Keeping fiscal deficits in check allows inflation to remain within permissible limits and therefore ensures a floor rate of return to financial wealth holders. Thus any departure from this framework hurts “investor’s confidence” and is therefore looked at unkindly by representatives of international finance. From this perspective the current political crisis is not so much about legal niceties as it is about a confrontation between two diametrically opposite class interests: On the one hand there is the vast support base of the PT consisting of desperately poor and hungry citizens who over the years have been vocal in demanding greater State intervention in the social sector and on the other hand there is a powerful and deeply entrenched financial lobby which views the departure from fiscal responsibility unkindly because expansionary fiscal policies run the risk eroding returns to financial wealth.

In all the noise and discussions surrounding the recent corruption scandal, what has gone unnoticed by many is that President Rousseff is not being impeached for corruption nor is she being impeached because of any serious erosion of her core support base. In fact while the mainstream media has been busy creating a pandemonium about the recent corruption revelations that have implicated many high ranking PT officials, it has remained silent on the fact that the main architect of the current assault against the PT, Eduardo Cunha, is himself deeply embroiled in corruption scandals. Even the Vice President Michel Temer who will now head the interim government, has scores of corruption allegations against him. Therefore the fact of the matter is that the entire assault on PT is not only undemocratic, it is downright hypocritical. It is an attempt by the rich and the powerful to nullify the democratic mandate President Rousseff and her party have received from the people of the country. Therefore what is happening in Brazil is nothing short of a political coup. It should not come as a surprise that according to some reports, Jair Bolsonaro, an opponent of President Rousseff and a member of Brazil’s Chamber of Deputies, has openly dedicated his impeachment vote in the memory of a man accused of having murdered and tortured several political prisoners during Brazil’s authoritarian regime.