THE DISASTROUS GOVERNMENTS NEOLIBERAL AND ANTI-NATIONAL OF BRAZIL

Fernando Alcoforado *

From the government of Fernando Collor in 1990, the neoliberal model was introduced in Brazil to facilitate the inflow of foreign capital considered necessary due to insufficient domestic savings to finance investments beginning the dismantling of the institutional apparatus mounted in the country from 1930 to 1988. From 1990 until the present time, the Brazilian government adopted a series of measures recommended by the IMF (International Monetary Fund) and the World Bank - the Washington Consensus - which established three steps to be taken in the following order: 1) stabilizing the economy (fighting against inflation); 2) structural reforms (privatization, deregulation of markets, trade and financial liberalization); and, 3) resumption of foreign investment to boost development.

It is in light of this context, one should interpret the policy to combat inflation, privatization of state enterprises and the opening of the Brazilian market to foreign capital adopted by governments Fernando Collor, Itamar Franco and Fernando Henrique Cardoso from 1990 to 2002 and maintained by governments Lula and Dilma Rousseff from 2002 to date. Besides having adopted measures based on the Washington Consensus, Collor, Itamar Franco, Cardoso, Lula and Rousseff favored the interests of foreign capital at the expense of national interests. This is corroborated by the indicators relating to foreign direct investment in Brazil (Figures 1 and 2), the participation of foreign capital in the Brazilian industry (Figures 3 and 4) and the remittance of profits abroad ( Figure 5) that showed increasing numbers against the interests of the Brazilian nation.

Figure 1, below, shows the evolution of foreign direct investment in Brazil from 1995 to 2011. From 2002 to 2011, foreign direct investment has become increasingly after falling from 1999 to 2002, showing the dependence of Brazil to foreign capital.

Figure 1 - Foreign Direct Investment in Brazil

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Source: BACEN

Figure 2 shows the total foreign capital into shares in Bovespa (Stock Exchange in the State of São Paulo) demonstrating the increasing expansion of foreign capital in the Brazilian economy from 2002 to 2006.

Figure 2 - Total foreign capital into shares in Bovespa (Stock Exchange in the State of São Paulo)

Source: CVM

Figure 3 shows the expansion of the hegemony of foreign capital in the Brazilian industry from 1991 to 1999.

Figure 3 - Participation of foreign, national and state capital in the Brazilian industry

 

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Source:http://www.usp.br/fau/docentes/depprojeto/c_deak/CD/4verb/entregsm/index.html

Figure 4 shows the expansion of the hegemony of foreign capital in the Brazilian industry in leading sectors 1991-1999. In this figure, it is evident domination of foreign capital on the most technologically advanced Brazilian industries.

Figure 4 - Participation of foreign, national and state capital in the Brazilian industry in leading sectors

Source:http://www.usp.br/fau/docentes/depprojeto/c_deak/CD/4verb/entregsm/index.html

The denationalization of the Brazilian economy is still evident when one notes that of the 50 largest companies, 26 are foreign, according to the Census of Foreign Capital in Brazil. More than half of Brazilian companies in leading sectors (automotive, aerospace, electronics, information technology, pharmaceutical , telecommunications , agribusiness and mining ) are in the hands of foreign capital. Foreign capital is present in 17,605 Brazilian companies that account for 63 % of Gross Domestic Product (GDP), and has control of 36 % of the banking sector and has 25 % of Bradesco shares and 20 % of the shares of the Bank of Brazil.

Even Petrobras, due to Law 9478 of 1997 that ended the state oil monopoly, currently has 52 % of its capital under private control , and 35 % of this capital is foreign. It is important to mention that the National Petroleum Agency (ANP) and the Ministry of Energy and Mines following the policy of auction to transfer ownership of Brazilian oil to international oil companies as they did recently with the field Libra of pre-salt layer. Recently, to increase the participation of foreign capital in the country, the federal government sent for the approval of the National Congress on April 20 passed a provisional measure (MP) that allows increase from the current 20% to 49 % of foreign capital in Brazilian airlines, besides deciding to privatize airports and ports by the end of the year.

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One indicator of the degree of dependence of Brazil against the international financial system is the growth in remittances of profits abroad (Figure 5) showing how great the field of international monopolies on the national economy. Figure 5 shows the evolution from 2003 to 2011 increasing the remittance of profits of foreign companies operating in Brazil to abroad.

Figure 5 - Remittances of profits abroad - 2003-2011

2003 2004 2005 2006 2007 2008 2009 2010 2011*0

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10

15

20

25

30

35

40

Remittances of profits abroad US$ Bilhões

US$ Bilhões

 

* Estimate

Source : Central Bank of Brazil

With the election of Lula for the presidency of Brazil in 2002, there was the expectation that his government took the decision to renationalize state enterprises privatized by Cardoso and also remove the privileges granted to financial capital by previous governments, and prevents the free action of the international monopolies in the Brazilian economy. What actually happened was the continued submission of Brazil to international capital by governments Lula and Dilma Rousseff as demonstrated with the analysis of figures 1-5, above. Further analysis reveals that the Brazilian economy governments Lula and Dilma Rousseff benefit mainly the wealthy classes and offer crumbs to the poor with the Bolsa Família and did not break the chains that undergo Brazil to the world imperialist system making it even more dependent on this system. In other words, the last ten years there has been no change in the subordination of Brazil to the large international financial capital nor decreased the area of international monopolies on the Brazilian economy. Rather, there was a growing process of denationalization of the Brazilian economy.

The submission to foreign capital of the Brazilian government from Fernando Collor to Dilma Rousseff results from the fact that the federal government does not have the resources to meet the needs of the country, given that 44.93 % of the Union budget resources are allocated to the servicing of debt (interest + amortization), a money ceases to be invested in health, housing and education, etc. to guarantee income to bankers. Central Bank data show that domestic and foreign banks and investment funds are the

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owners of 76 % of domestic debt securities (about US$ 3 trillion). In turn, external debt, and have not been zeroed as was hyped by President Lula, had an increase of 43 % from 2009 to 2011 reaching US$284.1 billion.

The end of the subordination of Brazil to international capital depends on the government's decision regarding the payment of domestic and foreign debt that should have their repayment periods extended to the country with the necessary resources to investments in the expansion of the economy, considering only the economic infrastructure and social, requires about US$ 2 trillion. For the above, Brazil is experiencing critical moments in its history due to the increasing dependence of the country to international capital that fuels the process of denationalization of the Brazilian economy. If present trends continue and denationalization of public debt rising, the trend is that Brazil is totally overwhelmed by international capital that will eliminate national and state companies in all economic sectors of the country tutoring the people and the Brazilian government. This can only be modified when there is in charge of the nation a government to adopt an economic policy that is the antithesis of the neoliberal and anti-national policy implemented by the current government.

* Alcoforado, Fernando, engineer and doctor of Territorial Planning and Regional Development from the University of Barcelona, a university professor and consultant in strategic planning, business planning, regional planning and planning of energy systems, is the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011) and Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), among others.

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