Monthly Archives: February 2013

brazil gdp

BRAZIL: Born to be Empire

By Gino Pepi

There is no doubt Brazil is an emerging imperialist power. It dominates the Latin America economy, exports capital, is a major factor in markets around the world, is expanding its military capacity and intervenes politically to assert its growing influence, gaining on the decaying US Empire.

In terms of gross domestic product (GDP), Brazil’s economy is the largest in Latin American and the second largest in the continental Americas, after the USA. In relation to the world’s few growing economic powers, Brazil is among the top four. Brazil economically and politically dominates South America and is the main competitor of the USA in the Americas. It is clear that President Obama’s March, 2011 visit to Brazil was not to take post Carnival samba lessons, but to open discussions with an equal to preserve the economic and political position of the USA. Obama was late on both counts.

Only the Brazilian ruling class – no other is in a similar position – can take the initiative to resist the growing tendency of the US, through its present military/political offensive, to undermine the last vestiges of relative independence of the other national bourgeoisies on the North and South American continents.

Brazil has one of the fastest-growing economies in the world. Its economy is growing at a time when most other global capitalists are in decline and crisis. Brazil has had an average annual GDP growth rate of over 5 percent since the early 2000s. Brazil’s GDP was estimated as at least US $800 billion in 2009 and has increased since then. It will soon move from being the eighth to fifth largest national economy in the world, even though this would give only a distorted and diminished picture of its overall power.

The Miami Herald of October 7, 2010 says, “The IMF (International Monetary Fund) forecast(s) … Brazil’s economy is expected to chug along at 7.5 percent this year (2010) before slowing to 4.1 percent growth in 2011 … Meanwhile, the IMF predicts 2.6 percent growth this year for the United States — a weak performance coming after a recession — and 2.3 percent growth in 2011 … Growth is expected to be even slower in the Euro Zone where the IMF forecasts the average economic growth among the 16 nations that use the Euro as their currency will be 1.7 percent this year and 1.5 percent next year.”

Brazil is the largest and fastest growing producer and distributor of most of the important market commodities in the world. These include iron ore, several important industrial minerals and industrial diamonds, soybeans, corn, chicken, beef, orange juice, coffee, sugar and tobacco.

Brazil is the first country to bring together the ten largest car assembly companies inside its national borders. Brazil also has the world’s third largest aircraft manufacturer, Embraer, which supplies most of US regional airlines with mid-size air transport – on that line is not third, but first in the world – and is expanding rapidly into military aircraft production. It ranks fourth in terms of world military weapons and vehicle production.

Brazil has an increasing capacity for space exploration, internal based missile launch sites and has been part of the construction team of the International Space Station. Part of Obama’s visit to Brazil was to discuss US use of its missile launch sites.

With its huge bio-fuels (ethanol) industry, Brazil has the “greenest” economy in the world; while at the same time it is the source of the rise of agricultural commodities in the world’s markets.

Its offshore petroleum industry is so large, that it has to hire most of its oil platform welders from other countries like the United States. Petrobras (the nationalized oil company) has a recent gross product of US $67 billion. 150 miles off the Brazilian coast, Petrobras has plans to build offshore platforms that will reach 20,000 feet down to the sea floor just to start drilling.

Anywhere in South America you stop for gasoline or natural gas fuel, you’ll most likely be at a Petrobras station. Soon, Petrobras will unify the oil production capacity of Argentina, Uruguay and Venezuela with that of Brazil to become a major oil conglomerate – totaling ~11% of US oil imports, almost as much as Saudi Arabia. Brazil plays a leading role in natural gas extraction and distribution in Bolivia and Ecuador. It plays a similar role in the hydroelectric industry of Paraguay.  It is also a major partner with Venezuela in the exploitation of the natural resources potential of the Orinoco river basin.

Most of its iron ore exports go to China. North of Rio de Janeiro, Brazil is building a huge shipping port complex, with Chinese financing, to speed delivery of this commodity to China. In February of 2011, US National Public Radio reported that Brazil is building a cross-country railroad system, to cross to Columbia’s Pacific coast to further increase its shipping capacity to China.

Brazilian exports have tripled since 2003 on rising world demand for everything it produces. Brazil, once the world’s largest emerging-market debtor, became a net foreign creditor for the first time in 2011 as international reserves swelled to a record $171.6 billion from $37.6 billion at the start of 2003. Brazil is the sole capital exporter in Latin America.

Brazil expanded into all this, in part, by building Mercosur in the early 1990s with partners Argentina, Paraguay and Uruguay. Brazil created this trading block before the USA created NAFTA. The New York Times, The Washington Post and the McClatchy newspaper group have reported that in every year since the founding of Mercosur, Brazil has lead serious attempts to expand it.  However its development as an imperialist power comes from long history of military conquests and treaty deals.

Brazil has made Venezuela a soon to be full Mercosur partner, most other countries in South and Central America to be associate partners, attempted to expand the trading block to include South Africa and almost concluded a deal to ally the European Union (EU) in a joint Mercosur trade block.

Mercosur is now the third largest trade block in the world behind the EU and NAFTA and has played the major role in stopping the USA in its attempt to fulfill its goals for completing a trade block in South and Central America, the Free Trade of the Americas Act.

Brazil is an outspoken critic of US foreign policy, mostly in preserving its own influence in other Latin America countries and thus “defending” its pawns against the US pac-man geopolitical game. For example it opposed the US policy in relation to the 2009 coup in Honduras, defends Argentina’s claim to the Malvinas, collaborated with Turkey on attempting to negotiate a deal with Iran on its nuclear program and is fighting to become the next permanent member to the UN Security Council. Everything it does is to consolidate its dominant role in the region and expand elsewhere.

Brazil is a major military force in the Americas. The Brazilian military, a longtime a participant in UN “peacekeeping” forces, lead the UN forces into Haiti, in August of 2003. As of 2010 there are about 11,000 US troops and 11,000 other foreign troops and police in Haiti of which Brazil supplies about half and Brazilian generals command all of those forces. Brazil has major capacity for the manufacture of land, air and naval vehicles and weaponry and last but not least, it is also building its own nuclear submarine fleet, in co-operation with France who is also trading Brazil the technology and engineering know how to continue to expand this nuclear fleet on its own.


The total sum of all the above leaves no doubt that the Brazilian ruling class has already become an imperialist force in the world and gets stronger every day. However this spectacle of economic might exists side by side with wealth for a few and poverty for many. Is an imperialist martial power, stomping through the world on feet of clay.

In 2008, 22.6% or 34.9 million Brazilians lived below the official national poverty line. Brazil has one of the highest disparity rates of poverty versus wealth in the world. The richest 10% of Brazilians control 42.7% of the nation’s income, while the poorest 10% have less than 1.2%. Brazil’s poverty rate is clearly displayed by the urban slums surrounding its cities, the favelas, where one half of Brazil’s poor live.

In the favelas the poverty rate increases with the number of dependents in the household, 52% of the populace is not connected to potable water distribution, 68% have no garbage collection and 78% are not connected to sanitary sewage disposal or septic tanks.

Add to that 25% do not have electricity and 74% live in households where the head of the household has less than four years of schooling. These appalling conditions are the subtext for high rates of criminal activity, inequality and the frustrating inability of the poor to develop their human potential. For women this all goes double. Brazilian military is now stamping out criminal control of these areas and the government is planning to urbanize and integrate the favelas.

For the rural poor the conditions are the same or worse. In the countryside they struggle for land, particularly under utilized but arable and potentially productive land, which leads to the murder of organizers of all sectors of the landless and at times reaches the level of small civil wars. Add these conditions to the racial discrimination against the indigenous populace and against the descendents of the four million slaves brought to Brazil from Africa. Although slavery was abolished in Brazil over a hundred years ago, access to education, land, health care, rights to their land titles and employment are still problems for slave descendents. Racism is a big part of the Brazilian economic miracle.

The working class and its union organizations are active in all sectors and parts of the Brazilian economy and politics. The Central Única dos Trabalhadores (Unified Workers’ Central, known by the acronym CUT), is the main union confederation in Brazil. The CUT was formed in 1983 based on the auto and metal workers unions organized in the manufacturing suburbs around Sao Paulo. It is the main base of the Workers’ Party (PT).

The CUT is the largest and most powerful trade union federation in Brazil and Latin America, representing over 7.4 million workers in all sectors of the Brazilian economy. It is the fifth largest trade union confederation in the world. It faces ongoing obstacles to union organizing because of Brazilian laws curtailing workers’ rights to organize.

It is from the CUT and the PT from which Inácio Lula da Silva (Lula), a former metal workers union leader and leader of the CUT, rose from impoverished shoeshine boy to be an extremely popular prime minister and world figure. The workers that formed the CUT paid with their blood, sweat and tears to be a large component of the forces that overthrew the Brazilian military dictatorship.

Lula and the PT however lead a government of class conciliation designed to introduce just enough reforms to win the critical loyalty of the Brazilian working class for the imperialist project of the ruling class. In this way the working class of Brazil advances its own living standard at the cost of the workers and oppressed of all the other countries Brazil already or will in the future dominate.

It is the same process by which the trade unions in the USA and the British Labour Party for example won their roles in their national political systems as labor aristocrats or privileged workers. The PT and the CUT are following the same or similar paths in Brazil.

It was with the consent of the Brazilian bourgeoisie that Lula led the government and chose his successor, the first woman prime minister of Brazil, Dilma Roussef. Lula held office from 2003 to 2010, leading a government that made some small steps to solve the poverty problems of Brazil. As Lula was formally leaving his elected office he established a research institute to facilitate Brazilian investments in Africa.





Argentina: Tango & Rock ’n Roll


By Nicolás Barros

In the next few years the international economic and political situation will continue to benefit Argentina. However, there has been no new investment in productive infrastructure in the country. The country’s largest businesses understand the current situation. It favors them, and – aside from some minor criticism – they strongly support the Kirshner (CFK) government. The working class along with other oppressed sectors of the masses have staged a number of struggles and raised their demands. However, this has not resulted in a substantial political challenge to the government and regime mostly because within the working class there is no structure and leadership willing to confront them. There are alarming signs surrounding the actions of the sinister Peronist union bureaucracy (essentially the Hugo Moyano led CGT), the Armed Forces, the police and security forces, which remain violent, ruthless and powerful mafia like organizations.

The international economy continues to favor Argentina. The worldwide destruction of the environment has resulted in the depletion of resources such as raw materials, potable drinking water, arable land, fossil fuels, in atmospheric pollution, desertification, pollution from untreated sewage flowing into open waters, etc. In contrast to this worldwide situation, Argentina has a great advantage in terms of abundant unused natural resources.

First, food production in Argentina is a major asset. The country has a population of only 40 million and its resources could feed up to 560 million.

Secondly, there is a large reserve of skilled labor, another capacity accumulated at a relatively low cost. This is still the case despite the decrease of skilled labor that characterized Argentina after the 1970’s and the decades of general impoverishment that followed.

Thirdly, the balance of imports and exports is under control. Since 2001 the foreign debt has grown vegetatively. In order to normalize relations in the financial markets, the Kirchner administration negotiated an exchange of foreign debt for state issued bonds, which managed to extend the timeline of payments. In the process: unpaid interest was capitalized, and capital was reduced. Interest rates, contractual obligations, type of currency for payments and the mass of debt remained about the same. The end result is a debt that, provided there is a growing economy and no new indebtedness, can be paid. It won’t be a legitimate or beneficial debt, just a debt that is payable within its current terms.

It is important to mention that in recent months several provinces in Argentina, among them Buenos Aires, Neuquén, Cordoba, Rio Negro, Chubut and the city of Buenos Aires, have each received loans in amounts of between 85 and 450 million US dollars, with interest rates between 9.75% and 15.25%, which will be applied to current expenses. Although these are still low figures, the tendency is disturbing.

The only source of foreign income for the country is its trade surplus. The Kirchner administration uses these resources for:

a. The maintenance of a fund to protect itself against foreign exchange risks. Foreign exchange reserves are close to 60 billion US dollars, and are used in part to stabilize the value of the peso, the domestic currency, assuring a supply of enough resources in case of a surge in the demand for dollars. This is the policy advocated for decades by the International Monetary Fund (IMF), even more so after the collapse of Iceland, Greece, Ireland and Portugal.

b. The repayment of the foreign debt and payments of capital and interest on public foreign debt.

c. The remission of royalties, utilities, the flight of capital and payments for the license over trade names or products registered with foreign owners; repatriation of utilities (earnings after taxes) obtained by subsidiaries of transnational corporations; and payment of dividends to actionists outside of the country.

Many corporations are subsidiaries that send payments to their parent company abroad for credits they received, however many of these or similar transactions are fraudulent maneuvers used to send money out of the country.

d. Subsidizing national and international businesses and other economic sectors. The state provides subventions to a variety of entities, from private corporations like General Motors or FIAT, to entire economic sectors like oil, energy and transportation. A fourth aspect of the Argentinean economy is actually its weakest: the lack of productive investment. Although scarce investment in capital goods is a global phenomenon (except for Brazil, Russia, India and China), that does not make it any less harmful for several reasons:

1) The over utilization of existing capacity produces inflation. When existing factories, in the absence of expansion projects or adequate maintenance, are working at the limit of their capacity, the entrepreneurs react to their own decision not to increase investment and production with price increases.

 2) The trade surplus based on the production of finished commodities has deepened economic dependence by requiring higher imports of intermediate goods (materials that become part of another product) to sustain consumption. Some agricultural necessities are imported. For example in the automotive industry, 60% of parts used on the assembly line are imported. In the auto parts industry many of the components also come from abroad. This is repeated to a greater or lesser degree in electronics, chemicals, agricultural machinery, appliances, medicines and so on.

3) The maintenance cost also increases with the gradual obsolescence of capital goods, plant facilities, machinery, etc.

4) The difference obtained by the growth of sectoral productivity of exportable items does not return as physical capital goods.

5) Social training of workers is degraded as successive generations abandon formal education and, most importantly, are not engaged in formal, permanent employment at a young age. In this way they lose contact with changing work methods and practices that qualify the workers and influence their culture.

6) It results in environmental deterioration

7) It increases stress on the resources of the extractive industry, both renewable and non-renewable. It results in the disappearance of thousands of plant and animal species and forests as a sub product of the activity of industries like mining, petroleum, chemical, agriculture and forestry. It causes pollution of the coasts and watercourses, increases the emission of greenhouse gases due to intensive farming and the amount of monocultures production. Tragically, indigenous peoples are murdered by the destruction of the ecosystems that sustain them.

Despite the lack of investment, the economic situation is still relatively beneficial and, together with the social stability reached by the policies of the Kirchners, are the main reasons why the government has such strong support from the bourgeoisie. Even the arbitrary actions related to trade issues by Guillermo Moreno*, Interior Commerce Minister, or the reactions of Hugo Moyano**, leader of the CGT, howling against judicial problems of his own making, or the suggestions of price control, or the relationship with Hugo Chávez, do not become major issues and do not diminish the main contention point: business profits have been maintained and have even increased year after year. Even in the critical years of 2008 and 2009 the Argentinean bourgeoisie clearly maintained their profits.

In general the working class also has a favorable disposition towards the current government. It is true that opinions differ from sector to sector, but the most favorable opinions are found among the most exploited. The urban petite bourgeoisie is fragmented between those who are fiercely anti-Kirchner and others who have more recently come to support the government. The reason for this is tangible: unemployment remains stable, neither increasing nor decreasing, and underemployment shows only a vegetative growth. (Watch out if it grows like zucchini though!) While inflation is an important adverse factor, the cycle of negotiations of collective bargaining agreements and wage increases helps to keep the calm, particularly among the privileged sectors of the organized labor movement, those who have salaries above $5000 Argentinean pesos. For them, the main demands are tax brackets set to avoid their payment of income tax and to continue their access to good consumer credit.

From the perspective of other parts of the working class and the oppressed masses, the situation is more complex. There have been a number of important union struggles, such as those involving food processors (Kraft), oil workers, teachers, railroad and subway workers, state employees in Cordoba, together with struggles for land and housing, and protests against police brutality, etc. but none of these struggles has been able to advance beyond an elementary level. There is not a single force, more or less organized, within the working class movement (mainly industrial) that is capable of channeling sectoral demands into a broader political struggle to challenge the regime. Despite all this, these recent struggles and their results have enriched the experience of the workers, paving the way for a renewed and more militant struggle in 2011.

The most striking social consequences of the existing inequality are to be found in the conditions of extreme poverty suffered by the original ethnic population, aliens in their own land, vastly reduced in numbers, their habitats, and subsistence sustaining ecosystems stolen, and prominent only as the basis for the statistics reporting rates of death due to malnourishment.

The small towns of the interior have been reduced to ghostly railway stations and just too many old good memories. Future archaeological excavations of these places would reveal geological layer after layer of accumulated misery. They reveal the oppression of the indigenous Araucanians/Mapuches, Wichis, Tufas, of the ethnic populations of the Bolivians, Paraguayans, Peruvians, etc. and also the special oppression of women whose work is inadequately compensated and whose needs are greater, all of which is nailed to a crucifix that Argentineans pay for with their taxes.

Although Kirchnerism appears to be strong, it represents only the progressive leg of the three-legged governing coalition formed with the reactionary Peronist union bureaucracy, the same characters who once were, literally, executioners of progressive forces, and with elected Peronist officials, including the cuasi-mafioso Mayors of greater Buenos Aires and the semi-feudal governors of the interior provinces. The unprincipled arrangement cementing this government has proven to be very useful (but not without contradictions) in the process leading to a gradual return to a state of a more or less peaceful normalcy after the social revolt of 2001. To this effect the government counted on the full support of all the right wing political currents in the opposition, including the ancient Union Civica Radical; the so-called Federal Peronism; PRO, the party of Mauricio Macri, Mayor of Buenos Aires; the Civic Coalition, etc. All these forces attempted to organize an alternative to Kirchnerism, but never achieved their goal.

Another defining aspect of Argentina is its position as a country dependent on imperialism, which the current government has been unable to change. This can be illustrated by the participation of Argentina in the military forces invading Haiti. Argentina has collaborated as a supporting player in the invasion and genocide of the Haitian people under the military leadership of the USA, France and Brazil. We also have to point to the complete alignment of the government with the emerging Brazilian empire, which already, through its businesses, controls two thirds of the Argentinean economy.

We see two warning signals for Argentina in the immediate future: first the Peronist union bureaucracy and secondly the state security apparatus and its mirror in the armed forces. In the first case it is not only about the CGT as the key institution that helped the government to sail through a smooth transition, but about the leadership at the helm today – the set of unions in the CGT led by Hugo Moyano- that portray themselves as the political and ideological heirs of Peron’s legacy: my only heir is the people.

The Moyano-led unions have candidates for deputy governor, mayors, representatives, senators, councilmen and officials in the three branches of government and are establishing a new national structure called the Peronist National Trade Union Current (Corriente Nacional Sindical Peronista or CNSP).

The other warning signal is coming from the police, security and armed forces. They have gradually permeated all layers of society. They organize crime and drug trafficking, something particularly dangerous in poor neighborhoods and marginalized sectors of society. They also get involved in the coordination of private security, the “patovicas” (night club guards), or with “barras bravas” (hooligans around soccer teams) or other similar layers of repressive bodies and get involved in running of illegal gambling, prostitution rings, etc. This is a caste-like layer of society that constantly generates semiautonomous sectors seeking new businesses. It is also a tool of social control and a source of political pressure to be afraid of.

The country will most likely move in the direction of greater struggles and conflicts. Sooner or later the situation in other parts of the world will reach Argentina, the pending contradictions within the regime will explode into the open and rumblings will again be heard in the streets.

The electoral season this year could turn into a catalyst to amplify the struggles. It could offer a political opportunity for large sectors of the masses to express their disgust with the promises of the current pseudo progressive government and its sinister right-wing opposition. For this to happen, it would be necessary to build an electoral front between the left, which still remains a marginal force, and a very weak center left This would be a highly visible response to the need for political representation of important and advanced sectors of the working class and oppressed masses.

On the agenda for the near future, we see the need for building of mass rank-and-file union organizations combined with a sustained political struggle against the union bureaucracy. The fight to weaken and dismantle the omnipresent police and security forces will also be high on the list. Add to this the struggle to stop the attacks against indigenous peoples and the destruction of the environment, not to mention the long overdue battles of the agrarian revolution. All of these issues will be resolved as part of the historic struggle for a socialist transformation of Argentina and world society.