The economist and former head of the São Paulo State Department of Finance Leda Paulani spoke with Brasil de Fato Radio last week during the weekly show “No Jardim da Política” on the economic measures the far-right Jair Bolsonaro administration wants to implement, and which are pushing Brazil into an abyss of ultraneoliberalism.
Paulani, a professor at the Department of Economy of the University of São Paulo and a visiting professor at the Federal University of the ABC Metropolitan Area, said a “tsunami of privatizations” is expected to worsen in the future government, to start on Jan. 1. “Major public banks, the Petrobras, which is a publicly traded company, and whatnot. Those people are targeting all that.”
Paulani also spoke about the relationships between foreign policy and economy in the future Brazilian government.
Read the highlights of the interview below.
No Jardim da Política: How do you see the government-elect’s measure to merge the ministries of Finance and Planning under the same “umbrella?” What are the pros and cons of having a “super-ministry” granting so many powers to Paulo Guedes?
Leda Paulani: Not a lot of information was actually announced. He didn’t even have a campaign platform – not just for the economy, but for many other areas as well. What happened is that, regardless of not having an actual platform for the economy, we can assume what to expect considering the characteristics of the so-called “super-ministers” like Paulo Guedes.
He [Guedes] is an ultraneoliberal economist, a type that thinks there shouldn’t even be governments to begin with. However, because there needs to be governments in a capitalist economy, because they have to make sure there are rules in a market economy and contracts are legally enforceable. So they accept the government, but it has to be as small as possible. It has to interfere as little as possible with the market game.
That deepens the neoliberal program that was completely embraced by the [Michel] Temer administration. Actually, the previous PT [Workers’ Party] administrations did not abandon neoliberalism. Many times, their economic policy was neoliberal, but somethings were against it. For example, they stopped privatizations. Even the social programs [they implemented], because of their impact, ended up strengthening the government, which was not really accepted by [laissez-faire economic] liberalism and neoliberalism. The foreign policy [in the PT administrations] was the opposite of what was expected for a neoliberal country as well.
The Temer administration [that came into power after the ousting of PT’s Dilma Rousseff] changes all that and implements text-book laissez-faire economy policies. The Bolsonaro administration will take that even further. There is no doubt about it, because of Paulo Guedes’ profile.
What does that mean?
Well, it means every attempt to further reduce the role of the government. At the core of this, it means continuing to remove labor rights, pludering labor rights, and even the Pension Reform and such a high level of privatization.
It means selling everything that, one way or another, survived this tsunami of privatizations that has been taking place since the 1990s. Major public banks, Petrobras, which is a publicly traded company, and what not, but it is still state-run. Those people are targeting all that.”
The next administration has made announcements about its economic policy that could strongly impact the economy. One of them is taking sides in this US-China trade war. Bolsonaro has also spoken about moving Brazil’s embassy from Tel-Aviv to Jerusalem.
Brazil’s three biggest export commodities today are: iron ore, soybean, and crude oil. And China is our biggest partner. We also have Arab countries [buying] beef, which is the fifth or sixth [top-selling] commodity. After oil, there’s coffee and sugar. We only have one manufactured good on our top-ten export products list, in terms of revenue, which is cars. And our main car buyer is Argentina, a country Bolsonaro is also at odds with, because he said he wouldn't visit Argentina first because he learned [Argentinian president Maurício] Macri made compliments to Fernando Haddad [the Workers’ Party presidential candidate in the country’s 2018 election] at some point in his life. That’s unbelievably childish.
I think exporters are making a lot of moves to try and fix the damages [of Bolsonaro’s remarks and threats], because the big capital of agricultural goods and low added-value goods – and that’s what we’re becoming, unfortunately – is probably not feeling very comfortable with that kind of statement. Because he’s putting the country at odds, from a diplomatic point of view, with Brazil’s biggest partners in terms of exports.
If we are relatively comfortable right now in terms of external accounts, because of the level of reserves we were able to accumulate, and that’s because these products were very successful in recent years in terms of prices and volumes.
There’s also Bolsonaro’s remarks about Mercosur. He said he will not give Mercosur agreements priority.
No wonder the CNI [National Confederation of Industry] is against this, because our partners who buy Brazil’s few manufactured products, where we have some relevance and importance, are Mercosur countries. Regarding cars, nearly 100 percent of sales are for Latin American countries, most of them Mercosur members.
Before the 2016 coup, when Celso Amorim, whom I respect very much, was the minister of Foreign Relations, Brazil’s foreign policy was proud and energetic. Proud because there was no unconditional alignment with anyone, energetic for mobilizing forces from places other than the more developed countries, to re-balance the world somehow, through diplomacy. Diplomacy has effective, concrete consequences.
In everything around the Brics [trade bloc including Brazil, Russia, India, China, and South Africa], Brazil played a key role, it held the secretariat. Brazil’s diplomatic will to effectively build the Brics was crucial, as it was with Mercosur. That upsets an imperial, imperialistic country like the United States. They are not happy about that. They saw potential rivals – not so much Brazil, but China, Russia, and India coming together with Brazil and South Africa. A power started to develop and that started to bother them.
The same happens with Mercosur, because if Mercosur becomes stronger, the virtually automatic alignment Latin American countries have had throughout the 20th century with the American policy would cease to exist.
That happened when several Latin American governments were taking a centrist and center-leftist turn. That strengthened the Mercosur idea and, in this sense, impacted the Americans’ interests.
The Bolsonaro administration is already clearly and unconditionally aligned with the American government. It’s once again a passive, subservient relationship. Instead of being proud, it becomes subservient to the great American power, as if this were a good measure for the economy, and it’s not.
*With collaboration by Juca Guimarães
Edited by: Cecília Figueiredo