Source:
Rede Brasil
Magnolia Azevedo Said
Fri Jan 12 2007
Policies should be analyzed by taking into account their origin, their formulation and the impacts they may cause. Arising from a colonizing vision and being inspired by neo-liberal principles, IFIs policies have been implemented in different continents for over 60 years. Thus, adjustment Programs have been used in order to make the necessary resources available for payment of debts undertaken by loans and also for the fulfillment of trade agreements. Brasil now are facing a "virtuous growth cycle" but inequalities remain within the same absurd standards.
One-sided thinking poses an obstacle to processes of maladjustment in the political, social and economic organization of states. Said maladjustments are the result of an structural adjustment policy, supposedly aimed at fulfilling a commitment to honor the financial debts held by those states. The fact is that the power of capital becomes effective in an uncontrollable way and political citizenship remains constrained to the frail expression of social movements, when it comes to join the debate on debt and development. In Brazil, said frailty is also noticeable in the National Congress, mostly made up by representatives of national elites and international speculative capitals, whose actions are aimed at ensuring the necessary regulatory framework for the implementation of neo-liberal policies. As a result, Congress nowadays is a place that has been emptied of content and duties, by dint of its role deviation. This is the case when it comes to international agreements, treaties and acts related to loan operations. Article 52 of the Federal Constitution, for instance, which deals with the exclusive competence of the Federal Senate, is systematically ignored in terms of the political bond established with Multilateral Financial Institutions (MFIs), as a result of recurring loans. The Economic and Financial Order (art. 170) has its general principles undermined every time the economic-financial activity is carried out at the expense of an existence that turns out to be rather indecent for all men and women. Nothing is fulfilled. Everything becomes liberalized by the economy, so long as the market god is not contradicted.
Among several questions, some are:
* Is it possible to achieve a sustainable development, imposing silence on IMF, WB, IDB and WTO policies?
* Is it possible to passively accept the role undertaken by MFIs as enhancers of authoritarian and populist governments and exploiters of poor people?
* Is it possible to alter the path taken by the country from the perspective of an emancipating society, when the macroeconomic scenario heads towards the same subservience to market interests, the same lack of responsibility towards wealth preservation within our country and the same policy that undermines major state institutions?
It would indeed be possible, once public institutions were re-built and our history was re-made in the light of the confrontation with US hegemony. It would be enough if Brazilian people acted as political subjects, thus breaking – according to Cesar Benjamin – “with the internal structures that perpetuate inequalities and the external ones that perpetuate dependence”.
The fact is that nowadays economic indicators are quite positive and it is on these indicators that the Lula administration relies when stating that the country is doing well, not having been even shaken by the recent political crisis. However, this field is mined with contradictions and ambiguities: the economy grows but fails to be joined by employment; loans granted to pensioners encourage short-term consumption but bring about long-term indebtedness; family consumption increases but the production of goods remains insufficient; there is an increase in trade but the one harvesting profits – as a result of imports – is the Chinese and Asian trade, due to the lack of domestic production; income distribution was improved by means of compensation programs but the rich get increasingly richer and gender and race inequalities remain within the same absurd standards.
In fact, everything converges so as to maintain a logic that links productive to financial capital, where, for instance, financing a car is more important than selling it, given the fact that the company profits from high interest rates. All of this leads to the choices made by the government and subjected to the International Financial System in the economic sphere.
The “social results” of the federal government have been justified by the economic results of the government policy, whose indicators are related to primary surplus, fiscal responsibility, reduction in country risk, and maintaining external credibility. That is to say, the government aims to prove that such economic policy was instrumental in carrying out the “world’s largest income distribution program”, as stated by President Lula. Thus, he manages to conceal Brazil’s largest scandal ever – which is the payment, year after year, of huge interest rates and service on an illegitimate public debt, the reasons of which are altogether bypassing debate within society.
On the other hand, such income transfer has not resulted in a distribution of income with a clear impact on the reduction of inequalities. In fact, the aim of the model applied has favored an increasingly higher wealth creation among Brazil’s 20,000 richest families and has generated bulky profits for the six largest private banks operating in the country.
Policies should be analyzed by taking into account their origin, their formulation and the impacts they may cause. Arising from a colonizing vision and being inspired by neo-liberal principles, MFI policies have been implemented in different continents for over 60 years. Thus, adjustment Programs have been used in order to make the necessary resources available for payment of debts undertaken by loans and also for the fulfillment of trade agreements.
Said policies destroy the idea of universal public policies. Poverty is no longer considered as an economic problem and starts just being addressed as a social problem, that is to say, the poor are regarded as a social pathology, which therefore resulted and will result in the failure of such policies within the current economic model. There still remain compensation policies rather than the solution of structural problemas that could lift poor people out of that situation.
Brazil lives through cycles: the cycle of patrimonialism, the cycle of development, of modernity, all of them highlighted for being a counterpoint to the so-called backwardness forces. At the present time, we are facing a “virtuous growth cycle”, supported by major works: hydroelectric dams, refineries, steel works, ports, as anchors for a development model that was conceived in the Washington Consensus and became materialized through policy guidelines and conditionalities imposed on the continent and on the agreements signed between MFIs and the Brazilian government. Thus, the implementation of domestic public policies is attached to the economic and geopolitical projections carried out by such institutions to design their own map of the world.
The interventions of these institutions in the country are of all kinds, ranging from economic to political, technical, social and environmental assistance, thus determining our public policies. So many years of blockade regarding the implementation of a sustainable development project have led to a belief in the inexorability of thinking about development finance without the endorsement by these institutions. In this way, a subservient contract is entered into between the government and MFIs, which has been sustaining the Brazilian public debt, making the conditions of extreme injustice endured by most part of the population irreversible.
Nevertheless, the course undertaken by our financing for development and the path followed by the crises faced by the World Bank, the IDB and the IMF, in the fields of legitimacy, finance and confidence in what is being said with regards to their paradigms of policies applied, can be a historical opportunity for civil society to promote a strategy aimed at the disempowerment of MFIs, taking the following as starting points:
1. Discrediting the reasons that may enable the Brazilian government to justify the payment of external and internal debts by means of an audit;
2. Rejecting conditionalities to the disbursement of loans as well as unilaterally defined clauses in contracts;
3. Separating loan requests from the processes of budget implementation within the Union of States;
4. Making a civil society monitoring system feasible to follow the negotiation, implementation and evaluation of impacts caused by banks’ projects.
Only in this way can the foundations for a development project start to be laid, aiming at recovering the country’s patterns of equality and sustainability. In this respect, the existence and importance of development finance institutions shall only be justified by virtue of their real contribution to an autonomous, inclusive and fair development project at national level.
Magnolia Azevedo Said is member of the executive coordination of Rede Brasil on Multilateral Financial Institutions
This article was first published in Portuguese language at Rede Brasil Newsletter - December, 2006. See full newsletter
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