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Пишет Misha Verbitsky ([info]tiphareth)
The current crisis in Brazil, in fact, is to a great extent due to Cardoso’s over-dependence on multinationals and international financial institutions to develop Brazil’s economy. As an ECLAC study of Brazil’s services sector shows, multinationals never act as agents of national development. The major goal of multinationals is to gain access to the national market rather than to maximize exports, not to speak of creating employment. Again, access to local markets is obtained not so much through the creation of new facilities as by purchasing existing assets. Therefore, the host country rarely earns any additional foreign exchange from exports of products made by multinationals.

On the other hand, removal of protectionist barriers, a crucial aspect of liberalization, results in surging imports, leading to an inexorable rise in the trade deficit of these countries. Brazil is no exception. While, in the early 1990s, Brazil was running a trade surplus to the tune of US$10-15 billion a year, by 1997 it was transformed into a deficit of US$8.3 billion. The pegged exchange rate, which Cardoso held on to for long, furthered Brazil’s woes by making Brazilian exports expensive compared to those of its competitors with flexible exchange rate regimes.

Unrealistically over-valued currencies in an open economy sooner or later spark off speculation about imminent devaluation. This in turn leads everyone to converting the domestic currency into US dollars, putting even greater pressure on the former. Often, the national government is forced to suspend conversion or freeze accounts, partially or entirely, to prevent mass withdrawal of domestic deposits from banks by nervous investors who fear that inevitable devaluation will greatly diminish their holdings in real terms and therefore want to convert their holdings into US dollars. The rising demand for US dollars makes the country even more dependent on foreign capital and leads to an unsustainable current account deficit. Even a momentary lapse of investor confidence in the performance of the economy results in capital flight, leaving the country’s economy in the lurch.

Brazil under Cardoso has been a classic case of the above. In a bid to attract more foreign capital, the country raised its interest rates too high, encouraging the entry of short-term speculative funds that are prone to overnight escapades. The crisis worsened in late 2000 when Brazil was hit by a series of international shocks – recession in the global economy, a looming default in Argentina, a domestic energy crisis triggered by investment cuts and a mal-advised privatization programme. Inflow of foreign capital fell sharply and the currency depreciated further. Cardoso raised interest rates again in early 2001 in a bid to prevent the outflow of foreign capital. And he begged the IMF to help Brazil regain the confidence of international financial markets. The IMF agreed, in August 2001, to a new fifteen-month Stand-by Agreement. The deal was worth US$15 billion, with an immediate tranche of US$5 billion to boost foreign reserves. In exchange, Cardoso agreed to raise Brazil’s primary budget surplus from 3 per cent of GDP in 2000 to 3.35 per cent in 2001 and 3.5 per cent in 2002. To be eligible for the recently negotiated US$30 billion loan, the percentage has been raised even further to 3.75, a rate that has to be maintained till 2005.

This, then, is the genesis of the crisis Cardoso has landed Brazil in. Ironic, for Cardoso had initially entered the political arena as a bitter critic of ‘dependent development’, criticizing the association of national with international capital in the periphery of the world system for perpetuating “deep social and economic inequalities, loss of control over the direction of national development, and vulnerability to external financial shocks”. In his former incarnation, he had said that dependent development “occurs because both state and business pursue policies that create markets based on concentration of income and social exclusion of most of the population. . . . The conflicts between the state and big business are not as antagonistic as the contradictions between the dominant classes and the people.”

https://www.networkideas.org/news-analysis/2002/08/the-imf-bail-out-for-brazil-in-whose-interests/


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