Brazil’s president Michel Temer and senior lawmakers are still unwavering in their support for a major pension reform despite nationwide protests against the proposal and the dramatic expansion of a graft probe threatening the ruling coalition.
Moody’s Investors Service added a vote of confidence in the government, citing the ongoing progress of fiscal reforms as a reason for revising its outlook for Brazil’s sovereign credit rating to “stable” from “negative.”
Brazil’s currency and benchmark stock index both rose around 2.0% on Wednesday, leading a rally in Latin American assets after the U.S. Federal Reserve signaled a gradual pace for interest rate rises.
Recent developments underscored that the political momentum is still in President Temer’s favor as he pushes head with an unpopular austerity agenda that has drawn opposition into the streets, but retained the support of congressional leaders.
The public backing from legislative allies was particularly important after Brazil’s top public prosecutor moved on Tuesday to target dozens of senior politicians as part of a corruption probe centered on kickbacks at state oil company Petrobras.
Despite the snowballing investigation and well-organized union resistance, Thomaz Favaro, a political analyst with global consultancy Control Risks, said Temer has built a more robust coalition than his predecessor, Dilma Rousseff, who was impeached last year as the Petrobras scandal gained steam.
“The coalition behind Temer has proven to be more stable than Dilma’s and will continue to be so despite corruption investigations, due to the degree of ideological affinity that unites it on business initiatives and concern for Brazil’s fiscal position,” he said.
Asked if the scandal would interfere with the legislative calendar, Senate President Eunicio Oliveira and House Speaker Rodrigo Maia said nothing had changed. Both said investigations would give a chance to clarify allegations in the press.
Their steadfast support contrasted with rowdy demonstrations that occupied the finance ministry in the capital Brasília and snarled traffic in the business hub of São Paulo to protest Temer’s proposed reforms.
The impact of a strike by public transportation workers was lighter than anticipated in Rio de Janeiro and other smaller cities. Still, an afternoon march drew tens of thousands to Avenida Paulista, a midtown thoroughfare in São Paulo, where ex-president Lula addressed the crowd.
The protests highlighted well organized union resistance to limiting pension benefits and raising the retirement age as the government has proposed.
A smaller demonstration in Rio was marked by clashes between masked protestors and police, who used tear gas to control the crowd.
Temer told small business owners in Brasília that pension reform was essential to lifting the economy from its worst slump on record and closing a huge fiscal deficit before it triggered an even deeper crisis.
“We can’t do something too modest now or in four or five years we’ll have to follow the example of Portugal, Spain, Greece and other countries that had to make a much bigger cut because they didn’t take preventative measures,” he said.
The Voice of the Streets
Representatives of more than 170 civil organizations demonstrated at Brazil’s Chamber of Deputies Tuesday (March 14) against the pension system reform proposal being discussed by a special committee at the house.
The protesters presented an open letter to the head of the committee, Carlos Marun, from the PMDB party, asking them to dismiss a constitution amendment bill (PEC 287) to overhaul the rules of the country’s pension system.
The letter argued that the bill “is based on false premises and violates social rights in many ways.” They also urged the lawmakers to discuss the matter with the society to work out alternatives for improving the social security system and stop the drive to revoke social rights.
Moreover, they went on, the reform proposal will disfigure the pensions system and make retirement and other social security benefits difficult to attain.
The main objections include a minimum eligibility age of 65 for men and women to retire, a requirement of 49 years of contribution into the pension system as a condition of eligibility to the full amount of the retirement benefit, and fixing bereavement and welfare benefit amounts below that of the minimum wage currently in effect.
After the demonstration, Claudio Lamachia, federal head of the Brazilian Bar Association (OAB), urged discussing the matter further before putting a bill to change the pension system to vote. “We understand a reform is needed, but it cannot be a setback or threaten people’s rights.”
Lamachia said there are unanswered questions that should be addressed. “The very question as to the existence of a social security deficit in the first place. This is an issue that calls for transparent debate, and that’s what we ask of this House,” he explained.
“We are here to say, in an orderly, organized, and clear manner, we want this matter to be discussed more transparently.” For Lamachia, the pension reform is too relevant an issue to be put to vote in parliament without listening to the society.
Acts of vandalism, congested traffic, and halted trains and metro lines marked the National Day for the Fight against the Labor and Pension Reforms, against the overhauls under deliberation by special commissions at the Chamber of Deputies. President Michel Temer has reiterated his pleas for lawmakers to approve the changes as quickly as possible.
In the early hours, members of rural movements stormed the Finance Ministry, in Brasília, after breaking glass windows in the building.
The protest gathered around 500 people, some of whom accompanying children, the Military Police reported. According to the Landless Workers’ Movement, however, 1,500 people convened for the rally.
At least two protests against the pension reform caused an impact on the traffic in major thoroughfares in downtown Rio de Janeiro. Members of the Internationalistic Homeless Front (FIST) marched all the way to the city center.
The rallies slowed down the traffic on Brasil Avenue, the main connection between north and west zones to the city center.
Port workers staged their demonstration outside the entrance to the Port of Rio de Janeiro.
The city of São Paulo woke up Wednesday without its chief means of public transport, the metro, which serves some 3.2 million people. Also, nearly all bus lines were halted, and the traffic was blocked in several areas due to the stoppages.
The decision of metro workers to join the countrywide movement violated a court ruling which stipulated that operations were not to be interrupted in the rush hour (6-9 am, 4-7 pm) and were allowed to be reduced to 70% in other time periods.
To alleviate the traffic congestion, the authorities suspended the city’s mandatory license-number rotation for vehicles, allowed the use of bus-dedicated lanes for all vehicles, and removed the fees for parking spaces in the blue zone.
In addition to the increase in the number of cars on the streets, further hindrances were brought about by blocks in at least five locations in the city.
In Salvador, the Military Police announced that some 9 thousand took part in the demonstrations, most of them bank workers and education professionals.
According to Cedro Silva, president of Bahia’s Unified Workers Central (CUT), the rallies are a way for workers to resist the proposal for the labor reform.
“We won’t let millions of workers to be harmed with this reform, because the people have not been heard. We won’t let this reform be approved, because it’s a setback for the country,” the union leader argued.
One of the most controversial topics in the labor reform is that it allows internal deals between employers and workers to supersede the law, which may lead to a change in the work day, among other things.
As for the pension overhaul, the great debate centers on setting the minimum age for men and women at 65, abolishing the possibility or retiring for length of contribution, currently set at 30 years for women and 35 for men.