London Argues Military Dictatorships May Be Required To Defend Its Economic System

Nov. 26, 2019 (EIRNS)—The Financial Times Editorial Board yesterday warned Brazilian President Jair Bolsonaro that he is not allowed to have “second thoughts about handing free rein to a minister who studied economics at the University of Chicago in the 1970s.” The minister in question is Finance Minister Paulo Guedes, who that very day told reporters in Washington, D.C. that if mass protests spread into Brazil from the rest of South America, military dictatorship may be imposed to crush it.

Such a message is clearly not aimed solely at Brazil.

Bolsonaro has done most of what London’s man Guedes demands. The government succeeded in getting Congress to pass a law gutting the social security system (something sought by international financiers for decades), and it is proceeding on other “reforms”: privatizing the state electricity company, ending the government monopoly on minting currency, mandating automatic austerity triggers for states and municipalities if they go over spending limits, and tax overhaul, among them.

Bolsonaro only postponed implementation of one “reform,” which would cut public workers’ wages and rights. The FT, however, recognized that this hesitation reflects fear that a process akin to Chile’s “popular uprising [against] Friedmanite economic policies” could break out in Brazil, where former President Lula da Silva’s release from jail could be a factor. Lula “has lost no time in labelling Mr. Guedes a destroyer of jobs and rallying opposition,” the FT editorial board complained.

“Far too much is at stake for Brazil to risk its economic reforms foundering on the rocks of populism. Latin America’s giant has already waited inordinately long to put government finances on a sustainable footing and to make the country a more attractive place to do business. If it misses the opportunity now, the window for change will close, perhaps for years, and international investors will turn elsewhere,” the City of London’s FT threatened. “Mr. Bolsonaro should keep his nerve....”

Guedes, in Washington for meetings, when asked about Lula’s calls for mobilization against his economic “reforms,” suggested the military government’s 1968 “Institutional Act-5” (AI-5) may have to be reinstated. Under AI-5, Congress was shut down, mass arrests began, and torture was institutionalized as policy. “Is democracy only when your side wins? When the other side wins, after 10 months you convoke everyone to take to the streets? What kind of responsibility is that? Don’t be startled if someone asks for an AI-5,” Guedes threatened.

President Bolsonaro’s son and political ally, Eduardo, suggested reinstating AI-5 in November. Then, the Supreme Court remained silent. But London’s Guedes wields far greater power, and the head of the Supreme Court, Dias Toffoli now responded: “AI-5 is incompatible with a democracy.... You do not build a future with the failed experiences of the past,” he said.