Brazil’s crisis deepens as truckers stay on strike

Oil workers threaten to down tools as pressure on centre-right Temer government grows

Brazil faced a deepening crisis as the nation’s truckers refused to abandon a crippling strike despite a series of concessions from the government and other workers threatened to join the movement.  With the strike entering its second week, truckers on Monday ignored an offer from Brazil’s President Michel Temer to cut the price of diesel by about 12 per cent, leaving cities in Latin America’s biggest country without fuel at petrol stations and with growing shortages of essential goods, from fresh fruit and vegetables to medicine.

The strike, which forced the reduction of public transport services in key cities and the culling of more than 70mm chickens due to lack of feed in the world’s largest poultry exporter, was set to worsen with oil workers saying they would down tools on Wednesday.

“Our intention is to put an end to the national congress,” said Francisco Antônio Rodrigues, a driver sitting by his truck at a protest in São Paulo’s Régis Bittencourt highway. “We want the military to intervene to take out that band of thieves who are in there.”

The truckers’ strike is proving a test for Latin America’s largest economy, which is still struggling to emerge from its worst recession in history and faces elections in October that are shaping up to be its most unpredictable in years.  The strike erupted last week after rising international oil prices and a rapid depreciation of Brazil’s currency, the real, against the dollar led to soaring fuel prices.

In a country that is almost wholly dependent on road transport, the truckers’ strike is putting growing pressure on the centre-right government of Mr Temer, who came to power with the impeachment of his leftist predecessor Dilma Rousseff in 2016.

Brazil’s ‘new’ middle class holds key to election Already one of the most unpopular presidents in Brazil’s history, Mr Temer and the congress are viewed with suspicion by voters following a sweeping corruption probe into state-owned oil company Petrobras and other business groups, analysts say.  “This is a negation of the political class,” Carlos Melo, a political scientist with Insper, a business university in São Paulo, said of the strike.

The truckers’ strike was precipitated by a policy from Petrobras of marking prices daily to international prices, analysts say. Past leftist governments offered subsidised prices. Since the policy began last July, Brent crude has risen 57 per cent while the Brazilian real had depreciated 12 per cent, leading to increasing complaints from truckers, who claim they were unable to make a living.

Petrobras shares have fallen about 38 per cent from their highs in mid-May. The strike was likely to hit economic growth in the second quarter after what was expected to have been a flat first three months of the year, said André Perfeito, an economist with Spinelli stockbrokers in São Paulo.  “Is it the end of the world? No,” he said, adding that Brazil had strong foreign exchange reserves and a small current account deficit.

But Mr Melo said the Temer government had made errors dealing with the crisis, first by ignoring earlier complaints from truckers’ unions about diesel prices, then by offering concessions without forcing the truckers to offer something in return.  After the price cut was granted on Sunday night, the truckers refused to abandon the strike. When the president tried to get tough, calling out the army last Friday, the measure proved equally ineffective.

Mr Melo said talk among the strikers of a military intervention stemmed from the fact that Brazil was facing a combination of crises including high unemployment and a crime wave. While he said the military probably did not want to intervene in politics, Mr Temer had repeatedly summoned it to interfere in civilian matters — earlier this year announcing a state of military intervention in crime-hit Rio de Janeiro.  “They are inviting the vampire into the house,” Mr Melo said.

Among the truckers in the Régis Bittencourt, there was no sign of abandoning the strike. They said they had organised themselves spontaneously across the country through WhatsApp and social media, such as Facebook — not through the unions, which they distrusted.  Large banners attached to their trucks said: “The unions don’t represent us”. Passing cars — the few that still had enough petrol to take to the road — tooted their support, showing popular backing for the truckers’ cause.

“Our taxes are the highest in the world, our vehicles are the most expensive, everything is the most expensive, full of taxes. They [the politicians] rob too much, corruption is very big in politics here,” said Leico Rodrigues, the son of Mr Rodrigues.

Copyright The Financial Times Limited 2018. All rights reserved.

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