Transport strike in BrazilFew events in the past 30 years have had such a sudden, devastating and unexpected impact on Brazil than the 11-day transport strike by the country’s lorry drivers that began on 21 May. There is a fair chance that it will be seen as a turning point in Brazilian history because it has helped unleash forces that will determine the country’s political and economic future for years to come.

The truck drivers were demanding: that the government cut the domestic price of diesel — driven higher along with world oil prices and the shrinking value of Brazil’s real (BRL) against the US$ — and move to control highway freight rates which have been driven lower by the country’s recession. To back up their demands the drivers stopped the movement of nearly all cargo on major highways in 23 of the country’s 27 states.

Transport strikes are not uncommon in Brazil; most last only days and, even when serious, their impact is regional or sector-specific. Businesses might suffer losses but the average Brazilian is rarely affected. The Constitution, while guaranteeing the right to strike, prohibits strikers from preventing the supply or production of basic goods such as food and fuel to the general population. There are serious financial penalties for trade unions and individual truckers in order to help limit militancy.

A strike of this magnitude, however, is unprecedented, and with 60% of all goods transported by road much of the country soon ground to a halt.  Less than a week after this protest began, much of Brazil had run out of fuel. Sao Paulo and Rio de Janeiro bus services were reduced by half or more which caused chaos on public transport. With service stations lacking petrol and ethanol, passenger vehicles and motorcycles streets stopped circulating, which left the usually heavily congested streets of Sao Paulo and Rio de Janeiro nearly deserted. Police cars were withdrawn from service — thereby allowing gangs to move into formerly safe public areas — and ambulance services were curtailed. Airports ran out of jet-fuel which forced the cancellation of hundreds of flights and stranded thousands of passengers. A shortage of bottled liquefied petroleum gas (LPG) made it impossible for millions of people to cook their meals.

Schools and universities suspended classes while hospitals — lacking medicines and other essentials such as oxygen — closed their doors to all but emergency cases and cancelled non-essential surgery. Government services were suspended and companies were forced to reduce their activity or close up all together.

Crops rotted in the fields, stacked high in warehouses, or stuck on one of the thousands of trucks loaded with perishable goods stuck at strikers’ roadblocks. Unable to get new supplies the supermarket shelves were bare and the price of market vegetables skyrocketed.

An estimated 70 million chickens and hundreds of thousands of pigs died or were destroyed because of the lack of feed. The lack of transportation made it impossible to even give away more than a fraction of the slaughtered animals for free or move the carcases to landfills for disposal. Dairy farmers were forced to pour 360,000 litres of milk down the drain. The Confederação Nacional de Agricultura (CNA) — the country’s largest farmers’ organisation — estimate that the agricultural sector’s losses from the transport strike at more than BRL6.6 billion (US$1.68 billion), despite lasting less than two-weeks.

Even as daily life returns to normal, however, the consequences of the transport strike promise to far exceed, and last far longer, than its immediate and astonishing impact on Brazilian society. Not only has it already undermined the country’s slow recovery from recession, but the agreed deal to end the transport strike has already undermined Brazil’s fragile public finances and shattered investor confidence in state-controlled Petrobras.

It has also exposed the fragility of the country’s political system as it struggles to redefine itself. Not only was the government totally caught off guard by the strike but it happened at a time when the political system is in its most chaotic state for three decades. Much of the political elite, including President Michel Temer himself, are under investigation for corruption. Politicians from nearly all major parties have been: arrested on suspicion of wrong-doing and are being held without bail; are under active indictment; or are already convicted and sentenced to long prison terms.

In the midst of the confusion, with leaders preoccupied with saving their own skins, the transport strike quickly spiralled out of control as both left and right wing politicians sought to use the government’s chaos and unpopularity for their own advantage. Transport companies — normally a key target of strikes by truckers and often owned by important supporters of the ruling coalition — openly or clandestinely backed the protests. Many willingly joined the transport strike but many others who wanted to work found themselves locked out by companies whose executives were recorded making militant speeches in support of the strike.

Even as they suffered from the strike’s effects, many Brazilians decided to support the strikers, often for no other reason than to express their opposition to the Temer government. The strikers cause was also helped by the strong and persistent support for petroleum nationalism and a belief that Petrobras was partially responsible for the disruption because it had unfairly raised diesel prices. Now that Brazil has surpassed Venezuela to become South America’s largest oil producer, many Brazilians of all economic and social classes cannot understand why Petrobras considers it necessary to adjust fuel prices in line with world crude prices, or how holding prices artificially low might undermine its ability to invest. Serious commentators claim that the policy is a sop to foreign investors while ignoring that the biggest single beneficiary of Petrobras profits and dividends is the Brazilian government.

Others — including some Petrobras employees who were interviewed this week — dismiss the idea that Petrobras faces any serious financial problems as a result of the Lava Jato corruption scandal, or any real limits to its ability to invest. A considerable number of people fervently believe that the corruption allegations surrounding Petrobras were part of a political witch hunt by those seeking to cede control of Petrobras to foreign investors. This explains why former president Luis Inácio Lula da Silva (2003-2011) — currently serving a 12-year sentence for corruption and racketeering — remains the most popular choice for president despite his conviction making him ineligible to run in the coming election.

Calls from right-wing populists — nostalgic for the country’s 1964-1985 military regime — to call out the army to smash the transport strike also exploded into view with supporters openly unfurling banners for TV cameras covering the strikers’ blockades. This made many moderates — including those who considered the truckers’ fuel and rate control demands economically insane — loathe to support the use of force against the truckers’ road-blocks for fear that militarists might use the action to rally support for authoritarian candidates.

Amid the expanding political chaos and lack of strong leadership, leading presidential candidates have shown themselves equally as afraid to anger those who have been harmed by the strike as they are to alienate the truckers and their supporters. Several have split the difference by expressing deep concern about strike’s impact while insisting that the drivers’ goals are just. Candidates in the middle — and especially those who have long opposed the kind of market intervention that the truckers were demanding — kept their mouths shut.

President Temer, unprepared and under fire from all sides, quickly acquiesced to the drivers’ demands. He then issued a decree allowing the use of the army to help police to clear blockades by the most militant truckers and to escort essential supplies such as fuel and medicines to service stations and hospitals. Temer, who had previously refused to rule out his own run for president this year, has now finally pulled out of the race.

The settlement agreement has, however, only unleased new problems. The cost of reducing the price of diesel by BRL0.46 per litre for at least 60 days is expected to cost the Treasury BRL9 billion (US$2.9 billion). This has already forced the government to cut spending on social services, including education and health care, and increase payroll taxes at a time of high unemployment.

This article was taken from our Brazil Politics & Security publication. For information on this article or to talk to our team about your business in Brazil then please contact us.