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Can The Sinking Brazilian Economy Be Saved?

President Rousseff has abandoned big spending projects in favor of currency devaluation to fuel exports. Will it save her presidency? And more importantly, this BRICS nation's floundering economy?

A cargo ship in Brazil
A cargo ship in Brazil
Eleonora Gosman

-Analysis-

SÃO PAULO — The only positive note for Brazil in the deplorable start to 2015 has been state prosecutor Rodrigo Jano's decision to leave President Dilma Rousseff out of the Petrobras corruption scandal. But economic data may not be so kind to her.

The price of the dollar most recently broke the barrier of three reais, the Brazilian currency, which means a 22.6% devaluation compared to March 2014 and an 11-year low. Likewise, there have been no optimistic reports on industries such as car manufacturing, which is a major employer.

Production has fallen 28.9% year-on-year; unsurprising, given that at least 1,800 people lost their jobs last February. Congress is expected to vote for a cost-cutting program, so the current political crisis definitely doesn't favor economic recovery.

Economists such as Luis Carlos Bresser Pereira, a minister under President Fernando Henrique Cardoso, believe that big spending cuts are necessary. According to Bresser, "Dilma is not orthodox" in economics, but "she is doing what she has to do." He says she has had to curb overgenerous subsidies, abuses of the system and "mistaken" tax breaks. "There is nothing more in tune with development policies than setting the finances straight," he says. "Instead of providing tax incentives, she is adjusting the exchange rate."

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Rousseff, "not orthodox" in economics — Photo: Porto Alegre - RS

The prominent economist maintains that circumstances have led Rousseff to change her economic model. She therefore dropped the policy of boosting growth with public works projects, which previously generated jobs and internal demand, and opted instead for an export-based project. In the case of industry, Bresser says, this should create conditions for reviving production and jobs.

Other experts — while not questioning the concept or considering whether it's orthodox or unorthodox, development-oriented or neoliberal — believe the measures Rousseff has taken in her second presidential term are not enough to push the economy out of recession. Pedro Varkanian of Mackenzie University says the economic situation is "highly challenging" for combining the worst factors: stagnation and rising inflation.

This economist believes Brazil is about to enter into stagflation, a situation Argentina has suffered on more than one occasion, most recently during the period after 2001. Varkanian says the dollar's increased value "leads to an increase in the price of imported consumer goods," and has a generalized inflationary effect. Add to this the government's price hikes for transport and electricity, and these will inevitably have an effect on working-class incomes and spending, Varkanian says.

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Indigenous Women Of Ecuador Set Example For Sustainable Agriculture

In southern Ecuador, a women-led agricultural program offers valuable lessons on sustainable farming methods, but also how to end violence.

Photo of women walking in Ecuador

Women walking in Guangaje Ecuador

Camila Albuja

SARAGURO — Here in this corner of southern Ecuador, life seems to be like a mandala — everything is cleverly used in this ancestral system of circular production. But the women of Saraguro had to fight and resist to make their way of life, protecting the local water and the seeds. When weaving, the women share and take care of each other, also weaving a sense of community.

With the wrinkled tips of her fingers, Mercedes Quizhpe, an indigenous woman from the Kichwa Saraguro people, washes one by one the freshly harvested vegetables from her garden. Standing on a small bench, with her hands plunged into the strong torrent of icy water and the bone-chilling early morning breeze, she checks that each one of her vegetables is ready for fair day. Her actions hold a life of historical resistance, one that prioritizes the care of life through the defense of territory and food sovereignty.

Mercedes' way of life is also one that holds many potential lessons for how to do agriculture and tourism better.

In the province of Loja, work begins before sunrise. At 5:00 a.m., the barking of dogs, the guardians of each house, starts. There is that characteristic smell of damp earth from the morning dew. Sheep bah uninterruptedly through the day. With all this life around, the crowing of early-rising roosters doesn't sound so lonely.

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