BRAZIL-MINING: Unprecedented Battle over Privatisation

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Apr 29 1997 (IPS) - The Brazilian government’s planned privatisation of the world’s largest iron exporting company, set for Tuesday but suspended at the last minute, has come under fire from all sides, and is facing an unprecedented legal battle.

More than 30 demonstrators were injured Monday and Tuesday in clashes with police in downtown Rio de Janeiro, as they protested in front of the Stock Market, where the auction of one-third of the assets of the Vale do Rio Doce Company – 3.3 billion of an estimated total value of 10.4 billion dollars – was to take place Tuesday.

The government, facing upwards of 100 legal challenges against the privatisation, announced the suspension of the auction on Monday. But a team of 120 lawyers assembled by the National Bank for Economic and Social Development (BNDES), which coordinates Brazil’s privatisation programme, is working non-stop to overturn court rulings blocking the sale.

The announced privatisation of the giant state mining firm – a complex of 50 separate companies with interests in railways, ports, timber and a number of mining sectors – has met with widespread opposition, especially in states where the companies operate.

The leading party, the Brazilian Democratic Movement, launched a TV campaign with former presidents Jose Sarney and Itamar Franco, arguing that strategic interests must remain in State hands. The Catholic Church has also joined the opposition.

The Vale do Rio Doce Company – in the words of Senator Sarney, “a development agency” – is not only a national symbol, but a highly efficient profit-making enterprise, unlike most of the other public firms sold off in the current wave of privatisations.

The enterprise is the driving force behind industrial development in several southeastern and northern states.

The street battles in Rio de Janeiro broke out Monday night, when military police attempted to remove some 200 demonstrators from the November 15 Plaza in front of the Rio de Janeiro Stock Market. At least six people were seriously injured.

On Tuesday morning, thousands of students, trade unionists and political activists poured into the streets to protest the privatisation. More than 20 people suffered minor injuries in clashes with police.

Police billy-clubs and water-hoses were met by sticks and stones thrown by the protesters. At least six police were slightly injured.

But it was the barrage of legal challenges, not the demonstrations, that brought Monday’s suspension of the sale. Of the 103 challenges lodged by unions, the Brazilian Bar Association and a wide range of public figures and institutions, 11 preventive rulings handed down by state courts continued to impede the auction, BNDES president Luiz Carlos Mendonza de Barros said Tuesday.

The main arguments underlying the lawsuits are that the privatisation is unconstitutional, irregularities have been committed in the process, and the sale will put strategic resources in private and foreign hands.

The president of the Rio de Janeiro Stock Market, Fernando Opitz, underlined that as soon as the last legal snag was overcome, the auction would be held – even if that occurred in the middle of the night.

President Fernando Henrique Cardoso said previous sales of public assets faced similar street protests and legal maneuvering.

Many of the 52 privatisations carried out since 1991 are still facing legal action. The sales were conducted after preventive rulings were annulled, although final legal decisions are still pending.

But analysts underline that the breadth of the opposition and the number of lawsuits is greater than ever before.