Brazil strikes recede, but now government has to pay

by Sebastian Smith
An oil industry worker demonstrates in front of the headquarters of Petrobras state-owned oil company in downtown Rio de Janeiro

Brazilian oil workers called off a three-day strike Thursday, bringing relief to state energy giant Petrobras and the embattled center-right government, still reeling from a truckers' strike that brought Latin America's biggest economy to a standstill.

Brazil's main oil union federation, the FUP, backed off after the top labor court ruled its strike illegal and imposed daily fines of two million reais ($537,000) on unions violating the order.

Given the court ruling, the FUP "recommends that unions suspend the strike," it said in a statement.

The strike, which started Wednesday, called for Petrobras CEO Pedro Parente to be removed and for an end to the company's ability to set prices at free-market rates -- a policy that has seen steep increases this year.

The stoppage came on the heels of a devastating truckers' strike in protest at the high fuel prices.

With truckers blocking highways and refusing to deliver cargo, entire cities were left without functioning gas stations for more than a week. Supermarkets ran out of fresh food and as many as a dozen airports were unable to refuel airplanes.

The oil workers' brief strike had little concrete impact, in part because the truckers' action meant refineries had reserves full.

However, the FUP's call will have been a relief for President Michel Temer's deeply unpopular government, after it had to cave in to the truckers' demand for cheaper fuel and see its already shaky authority crumble further.

- Paying the bills -

Life in big cities like Sao Paulo and Rio de Janeiro was getting back to normal Thursday, with fruit gradually reappearing on shop shelves, gas stations reopening and buses running.

But now Temer's government must find a way to pay for the 9.6 billion reais ($2.6 billion) subsidies promised to alleviate the truckers' fuel costs.

Measures announced Thursday included cutting support for the chemicals industry, axing incentives for exporters, and chipping away at public welfare programs.

Even with this, the threat of industrial unrest remains.

The discounted diesel promised to the truckers will only last for 60 days and no plan has been announced for how to avoid renewed conflict.

As for the oil workers' unions, they described the suspension of the three-day strike as "a temporary retreat" and a "warning," with an indefinite strike penciled in for mid-June.

Temer is now caught between warding off an evermore hostile public and keeping the markets happy with his policy of austerity cuts and free-market reforms to the sluggish economy.

The Petrobras pricing autonomy, granted in late 2016, was billed as an important measure to develop the huge company.

Under pressure, Temer suggested this week he might reconsider the policy. He then backtracked on Wednesday, with a government statement reassuring investors that "we will maintain the pricing policy."

With general elections in October and Temer's allies facing an onslaught from more radical rightwing and leftwing opponents, the future looks grim for a president who only came to power because his leftist predecessor Dilma Rousseff was impeached in 2016.

Although the truckers' strike caused serious disruption to millions of people, a Datafolha poll found that 87 percent of Brazilians supported the action.

An oil industry worker demonstrates in front of the headquarters of Brazil's state-owned oil giant Petrobras in Rio de Janeiro, Brazil on May 30, 2018 -- the strike was suspended the following day