Brazil: The Day after Temer

By Marcio Cunha Filho*

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Demonstrators in São Paulo demanded the resignation of Brazilian President Temer on May 17, 2017. / Mídia NINJA / Flickr / Creative Commons

Brazil’s political turmoil has reached new heights with the leaking of audio recordings of President Temer allegedly authorizing bribes to prevent the former Speaker of the House, Eduardo Cunha, from concluding a plea bargain arrangement with investigators.  Although the recordings were inconclusive and Temer alleges that they were fabricated, their emergence was enough to push an already fragile government to the verge of collapse in less than 24 hours.  The day after the leak, according to press reports, four of Temer’s ministers were already discussing his replacement at a closed meeting with current Speaker of the House Rodrigo Maia, who is the next in line for succession. Some parties, such as the PPS, have already left Temer’s coalition. The PSDB, Brazil’s largest center-right party and Temer’s main coalition partner, is also discussing a possible withdrawal from government.  (The party’s former President and one of Temer’s closest allies, Senator Aécio Neves, was removed from office by a Supreme Court decision as part of Operation Car Wash.  (See here and here for previous articles about the Lava Jato investigations.)

  • Temer has denied the possibility of resigning, but there are a few ways he could be forcefully removed from office. Most observers argue that, however he departs, the Constitution would require his successor to be indirectly elected by Congress within 30 days.  Others posit, however, that if the Superior Electoral Court condemns Dilma and Temer together for illicit funding in the 2014 Presidential campaign – the trial is in early June and is likely to be the fastest possible way to remove Temer – then the electoral code dictates that new direct popular elections be held (as long as annulment is not declared within the last six months of their term, which ends in December 2018).
  • Key political actors seem to be favoring the scenario in which Congress indirectly elects the successor. Although very fragmented, the Brazilian Congress is mostly conservative or right-leaning, and many of its members fear that former President Luis Inácio Lula da Silva, who polls currently indicate would easily defeat any other candidate, might be elected in a popular election.

In this context, indirect election would put Brazil’s political system on the very edge of legality.  During a similar crisis in 1964, Congress’s ousted left-wing acting Vice President João Goulart and elected another itself, without popular approval, in an act almost universally seen today as illegal.  That act ended up throwing Brazil into a violent military dictatorship that lasted for more than two decades.  In the current political crisis, if Congress were to act against the current rules of the electoral code and without popular approval, this could again be another step towards the establishment of an illegal regime, which could further curtail accountability and democratic mechanisms in the country.  Placing the destiny of the country in the hands of a Congress, with many of its members under investigation themselves, might be a mistake with profound consequences.  Popular elections would also entail great uncertainty as well, but the uncertainty of elections is an inherent element of democratic systems.  When political actors try to limit or manipulate electoral outcomes in the name of predictability or security, this is when democracy dies.

May 19, 2017

* Marcio Cunha Filho is a Ph.D. candidate at the University of Brasília; federal auditor in Brazil’s Office of the Comptroller General; and CLALS Research Fellow.

Can the 2018 Election Overcome Brazil’s Crisis of Legitimacy?

By Fabio Kerche*

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The Brazilian flag. / Club Med UK / Flickr / Creative Commons

The political and economic crisis punctuated by the impeachment of Brazilian President Dilma Rousseff in 2016 persists unabated under the troubled administration of Michel Temer.  Stagnation is fueling unemployment, and the government’s efforts to rein in pensions and limit public spending are reinforcing the perception that the principal objective of those who ousted Dilma is to cut back on social rights promised in the 1988 Constitution and deepened by Dilma and her predecessor, Luiz Inácio Lula da Silva.  Even more ominously, the continuing cascade of corruption allegations is also undermining support for the new government.

  • Surveys show that only 10 percent of Brazilians rate the Temer government as “good” or “great,” and that its legitimacy is further undermined by whistleblowers alleging that the president and nine of his ministers are corrupt.

The notorious “Car Wash” anti-corruption campaign is hurting more than Temer and his men.  Zealous prosecutors and judges are essentially criminalizing not only politicians’ behavior but, through aggressive interpretations of the law, the practice of politics itself.  The targeting of Dilma’s leftist PT is most obvious, but the deluge of charges is now buffeting all the major political parties.  Leaders of the center-right PSDB, including former President Fernando Henrique Cardoso, have been accused of corruption as well.  Except for some miniscule political parties, virtually the entire political system now faces corruption charges.

The 2018 presidential election offers the most plausible avenue for emerging from the crisis, but even that remains highly problematic.  There is a relative consensus among the political class and political analysts that a new, legitimate, and directly elected president could reverse, or at least limit, the deterioration of the political system.  With just over a year remaining for candidates to register, the likely roster is very uncertain, in part because a basic feature of constitutional democracy – that citizens are allowed to compete for office – is increasingly in jeopardy amid the current anti-corruption fever.  Early polls place Lula as the strongest among the likely candidates, and he remains in first place even when surveys include Sérgio Moro, the most important judge in the Car Wash saga, who has not declared himself to be in the running.  But it is unclear whether the courts will let Lula stand for office.  Right-wing media are hammering Lula’s alleged corrupt practices while downplaying those of Temer and his cabinet.  Potential candidates of PSDB have been denounced for receiving bribes and having overseas bank accounts, and their numbers are shrinking in the polls.  An alternative now being floated as a potential PSDB candidate is João Dória, the newly elected mayor of São Paulo who, like U.S. President Donald Trump, is a non-mainstream politician and businessman who formerly hosted the Brazilian version of the TV show The Apprentice.)

  •  This uncertainty – even if the parties resist the continuing wave of Car Wash denunciations and take back some political space from the unelected judicial branch of government – raises the question whether, over the next 18 months, Brazil’s 32 year-old democracy proves itself to be irreversible or to have been an all too brief interlude in the country’s political history. The apparent appeal of outsiders in an environment that is criminalizing politics is a worrisome sign.

April 24, 2017

* Fabio Kerche is Research Fellow at CLALS and Researcher at Casa de Rui Barbosa Foundation, Rio de Janeiro.

Brazilian Prosecutors: Crossing the Line?

By Fabio Kerche*

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PSB Nacional 40 / Flickr / Creative Commons

Brazil’s Federal Prosecutors – treated as heroes by parts of Brazilian society and the mainstream press – have become so powerful and aggressive that they face growing allegations of violating some civil and political rights. The Lava Jato (Car Wash) investigation that helped bring down President Dilma Rousseff is not the first time that prosecutors have been in the spotlight; they are often easier to find in newspapers political section than among crime news. For instance, during the 1990s State Prosecutors sued hundreds of mayors and became protagonists in the Mensalão, a campaign finance scandal during the administration of President Lula da Silva. But their activities have never been as intense as recently, leading to the unprecedented “judicialization” of politics, a term that political scientists use to refer to over-reliance on the judicial system to mediate policy debates and political disputes.

The roots of prosecutors’ extraordinary power are in the 1988 Constitution, which assured their autonomy and gave them extensive civil and criminal tools with which to act. At the same time, lawmakers created few processes to ensure prosecutor accountability, making them autonomous even in relation to the Procurador-Geral da República, who is supposed to be the chief Federal Prosecutor but cannot provide effective oversight under current law. After passing the pre-employment examination, prosecutors cannot be fired or demoted. They are an army of 10,000 who are entirely independent of politicians and society. Unlike in the United States, where the President can dismiss a U.S. Attorney and electors can vote out a District Attorney, Brazil lacks analogous mechanisms for ensuring prosecutors’ professionalism.

Two innovations during the Partido dos Trabalhadores (PT) governments of Presidents Lula and Dilma fed the powers that now try to devour them.

  • While nominating Chief Prosecutors for their two-year terms, they essentially waived their right to choose by going with the candidates with the most support from their own agency colleagues, at times based on institutional interests (such as wages) rather than professional integrity and vision. Not only did this weaken the influence of the incumbent President; it opened the way for leading prosecutors friendly with past administrations to become relentless pursuers of PT leaders. Dilma also approved legislation expanding prosecutors’ authority to offer plea bargains, reducing suspects’ sentences in exchange for information about accomplices and their bosses. Prosecutors and the judge responsible for Lava Jato have been constantly ordering arrests of officials, whose only ticket out of prison is to turn over information. Yet, since potential snitches cannot receive credit for reporting cases and names that have already been provided by others, this process has created a voracious accusation market and a deluge of new “facts” and new names, particularly including PT leaders. Suspects are condemned by public opinion, creating a true cycle that feeds on itself.

A survey released last week by Vox Populi and Brazil’s largest trade union federation, the Central Única dos Trabalhadores (CUT), shows that 43 percent of Brazilians think prosecutors are “fair” and treat all politicians equally. But an almost equal number – 41 percent – claim prosecutors persecute politicians from the PT and do not act against politicians from its principal adversary, the PSDB. With Brazilian society split over the Brazilian Prosecutors Office’s integrity, the lack of any instrument for punishing or rewarding prosecutors is particularly problematic. Brazilian citizens have few political and legal tools to wield against prosecutors whom they believe abuse power. When institutions fail and do not shape behavior, personal and political agendas become paramount. This is not a good democratic model, even when prosecutors are supposedly fighting against corruption. It opens the door to political witch hunts and erodes popular confidence in democracy and its institutions.

October 27, 2016

* Fabio Kerche is a CLALS Research Fellow and Researcher at Casa de Rui Barbosa Foundation, Rio de Janeiro.

Brazil: Sacrificing Anti-Poverty Success?

By Hayley Jones*

Bolsa Familia

Photo Credit: Senado Federal / Flickr / Creative Commons

Brazil’s flagship antipoverty program, the Bolsa Família, faces an uncertain future as the government of Interim President Michel Temer confronts adverse economic and political circumstances.  The program, which provides direct cash benefits to poor households on the condition that children fulfill education and health-related targets, was an important factor in Brazil’s progress on poverty and inequality since the early 2000s – between 2001 and 2013 the poverty headcount ratio declined from 24.7 percent to 8.9 percent, and the Gini coefficient declined from 59.3 to 52.9.  The Bolsa Família (formerly called Bolsa Escola) was a pioneer in the use of cash transfers in social policy in the 1990s.  The idea is enticingly simple: the cash allows families to meet immediate needs, while the education and health conditions ensure poor children are better equipped to lift themselves out of poverty in the long run.  Under Presidents Lula and Dilma, the Partido dos Trabalhadores (PT) put the policy at the heart of its platform, and reaped advantages at the polls with the expansion of coverage and benefits.  The program now reaches about one-quarter of the population.

The social gains made in part thanks to the Bolsa Família may now be at risk.  Brazil has been hit hard by the collapse of commodity and oil prices over the last two years and is currently experiencing what is predicted to be the country’s worst recession since the 1930s.  GDP fell by roughly 4 percent in 2015 and is expected to do the same in 2016.  The deep political crisis gripping the country since earlier this year further threatens the program.  Temer, his party (PMDB), and Finance Minister Henrique Meirelles have stressed the need to cut spending to reduce the deficit.  While many areas of social spending, such as pensions and education, are protected in the budget under the 1988 Constitution,  the Bolsa Família is not.  With the large political constituency benefitting from the program, there is likely little appetite in the interim government to ax the program altogether.  In fact, at the end of June Temer announced a 12.5 percent increase to the Bolsa Família – more than the 9 percent promised by Dilma – to compensate for inflation.  But he also emphasized that benefits should be temporary and that there is a need to focus on exit doors from the program.  Social Development Minister, Osmar Terra, has suggested that the program could be made more efficient and costs cut by 10 percent.

Temer may not be entirely wrong to highlight the need for exit strategies, but they should be exit strategies from poverty rather than from the Bolsa Família itself.  There is so far little evidence that it has done much to change the life trajectories of poor young people that would allow them to move out of poverty. The emphasis on increased school enrollment and attendance as transformative obscures much deeper problems, including poor school progression and completion rates in low-quality schools, a lack of educational infrastructure and resources, poorly trained teachers, and outdated curricula, among others.  If Temer is serious about moving beneficiaries out of poverty and the program, priority will have to be given to correcting regressive spending in public education (which prioritizes higher over basic education); better aligning curricula with labor market demand; and addressing the poor job opportunities for low- and semi-skilled workers. Economic realities and the rhetoric on efficiency and exit strategies do not bode well for such changes.  Under Temer, the Bolsa Família seems likely be limited to a policy tool for risk insurance and meeting basic needs rather than a platform for extending the social gains of the last decade.

July 12, 2016

*Hayley Jones is a DPhil (PhD) Candidate in the Department of International Development at the University of Oxford, United Kingdom.  Her thesis examines long-term poverty reduction in the Bolsa Família program.

Brazil: Daring to Look at Succession Scenarios

By Silvio Levcovitz*

Lava Jato

Photo Credits: Instituto Liberal (Brasil) and Brasil 247 / Google Images / Labeled for noncommercial reuse

Brazil’s snowballing scandals are generating a high level of uncertainty regarding the country’s political future.  “Operation Car Wash”—a two-year investigation by a task force of the Federal Police and the Federal Prosecutors—has already led to the conviction and 20-year imprisonment of several senior officials from Petrobras and prominent construction companies, and others are likely to follow.  In Brazil, congressmen, cabinet ministers, and the President can be criminally charged only by the Supreme Court, through a long, difficult process called “privileged forum.”  On March 17, former President Lula, under investigation for allegedly receiving two properties as a bribe from construction companies, was designated a Minister of State in President Dilma Rousseff’s administration, an appointment that would have afforded him that protection.  The judge pursuing him released a recording of a call from Dilma offering him immunity as well as Lula’s calls on family and other private matters.  Many in the Brazilian legal community have disapproved of the judge’s disclosure of the calls as disrespecting the rule of law and the right to privacy, but the damage to Dilma and Lula was done.

Calls for the President’s impeachment are surging—and she repeatedly rejects the pressure to resign.  On Sunday, March 13, a half-million people protested in São Paulo, and the press estimates that another 1-2 million demonstrated elsewhere around the country.  (Demonstrations supporting Dilma have attracted 100,000 citizens in São Paulo.)  The PMDB, party of Vice-President Michel Temer and President of the House Eduardo Cunha, is officially quitting the government this week, and other minor parties appear likely to do the same, definitely cracking the presidential support.  The impeachment process in Brazil has two steps.  In the House, two-thirds of its 513 members (342 votes) are required for “admission” or approval, in which case the Senate can decide by majority vote to take up the charges, resulting in the President being suspended for up to 180 days.  Conviction requires the votes of two thirds of the 81 senators.  Although press reports indicate the mood is for the impeachment, the government is offering positions and funds individually to Congressmen and in hopes of achieving a low turnout to stop the process in the House.

Predicting the outcome of such a volatile situation is inherently risky, but discussion of post-Dilma scenarios is growing increasingly common.  Should she step down or be removed from office, Vice-President Michel Temer would be her constitutional successor.  Like Dilma, however, Temer is being charged by the Superior Electoral Court on suspicion of illegal campaign financing and, if convicted, would not be allowed to take office.  The next two in line to succeed her—President of the House Eduardo Cunha and President of the Senate Renan Calheiros—have been snagged by Operation Car Wash and face charges by the Supreme Court, suggesting that they too could be disqualified.  (The Federal Attorney General has already asked the Supreme Court to issue a preventive order to remove Cunha because of evidence that he has received US$5 million in secret Swiss bank accounts, without any justification.)  That leaves Supreme Court President Ricardo Lewandowski as a possible successor for a maximum period of 90 days, at which point elections would be called.  As Brazil faces crisis after crisis, the press have taken to commenting that the country’s fast-paced, dramatic events make the American series House of Cards look slow and boring. 

March 30, 2016

* Silvio Levcovitz is a CLALS Fellow and political science PhD candidate at the Universidade Estadual de Campinas, São Paulo.  He has been a public lawyer in Brazil and is researching criminal cases of corruption and civil claims of administrative misconduct from 1991 to 2014.

Brazil: Crises Hindering Foreign Policy

Dilma 2016

Photo Credit: Marcelo Camargo / Agência Brasil / Flickr / Creative Commons

by Tullo Vigevani*

The pace of Brazil’s rise in international affairs since 2000 is likely to be slowed by the multiple crises facing President Dilma Rousseff’s government and the private sector, but Brasilia will strive as best it can to maintain its global and regional priorities.  Political tensions are soaring amid corruption indictments and severe economic contraction – the nearly 4 percent decline in GDP in 2015 is expected to be repeated this year, with increasingly negative social consequences.  The government faces growing criticism that extends beyond the principal opposition parties: its own party base and supportive labor unions and social movements criticizing Rousseff’s administration.  The corruption investigations have spread far beyond the national oil company, Petrobras, and into corporate networks across economic sectors, exacerbating a climate of growing anxiety.  Major media are railing against the President and her predecessor, Luiz Inacio Lula da Silva, whose detention for questioning by a judge last week deepens the crisis and further dims the already faint prospects for a restoration of stability in 2016.

These developments have created an element of paralysis in foreign policy.  Foreign minister Mauro Vieira, like his two immediate predecessors – Luis Alberto Figueiredo (2013-2015) and Antonio Patriota (2011-2013) – has been unable to sustain the “active and proud” policy of Lula-era Foreign Minister Celso Amorim (2003-2010).  After basking not long ago in the fruits of its assertive foreign policies – including selection as host of the 2016 Olympics – Brazil’s government now is dealing with matters such as the Zika virus and microcephaly taking front stage.  Rousseff on one hand is barraged by criticism of a lack of macroeconomic rigor and the failure to better integrate Brazil’s economy into global production chains, and on the other she is criticized for slow investments and development policies.  Her ambition to promote South American trade and economic integration is being undermined by the recessionary pressures confronting Brazil and neighboring economies buffeted by the end of the commodities boom.

  • MERCOSUR remains a priority for the administration. Criticism by liberal economists will mount, however, that Mercosur, as a customs union, discourages potential agreements with developed economies, particularly the United States, thus exacerbating Brazil’s de-industrialization.  There is evidence that Mercosur helps companies that produce high value-added goods: whereas in 2014 manufacturing accounted for 77 percent of Brazilian exports within Mercosur, it accounted for only 4 percent of exports to China.  (The figures for the European Union and the U.S. were 37 and 55 percent, respectively).  Progress on trade agreements with the United States and other developed countries appears unlikely, but agreements on trade promotion seem likely.
  • Cooperation with UNASUR will remain a priority as well, but plans that rely on Brazil’s ability to provide resources face new political and economic restraints. The Ministries of Finance and Planning and the Central Bank reportedly are going to rein in contributions of the Brazilian Development Bank (BNDES), and funding for the South American Council of Infrastructure and Planning (COSIPLAN).  Initiatives such as the South American Defense Council will continue.  Clearly, state enterprises such as Petrobras and private-sector conglomerates will face limits on their foreign activities, reducing Brazil’s influence in the region.

The relationship between domestic and international affairs is inescapable, and Brazil is no exception.  But even as the domestic political and economic conditions deteriorate for a period, the country will not turn inward or abandon its interest in the international arena, particularly with China and the BRICS.  However rough the road ahead, President Rousseff’s government appears likely to remain steadfast in its approach to regional diplomatic and political organizations – including the Community of Latin American and Caribbean States (CELAC) and the OAS – even though resources will be tight.  It will remain active, within its diminished capacity, in an array of multilateral settings ranging from UN peacekeeping operations and the FAO, to the G-20, WTO and IMF.  Moreover, senior officials in Brasilia, including in the Foreign Ministry, appear committed to stronger bilateral ties with core partners, particularly the United States, and continued Brazilian support for democratic stability throughout Latin America, including in resolution of the Venezuelan crisis.  Even though resources and performance may suffer, a robust role in the hemisphere appears likely to remain a pillar of Brazil’s foreign policy.  The idea of Brazil’s autonomy in the international arena has deep roots, and whatever the domestic criticism leveled against the Rousseff administration, these will be matters of interpretation rather than a fundamental questioning of Brazil’s greater insertion into global processes and of political and economic interdependence.

March 7, 2016

*Tullo Vigevani is Professor of Political Science and International Relations at the State University of São Paulo (UNESP) and a researcher at the Center for Studies on Contemporary Culture (Cedec) and the Brazilian National Institute of Science and Technology for Studies on the United States (INCT-INEU), in São Paulo.

Brazil: Not-so-Happy New Year

By Matthew Taylor*

Brazil Basta

Photo Credit: Antonio Thomás Koenigkam Oliveira / Flickr / Creative Commons

A vicious combination of corruption scandal and economic malaise suggests a troubled new year awaits Brazil.  Economists estimate gross domestic product has contracted 3 percent this year and will decline a similar amount in 2016, while inflation and weak government finances hamper efforts to stimulate growth.  Two of three big rating agencies have cut Brazilian debt from investment grade to junk. Unemployment has risen from under 7 percent a year ago to nearly 10 percent, with forecasts of 12 percent on the horizon.  Efforts to reform fiscal policy are getting nowhere, and the champion of fiscal reform, Finance Minister Joaquim Levy, has just resigned.  The bonanza launched by the 2003-2010 presidency of Lula da Silva – seemingly setting Brazil on a unique path of state capitalist development – is long over.

The country’s interconnected scandals cast shadows on many of the leading players on the national stage, including President Dilma Rousseff.

  • Petrobras, the crown jewel of Brazil’s state capitalist model, is at the center of allegedly massive corruption schemes. Rousseff, who was chair of the Petrobras board at the time of the alleged wrongdoing, has claimed absolute ignorance.  But the charges implicate Brazil’s leading political and business elites, many of whom have been jailed in recent months.
  • A feud between Dilma and the president of the Chamber of Deputies, Eduardo Cunha, reached a new low this month after Cunha’s approval of impeachment proceedings against her. (His own ethics problems continue to fester.)  The charge against Dilma is not of personal corruption but rather that Rousseff flouted budget laws by using public banks to cover up unauthorized debt issuance and off-books spending.  Rousseff supporters have argued that the impeachment charges represent the worst of golpismo, or coup-mongering, and a constitutional overreach that threatens to undermine democracy.

For Brazil, 2016 will be dramatic and unpredictable – as the country weathers the most dangerous political crisis since the impeachment and resignation of President Fernando Collor in 1992.  Dilma’s opponents will have difficulty convincing two-thirds of the Chamber and Senate to oust her, but the crisis is already creating significant fissures in the democratic system.  The parties have been turned upside down.  Even if Dilma survives in office, she faces nearly impossible odds in restoring the credibility of her administration and party, the Partido dos Trabalhadores, or PT.  There are early indications that the PT will face a bloodletting in the 2016 municipal elections, and former President Lula, the party’s once-ironclad standard-bearer, has the highest rejection rate (55 percent) of any potential candidate in the 2018 presidential contest.  The PMDB, Dilma’s coalition partner, is threatening to break with the government, but is internally divided. The opposition PSDB is facing scandals, protests, and troubles of its own in the states it governs.  The newfound proactivity of prosecutors and judges is making democratic checks and balances work as never before – and is largely welcomed by Brazilians – but Brazil’s old party system may not be able to keep pace.  Rumblings for a rethinking of the political system will grow louder in the new year, as the crisis deepens.

December 21, 2015

*Matthew M. Taylor is associate professor at the School of International Service at American University.

Dilma – and Brazil – in Crisis

By Eric Hershberg

Photo Credit: Ministério da Ciência, Tecnologia e Inovação / Flickr / Creative Commons

Photo Credit: Ministério da Ciência, Tecnologia e Inovação / Flickr / Creative Commons

Brazil’s corruption scandals and deepening recession have raised doubts about not only the viability of President Dilma Rouseff’s government, but also about the national renaissance and global role that Brazilians have long strived for and seemed only recently to have achieved.  The commodity boom of the past decade propelled Brazil to become the world’s sixth largest economy and make major inroads against its historically obscene levels of poverty and inequality.  Often working in tandem, Brazil’s leading public and private enterprises, assisted by the generous state development bank, prospered immensely and fueled growth in Brazil itself and elsewhere in Latin America, building infrastructure from Ecuador to Cuba.  Four Partido dos Trabalhadores (PT) presidential victories in a row (two each for President Lula da Silva and for Dilma) appeared to validate a development strategy built upon government alliances with ambitious large firms and generous cash-transfer programs for needy segments of the population, which became reliable sources of electoral support.  Brazil, the country that skeptics considered unlikely to ever fulfill its aspiration of becoming more than “the country of the future,” seemed to have turned a historic corner – until it all came crashing down.

With the commodity boom now over, the economy is contracting at an annual rate of more than 2 percent, and a Central Bank survey released last week forecast that the recession will continue into 2016.  The past decade’s extraordinary gains in formal sector employment and wage rates are being rapidly eroded.  The dire macro-economic situation forced Dilma to shift course earlier this year, when to the dismay of her PT base, she appointed pro-austerity economist Joaquim Levy as Finance Minister.  His mandate – to tackle fiscal deficits – required dealing with the end of the commodity-driven cycle of growth and problems with the state capitalist model pursued by the PT since 2004.  Levy’s strategy will take time to bear fruit, probably through most of Dilma’s term, and will be painful.

But the President’s biggest challenges stem from the vast corruption scandals that have devastated her credibility and the reputation of the enormous companies that were the protagonists of Brazil’s latest miracle.  Although Dilma has not been charged with any wrongdoing, the scandalous actions at state oil firm Petrobras, which at its height accounted for as much as 10 percent of Brazil’s GDP, were in full flourish when she was Lula’s Energy Minister and nominally in charge.  Prosecutors have filed evidence of bribery and kickback schemes that bilked billions of dollars from the company’s coffers, and officials in both the PT and allied parties have been charged with serious crimes.  Dilma’s popularity ratings are now in single digits, with little prospect of improvement.  Street protests calling for her impeachment are more focused than those that tormented her in 2013 and 2014, when popular discontent focused less on corruption than on the poor quality of transportation, education, health care, and other public services at a time when the government was making huge investments to prepare for the 2014 World Cup and the 2016 Olympic games.

Further damaging revelations are likely as investigations continue, and they will affect an ever-wider array of political actors and major economic enterprises.  Many of the president’s political foes support either impeachment or resignation, while others are inclined to let her government wither in place.  The key alternative parties – the PSDB of former President Cardoso and the PMDB (the latter rumored to be closer than ever to breaking its tenuous alliance with the President) – are not aligned in a way that establishes a clear path to push Dilma out.  The most optimistic scenario for the President entails remaining, terribly wounded, in office, but this could change if, as many observers believe, the Auditing Court (TCU) determines that Dilma has misused public funds, or if the TSE should press forward with investigations of illegal financing of Dilma’s campaign.  

If two or three years ago it seemed plausible that history would credit the PT for having transformed Brazil into a high-quality democracy with improved social inclusion, today that appears to have been a pipe dream.  Beyond the immediate factor of Dilma’s ineffectual leadership, there are broader, systemic reasons for this tragedy.  Brazil’s fractured party system and the coalition-building it requires engenders corruption-fueled legislative bargaining, as evidenced by the Mensalão scandal.  Brazilian state capitalism has blurred lines between state economic policies and corporate beneficiaries, further fueling a culture of corruption evident by the fact that roughly 40 percent of members of Congress are under investigation, according to the New York Times.  Regardless of whether Dilma survives in office, the current moment has drawn Brazilians’ attention to the deep political and economic roots of their current situation, and dashed their hopes of soon becoming “O País do Futuro.” 

August 24, 2015 

Corruption in Chile and Brazil

By Luciano Melo

Brazilian Pres. Rousseff (l) and Chilean Pres. Bachelet. Photo Credit: UN Women / Flickr / Creative Commons

Brazilian Pres. Rousseff (l) and Chilean Pres. Bachelet. Photo Credit: UN Women / Flickr / Creative Commons

A growing perception of corruption in Latin America, most recently in Brazil and Chile, is eroding confidence in two of the region’s most dynamic presidents – Dilma Rousseff and Michelle Bachelet.  The Chilean and Brazilian corruption cases are both serious, but differing perceptions and expectations in the two countries suggest the scandals will have different impacts.

  • Chile has long been the darling of economists and political scientists (and U.S. policymakers) in terms of democratic maturity, economic development, and transparency. The use of political influence to secure millions of dollars in sweetheart loans there has pulled the country down from its high perch, and since the issue directly touched President Michelle Bachelet’s own family members, it has become a huge deal in and outside Chile.
  • Although among the six main economies in the world and alone among the BRIC countries in boasting a stable democratic system, Brazil, by contrast, has repeatedly been tainted by corruption scandals that would lead to the fall of most Scandinavian governments in a matter of days. Former President Lula’s son became a millionaire while his father was in power, yet this fact hardly stained the ex-President’s popularity.  The scandals weighing down President Dilma Rousseff are different.  Brazilian citizens customarily have thought of Petrobras, one of the few remaining state enterprises after the wave of privatizations under President Cardoso during the 1990s, as a great source of national pride, and this sentiment was encouraged by the PT government, never a fan of the neoliberal predilections of its predecessor.  So when the scandal touched almost all of the party’s leaders, in addition to the prized national oil company, even Brazilians inured to corruption felt pain. Moreover, Lula and Dilma’s party, the PT, had promised to do politics in a different way.  As a union leader and a woman who fought against the dictatorship, respectively, they represented the rise to power of leaders based entirely outside the traditional parties and their murky ways of doing business.  Now, some of Dilma’s disillusioned supporters are demanding her impeachment, and many famous artists who once endorsed the PT are feeling betrayed.

Latin American voters have long manifested contrasting expectations of their presidents – cynicism about their venal nature coincided, as Latin America specialist Guillermo O’Donnell once said, with hope that they be “acclaimed saviors.”  Within the codependent relationship between citizens and politicians, trust is impaired once betrayal surfaces, but the marriage normally continues.  In some cases of rupture, as happened with impeached President Fernando Collor in 1992, it hasn’t meant the end of the political affair.  In the October 2014 elections Collor was reelected as Senator for the state of Alagoas.  Dilma and Bachelet have already said they will not resign, and that they intend to implement a comprehensive cleanup.  The road will be easier for Bachelet.  The Chilean scandal is still small and remains manageable, and although the decline in commodity prices has already  affected the country’s economy, further taxing Bachelet’s popularity, Chile has a sovereign reserve fund to cushion any blows.  For Dilma the conjuncture is considerably bleaker.  She was on the board of Petrobras while its executives were engaged in costly shenanigans, and it is now known that the fraudulent scheming also involved the Health Ministry and the state-owned bank Caixa Economica Federal.  And in Brazil, in contrast to Chile, the fiscal situation is sufficiently tight as to constrain the president’s room to maneuver as the commodity-driven economy stagnates.  At this point both women appear likely to survive their challenges, but the road ahead looks a lot tougher for Dilma than for Bachelet.

April 16, 2015

Oil Scandal Besets Brazilian Politics … Drip-by-Drip

By Matthew Taylor and Luciano Melo*

Nestor Galina  / Flickr / CC BY-NC 2.0

Nestor Galina / Flickr / CC BY-NC 2.0

Brazil’s oil scandal – the largest corruption scheme in Brazil’s history – probably won’t bring down the government of President Dilma Rousseff but will keep it in constant peril.  Since March 2014 the Brazilian Federal Police have been investigating the disappearance of tens of billions of dollars allegedly siphoned from the national oil company, Petrobras.  The company is a national symbol, founded by legendary President Getúlio Vargas in 1953, and a powerful economic force, especially in light of the discovery of massive deepwater oil off Brazil’s coast and the massive investments that have been undertaken to develop those fields.  No image captured Brazil’s triumphant resurgence over the past decade than a famous 2006 shot of President Lula holding up his hand covered in oil at a ceremony celebrating Brazil’s oil self-sufficiency.  (The picture itself was a takeoff on an iconic photo of Vargas.)

President Dilma Rousseff – who had close ties to the company as chairwoman of its board (2003-2010) and Minister of Mines and Energy (2003-2005) – is now confronting the dark underside of Brazil’s oil dream.  She is respected for her personal probity; nobody has suggested that she gained personally from the brazen corruption within Petrobras.  But critics point out that she was either cognizant of corruption or woefully incompetent.  As a result, the scandal weakens her considerably, just as she faces a revitalized opposition, a restive group of political allies, an economy grinding to a near halt, and a very real possibility that Brazilian debt will be downgraded to junk status.  Indeed, the scandal increases the chances of each of those four outcomes considerably.

The good and bad news from Dilma’s perspective is that the courts are very slow in Brazil.  If this case moves as quickly as the vote-buying mensalão scandal of 2005 – which was actually relatively efficient and effective by the standards of the Brazilian court system – final legal resolution of the case is unlikely before 2021.  Furthermore, for now there seems to be little appetite among the opposition for impeachment, possibly in part because some opposition members are rumored to be implicated as well.  So Dilma seems likely to survive politically, even as the scandal threatens to remain part of the political geography for the remainder of her second term.  This will be excruciating, as each week brings further revelations.  Indictments against a host of politicians are expected as soon as next month.  Perhaps most damaging in the long-term, though, will be the realization that nearly a decade after the mensalão scandal, legislative coalitions continue to be held together by the glue of pervasive corruption, and campaign finance appears deeply rooted in the misappropriation of public resources.

*Matthew Taylor is an associate professor at American University’s School of International Service and currently a fellow at the Woodrow Wilson Center for International Scholars.  Luciano Melo is a Ph.D. student in the School of Public Affairs.

January 22, 2014