tag:theconversation.com,2011:/africa/topics/brazilian-economy-26418/articlesBrazilian economy – The Conversation2023-03-22T12:38:29Ztag:theconversation.com,2011:article/2006912023-03-22T12:38:29Z2023-03-22T12:38:29ZThe Amazon is not safe under Brazil’s new president – a roads plan could push it past its breaking point<figure><img src="https://images.theconversation.com/files/516477/original/file-20230320-2823-r24sy7.jpg?ixlib=rb-1.1.0&rect=78%2C365%2C3071%2C1950&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Fires are often set to clear land near roads in the Amazon.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/in-this-aerial-view-the-red-dust-of-the-br230-highway-known-news-photo/1166452675">Johannes Myburgh / AFP via Getty Images</a></span></figcaption></figure><p>Conservationists <a href="https://www.reuters.com/world/americas/lula-cheered-new-climate-policies-after-brazil-election-2022-10-31/">breathed a sigh of relief</a> when Luiz Inácio Lula da Silva won Brazil’s presidential election in the fall of 2022. His predecessor, Jair Bolsonaro, had <a href="https://doi.org/10.1038/d41586-022-03038-3">opened large parts of the Amazon region to business</a> by crippling enforcement of environmental laws and turning <a href="https://theconversation.com/the-great-amazon-land-grab-how-brazils-government-is-clearing-the-way-for-deforestation-173416">a blind eye to land grabbing</a>. It should come as no surprise that deforestation showed <a href="https://doi.org/10.1038/d41586-022-03038-3">a sharp uptick</a>.</p>
<p>However, while Lula oversaw a more than <a href="http://terrabrasilis.dpi.inpe.br/app/dashboard/deforestation/biomes/legal_amazon/rates">70% drop in deforestation</a> during his first run as president in the early 2000s, the rainforest’s future remains deeply uncertain. </p>
<p>That’s in part because Brazilian administrations, whether of the right or left, have all promoted an ambitious project to boost exports and the economy called the Initiative for the Integration of the Regional Infrastructure of South America, <a href="https://doi.org/10.1111/btp.12610">or IIRSA</a>.</p>
<p>The initiative focuses on new roads, dams and industry that can threaten the region’s fragile rainforest ecosystem – and harm the world’s climate in the process.</p>
<figure class="align-center ">
<img alt="Trucks are lined up on a road bending between a burned area and trees, with a smaller road winding off to the side." src="https://images.theconversation.com/files/516475/original/file-20230320-2896-c7n9r5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/516475/original/file-20230320-2896-c7n9r5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/516475/original/file-20230320-2896-c7n9r5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/516475/original/file-20230320-2896-c7n9r5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/516475/original/file-20230320-2896-c7n9r5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/516475/original/file-20230320-2896-c7n9r5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/516475/original/file-20230320-2896-c7n9r5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Trucks along the BR163 highway, a major transport route that has contributed to deforestation.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/aerial-view-of-trucks-queueing-along-the-br163-highway-in-news-photo/1174358903">Nelson Almeida / AFP via Getty Images</a></span>
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<h2>The problem with infrastructure in the forest</h2>
<p>At first glance, IIRSA might sound like progress. Its <a href="https://doi.org/10.1016/j.oneear.2019.09.009">goal is to improve</a> Amazonia’s economy by developing its resources and establishing better access to global markets. To accomplish this, the initiative plans to rehabilitate and extend the existing highway system and build dams, ports, industrial waterways and railroads.</p>
<p>However, evidence from my research in the Amazon over the past 30 years and by other scientists shows that <a href="https://doi.org/10.1111/j.1467-9787.2007.00502.x">new roads lead to more deforestation</a>, putting extreme pressure on the rainforest. Outside of protected areas, nearly 95% of all deforestation occurs within <a href="https://doi.org/10.1016/j.biocon.2014.07.004">3.4 miles (5.5 kilometers) of a road</a> or less than two-thirds of a mile (1 km) from a river. </p>
<p>Deforestation <a href="https://doi.org/10.1126/science.1182108">rates fell</a> during Lula’s first presidency, primarily because Brazil <a href="https://doi.org/10.1088/1748-9326/6/2/024010">expanded its protected areas program</a> and <a href="https://doi.org/10.1016/j.landusepol.2014.06.026">enforced environmental laws</a>. However, deforestation began to rise again during the administration of his protégé, President Dilma Rousseff. </p>
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<p>Both Lula and Rousseff furthered the IIRSA agenda by building dams on the Madeira River and <a href="https://theconversation.com/satellites-over-the-amazon-capture-the-choking-of-the-house-of-god-by-the-belo-monte-dam-they-can-help-find-solutions-too-182012">on the Xingu River</a>, where the Belo Monte dam diverted streamflow <a href="https://theconversation.com/satellites-over-the-amazon-capture-the-choking-of-the-house-of-god-by-the-belo-monte-dam-they-can-help-find-solutions-too-182012">vital to the survival of Indigenous communities</a>. </p>
<p>They also downsized protected areas to make way for their projects. Rousseff even <a href="https://www.jstor.org/stable/pdf/43964662.pdf">downsized Amazon National Park</a>, the first such park in Amazonia. In all, 181 square miles (469 square kilometers) were removed, close to 5% of the total area. The most scenic park landscape along the Tapajos River shoreline was taken to make way for dam construction. </p>
<p>Now back in office, Lula has signaled his approval of a key IIRSA project: the <a href="https://amazonasreporter.com.br/2023/02/com-articulacao-do-governador-wilson-lima-demandas-do-amazonas-sao-prioridade-no-plano-de-100-dias-do-governo-federal/">revitalization of BR-319</a>, a federal highway between Porto Velho and Manaus.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/516159/original/file-20230318-6597-vvwfn5.gif?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="An animation shows primarily the highway in 2000 but deforestation quickly expanding off of it over the following years." src="https://images.theconversation.com/files/516159/original/file-20230318-6597-vvwfn5.gif?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/516159/original/file-20230318-6597-vvwfn5.gif?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=667&fit=crop&dpr=1 600w, https://images.theconversation.com/files/516159/original/file-20230318-6597-vvwfn5.gif?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=667&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/516159/original/file-20230318-6597-vvwfn5.gif?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=667&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/516159/original/file-20230318-6597-vvwfn5.gif?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=838&fit=crop&dpr=1 754w, https://images.theconversation.com/files/516159/original/file-20230318-6597-vvwfn5.gif?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=838&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/516159/original/file-20230318-6597-vvwfn5.gif?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=838&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Satellite images from 2000 to 2019 show how deforestation spread out from Highway BR-163 over 10 years.</span>
<span class="attribution"><a class="source" href="https://earthobservatory.nasa.gov/images/145888/making-sense-of-amazon-deforestation-patterns">Lauren Dauphin/NASA Earth Observatory</a></span>
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<p>If this project is completed, it will open the central Amazon basin <a href="https://doi.org/10.1007/s13280-022-01718-y">to even more deforestation</a>.</p>
<p>I believe this should cause alarm. Research shows too much deforestation could push the forest <a href="https://doi.org/10.1080/2373566X.2022.2132978">over a tipping point</a> from which it can’t recover. No one knows exactly where the line is, but the vast Amazon that people picture today with its extraordinary biodiversity and dense forests would be no more. Such a catastrophe once seemed the bad dream of doomsayers, but there is mounting evidence that the forest is in trouble.</p>
<h2>The Amazonian tipping point</h2>
<p>The tropical rainforest sustains itself by <a href="https://leaf.leeds.ac.uk/news/recycle-rain-models/">recycling rain</a> to the atmosphere through evapotranspiration, which makes more moisture available. Rainfall recycling <a href="https://doi.org/10.1126/sciadv.aat2340">accounts for about 50%</a> of the basin’s precipitation today.</p>
<p>Too much deforestation could leave too little rainfall recycling to sustain the forest.</p>
<p>Scientists initially estimated the tipping point would occur <a href="https://doi.org/10.1016/j.cosust.2009.07.003">once about 40%</a> of the Amazon was deforested. That estimate has slipped downward over time given the <a href="https://theconversation.com/in-brazils-rainforests-the-worst-fires-are-likely-still-to-come-122840">intensification of fires</a> and the onset of <a href="https://doi.org/10.3389/feart.2018.00228">observable climate change in the basin itself</a>. Moreover, <a href="https://doi.org/10.1038/s41558-022-01287-8">the forest shows diminishing resilience</a>, meaning it is less able to recover from climate extremes. Scientists have already observed widespread <a href="https://doi.org/10.1111/gcb.14413">shifts to more drought-tolerant tree species</a>.</p>
<p>Given the evidence, scientists have revised the tipping point to <a href="https://doi.org/10.1126/sciadv.aat2340">deforestation as low as 20% to 25%</a>. Even if only a fifth of the forest is lost, the remainder could quickly degrade into an ecosystem of fire-adapted grasses and shrubby trees that look nothing like the massive ones native to the rainforest. </p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/c4-KpR1HrNs?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">NASA satellite images show the expansion of deforestation as roads are built in the Amazon.</span></figcaption>
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<p>Deforestation across all the Amazonian nations now stands <a href="https://doi.org/10.1016/j.oneear.2019.09.009">at a little over 16%</a>. In my view, this is far too close for comfort, especially with the momentum of the IIRSA program.</p>
<h2>More than one tipping point?</h2>
<p>The deforestation problem isn’t the only pressure on the forest – the Amazon is also dealing with the heat and drought of global warming. </p>
<p>Evidence suggests that global climate change may be enough to <a href="https://doi.org/10.1073/pnas.0705414105">push large parts of the rainforest to the brink</a>. One concern is that the dry season is getting longer, a shift that <a href="https://doi.org/10.1073/pnas.1302584110">appears to be driven by global warming</a>. This affects annual precipitation by reducing the number of rainy days and makes fire more damaging by extending the season when trees can easily burn.</p>
<p>Currently, dry season lengthening is <a href="https://doi.org/10.1073/pnas.1302584110">most pronounced in the Southern Basin</a>. However, changes in the southern rainfall pattern can reduce precipitation in the <a href="https://doi.org/10.1038/srep41489">wettest parts of the basin to the west</a>. One estimate suggests dry season lengthening <a href="https://doi.org/10.1080/00139157.2021.1842711">could cause a tipping point transition by 2064</a>.</p>
<h2>What can be done?</h2>
<p>Averting Amazonia’s looming tipping point catastrophe will require effort by the global community. In the past, <a href="https://doi.org/10.1126/science.1248525">Brazil has controlled deforestation</a> through its forest code and by designating protected areas. </p>
<p>To step back from the brink, Lula would have to begin enforcing the forest code again, which limits deforestation on private property. He would also have to persuade the Brazilian Congress to <a href="https://theconversation.com/the-great-amazon-land-grab-how-brazils-government-is-clearing-the-way-for-deforestation-173416">stop creating incentives for land grabs</a> – the taking of public land for private uses. </p>
<p>Although Lula would have a difficult time reclaiming already grabbed land, expanding protected areas could reduce deforestation. Obviously, downsizing Amazonia’s existing protected areas would have to stop. </p>
<p>Finally, Lula would need to revisit the IIRSA program and pursue only those projects that bring economic development without excessive deforestation. </p>
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<a href="https://images.theconversation.com/files/516485/original/file-20230320-3119-r24sy7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A road with soybean fields on both sides and the edge of the dense Amazon rainforest in the background." src="https://images.theconversation.com/files/516485/original/file-20230320-3119-r24sy7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/516485/original/file-20230320-3119-r24sy7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/516485/original/file-20230320-3119-r24sy7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/516485/original/file-20230320-3119-r24sy7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/516485/original/file-20230320-3119-r24sy7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/516485/original/file-20230320-3119-r24sy7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/516485/original/file-20230320-3119-r24sy7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The edge of a soy plantation shows the Amazon before and after deforestation.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/soy-plantation-in-amazon-rainforest-near-santarem-news-photo/462376826">Ricardo Beliel/Brazil Photos/LightRocket via Getty Images</a></span>
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<p>Research I am currently working on with colleagues in the Ecuadorian Amazon focuses on a particular type of protected area, <a href="http://www.indigenousterritories.com/">the Indigenous Territory</a>. We argue that safeguarding Indigenous territorial rights provides Amazonia’s national governments with effective conservation allies. This is because <a href="https://doi.org/10.1080/00139157.2018.1418994">Indigenous peoples want to defend their homelands</a>. Unfortunately, <a href="https://news.mongabay.com/2022/08/fighting-extractive-industries-in-ecuador-qa-with-indigenous-activist-maria-espinosa/">national governments are not always supportive of Indigenous rights</a>, especially when their territories contain mineral wealth.</p>
<p>Slowing global climate change, however, will require international collaboration on an unprecedented scale. Luckily, a forum for this already exists with the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement">Paris Agreement</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/516567/original/file-20230321-20-sx6yvp.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Map showing the states and how hot spots show up along highways" src="https://images.theconversation.com/files/516567/original/file-20230321-20-sx6yvp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/516567/original/file-20230321-20-sx6yvp.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=444&fit=crop&dpr=1 600w, https://images.theconversation.com/files/516567/original/file-20230321-20-sx6yvp.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=444&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/516567/original/file-20230321-20-sx6yvp.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=444&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/516567/original/file-20230321-20-sx6yvp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=557&fit=crop&dpr=1 754w, https://images.theconversation.com/files/516567/original/file-20230321-20-sx6yvp.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=557&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/516567/original/file-20230321-20-sx6yvp.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=557&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Areas with intense deforestation in 2021 largely aligned with major roadways.</span>
<span class="attribution"><a class="source" href="https://maaproject.org/2021/amazon-hotspots-2021/">Finer M, Mamani N, Spore J (2020) Amazon Deforestation Hotspots 2021. MAAP: 147</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<h2>The people of the Amazon</h2>
<p>The Amazon Basin is home to 35 million people, <a href="https://doi.org/10.1016/j.oneear.2019.09.009">many of whom live in poverty</a>. They have every right to desire a better life, and that’s one reason that IIRSA has a great deal of local support. </p>
<p>However, while the initiative might bring short-term benefits, it also risks destroying the very resources it was intended to develop. And that could leave the region in a state of poverty that cannot be alleviated.</p><img src="https://counter.theconversation.com/content/200691/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert T. Walker receives funding from The U.S. National Science Foundation. He is affiliated with The University of Florida, Center for Latin American Studies. </span></em></p>Nearly 95% of deforestation in the Amazon occurs within 3.5 miles of a road or near a river. Brazil’s plans to ramp up exports may be on a collision course with the forest.Robert T. Walker, Professor of Latin American Studies and Geography, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1976732023-01-30T13:14:44Z2023-01-30T13:14:44ZBrazil’s economic challenges are again Lula’s to tackle – this time around they’re more daunting<figure><img src="https://images.theconversation.com/files/505670/original/file-20230120-15684-t92yp2.jpg?ixlib=rb-1.1.0&rect=77%2C17%2C3917%2C2329&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Bolstering Brazil's economy will be hard if there's a global recession.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/brazils-president-luiz-inacio-lula-da-silva-gestures-during-news-photo/1246116883?adppopup=true">Mauro Pimentel/AFP via Getty Images</a></span></figcaption></figure><p>Even when they’re in trouble, Brazilians rarely lose their sense of humor. But in recent years, their joviality has often given way to <a href="https://www.ipsos.com/sites/default/files/ct/news/documents/2021-06/Culture%20wars%20around%20the%20world%20_0.pdf">political division</a> everywhere from social media to the dinner table.</p>
<p>One <a href="https://theconversation.com/brazil-no-longer-the-country-of-the-future-59505">familiar quip</a> – that Brazil is the country of the future and always will be – has lost its levity as Luiz Inácio Lula da Silva begins his third <a href="https://www.gov.br/secretariadegoverno/pt-br/posse-presidencial">presidential term</a>. <a href="https://www.npr.org/2023/01/01/1146518711/leftist-lula-brazil-sworn-in-president">Lula previously led his country from 2003 to 2010</a>. The president, who was sworn in again on Jan. 1, 2023, promised on the campaign trail that Brazil’s future can be like its past again: more prosperous and less polarized. </p>
<p>Having <a href="https://scholar.google.com/citations?user=KBw41t4AAAAJ&hl=en&oi=ao">studied Brazil</a> in <a href="https://www.nber.org/people/marc_muendler?page=1&perPage=50">our economic research</a>, and having lived in the country for several years by birth or by choice, we argue that it will not be easy for Lula to fulfill his economic promises.</p>
<p>Unlike in his first two terms, when domestic and foreign markets <a href="https://www.econ.puc-rio.br/biblioteca.php/trabalhos/show/1533">helped the economy along</a>, Lula now faces <a href="https://www.oecd.org/economy/brazil-economic-snapshot">strong headwinds at home</a> <a href="https://www.weforum.org/press/2023/01/chief-economists-say-global-recession-likely-in-2023-but-cost-of-living-crisis-close-to-peaking">and abroad</a> – and that means sound policies are even more important this time around.</p>
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<h2>Good times, bad times and economic choices</h2>
<p>Brazil shot up from the world’s 14th-largest economy in 2003 to the <a href="https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=BR">seventh-biggest in 2010</a>, during a boom that largely coincided with Lula’s prior presidency. At the same time, the country’s <a href="https://databank.worldbank.org/source/world-development-indicators">poverty rate</a>, which the World Bank today pegs at the share of the population living on less than US$3.65 a day, fell sharply, from 26% to 12%.</p>
<p><a href="https://www.exportgenius.in/blog/brazil-exports-higher-than-imports-a-brief-overview-of-brazil-trade-641.php">Brazil exports so many</a> gallons of orange juice, bags of coffee, bushels of wheat and other commodities that it’s serving up the world’s breakfast. Global growth during those years boosted the demand for these commodities as well as for Brazil’s processed goods. Manufacturing exports fueled Brazil’s growth in the decade following the year 2000 for the first time, led by sales <a href="https://legacy.trade.gov/steel/countries/pdfs/exports-brazil.pdf">of products like steel</a>, car parts and cars, and <a href="https://embraer.com/">aircraft made by Embraer</a>.</p>
<p>During these boom years, Lula ran a balanced government budget, held inflation low and <a href="https://www.imf.org/en/Publications/Books/Issues/2019/03/11/Brazil-Boom-Bust-and-Road-to-Recovery-44927">kept the Brazilian real’s exchange rate </a> with other currencies under control – macroeconomic policies that he maintained from his predecessor, Fernando Henrique Cardoso. Lula also bundled <a href="https://doi.org/10.1080/01436597.2015.1059730">Cardoso’s popular anti-poverty programs</a> into Bolsa Família, a successful <a href="https://doi.org/10.1017/S0022216X0600157X">conditional cash transfer program</a>. To remain enrolled and receive the monetary benefits, low-income families had to get their children vaccinated against diseases, keep them in school and <a href="https://www.iadb.org/en/toolkit/conditional-cash-transfer-programs/brazil-bolsa-familia">meet other requirements</a>. </p>
<p>Cynthia Benedetto, Embraer’s chief financial officer, <a href="https://valor.globo.com/brasil/noticia/2011/09/13/chegou-a-hora-do-brasil-ou-ela-acabou-de-passar.ghtml">observed in 2011</a>: “Since my childhood I heard that Brazil is the country of the future,” and then warned, “Now the future has arrived, and I start to fear that it is short.”</p>
<p>She was right. The good times didn’t last. </p>
<p>During the second decade of this century, the prices of many of the commodities that Brazil exports <a href="https://fred.stlouisfed.org/series/PNFUELINDEXQ">fell or even plummeted</a>. The country experienced two of the <a href="https://www.npr.org/sections/thetwo-way/2017/03/07/519073220/brazils-recession-the-longest-and-deepest-in-its-history-new-figures-show">worst recessions in its history</a>. In the downturn that lasted from late 2014 to mid-2016, <a href="https://sidra.ibge.gov.br/tabela/4094">nearly 5 million Brazilians lost their jobs</a>. After a sluggish recovery, the COVID-19 pandemic hit, and <a href="https://repositorio.cepal.org/bitstream/handle/11362/46504/64/PO2020_Brazil_en.pdf">10 million Brazilians became jobless</a> in another big downturn.</p>
<h2>Political upheaval</h2>
<p>Bad choices made tough and unlucky times worse.</p>
<p>A combination of <a href="https://doi.org/10.1080/05775132.2020.1866906">economic mismanagement</a>, <a href="https://www.jstor.org/stable/45290155#metadata_info_tab_contents">widespread corruption</a>, <a href="https://semancha.com/2013/06/22/the-gringos-guide-to-demonstrations-in-brazil/">political turmoil</a> and a <a href="https://ourworldindata.org/coronavirus/country/brazil">global pandemic</a> all contributed to 10 years of backward sliding after a decade of progress.</p>
<p>Lula’s <a href="https://www.poder360.com.br/justica/5-anos-de-lava-jato-285-condenacoes-600-reus-e-3-000-anos-de-penas/">allies</a>, including some in his <a href="https://www.camara.leg.br/tv/388972-supremo-condena-ex-ministro-jose-dirceu-a-10-anos-e-10-meses-de-reclusao/">inner circle</a>, were found to be part of <a href="https://www.bbc.com/news/world-latin-america-35810578">one corruption scheme after another</a>. Lula himself <a href="https://www.reuters.com/article/brazil-corruption-lula/former-brazilian-president-lula-found-guilty-of-corruption-idUSE6N1JB014">ended up in prison for corruption</a> until <a href="https://portal.stf.jus.br/noticias/verNoticiaDetalhe.asp?idConteudo=464261&ori=1">Brazil’s Supreme Court declared the case a mistrial</a> because the presiding judge was determined to have been biased.</p>
<p>Brazilians elected Lula’s hand-picked successor, <a href="https://www.bbc.com/news/world-latin-america-29782073">Dilma Rousseff</a>, in the 2010 and 2014 presidential races. She cast aside some of her predecessors’ policies that had buttressed economic stability.</p>
<p>Rousseff <a href="https://www.correiobraziliense.com.br/app/noticia/economia/2016/01/20/internas_economia,514557/tombini-se-curva-a-pressao-do-pt-e-banco-central-deve-manter-juros.shtml">ended the central bank’s de facto independence</a> and lowered interest rates in an <a href="https://drive.google.com/file/d/1ldGPSw-D2wugZNlKc8_lBg918YGC0-3G/edit">abrupt turnaround that sparked inflation</a>. She gave up on <a href="https://www.correiobraziliense.com.br/app/noticia/economia/2013/11/07/internas_economia,397597/mantega-admite-que-a-meta-fiscal-deste-ano-nao-sera-atingida.shtml">balancing the budget</a>.</p>
<p>Once corruption was exposed in state-owned oil company <a href="https://www.cnnbrasil.com.br/politica/lula-admite-corrupcao-na-petrobras-erros-de-dilma-e-compara-mensalao-a-orcament/">Petrobras</a>, the <a href="https://www.bbc.com/news/business-39194395">construction industry</a> and at Brazil’s massive <a href="https://www.metropoles.com/brasil/politica-brasil/diretor-do-bndes-brasil-legalizou-corrupcao-com-mudanca-na-lei">state-run development bank</a>, economic activity slowed across the board. Rousseff oversaw one of Brazil’s most severe economic contractions in memory: <a href="https://databank.worldbank.org/source/world-development-indicators">GDP shrank by 7%</a> and <a href="https://blogdoibre.fgv.br/posts/divida-bruta-ou-divida-liquida-eis-questao">public debt increased 20 percentage points as a share of GDP</a> from 2014 to 2016.</p>
<p>Brazil’s <a href="https://apnews.com/article/latin-america-caribbean-brazil-impeachments-international-news-d5614b598b25470e839d9d8acfc9cff8">Congress impeached and convicted Rousseff</a> in 2016 for fiscal improprieties. Her vice president, <a href="https://www.reuters.com/article/uk-brazil-politics-temer-idUKKCN0Y32WC">Michel Temer</a>, served out the rest of her term and appointed Lula’s central bank chair, <a href="https://www.reuters.com/article/us-brazil-politics-ministers/brazils-temer-names-henrique-meirelles-as-finance-minister-idUSKCN0Y322W">Henrique Meirelles, as minister of finance</a> to help rein in public debt.</p>
<p>Jair Bolsonaro, a vocal admirer of Brazil’s <a href="https://www.npr.org/2018/07/30/631952886/dictatorship-was-a-very-good-period-says-brazil-s-aspiring-president">20th-century military dictatorship</a>, <a href="https://www.theguardian.com/world/2019/jan/01/jair-bolsonaro-inauguration-brazil-president">became president in 2019</a> by riding the wave of widespread sentiment against Lula’s and Rousseff’s Workers’ Party. Bolsonaro prioritized <a href="https://oglobo.globo.com/economia/carlos-goes/coluna/2021/09/do-entusiasmo-com-equipe-economica-decepcao-25212666.ghtml">short-term political gain</a> over long-term adjustment, often <a href="https://www.bbc.com/portuguese/brasil-50105202">clashing with his own economic aides</a> and dodging rules meant to curb government spending. </p>
<p>By 2020, Brazil’s economy <a href="https://databank.worldbank.org/source/world-development-indicators">ranked No. 12 in the world in terms of GDP</a>, and living conditions deteriorated. In 2021, the poverty rate likely hit the highest level in a decade, according to estimates by <a href="https://web.archive.org/web/20230106004340/https://repositorio.ipea.gov.br/bitstream/11058/11563/4/NT_102_Disoc_Um_Pais.pdf">researchers at IPEA, a government think tank</a>, as well as <a href="https://agenciadenoticias.ibge.gov.br/en/agencia-news/2184-news-agency/news/35695-poverty-hits-a-record-in-2021-62-5-million-persons-highest-level-since-2012">IBGE</a>, Brazil’s statistics agency.</p>
<p>The pandemic and the social spending fluctuations it brought about have made it hard to accurately track economic trends in recent years. But the numbers suggest that Brazil is close again to where it started the 21st century. </p>
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<h2>Back to the future</h2>
<p>Lula’s economic challenges are daunting, over and above the political crisis after the <a href="https://theconversation.com/democracy-under-attack-in-brazil-5-questions-about-the-storming-of-congress-and-the-role-of-the-military-197396">riots by opposition supporters in Brasília</a>.</p>
<p>First, the economic outlook is gloomy. Inflation has led central banks worldwide to <a href="https://www.fitchratings.com/research/sovereigns/global-interest-rates-rising-faster-than-expected-pivot-unlikely-in-2023-10-11-2022">increase interest rates</a>, and the International Monetary Fund <a href="https://www.imf.org/en/Blogs/Articles/2022/10/11/policymakers-need-steady-hand-as-storm-clouds-gather-over-global-economy">forecasts a global slowdown in 2023</a>. </p>
<p>Even if the world still wants Brazil’s coffee, <a href="https://citrusindustry.net/2023/01/13/brazils-orange-juice-production-and-exports/">orange juice</a> and cereal from wheat or corn for breakfast, we doubt that foreign demand for Brazil’s exports will bounce back to the levels seen in past boom years. </p>
<p><a href="https://data.imf.org/commodityprices">Global prices for many of the commodities Brazil exports</a> have been sliding downward for the past 15 years. They briefly reached their 2008 peak level again in mid-2022, partly driven by Russia’s invasion of Ukraine and the ensuing global turmoil that <a href="https://www.ifpri.org/blog/food-export-restrictions-have-eased-russia-ukraine-war-continues-concerns-remain-key">drove food prices up</a>.</p>
<p>But the prices of commodities that are <a href="https://www.usitc.gov/data/gravity/itpde.htm">particularly important to Brazil</a>, such as <a href="https://tradingeconomics.com/commodity/soybeans">soybeans</a>, <a href="https://tradingeconomics.com/commodity/corn">corn</a> and <a href="https://tradingeconomics.com/commodity/coffee">coffee</a>, are all down significantly from their recent peaks.</p>
<p>During his 2022 campaign, Lula promised to <a href="https://economia.uol.com.br/noticias/reuters/2022/08/17/lula-reajuste-tabela-imposto-de-renda.htm">slash taxes on the upper-middle class</a> and <a href="https://oglobo.globo.com/economia/noticia/2022/10/eleito-prioridade-de-lula-e-renovar-auxilio-brasil-de-r-600-e-dar-aumento-real-para-o-minimo.ghtml">increase benefits for the poor</a> while <a href="https://gauchazh.clicrbs.com.br/economia/noticia/2022/11/alckmin-diz-que-governo-lula-vai-fechar-contas-no-azul-e-reduzir-divida-mas-nao-em-24-horas-clalruut3000801g7stvj1i22.html">keeping government finances under control</a>.</p>
<p>This arithmetic is feasible in an era of rapid growth, when newly generated wealth can finance public transfers. At times of slow or no growth, like today, it becomes much harder to pull off.</p>
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<p>Second, unlike when Lula first took office <a href="https://oxfordre.com/latinamericanhistory/display/10.1093/acrefore/9780199366439.001.0001/acrefore-9780199366439-e-416;jsessionid=A0929A5DBDAF95045F6D2AA8214B2378?mediaType=Article">following a period of fiscal stability</a>, this time he must credibly rebuild much of the fiscal framework.</p>
<p>After boosts to benefits, tax cuts and some <a href="https://www.insper.edu.br/agenda-de-eventos/lancamento-do-livro-para-nao-esquecer-politicas-publicas-que-empobrecem-o-brasil/">unfunded pension commitments to retirees</a>, it’s become hard to balance Brazil’s budget. In response to the crisis in the mid-2010s, Brazil’s <a href="https://www12.senado.leg.br/noticias/materias/2016/12/15/promulgada-emenda-constitucional-do-teto-de-gastos">Congress passed a spending cap</a> that gradually rises so as to foster slow fiscal adjustment while avoiding harsh austerity. But Bolsonaro essentially got rid of the cap by circumventing it.</p>
<p>One example is the federal government’s obligation to cover court-mandated payments: <a href="https://www.google.com/url?q=https://www.camara.leg.br/noticias/839381-camara-aprova-em-2o-turno-mudancas-na-pec-dos-precatorios/&sa=D&source=docs&ust=1674072828470042&usg=AOvVaw3wBnAFA1gSAvGVnSFLHL8g">Bolsonaro delayed</a> the disbursement of 110 billion reais ($21.6 billion), equal to more than 1% of Brazil’s GDP, in 2022. That means the new government has to pay this year’s and some of last year’s bills at the same time.</p>
<p>While <a href="https://www.nbcnews.com/news/latino/brazils-bolsonaro-says-no-national-lockdown-record-covid-deaths-rcna618">Bolsonaro dismissed the severity of COVID-19</a> when it was spreading uncontrolled through his country, his government did help people cope with its economic fallout by allowing <a href="https://www.planalto.gov.br/ccivil_03/portaria/dlg6-2020.htm">emergency spending that breached Brazil’s spending cap</a>. However, his administration <a href="https://g1.globo.com/jornal-nacional/noticia/2022/06/30/senado-aprova-pec-que-preve-estado-de-emergencia-para-ampliar-beneficios-sociais.ghtml">maneuvered to perpetuate the state of emergency</a> and kept spending levels higher than the cap would allow long after Brazilians stopped staying at home for public health reasons.</p>
<p>Third, we expect political divisions, including some <a href="https://www.gov.br/planalto/pt-br/acompanhe-o-planalto/noticias/2023/01/geraldo-alckmin-toma-posse-como-vice-presidente-da-republica">within Lula’s administration</a>, to be another obstacle. Different factions on his economic team are likely to be at loggerheads for the foreseeable future because they prefer starkly different policies.</p>
<p><a href="https://www.cnnbrasil.com.br/politica/simone-tebet-quem-e-a-nova-ministra-do-planejamento-e-ex-adversaria-de-lula-na-eleicao/">Simone Tebet</a>, the new economic planning minister who is in charge of coordinating spending, has several fiscal conservatives on her team.</p>
<p>Finance Minister Fernando Haddad, in contrast, has appointed undersecretaries known to invariably <a href="https://www1.folha.uol.com.br/colunas/bernardo-guimaraes/2022/12/o-que-esperar-da-politica-economica-do-novo-governo.shtml">advocate for more spending</a>. Plans for taxes and spending released to date set a budget surplus of 0.5% of GDP as the new government’s target, primarily financed with more tax collection. </p>
<p>Using budget projections by the <a href="https://www.imf.org/-/media/Files/Publications/fiscal-monitor/2022/October/Data/fm-october-2022-database.ashx">International Monetary Fund</a>, we consider those revenue projections <a href="https://www1.folha.uol.com.br/mercado/2023/01/pacote-de-haddad-vai-na-direcao-correta-mas-ha-duvidas-sobre-execucao-dizem-economistas.shtml">overly optimistic</a>.</p>
<p>To be sure, any new government deserves time to prove itself, especially under tough circumstances. But <a href="https://www.briq-institute.org/global-preferences/rankings#1-0-1">patience is rarer in Brazil</a> than humor – and always has been.</p><img src="https://counter.theconversation.com/content/197673/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc-Andreas Muendler received funding from the National Science Foundation for research using Brazilian data.
Marc-Andreas Muendler worked as a consulting researcher for the Brazilian labor ministry and the Brazilian census bureau, and currently works closely with the research department of Brazil's central bank in Sao Paulo on research into firm dynamics.</span></em></p><p class="fine-print"><em><span>Carlos Góes was a senior economic adviser at the Executive Office of the President of Brazil (2017-18). He is currently an economics columnist for O Globo, a Brazilian newspaper. He is the founder of Instituto Mercado Popular, a nonpartisan São Paulo-based think tank. </span></em></p>He faces strong headwinds at home and abroad as his third term as president gets underway.Marc-Andreas Muendler, Professor of Economics, University of California, San DiegoCarlos Góes, Doctoral Candidate in Economics, University of California, San DiegoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1938832022-11-10T17:13:35Z2022-11-10T17:13:35ZBrazil: the new president inherits massive economic and environmental problems<figure><img src="https://images.theconversation.com/files/494649/original/file-20221110-26-emob5.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3877%2C2569&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Plenty for the president-elect to think about.</span> <span class="attribution"><span class="source">Shutterstock/Marcus Mendes</span></span></figcaption></figure><p>The <a href="https://www.theguardian.com/world/2022/oct/30/lula-stages-astonishing-comeback-to-beat-bolsonaro-in-brazil-election">newly elected</a> president of Brazil is an experienced politician, having already served two terms in the role. But Lula da Silva will take the reins of a country that looks very different from the one he presided over before.</p>
<p>Much of this change was caused by COVID. Brazil had the world’s second-highest death toll (after the US) and the government spent <a href="https://www.ft.com/content/152609c9-8162-4bdc-aeef-4c3f8829d66f">about US$60 billion</a> (£52 billion) in mitigation measures, including cash transfers to the poorest. </p>
<p>Such high levels of <a href="https://theprisma.co.uk/2022/10/17/brazil-a-general-contempt-for-human-life/">public spending</a> by President Bolsonaro (which some viewed as a ploy to boost his popularity ahead of the 2022 election) have significantly deepened the country’s level of debt. </p>
<p>Now the country faces a serious economic hangover. Restoring fiscal sustainability is Lula’s first major task, as he attempts to strike a difficult balance between protecting the poor and ensuring sustainable public finances.</p>
<p>The international context for this could hardly be more challenging. <a href="https://fortune.com/2022/11/03/elliott-warns-hyperinflation-global-societal-collapse-financial-crisis/">Global levels</a> of inflation and interest rates, as well as supply constraints caused by Russia’s war with Ukraine have drastically increased the cost of imported goods. </p>
<p>In the past, high commodity prices had supported Brazil’s growth, given its substantial exports of things like iron and oil. But the situation today is very different. China, Brazil’s largest trading partner, has seen a <a href="https://www.ft.com/content/a53c4f92-0999-4cd1-beb7-c901c0f6cb19">cooling of its economic growth</a>, and the price of those same commodities has decreased. </p>
<p>Added to this, Brazil remains a relatively closed economy that has failed to diversify away from mining and agribusiness. And while the farming industry accounts for over a <a href="https://g1.globo.com/economia/agronegocios/noticia/2021/03/11/agronegocio-cresce-243percent-em-2020-e-responde-por-mais-de-um-quarto-do-pib-do-brasil-diz-cna-1.ghtml">quarter of Brazil’s GDP</a>, with the country’s exports of crops and meat totalling US$100 billion in 2021, the sector does not have enough scope to provide new jobs, limiting national prospects of employment recovery. </p>
<p>Despite a recent decrease, <a href="https://agenciadenoticias.ibge.gov.br/en/agencia-press-room/2185-news-agency/releases-en/35304-continuous-pnad-unemployment-rate-is-8-7-underutilization-rate-is-20-1-in-quarter-ending-in-september">unemployment levels</a> in Brazil remain high. And combined with inflation rates of around 8% this year this is hurting the poorest most, causing 33 million <a href="https://apnews.com/article/jair-bolsonaro-elections-caribbean-presidential-business-9bf9953778a0a227ad4b6708c879d9f0">Brazilians to go hungry</a> – an increase of 14 million compared with two years ago.</p>
<p>But Lula has some form in this regard. While in office from 2003 to 2011 <a href="https://www.cps.fgv.br/cps/bd/papers/es86-Poverty-Reduction-and-Well-Being-Lulas-Real.pdf">he was credited</a> with lifting 33 million people out of poverty, reducing extreme poverty by 25%, and expanding access to healthcare and education. </p>
<p>Now protecting the poorest and most vulnerable could not be more urgent – but the global and national economic picture gives him little room for manoeuvre. One option open to him is to focus on attracting green international investment by developing Brazil’s <a href="https://www.evwind.es/2022/08/24/brazil-with-great-potential-for-solar-and-wind-energy/87534">flourishing renewable energy sector</a> and acting quickly on his campaign promises to eradicate deforestation in the Amazon. </p>
<p>But Lula will need to reassure investors over his broader vision and economic plans. During his campaign he promised <a href="https://www.bloomberg.com/news/articles/2022-10-27/brazil-markets-rally-as-lula-pledges-fiscal-responsibility#xj4y7vzkg">higher welfare spending and higher investment, but also fiscal responsibility</a>. There have been no indications of how he will pay for his spending wish list so far. </p>
<h2>Negotiation over confrontation</h2>
<p>Yet his commitments to prosperity and the protection of the Amazon seem sincere. Within hours of winning the presidency <a href="https://www.theguardian.com/world/2022/oct/30/lula-stages-astonishing-comeback-to-beat-bolsonaro-in-brazil-election">he pledged</a> to halt the destruction of the rainforest and restore Brazil’s credibility as an international leader on climate issues. </p>
<p>These are <a href="https://theconversation.com/lulas-victory-in-brazil-comes-just-in-time-to-save-the-amazon-can-he-do-it-193618">immense tasks</a>. Bolsonaro was elected on an anti-environmental platform back in 2018, and deforestation had soon reached <a href="https://www.reuters.com/world/americas/brazil-deforestation-data-shows-22-annual-jump-clearing-amazon-2021-11-18/">its highest level in 15 years</a>. Every day, an area of the Amazon <a href="https://www.hrw.org/news/2022/11/04/brazil-lula-should-urgently-address-amazon-crisis">the size of 2,000 football pitches</a> is eradicated and prepared for crops or pastures.</p>
<p>The Bolsonaro government <a href="https://theconversation.com/lulas-victory-in-brazil-comes-just-in-time-to-save-the-amazon-can-he-do-it-193618">weakened environment protection agencies</a> at the same time as it empowered the powerful agricultural industry that harms indigenous people and the forest they live in. Some environmental experts have argued that, while the goal of zero deforestation is credible, it is <a href="https://www.ft.com/content/8ce01a8c-6deb-45c6-95cb-99a66d4a84a3">practically impossible</a> within the next decade.</p>
<p>Brazil is also deeply divided after four years of polarisation and <a href="https://brazilian.report/power/2022/09/13/radical-rhetoric-political-violence/?mc_cid=c4424dd3b1&mc_eid=88a34429a6">political violence</a>. Nearly half the country did not vote for him, and many did so only to keep Bolsonaro out. The fact that many pro-Bolsonaro politicians were re-elected means the new president will have to make concessions and secure the support of opposition parties if he wants to implement changes. </p>
<p>Equally important is the need to consolidate Brazilian democracy after years of erosion. Bolsonaro implemented a massive return of the military to national political life. Today they occupy more positions in the public administration than during the 1964-84 dictatorship. </p>
<p>Establishing the preponderance of civil power over the Armed Forces is crucial for the democratic strengthening of Brazil.</p>
<p>A glimmer of hope lies in the fact that as one of the few heads of state to command respect from nations as diverse as the US, China, Germany and Russia, Lula may prioritise negotiation over confrontation. In a polarised world maybe he is the one who can promote peace and stability, and live up to some of the great expectations Brazilians have placed on his shoulders.</p><img src="https://counter.theconversation.com/content/193883/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nicolas Forsans does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Lula’s international reputation could be key to the country’s success.Nicolas Forsans, Professor of Management and co-director of the Centre for Latin American & Caribbean Studies, University of Essex, University of EssexLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1575562021-04-19T12:27:21Z2021-04-19T12:27:21ZBrazil’s economic crisis, prolonged by COVID-19, poses an enormous challenge to the Amazon<figure><img src="https://images.theconversation.com/files/394841/original/file-20210413-19-15eq4zg.jpg?ixlib=rb-1.1.0&rect=96%2C37%2C4767%2C3208&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A deforested piece of land in the Amazon rainforest near Porto Velho, in the state of Rondonia, in northern Brazil, on Aug. 23, 2019.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/aerial-picture-showing-a-deforested-piece-of-land-in-the-news-photo/1163385255?adppopup=true">Carl De SouzaA/FP via Getty Images</a></span></figcaption></figure><p>Brazilian President Jair Bolsonaro <a href="https://www.cnn.com/2021/04/15/americas/bolsonaro-biden-amazon-deforestation-intl/index.html">confirmed his country’s participation in a virtual climate summit</a> convened by the U.S. for April 22 and 23, vowing in a recent letter to U.S. President Joe Biden to end illegal deforestation in Brazil by 2030 – a striking about-face from a longtime adversary to the country’s environmental policies. </p>
<p>But Bolsonaro warned that Brazil will need “massive resources”, including considerable financial help, to protect the Amazon. Brazil is currently in the midst <a href="https://www.npr.org/sections/goatsandsoda/2021/03/23/980391847/brazil-is-looking-like-the-worst-place-on-earth-for-covid-19">of a deadly wave of the COVID-19 pandemic</a>, and its economy <a href="https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/BRA?year=2021">shrunk by a record 5.8%</a> last year. The Biden administration, meanwhile, is considering paying <a href="https://www.theguardian.com/environment/2021/apr/11/negotiating-with-your-worst-enemy-biden-in-risky-talks-to-pay-brazil-to-save-amazon">Brazil to protect its environment</a>. </p>
<p>But not so long ago, both Brazil’s economy and its Amazon were prospering.</p>
<p>In 2014, Brazil was closing out nearly a decade of continuous <a href="https://fred.stlouisfed.org/series/NAEXKP01BRQ657S">economic growth</a>. <a href="https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=BR">Per capita GDP</a> – the total value of the economy divided among the population – had grown by 400% in just 10 years and economic inequality was falling to record lows in a country that long had the world’s largest gap between rich and poor. Between 2004 and 2014, some 35 million Brazilians <a href="https://www.theguardian.com/global-development-professionals-network/2014/apr/17/brazil-role-model-development-africa">joined the ranks of the middle class</a>.</p>
<p>As Brazil’s economy thrived, <a href="https://science.sciencemag.org/content/344/6188/1118.abstract">deforestation in the Amazon</a> slowed. Deforestation levels in 2012 were <a href="http://www.obt.inpe.br/OBT/assuntos/programas/amazonia/prodes">one-sixth of what they were in 2004</a>. Back then, falling deforestation rates were hailed as a testament to the <a href="https://doi.org/10.1126/science.1248525">country’s prowess</a> in environmental policymaking. </p>
<p>But after nearly a decade of <a href="https://scholar.google.com/citations?hl=en&user=M3iEyN0AAAAJ">researching and writing about Amazon forest loss</a>, I’ve become convinced that Brazil’s successes in reducing deforestation a decade earlier likely had just as much to do with basic economics as environmental policy.</p>
<h2>Rise and fall of deforestation</h2>
<p>Forest loss in the Amazon has long reflected Brazil’s economic health. </p>
<p>For much of the late 20th century, when Brazil’s economy boomed, the federal government redirected public investment to the Amazon. Many of these investments – <a href="https://news.mongabay.com/2012/01/colonization-program-remains-important-driver-of-deforestation-in-brazil/">the massive land distribution programs of the 1980s</a>, <a href="https://doi.org/10.1590/1809-4422ASOC256V1922016">road projects</a> and the enormous public subsidies for farming and ranching – were closely associated with forest loss. </p>
<p>So, in the 20th century, when Brazil’s economy boomed, deforestation often followed. </p>
<p>Today, however, forest loss in Brazil’s Amazon tends to be more closely associated with international demand for commodities like soybeans, beef and gold than with government investments. And for farmers, prices for these commodities don’t just rise and fall with global demand. They also rise and fall inversely to Brazil’s economic health.</p>
<p>The underlying <a href="https://theconversation.com/brazils-thriving-soy-industry-threatens-its-forests-and-global-climate-targets-56973">economic reasons for this connection are complicated</a>. But in short, it has to do with how the value of Brazil’s currency, the real, affects farmers who grow animals or crops for export. </p>
<h2>Of currencies and commodities</h2>
<p>That’s because, historically, when Brazil’s economy struggles, its currency loses value against the U.S. dollar – the currency of international markets.</p>
<p>About 20% of Brazil’s beef and more than 80% of its soybeans are exported. For Brazilian farmers and ranchers who contribute to these export markets – including many who live or operate in the Amazon region – a struggling domestic economy and weak currency is actually a plus. It means that when foreign buyers purchase Brazilian exports in dollars, Brazilian farmers are being paid more in their local currency. </p>
<p>This gives them more money – money that can potentially be used for <a href="https://iopscience.iop.org/article/10.1088/1748-9326/aace8e/meta">purchasing and clearing forested land</a>. A lucrative export market is also a compelling reason to start purchasing and clearing new land. </p>
<p>Conversely, when the economy is strong, so is the Brazilian real. For Amazonian farmers in Brazil, that means less money earned, less to invest in clearing forests and less incentive to clear new land. </p>
<p>A decade ago, when <a href="https://fred.stlouisfed.org/series/NAEXKP01BRQ657S">Brazil’s economy was working well</a> and the real <a href="https://fred.stlouisfed.org/series/DEXBZUS">was particularly strong</a>, economic growth, nationally, was putting a brake on deforestation by <a href="https://doi.org/10.3389/ffgc.2021.613313">suppressing farmers’ and ranchers’ profits</a>. </p>
<h2>Economic crises are environmental crises</h2>
<p>The economic brakes that once guarded against Amazon deforestation have come off. </p>
<p>In 2015 <a href="https://theconversation.com/how-did-brazil-go-from-rising-bric-to-sinking-ship-57029">Brazil entered a severe recession</a>. Now in its sixth consecutive year of slow or even negative economic growth, the Brazilian economy remains beset by <a href="https://www.ecb.europa.eu/pub/pdf/other/eb201601_focus01.en.pdf">lower global commodity prices</a> and a <a href="https://fred.stlouisfed.org/series/GGGDTABRA188N">rising deficit</a>. Poverty is rising. Per capita GDP today is now about US$1,000 less per person than <a href="https://tradingeconomics.com/brazil/gdp-per-capita">it was a decade ago</a>. </p>
<p>Meanwhile, Brazil is one of the countries worst hit by COVID-19, with <a href="https://www.npr.org/sections/coronavirus-live-updates/2021/04/07/984991377/brazil-tops-4-000-daily-covid-19-deaths-nears-u-s-peak">4,000 people dying on its worst days</a>. The pandemic is prolonged and exacerbating the country’s economic crisis.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/394848/original/file-20210413-21-hhf1cu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Residents receive meals at a soup kitchen in Sao Paulo." src="https://images.theconversation.com/files/394848/original/file-20210413-21-hhf1cu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/394848/original/file-20210413-21-hhf1cu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/394848/original/file-20210413-21-hhf1cu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/394848/original/file-20210413-21-hhf1cu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/394848/original/file-20210413-21-hhf1cu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/394848/original/file-20210413-21-hhf1cu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/394848/original/file-20210413-21-hhf1cu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Residents receive meals at a soup kitchen in the Paraisopolis favela, in Sao Paulo, Brazil, on Jan. 28, 2021.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/residents-receive-meals-at-a-soup-kitchen-of-paraisopolis-news-photo/1230959554?adppopup=true">Nelson Almeida/AFP via Getty Images</a></span>
</figcaption>
</figure>
<p>Today, valued at about 18 U.S. cents, the real sits <a href="https://fred.stlouisfed.org/series/DEXBZUS">at a record low</a>. The last time the real was this low was in 2003 – another year, not coincidentally, that deforestation in the Amazon surged. </p>
<p>The weak Brazilian currency has pushed prices for <a href="https://www.cepea.esalq.usp.br/br/indicador/soja.aspx">soybeans</a>, <a href="https://www.cepea.esalq.usp.br/br/indicador/boi-gordo.aspx">beef</a> and <a href="https://goldprice.org/gold-price-brazil.html">gold</a> to heights which, 10 years ago, would have astounded. Soybean prices are five times higher than they were 15 years ago. Beef and gold prices are more than triple. For the farmers, ranchers and prospectors who work in the Amazon or at its periphery, these are very profitable times.</p>
<p>Last year, deforestation in the Amazon reached <a href="https://www.nature.com/articles/s41559-020-01368-x">its highest level</a> in over a decade. Unless something changes, I expect more land-clearing forest fires this July and August, when the Amazon’s dry season reaches its apex. </p>
<h2>To end deforestation, fix Brazil’s economy</h2>
<p>In today’s globalized economic system, the fates of Brazil’s economy and the Amazon forest are linked. </p>
<p>Brazil’s current economic crisis rewards the Amazon’s ranchers, <a href="https://www.sapiens.org/culture/amazon-gold-mining/">gold prospectors</a> and farmers with higher profits, creating serious financial incentives to clear more land. By some estimates, such fires in Brazil account for <a href="https://www.edf.org/sites/default/files/10333_Measuring_Carbon_Emissions_from_Tropical_Deforestation--An_Overview.pdf">70% of the country’s total greenhouse gas emissions</a>.</p>
<p>[<em>Over 100,000 readers rely on The Conversation’s newsletter to understand the world.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=100Ksignup">Sign up today</a>.]</p>
<p>The global debate about how to best protect the Amazon has largely focused on concerns over the <a href="https://theconversation.com/amazon-deforestation-already-rising-may-spike-under-bolsonaro-109940">state of Brazilian environmental policy</a> under President Bolsonaro. My research suggests the need to strengthen Brazil’s economy should be a critical part of these discussions. </p>
<p>When Brazil’s economy struggles, its farmers and ranchers will reap – and the Amazon will suffer.</p><img src="https://counter.theconversation.com/content/157556/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Richards has previously received funding for his work from the National Science Foundation and the National Geographic Society. Currently, he also serves as a Senior Economist with the U.S. Agency for International Development (USAID). The views and opinions expressed in this article are his and do not necessarily represent USAID.</span></em></p>Because Brazil’s economic prosperity in the last two decades is increasingly linked to the Amazon’s good health, restoring the country’s economy is a critical first step toward ending deforestation.Peter Richards, Adjunct Professor, George Washington UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1156172019-04-18T10:44:41Z2019-04-18T10:44:41ZBolsonaro’s approval rating is worse than any past Brazilian president at the 100-day mark<p>Brazilian President Jair Bolsonaro was elected last year on a wave of popular anger at the country’s stagnant economy and political chaos, promising voters a “<a href="https://www.infomoney.com.br/mercados/politica/noticia/7144371/desanimado-com-politica-economist-aponta-quem-pode-ser-esperanca-melhor">better future</a>.”</p>
<p>After just over 100 days in office, many Brazilians <a href="https://www.nytimes.com/aponline/2019/04/09/world/americas/ap-lt-brazil-bolsonaro-100-days.html">feel this right-wing former congressman has not delivered</a> on that promise. </p>
<p>Bolsonaro’s approval rating, which began dropping immediately after he took office on Jan. 1, has declined from <a href="https://g1.globo.com/politica/noticia/2019/03/20/governo-bolsonaro-tem-aprovacao-de-34-e-reprovacao-de-24-diz-pesquisa-ibope.ghtml">49% in January to 34% in late March</a>, according to the Brazilian Institute of Public Opinion and Statistics. That’s the lowest ever recorded for a Brazilian president at the 100-day mark.</p>
<h2>Nepotism, hate speech and mismanagement</h2>
<p>Bolsonaro’s rise to <a href="https://theconversation.com/bolsonaro-wins-brazil-election-promises-to-purge-leftists-from-country-105481">lead Latin America’s biggest country</a> after 13 years of leftist leadership was made possible by years of overlapping political, economic and crime crises that created widespread <a href="https://theconversation.com/disillusioned-brazilians-choose-bolsonaro-haddad-after-a-tense-and-violent-campaign-104224">disillusionment</a> across Brazil.</p>
<p>Capitalizing on voter frustrations, Bolsonaro, a longtime lower house representative, ran a polarizing outsider campaign not unlike the <a href="https://www.washingtonpost.com/politics/a-divided-country-gets-a-divisive-election/2016/01/09/591bfccc-b61f-11e5-a842-0feb51d1d124_story.html">2016 presidential campaign of Donald Trump</a>, now a close <a href="https://www.nytimes.com/2019/03/19/us/politics/bolsonaro-trump.html">ally</a>. He demonized women and minorities, attacked democratic institutions and, according to a Brazilian court, <a href="https://www.nytimes.com/2018/04/14/world/americas/brazil-president-candidate-hate.html">incited hate and violence</a>. </p>
<p>Still, he won the presidency last October with <a href="https://theconversation.com/bolsonaro-wins-brazil-election-promises-to-purge-leftists-from-country-105481">55% of the vote</a>, less than the more than 60% received by the leftist former president <a href="https://www.nytimes.com/2006/10/29/world/americas/30brazilcnd.html">Luiz Inácio Lula da Silva</a>, who won the 2002 and 2006 elections in a landslide. In Brazil, voting is compulsory.</p>
<p>Many Brazilians expressed hope that, once in office, Bolsonaro would set the demagogy and bigotry aside to focus on addressing the huge challenges facing Brazil. These include a <a href="https://theconversation.com/how-did-brazil-go-from-rising-bric-to-sinking-ship-57029">long-stagnant economy</a>, <a href="https://theconversation.com/brazil-in-political-crisis-over-jailed-president-4-essential-reads-91143">rampant government corruption</a> and <a href="https://theconversation.com/caught-between-police-and-gangs-rio-de-janeiro-residents-are-dying-in-the-line-of-fire-83016">record-setting urban violence</a>.</p>
<p>That hasn’t happened.</p>
<p>Hours after taking office, Bolsonaro issued an executive order that <a href="https://www.theguardian.com/world/2019/jan/02/brazil-jair-bolsonaro-amazon-rainforest-protections">decreased environmental protections of the Amazon</a>, outraging environmentalists worldwide and endangering the indigenous Brazilians who live in the world’s biggest rainforest. </p>
<p>On a recent visit to the Holocaust Museum in Israel, Bolsonaro made headlines for claiming that <a href="https://www.reuters.com/article/us-israel-brazil/brazils-president-calls-nazis-leftists-after-israel-holocaust-museum-visit-idUSKCN1RF1QD">Germany’s Nazi Party was a leftist regime</a>. His foreign affairs minister only made things worse when he defended his boss’s comments by explaining that both Nazis and socialists are “<a href="https://oglobo.globo.com/mundo/ernesto-araujo-volta-defender-que-nazismo-foi-um-fenomeno-de-esquerda-23562729">anti-capitalist, anti-religion, collectivist [and] against individual freedom</a>.”</p>
<h2>Picking unnecessary fights</h2>
<p>Bolsonaro has demonstrated a lack of mastery of the legislative process, despite having been a lawmaker for nearly three decades.</p>
<p>Reforming Brazil’s expensive, ailing pension system was one of Bolsonaro’s main <a href="https://www.reuters.com/article/us-brazil-politics/bolsonaros-economic-guru-urges-quick-brazil-pension-reform-idUSKCN1N41EB">electoral promises</a> to boost the economy. But his mismanagement of negotiations around a bill to save Brazil <a href="https://www.reuters.com/article/us-brazil-politics-pensions-factbox/factbox-pension-reform-brazils-uphill-battle-to-save-1-trillion-reais-idUSKCN1RH1VY">$US270 billion over the next 10 years</a> by raising the retirement age and increasing individual contributions has frustrated the fragile, cross-party coalition of lawmakers working to pass his plan.</p>
<p>Bolsonaro has <a href="http://www.brazilmonitor.com/index.php/2019/03/23/bolsonaro-and-maia-hangs-a-duel-with-statements-about-pension-reform-voting/">picked fights</a> with supporters of the bill, including the speaker of the lower house. And he has failed to explain <a href="https://uk.reuters.com/article/uk-brazil-politics/brazils-bolsonaro-signals-weaker-pension-reform-concern-over-boeing-deal-idUKKCN1OY0UN">critical aspects of the proposed reform</a>. </p>
<p>Pension reform, which requires three-fifths congressional support to pass, <a href="https://www.reuters.com/article/brazil-pensions/update-1-brazil-aims-to-pass-pension-reform-by-mid-year-source-idUSL1N1ZN1Y1">now seems unlikely to happen</a> before the June deadline Bolsonaro set – if it happens at all. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/269847/original/file-20190417-139104-fvhkiq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/269847/original/file-20190417-139104-fvhkiq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/269847/original/file-20190417-139104-fvhkiq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/269847/original/file-20190417-139104-fvhkiq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/269847/original/file-20190417-139104-fvhkiq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/269847/original/file-20190417-139104-fvhkiq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/269847/original/file-20190417-139104-fvhkiq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/269847/original/file-20190417-139104-fvhkiq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Pension reform also eluded Bolsonaro’s predecessor, former President Michel Temer, who was indicted on charges of money laundering in March.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Brazil-Corruption-Probe/dfc5bdb74a994cb098c5fe9ca571e9e2/4/0">AP Photo/Leo Correa</a></span>
</figcaption>
</figure>
<h2>Bolsonaro’s controversial cabinet</h2>
<p>Concerns over corruption have likewise clouded Bolsonaro’s first 100 days.</p>
<p>Bolsonaro has failed to take seriously repeated corruption allegations against <a href="https://www.nytimes.com/2019/04/12/world/americas/brazil-women-candidates-money.html">numerous aides</a>. That’s risky in Brazil, where a multi-year judicial investigation still underway has sent <a href="https://www.theguardian.com/world/2019/mar/21/brazils-former-president-michel-temer-arrested-in-corruption-investigation">two presidents</a>, <a href="https://www.cfr.org/backgrounder/brazils-corruption-fallout">several lawmakers</a> and dozens of corporate executives to jail for bribery.</p>
<p>And Bolsonaro recently raised eyebrows by suggesting that he’d like to appoint his son Carlos, a far-right Rio de Janiero city councilman who manages the president’s Twitter feed, <a href="https://jovempan.uol.com.br/programas/os-pingos-nos-is/merecia-um-cargo-de-ministro-ele-me-colocou-aqui-diz-bolsonaro-sobre-filho-carlos.html">to join his cabinet</a>. All three of the president’s sons play an unusually active role in their father’s government.</p>
<p>Bolsonaro’s frequent positive references to military dictatorship as a form of governance also has critics worried.</p>
<p>Protests erupted in early April after Bolsonaro <a href="https://www.france24.com/en/20190401-bolsonaro-coup-anniversary-brazil-protest-dictator">called on Brazilians</a> to honor the anniversary of the <a href="http://oxfordre.com/latinamericanhistory/view/10.1093/acrefore/9780199366439.001.0001/acrefore-9780199366439-e-623">1964 coup</a> that ushered in military rule in Brazil. Brazil’s 24-year military dictatorship claimed <a href="https://www.theguardian.com/world/2014/dec/10/brazil-president-weeps-report-military-dictatorship-abuses">191 lives</a>, “disappeared” 210 dissidents and tortured several thousand people, according to a <a href="https://libya360.wordpress.com/2014/12/11/brazilian-commission-report-details-murder-and-torture-by-us-backed-dictatorship/">2014 government report</a>. </p>
<p>“Liberty and democracy only exist when the armed forces want them to,” Bolsonaro has <a href="https://www.reuters.com/article/us-brazil-politics/brazils-bolsonaro-says-democracy-liberty-depend-on-military-idUSKCN1QO2AT">since commented</a>.</p>
<p>Bolsonaro served in Brazil’s armed forces. His vice president, <a href="https://www.youtube.com/watch?v=nuf1N5bY1Hs">Hamilton Mourão</a>, is a retired general. And eight out of the 22 ministers in Bolsonaro’s cabinet are military officers. </p>
<p>That’s a higher proportion of military men in government than any prior democratic administration in Brazil – higher even than <a href="https://veja.abril.com.br/politica/bolsonaro-supera-geisel-medici-e-figueiredo-em-ministros-militares/">some of its authoritarian regimes</a>.</p>
<p>Some of Bolsonaro’s civilian cabinet ministers are equally controversial. </p>
<p>Damares Alves, the evangelical pastor picked to lead Brazil’s Ministry of Women, Family and Human Rights, has made it her mission to promote “<a href="https://www.theguardian.com/world/2018/dec/06/outcry-over-bolsonaros-plan-to-put-conservative-in-charge-of-new-family-and-women-ministry">family values</a>,” which entails promoting traditional values and combating abortion as well as gender equality.</p>
<p>“It’s a new era in Brazil: Boys wear blue and girls wear pink!” she <a href="https://www.youtube.com/watch?v=6myjru-e81U">announced</a> on her first day in office.</p>
<p>Historically, the human rights ministry has worked to improve the lives of minorities in Brazil and ensure their legal protection.</p>
<p>And Bolsonaro’s first minister of education, Ricardo Vélez Rodríguez – <a href="https://www.dw.com/en/bolsonaro-fires-brazils-controversial-education-minister/a-48257072">who has since been fired for mismanagement</a> – outraged teachers when he ordered all public schools to submit to the ministry a video of schoolchildren singing the national anthem on the first day of the new school year.</p>
<p>Brazil’s literacy rate is among the lowest in Latin America, <a href="http://datatopics.worldbank.org/education/country/brazil">at 92%</a>. And its school dropout rate is among the region’s highest: <a href="https://data.worldbank.org/indicator/SE.SEC.CMPT.LO.ZS?locations=BR">28% of students never graduate</a>.</p>
<p>His demand may also have been illegal, since Brazilian law prohibits the recording of minors without parental consent.</p>
<p>Bolsonaro was elected to snap Brazil out of a deep slump. After three months in office, the “better future” he promised looks a lot like the crisis that came before.</p><img src="https://counter.theconversation.com/content/115617/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helder do Vale does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Bolsonaro was elected to bring Brazil a ‘better future.’ Instead, his first months in office have been marked by mismanagement, legislative gridlock and protest.Helder do Vale, Associate Professor, Graduate School of International and Area Studies, Hankuk University of Foreign StudiesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/985732018-10-11T13:07:32Z2018-10-11T13:07:32ZBrazil faces two very different economic models in Bolsonaro and Haddad<p>Brazil’s far-right candidate, Jair Bolsonaro, has won the first round of the country’s recent presidential elections. The former military captain won 46% of the vote, making him the favourite to become Brazil’s next president when the second round of voting takes place on October 28. He is up against Fernando Haddad of the Workers’ Party (PT), which was in power from 2003-16, but has been mired in high-profile <a href="https://theconversation.com/how-the-massive-petrobras-corruption-scandal-is-upending-brazilian-politics-43939">corruption scandals</a>.</p>
<p>The rise of Bolsonaro marks an extreme shift for Brazilian politics. A great deal of focus has been on his controversial anti-establishment rhetoric and <a href="https://www.theguardian.com/commentisfree/2018/oct/06/homophobic-mismogynist-racist-brazil-jair-bolsonaro">monstrous opinions</a>. As well as having <a href="https://theconversation.com/brazil-can-its-poorest-region-call-a-halt-to-jair-bolsonaros-dangerous-politics-104380">potentially dangerous politics</a>, a Bolsonaro presidency would mark a significant shift for Brazil’s economy, too.</p>
<p>Much of Brazil’s recent history has been marked by a state-led economic strategy known as <a href="http://www.scielo.br/pdf/ecos/v21nspe/v21nspea04">social-developmentalism</a>. This is, broadly-speaking, Haddad and the PT’s approach. It is focused on the potential of Brazil’s internal market, demand for natural resources, and developing internal demand through investment in infrastructure.</p>
<h2>Mixed results</h2>
<p>It cannot be said that the 13 years of PT government followed strict social-developmentalist rules. But it gave great importance to both public investment (federal investment grew by around 10.6% per year) and internal demand (via income distribution and raising the real minimum wage, which grew almost 5% per year). It was a period of relative steady growth (3.3% per year) <a href="https://books.google.co.uk/books?id=XppWDwAAQBAJ&printsec=frontcover&dq=valsa+brasileira+carvalho+laura&hl=pt-BR&sa=X&ved=0ahUKEwjqy4rt6vzdAhVNzoUKHRueA5gQ6AEIKTAA#v=onepage&q=valsa%20brasileira%20carvalho%20laura&f=false">and decreasing poverty</a>. </p>
<p>But stability collapsed in no small part thanks to a <a href="https://www.ecb.europa.eu/pub/pdf/other/eb201601_focus01.en.pdf?64a2cdbd9c4a9c254445668338164746">plummet in global commodity prices</a> in 2011, which hurt Brazilian exports. And this was coupled with the high-profile investigation into systemic cases of government corruption. Much of it involved political bribery run by construction companies, the same ones that were a key part of PT’s economic strategy.</p>
<p>Without the international growing demand for Brazilian natural resources and a limited investment in infrastructure, the PT’s social-developmentalist strategy collapsed. The economy followed closely and in 2015-16 Brazil’s GDP <a href="https://www.cia.gov/library/publications/the-world-factbook/geos/br.html">declined by 7%</a>. The failure of public services was made evident by the <a href="https://theconversation.com/there-would-be-no-shame-in-brazil-ditching-the-olympics-26204">numerous problems</a> with putting on the 2014 football World Cup and the 2016 Olympic Games. </p>
<p>This all helped to create an atmosphere of discontentment, which was channelled to PT’s last president, Dilma Rousseff. Bolsonaro has been extremely skilled in attacking PT and putting himself forward as the solution to Brazil’s woes. But rather than investing in public infrastructure projects, it is likely that he will open the country up to privatisation and there is no guarantee it will help the majority of people.</p>
<h2>Extreme economic liberalism</h2>
<p>Bolsonaro seems to favour a much more neoliberal approach to running the Brazilian economy. There is scant detail of his economic plans in his <a href="http://divulgacandcontas.tse.jus.br/candidaturas/oficial/2018/BR/BR/2022802018/280000614517/proposta_1534284632231.pdf">manifesto</a> (a requirement of presidential candidates in Brazil). In fact, Bolsonaro <a href="https://latinamericanpost.com/23485-brazil-what-would-happen-to-the-economy-with-paulo-guedes-as-minister">has confessed</a> to being ignorant of economic matters.</p>
<p>Instead, he has deferred to the economist Paulo Guedes, who is now <a href="https://www1.folha.uol.com.br/mercado/2018/10/procuradoria-investiga-guru-de-bolsonaro-sob-suspeita-de-fraude.shtml">under investigation</a> for fraud in businesses with state pension funds. He is a graduate of the Chicago school, which is renowned for emphasising the power of the free market. </p>
<p>Guedes’ <a href="https://www1.folha.uol.com.br/poder/2018/02/o-governo-e-muito-grande-bebe-muito-combustivel-diz-economista-de-bolsonaro.shtml">interviews</a> suggest that he embraces an extreme degree of liberalism never seen before in Brazil. This includes maintaining and reinforcing the extensive cuts in public spending promoted by current president Michel Temer, privatisation of all state-owned companies and an unfair, non-progressive taxation scheme where almost everyone would pay the same level of tax – even though the bottom 10% spend a third of their income in tax <a href="https://www.oxfam.org.br/a-distancia-que-nos-une">while the top 10% spend only a fifth</a>. </p>
<p>Bolsonaro’s combination of social conservatism with extreme economic liberalism has even made it to the front page of the pro-free market <a href="https://www.economist.com/leaders/2018/09/20/jair-bolsonaro-latin-americas-latest-menace">Economist newspaper</a>, which characterised Bolsonaro as a populist menace to Latin America.</p>
<p>While <a href="http://seer.ufrgs.br/index.php/AnaliseEconomica/article/view/47299">I have my reservations</a> over the social-developmentalist approach, it is irrefutable that it has managed to combine economic growth and stability, while reducing poverty. This was, however, in the context of favourable commodity prices.</p>
<p>But the competing strategy espoused by Bolsonaro seems to focus solely on a type of economic growth that does not necessarily mean socioeconomic development. The 1970s Chilean model of economic growth, which Guedes has praised, contributed to <a href="http://decompressinghistory.com/post/pinochet/">increasing social inequality</a> there. This is a pivotal issue for Brazil, which must be addressed by the next government’s economic strategy: the <a href="https://www.oxfam.org.br/sites/default/files/arquivos/relatorio_a_distancia_que_nos_une_en.pdf">six richest Brazilians own as much as the poorest 100m</a>.</p>
<p>If addressing Brazil’s great economic recession, rising crime and a 12% unemployment rate does not sound complicated enough, the country also needs a plan for rebuilding social cohesion. Recent years have left Brazil polarised. Respectful and democratic debates have been few and far between – from family WhatsApp groups to the higher judicial bodies. Bolsonaro seems to be taking advantage of this polarisation (the <a href="https://www.nexojornal.com.br/interativo/2018/10/10/Central-de-pesquisas-2%C2%BA-turno-a-evolu%C3%A7%C3%A3o-da-disputa-presidencial">latest poll</a> gave him 49% compared to Haddad’s 36%). This leaves Haddad with a serious challenge ahead of polling day on October 28.</p><img src="https://counter.theconversation.com/content/98573/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Arthur Gomes Moreira does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As well as having dangerous social and political consequences, a Bolsonaro presidency would mark a massive shift for Brazil’s economy, too.Arthur Gomes Moreira, Doctoral Researcher at SPRU, University of SussexLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/810082017-07-20T01:49:39Z2017-07-20T01:49:39ZHow Lula evolved from Brazil’s top politician to its most notable convict<p>Brazilians watched along with the rest of the world as one of the country’s leading federal judges ruled that <a href="http://uk.reuters.com/article/uk-brazil-politics-polls-idUKKBN17W0KD">its most popular political figure</a> is a criminal. </p>
<p>On July 12, <a href="https://www.washingtonpost.com/world/the_americas/brazils-new-hero-is-a-nerdy-judge-who-is-tough-on-official-corruption/2015/12/23/54287604-7bf1-11e5-bfb6-65300a5ff562_story.html?utm_term=.09ae2628acf9">Sergio Moro</a>, the federal judge leading Brazil’s <a href="https://www.theguardian.com/world/2017/jun/01/brazil-operation-car-wash-is-this-the-biggest-corruption-scandal-in-history">massive “car wash” investigation</a>, <a href="https://www.nytimes.com/2017/07/12/world/americas/brazil-lula-da-silva-corruption.html?rref=collection%2Fsectioncollection%2Famericas&action=click&contentCollection=americas&region=stream&module=stream_unit&version=search&contentPlacement=1&pgtype=sectionfront&_r=0">convicted</a> former two-term President <a href="http://www.bbc.com/news/world-latin-america-10841416">Luiz Inacio “Lula” da Silva</a> of corruption and sentenced him to nine and a half years in prison. </p>
<p>My academic engagement with <a href="https://theconversation.com/us/topics/brazil-2153">Brazil</a> began in the late 1970s, well before Lula – as he’s commonly known – finally won the presidency in 2002 after three tries. Over these four decades, I witnessed his remarkable rise and now his devastating fall, and met him three times. </p>
<p>Given that Lula is practically synonymous with brand Brazil, I believe his conviction confirms the total bankruptcy of Brazilian politics and raises serious doubts about the future of Latin America’s largest country. </p>
<h2>Lula’s rise</h2>
<p>Lula’s improbable emergence from the poverty of the Northeast and slums of Sao Paulo to the highest office in the land <a href="http://www.notablebiographies.com/supp/Supplement-Ka-M/Lula-da-Silva-Luiz-In-cio.html">is well-documented</a>.</p>
<p>As a young political scientist focused on Latin America, I first became aware of Lula the union organizer and political activist in the industrial suburbs of Sao Paulo during the country’s harsh military dictatorship (1964 to 1985). On three occasions our paths crossed. </p>
<p>The first came in the halls of Congress in the late 1980s when he served as a deputy following Brazil’s return to civilian rule. I initially dismissed Lula as a being too far on the leftist fringe to become a serious national player. But he defied skeptics like me and rapidly rose to prominence, where he remains today. </p>
<p>In 1989, in Brazil’s <a href="http://countrystudies.us/brazil/101.htm">first democratic election</a> since 1960, Lula made his first bid for the presidency. Although he lost, he made a much stronger showing than predicted. The campaign rallies I observed were large and impassioned.</p>
<p>Throughout the 1990s, Lula and his socialist Workers’ Party (PT) strengthened their hold on politics. The party increased its representation in Congress as well as at the state and local level. Lula ran again in the 1994 and 1998 presidential elections. Again, he fared well but lost. </p>
<p>Eventually Lula and the PT leadership saw the need to broaden their base beyond blue collar workers, urban slum dwellers and the rural poor if they were to win power and govern. This meant moderating their hard left image.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/178926/original/file-20170719-13593-1oxzvz0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/178926/original/file-20170719-13593-1oxzvz0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/178926/original/file-20170719-13593-1oxzvz0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/178926/original/file-20170719-13593-1oxzvz0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/178926/original/file-20170719-13593-1oxzvz0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/178926/original/file-20170719-13593-1oxzvz0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/178926/original/file-20170719-13593-1oxzvz0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Lula was branded a hard-core leftist in his early days. In 1995, he met with the Palestinian leader Yasser Arafat.</span>
<span class="attribution"><span class="source">AP Photo/Agencia Estado, Ed Ferreira</span></span>
</figcaption>
</figure>
<h2>Moving to the center</h2>
<p>I witnessed the beginning of this effort in the 1994 campaign. </p>
<p>A respected public figure – who was not a PT militant but saw Lula’s potential – set up a trip for the candidate and his advisers to Washington and New York. The goal was to assure political and business leaders that he would not upset U.S.-Brazil relations if elected. </p>
<p>I was invited to sit in on a meeting of the delegation with two members of the Senate Foreign Relations Committee and to attend a reception where one of the hosts was Lincoln Gordon, ambassador to Brazil during the <a href="http://nacla.org/news/2014/4/1/remembering-brazils-military-coup-50-years-later">1964 military coup</a>. In the minds of many Brazilians, Gordon <a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/12/21/AR2009122103466.html">represented Washington’s support</a> for the armed takeover and would not have expected Lula to meet with him.</p>
<p>On another occasion five years later, a Lula adviser approached me during a trip to Brazil and asked if a delegation of institutional investors I was accompanying would be interested in meeting his boss, who was dining at the same Brasilia restaurant. To me, this was another instance of reassuring foreign investors they could continue to make money in Brazil. </p>
<p>These and many other examples of outreach to the center proved decisive to Lula’s eventual victory in 2002. His “<a href="http://blogs.ft.com/beyond-brics/2014/01/06/hello-2014-time-for-a-new-letter-to-the-brazilian-people/">Letter to the Brazilian People</a>” promised that his government would pursue market-friendly economic policies. This pledge neutralized business opposition and calmed the middle class. He also promised to root our corruption from politics.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/178927/original/file-20170719-13534-6tacde.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/178927/original/file-20170719-13534-6tacde.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/178927/original/file-20170719-13534-6tacde.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/178927/original/file-20170719-13534-6tacde.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/178927/original/file-20170719-13534-6tacde.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/178927/original/file-20170719-13534-6tacde.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/178927/original/file-20170719-13534-6tacde.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Lula celebrates with his wife after finally winning the presidency in 2002.</span>
<span class="attribution"><span class="source">AP Photo/Dario Lopez-Mills</span></span>
</figcaption>
</figure>
<h2>Lula’s pledges</h2>
<p>Because of the widely perceived failure of Brazil to realize its potential, Brazil <a href="http://www.nasdaq.com/article/the-global-guru-the-country-of-the-future-cm362793">was branded as</a> “the country of the future … and always will be.”</p>
<p>President Luiz Inacio Lula da Silva had a mandate to lead Brazil into the future by integrating the dispossessed 40 percent of the population into the nation while working with the private sector to grow the economy and strengthen the rule of law. </p>
<p>In an <a href="http://www.latam.ufl.edu/research--training/la-business-environment/publications/">annual assessment</a> of the Latin American business environment, published from 1999 to 2014, I chronicled Lula’s considerable accomplishments in fulfilling two-thirds of his promises: His government coupled redistributive social programs with pro-growth measures, and as a result the economy boomed, poverty declined and life got better for all Brazilians. </p>
<p>Achievements at home won Lula and Brazil <a href="https://link.springer.com/chapter/10.1057%2F9781403918529_6">recognition and respect abroad</a>. Brazil’s reward for becoming a “serious country” under Lula was hosting the 2014 World Cup and 2016 Summer Olympics. Lula finished his second term as “<a href="http://www.newsweek.com/brazils-lula-most-popular-politician-earth-79355">the most popular politician on Earth</a>.” </p>
<p>But it was his failure to address his last promise, to clean up politics and to strengthen the rule of law, that appeared to be his undoing.</p>
<h2>Lula’s fall</h2>
<p>While in office, Lula managed to deflect charges of corruption – even though <a href="http://americasquarterly.org/content/lulas-sentencing-should-be-sober-moment-all-brazilians?utm_source=AQ%27s+Week+in+Review&qutm_campaign=a7043eccf8-EMAIL_CAMPAIGN_2017_07_14&utm_medium=email&utm_term=0_6a33e16b5d-a7043eccf8-26052141">there was a congressional vote-buying scandal</a> and key members of the government were forced to resign to fight criminal charges. </p>
<p>The car wash (lava jato) investigation, which has focused on corruption involving the national oil company, Petrobras, <a href="http://americasquarterly.org/content/lulas-sentencing-should-be-sober-moment-all-brazilians?utm_source=AQ%27s+Week+in+Review&utm_campaign=a7043eccf8-EMAIL_CAMPAIGN_2017_07_14&utm_medium=email&utm_term=0_6a33e16b5d-a7043eccf8-26052141">has already taken down</a> many once-“untouchables” in politics and business, such as former Speaker of the House Edardo Cunha and construction mogul Marcelo Odebrecht.</p>
<p>And it has now laid bare the full extent to which Lula and PT leaders engaged in politics as usual. They now join the rogues’ gallery of those under investigation, convicted or in prison. Its ranks <a href="https://theconversation.com/brazils-tide-against-corruption-swells-78024">include President Michele Temer</a> and the presidential runner-up to Dilma Rousseff in 2014, Sen. Aecio Neves. </p>
<p>So far, more than 200 lawmakers, former presidents, Cabinet officials and businessmen <a href="http://www.cbsnews.com/news/brazil-operation-car-wash-involves-billions-in-bribes-scores-of-politicians/">have been convicted</a> of corruption as a result of the car wash investigation. With Lula joining their ranks, it shows clearly that Brazil’s current political class has lost all credibility. </p>
<p>Rousseff, for her part, <a href="https://theconversation.com/what-is-brazilian-president-dilma-rousseffs-real-crime-59363">was impeached last year</a>, but it was not for corruption.</p>
<h2>Brazil without Lula</h2>
<p>Lula is not going quietly. </p>
<p>He <a href="https://www.wsj.com/articles/brazils-left-rallies-around-convicted-ex-president-lula-da-silva-1499952282">proclaims his innocence</a>, claiming the charges against him are politically motivated. And he says he will run for president in the 2018 election – a contest in which he <a href="http://uk.reuters.com/article/uk-brazil-politics-polls-idUKKBN17W0KD">remains the favorite</a> in the most recent polls – and is <a href="http://americasquarterly.org/content/brazils-lula-its-not-over-yet?utm_source=AQ%27s+Week+in+Review&utm_campaign=a7043eccf8-a&utm_medium=email&utm_term=0_6a33e16b5d-a7043eccf8-26052141">campaigning</a> while his conviction is appealed. </p>
<p>Even should his conviction be reversed, however, I believe that after three-plus decades as the commanding figure of Brazilian politics, the Lula era is over. He <a href="http://americasquarterly.org/content/brazils-lula-its-not-over-yet?utm_source=AQ%27s+Week+in+Review&utm_campaign=a7043eccf8-EMAIL_CAMPAIGN_2017_07_14&utm_medium=email&utm_term=0_6a33e16b5d-a7043eccf8-26052141">faces other criminal charges</a>. And although still popular, his negatives are rising. <a href="https://www.usnews.com/news/world/articles/2017-06-26/poll-shows-lula-and-silva-tied-in-2018-brazil-presidential-vote">One recent poll</a> shows 46 percent of those surveyed would vote against Lula.</p>
<p>So where does that leave Brazil? How much of the <a href="https://theconversation.com/brazil-plunges-once-more-into-political-crisis-jeopardizing-economic-recovery-78023">good he accomplished</a> will survive is uncertain, as is who will replace him to lead Brazil into the future.</p>
<p>Brazilians can only hope that it is someone who shares Lula’s commitment to social justice and economic partnership with the private sector, yet unlike him has a genuine commitment to strengthening rule of law. The one thing we know for sure is this person will not come from the bankrupt political class. </p>
<p>One person who fits that bill in the <a href="https://www.washingtonpost.com/world/the_americas/brazils-new-hero-is-a-nerdy-judge-who-is-tough-on-official-corruption/2015/12/23/54287604-7bf1-11e5-bfb6-65300a5ff562_story.html?utm_term=.09ae2628acf9">view of an increasing number of Brazilians</a> is Judge Sergio Moto, whose integrity they see as unimpeachable.</p><img src="https://counter.theconversation.com/content/81008/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Terry L. McCoy does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Now that a judge has convicted Luiz Inacio da Silva of corruption and sentenced him him to almost a decade in prison, what’s next for the country that loves him?Terry L. McCoy, Professor Emeritus of Latin American Studies and Political Science, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/802922017-06-30T12:29:24Z2017-06-30T12:29:24ZBrazil’s president faces criminal charges and 2% approval rating – but here’s how he clings on<p>Brazil’s attorney-general, Rodrigo Janot, has <a href="https://www.theguardian.com/world/2017/jun/27/brazils-president-michel-temer-charged-over-alleged-corruption">charged</a> the president, Michel Temer, with the crime of “passive corruption” – more commonly known as accepting a bribe. The country’s supreme court will now send the charge to congress’s lower house, the chamber of deputies, which will have to decide whether the court can try him. </p>
<p>To do that, two-thirds of the house’s members must vote in favour – if they do, Temer will have to step aside for the duration of the trial, and the president of the house, Rodrigo Maia, would become interim president. But whether or not Temer is sent to court, the spectacle of members of congress casting their vote for and against the criminal prosecution of the president is unprecedented in Brazilian political history.</p>
<p>The charge against Temer comes from the plea-bargained testimony of Joesley and Wesley Batista, two owners of the multinational meat company JBS. Their evidence includes a <a href="https://oglobo.globo.com/brasil/audios-ouca-as-gravacoes-feitas-pelo-dono-da-jbs-com-temer-21360751">secretly recorded conversation</a> between Joesley Batista and the president, and a <a href="http://g1.globo.com/politica/operacao-lava-jato/noticia/lava-jato-investiga-se-propina-do-dono-da-jbs-a-deputado-do-pmdb-foi-para-temer.ghtml">video</a> of Temer’s former aide Rodrigo Rocha Loures leaving a pizzeria and hurrying towards a taxi with a suitcase containing $500,000 reals (£125,000). </p>
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<p>The audio and video, released by the Globo news network in mid-May 2017, resulted in the most serious charge yet to come out of the massive anti-corruption probe known as <a href="https://theconversation.com/qanda-brazils-latest-presidential-corruption-scandal-78144">Operation Car Wash</a> which began in March of 2014. Dubbed “Car Wash” because it began as a Federal Police probe into money laundering in a car wash in Brasília, this complex of investigations has now expanded to a gargantuan effort involving the federal police, the public prosecutor’s office and the judiciary.</p>
<p>Temer vehemently <a href="http://plus55.com/brazil-politics/2017/06/michel-temer-says-accusations-infamous">denies the charge</a> as a “fiction” and insinuated that the attorney-general had received money from JBS. He has <a href="https://www.ft.com/content/0b4dc6ea-3c03-11e7-ac89-b01cc67cfeec?mhq5j=e1">ignored pleas to resign</a> made by the Folha de São Paulo newspaper and the Globo media conglomerate, as well as well-known political figures such as former presidents Fernando Henrique Cardoso and Luiz Inácio “Lula” da Silva. </p>
<p>Although few prominent politicians are openly supporting Temer, the president is counting on the backing of enough members of congress to stave off a trial in the supreme court. His government’s approval rating is by some estimates now <a href="http://www.infomoney.com.br/mercados/politica/noticia/6747810/dos-brasileiros-aprovam-governo-temer-aponta-ipsos-veem-brasil-rumo">as low as 2%</a>.</p>
<p>Members of the lower house who intend to shield the president from prosecution must make a difficult calculation. Some will be voting out of self-interest because they themselves are being investigated by Operation Car Wash’s anti-corruption team. They also know they will face the electorate in 2018 – and voting to defend an unpopular and allegedly corrupt president could well doom them at the ballot box. </p>
<p>But then again, many voters are feeling resigned. After all, if corruption is truly systemic, what point is there trying to work out who’s clean? </p>
<h2>Worn out</h2>
<p>Perhaps a more decisive issue come the next election will be the state of the economy. After two years of recession, the economy is projected to grow by less than 0.5% in 2017, while unemployment is at record-breaking levels of <a href="http://money.cnn.com/2017/06/01/news/economy/brazil-economy-unemployment/index.html">almost 14%</a>. The current political mess isn’t helping, but nor would the extended period of uncertainty that would follow a vote to send Temer to court. And if the economy doesn’t improve, even members of congress who vote to dispatch Temer may be tainted by association.</p>
<p>Brazil’s population, exhausted by a series of revelations of systematic corruption that have been fed to the media since the start of the Car Wash investigations, seems too shell-shocked to act. The president has only 18 months of his mandate left – and considerable political and legal resources. Protests against Temer have been much smaller than the 2015 and 2016 protests both against and especially in favour of impeaching his predecessor, <a href="https://theconversation.com/dilma-rousseff-two-views-of-democracy-and-the-battle-for-brazils-future-63668">Dilma Rousseff</a>.</p>
<p>One difficulty is that unlike in the case of Rousseff, Temer lacks an obvious successor – and the mechanism to install one is ungainly. If he were tried and convicted in the supreme court, that would <a href="http://plus55.com/brazil-politics/2017/06/brazil-electoral-court-temer">force</a> an “indirect election”, wherein congress would vote for a successor to serve out the remainder of the presidential term. But the law regulating such an election is vague and the sheer number of politicians under investigation for corruption means viable and popular candidates are thin on the ground.</p>
<p>Temer may yet survive – his image and moral authority badly tarnished, his political support frayed, but a survivor nonetheless, clinging to his presidency for dear life like someone tossed overboard at sea. If he endures, it will be a testament to the abject state of the political system, the devastating impact of the anti-corruption investigations on the political establishment and the seeming inability of Brazil’s democracy to renew itself and to evolve into a more transparent and accountable form of governance. </p>
<p>That renewal, if it comes, might not arrive until January 2019, when a new president would take office. Any new president will face daunting challenges – above all, unprecedented distrust of the political establishment and a legitimacy crisis that will make governing Brazil extraordinarily difficult for whoever takes on the job.</p><img src="https://counter.theconversation.com/content/80292/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Pereira has received funding from the Economic and Social Research Council of the UK and FAPESP in the state of Sao Paulo, Brazil. These are agencies that fund academic research. Anthony Pereira is also a member of the Council of the Brazilian Chamber of Commerce in Great Britain. </span></em></p>One of the world’s most spectacularly unpopular president might yet make it through.Anthony Pereira, Director, King's Brazil Institute, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/780232017-05-26T01:25:11Z2017-05-26T01:25:11ZBrazil plunges once more into political crisis, jeopardizing economic recovery<figure><img src="https://images.theconversation.com/files/171041/original/file-20170525-23251-14sbefp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Demonstrations demanding Temer's removal from office have been growing. </span> <span class="attribution"><span class="source">AP Photo/Eraldo Peres</span></span></figcaption></figure><p>Brazil’s <a href="https://www.stratfor.com/analysis/brazils-corruption-scandal-brings-outsider-politicians">massive corruption scandal</a> – which has brought down dozens of politicians and business leaders – has ensnared its latest victim: President Michel Temer, who got the job after <a href="http://www.bbc.com/news/world-latin-america-37237513">his predecessor was impeached</a>. </p>
<p>Allegations that Temer approved a <a href="https://www.ft.com/content/e38a68f8-3b7a-11e7-821a-6027b8a20f23">bribe to a corporate executive</a> <a href="https://theconversation.com/qanda-brazils-latest-presidential-corruption-scandal-78144">triggered demands</a> that he resign or be impeached as well. He has refused, even as protests <a href="https://www.nytimes.com/2017/05/24/world/americas/brazil-michel-temer-brasilia-protests.html">have escalated and turned violent</a>.</p>
<p>The ensuing crisis threatens to derail a fragile economic recovery and the reforms <a href="https://theconversation.com/brazil-71807">Brazil</a> needs to get back on its feet. </p>
<p>But once again, a political scandal at the very top is getting in the way. The irony is that Temer’s alleged misdeeds threaten to undermine the economic upturn his own government launched. </p>
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<img alt="" src="https://images.theconversation.com/files/171040/original/file-20170525-23267-1o9brd0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/171040/original/file-20170525-23267-1o9brd0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/171040/original/file-20170525-23267-1o9brd0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/171040/original/file-20170525-23267-1o9brd0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/171040/original/file-20170525-23267-1o9brd0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/171040/original/file-20170525-23267-1o9brd0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/171040/original/file-20170525-23267-1o9brd0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Temer continues to profess his innocence and resist demands that he go.</span>
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<h2>Temer takes charge</h2>
<p>Believe it or not, Temer only just completed his first year in office. </p>
<p>Previously Dilma Rousseff’s vice president, <a href="https://theconversation.com/dilma-rousseff-two-views-of-democracy-and-the-battle-for-brazils-future-63668">he assumed her duties</a> as the interim head of state in May 2016 after she was suspended and faced an impeachment trial in the Senate. He officially became president in August, when she was convicted and removed from office – though she was never directly linked to the the bribery and kickback scandal engulfing Brazil.</p>
<p>While the corruption scandal swirled around his government, Temer had never before been personally implicated. This changed on May 17, when a <a href="https://oglobo.globo.com/brasil/operacao-usada-por-temer-como-motivo-para-receber-dono-da-jbs-so-ocorreu-10-dias-apos-encontro-21373492">Brazilian newspaper</a> reported on a secretly recorded conversation in which the president is <a href="http://www.cnn.com/2017/05/18/americas/brazil-temer-bribery-allegations/">heard encouraging the CEO of JBS</a> – the <a href="https://www.wsj.com/articles/brazils-meatpackers-suffer-as-government-struggles-to-reopen-export-markets-1490293033">world’s biggest meat producer</a> – to provide hush money to a former lawmaker who’s currently in jail. Temer promised in return to help resolve a problem JBS had in Congress.</p>
<h2>Lifting up a sinking ship</h2>
<p>Given the cloud over Temer, even if he were able to serve out the remaining 18 months of his term – which appears increasingly unlikely – his ability to govern effectively and push through the <a href="https://www.bloomberg.com/politics/articles/2017-05-23/brazil-downsizes-economic-reform-agenda-to-post-crisis-reality">tough economic reforms needed</a> to sustain the incipient recovery is doubtful. </p>
<p>Following <a href="https://theconversation.com/how-did-brazil-go-from-rising-bric-to-sinking-ship-57029">nearly a decade of sustained expansion</a>, Brazil’s growth <a href="http://www.latam.ufl.edu/media/latamufledu/labe/LABER-2016.pdf">began to lose steam</a> in 2011. In both 2015 and 2016, GDP contracted by over 3.5 percent. Inflation ballooned to nearly 11 percent in 2015.</p>
<p>The central bank raised interest rates in an effort to tame inflation, public debt and the fiscal deficit rose, unemployment and poverty grew – eroding the social gains of the previous decade – and millions of Brazilians began falling out of the middle class.</p>
<p>Temer, upon inheriting an economy in deep recession, <a href="https://www.bloomberg.com/news/articles/2016-09-20/michel-temer-vows-to-spend-political-capital-on-reforming-brazil">promised to revive it</a>. </p>
<p>His prescription – a combination of austerity and market-friendly reforms – <a href="https://theconversation.com/as-brazil-tilts-rightward-lulas-leftist-legacy-of-lifting-the-poor-is-at-risk-65939">was a break with the left-leaning policies</a> of his Workers’ Party (PT) predecessors, including Rousseff. His initial Cabinet – all male, all white – also stood in stark contrast to the inclusive PT governments.</p>
<p>The business community and <a href="http://www.tradingeconomics.com/brazil/stock-market">financial markets</a> welcomed Temer’s stewardship of the economy. The Bovespa stock market and real currency <a href="https://www.bloomberg.com/news/articles/2016-09-20/brazil-s-real-advances-as-president-temer-vows-to-push-reforms">made big gains</a> on his assuming office. And he took significant steps to deal with the deficit. He <a href="http://www.latam.ufl.edu/media/latamufledu/labe/UF-LAS-Laber-030817.pdf">obtained congressional passage</a> of a constitutional amendment to cap increases in public spending at the rate of inflation for 20 years, and the government set up a new privatization program.</p>
<p>The <a href="https://www.bloomberg.com/news/articles/2017-04-20/brazil-emerging-from-its-worst-recession-says-finance-minister">economic situation improved</a>. Inflation fell, allowing the central bank to reduce borrowing costs, and foreign investment began to return. Most importantly, the economy <a href="http://marketrealist.com/2017/04/why-imf-slashed-brazils-economic-growth-outlook-in-2017/">was forecast to grow again</a>, weakly in 2017 but picking up in subsequent years. Unemployment had stopped climbing. </p>
<p>When I was in Rio de Janeiro and Sao Paulo in March, Brazilians told me that their country seemed to be finally coming out of its economic malaise. I wished them well but was skeptical given the unresolved political environment.</p>
<h2>Unfinished business</h2>
<p>Indeed, there is much unfinished business in reforming Brazil’s economy. </p>
<p>For example, labor markets are very rigid, making it hard for companies to hire and fire, and the generous pension system is fiscally unsustainable. Winning passage of such reforms was always going to be difficult, but Temer’s growing unpopularity makes it even harder. </p>
<p>Despite his success in reigniting the <a href="http://www.focus-economics.com/countries/brazil">economy</a>, Temer’s standing in the polls has been abysmal, with <a href="http://www.euronews.c/2017/03/31/brazil-temers-popularity-slides-further-poll">just 10 percent rating his government</a> as “great” or “good.” And that was before the current crisis. </p>
<p>The revelations linking Temer personally to corruption allegations have dealt a fatal blow to prospects for sustaining the recovery and pursuing more reforms. </p>
<p>Temer continues to insist he will not resign, but the opposition is increasingly vocal. Should Temer vacate the presidency by resigning or impeachment, Congress would elect a replacement to serve until January 2019. </p>
<p>Who will take over at that point is very much up in the air. Given the bankruptcy of the traditional political class and economic elite, the country has a serious leadership vacuum. Two of the most recent presidents are under active criminal investigation as are members of Congress, cabinet ministers and business executives. Others are already convicted and serving time. </p>
<p>This is bad news for Brazilians, who deserve stable leadership, free of corruption and dedicated to strengthening the economy and improving their lives. The present turmoil is not conducive to such a favorable outcome.</p><img src="https://counter.theconversation.com/content/78023/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Terry L. McCoy does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Brazil’s president, who came to power after his ex-boss was impeached, now finds himself embroiled in corruption charges, which threaten to derail the economic recovery he has championed.Terry L. McCoy, Professor Emeritus of Latin American Studies and Political Science, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/719682017-02-03T02:10:39Z2017-02-03T02:10:39ZWhy Brazil is winning its fight against corruption<p>Last month, the respected Brazilian Supreme Court Justice Teori Zavascki died in a <a href="https://www.nytimes.com/2017/01/19/world/americas/brazil-judge-zavascki-petrobras-investigation-killed-plane-crash.html?_r=0">plane crash</a>. He was overseeing the largest corruption investigation in the country’s history.</p>
<p>Even if his recently selected successor, <a href="http://www.bbc.com/news/world-latin-america-38839301">Edson Fachin</a>, rises to the occasion, Zavascki’s death remains a tragic loss and a blow to Brazil’s fight against corruption. Especially since it comes on the heels of lawmakers <a href="https://www.nytimes.com/2016/12/04/world/americas/thousands-in-brazil-protest-gutting-of-anticorruption-measures.html">torpedoing</a> in late 2016 a widely popular effort to make it easier for prosecutors and judges to clean up government.</p>
<p>While these events make it easy to despair, the reality reveals much more reason for hope. In our 2015 book “<a href="http://www.e-elgar.com/shop/greed-corruption-and-the-modern-state">Greed, Corruption and the Modern State</a>,” we argue that societies must push back against the influence of powerful economic actors in order to safeguard the public interest. The network of Brazilians exposing, prosecuting and sentencing the corrupt politicians swimming in this mar de lama, or sea of mud, embodies that ideal. However, their effort would benefit from legal reforms that make it easier to fight corruption. </p>
<h2>From scandal to scandal</h2>
<p>Brazilians have long had to accept corruption scandals as a chronic part of their government. Graft was present under <a href="http://www.tandfonline.com/doi/abs/10.1080/01436599208420302">military rule</a>, despite what those hoping for the <a href="http://www.bbc.com/news/world-latin-america-38010060">return of authoritarianism</a> seem to believe. But corruption scandals have also plagued every <a href="https://www.jstor.org/stable/4490507?seq=1#page_scan_tab_contents">presidential administration</a> since civil order was reestablished in 1985.</p>
<p>Even the administration of the popular Luiz Inácio “Lula” da Silva, who governed Brazil during a period of rising prosperity from 2003 to 2010, coincided with several corruption scandals. They include <a href="http://www.washingtonpost.com/wp-dyn/content/article/2006/09/29/AR2006092900891.html">Caixa Dois</a>, <a href="http://news.bbc.co.uk/2/hi/americas/3532239.stm">Bingos</a> and, most memorably, <a href="http://www.economist.com/blogs/economist-explains/2013/11/economist-explains-14">Mensalão</a>, a scheme in which coalition parties <a href="http://www.forbes.com/sites/andersonantunes/2013/11/28/the-cost-of-corruption-in-brazil-could-be-up-to-53-billion-just-this-year-alone/#622c59d7610b">accepted more than US$40 million</a> in clandestine payments to support Lula’s Workers Party (also known as the PT). </p>
<p>Yet even as the Supreme Court investigated the Mensalão case, the PT still won two presidential elections – one that reelected Lula and another won by Dilma Rousseff in 2010.</p>
<p>Rousseff’s administration began on a hopeful note for those battling corruption. <a href="https://www.washingtonpost.com/world/americas/in-her-first-year-brazil-president-dilma-rousseff-cleans-house/2011/12/12/gIQAOMnStO_story.html?utm_term=.1d29e4f5b2dc">She fired</a> five ministers linked to bribery, kickbacks and influence peddling and helped enact a major government <a href="http://www.freedominfo.org/regions/latin-america/brazil/">transparency law</a>. </p>
<p>But within a few years, the tide – and public support – turned against her as Brazil’s <a href="http://www.economist.com/blogs/graphicdetail/2016/04/economic-backgrounder">economic outlook</a> worsened and crowds protested continuing corruption and the billions that were spent on new <a href="https://www.theguardian.com/world/2013/jun/21/brazil-police-crowds-rio-protest">stadiums</a> for the 2014 World Cup.</p>
<p>As a result, the country soured on her at the same time that Brazil’s largest corruption scandal, known as Lava Jato, began to unfold. That scheme involved construction companies colluding with employees of the state-owned oil company <a href="http://www.coha.org/understanding-the-petrobras-scandal/">Petrobras</a> to win inflated contracts. Petrobras employees <a href="https://www.bloomberg.com/news/features/2015-05-08/brazil-s-massive-corruption-scandal-has-bitterness-replacing-hope">took bribes</a>, while politicians got <a href="https://www.nytimes.com/2015/08/09/business/international/effects-of-petrobras-scandal-leave-brazilians-lamenting-a-lost-dream.html">kickbacks</a> as personal gifts or campaign donations. </p>
<p>Meanwhile, Rousseff was accused of <a href="http://www.bbc.com/news/world-latin-america-36028247">spending public funds without congressional authorization</a> and was impeached in August, shortly after the 2016 Olympics. <a href="http://www.semana.com/mundo/articulo/destitucion-de-dilma-roussef-en-medio-de-corrupcion-y-clientelismo/492256">Although Rousseff herself was not accused of corruption, some argue that</a> she was essentially used as a scapegoat.</p>
<h2>Who’s changing Brazil</h2>
<p>But none of the bribes and kickbacks would be known today if the federal prosecutors had not doggedly investigated the Petrobras scheme allowing the judicial branch to take on the elite. </p>
<p>Brazilians themselves and an emboldened media also deserve credit for the gradual end of impunity. In the past three years, the public took to the streets on <a href="https://www.theguardian.com/world/2013/jun/21/brazil-police-crowds-rio-protest">multiple</a> <a href="http://www.reuters.com/article/us-brazil-protests-idUSKBN13T0O1">occasions</a> to protest waste and corruption. Local media coverage of the scandals was “<a href="https://www.washingtonpost.com/news/monkey-cage/wp/2016/05/05/corruption-is-not-new-to-brazil-so-why-is-it-threatening-the-presidency-now/?utm_term=.890a719ed8f3">scathing and unrelenting</a>.”</p>
<p>Authorities have made nearly <a href="https://www.ft.com/content/2ed33462-2d6b-11e6-bf8d-26294ad519fc#axzz4CERGbCFo">200 arrests</a>, and the lower courts have convicted over 80 people, including the ex-CEO of Odebrecht, Latin America’s largest construction group, which is also <a href="https://www.justice.gov/opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-pay-least-35-billion-global-penalties-resolve">on the hook</a> for at least $3.5 billion in fines for bribing government officials. The Supreme Court, which is responsible for trying politicians, is processing over 100 <a href="https://www.theguardian.com/world/2017/jan/19/brazil-supreme-court-corruption-case-teori-zavascki-dies-plane-crash?CMP=share_btn_link.">additional cases</a>. </p>
<h2>10 measures</h2>
<p>Despite their successes, Brazil’s prosecutors and judges operate in a challenging legal and institutional environment that makes it difficult to achieve decisive results.</p>
<p>To remedy these problems, prosecutors have crafted the reform statute known as <a href="http://www.dezmedidas.mpf.mp.br/">10 Measures against Corruption</a>, presented to Congress last year as a public initiative endorsed by over <a href="http://agenciabrasil.ebc.com.br/en/politica/noticia/2016-12/rodrigo-janot-defends-10-anti-corruption-ballot-measures">two million</a> Brazilians.</p>
<p>The bill’s threat to vested interests provoked powerful opposition in the legislature, and lawmakers quietly weakened it by adding an <a href="https://www.nytimes.com/2016/11/30/world/americas/brazil-corruption.html">amendment</a> to undermine the effectiveness of prosecutors and judges. An effort by the president of the Senate, Renan Calheiros, to <a href="http://www.reuters.com/article/us-brazil-politics-corruption-idUSKBN13Q59F">rush</a> the weakened bill through failed. And the Supreme Court seemingly fired back by forcing Calheiros to <a href="http://www.wsj.com/articles/renan-calheiros-ordered-removed-from-senate-presidency-by-brazil-supreme-court-judge-1480978526">relinquish</a> the presidency while he faces corruption charges of his own.</p>
<p>The failure to pass a strong reform bill, coming on top of the massive bribery and bid-rigging revealed by the Petrobras scandal, has shaken the country’s political system. The dramatic cases against officials and private parties have also meant the public believes that corruption is getting worse.</p>
<p>Paradoxically, however, the flood of recent cases indicate to us that conditions are improving. They show that elements of the country’s system of accountability are working.</p>
<h2>Reforming the system</h2>
<p>But to consolidate these past gains, important reforms are necessary. </p>
<p>The 10 Measures against Corruption ought to be a starting point for more fundamental reforms. <a href="http://combateacorrupcao.mpf.mp.br/10-medidas/docs/executive_summary_english_version.pdf">This bill</a> aims to eliminate some of the practices at the heart of the Petrobras scandal, such as illegal campaign contributions to politicians who, if elected, are expected to reciprocate by awarding government contracts. The bill <a href="http://fcpamericas.com/english/brazil/ten-measures-proposed-brazilian-federal-prosecution-service-fight-corruption-part-i/">also</a> <a href="http://fcpamericas.com/english/brazil/ten-measures-proposed-brazilian-federal-prosecution-service-fight-corruption-part-ii/">seeks</a> to speed up criminal proceedings, ensure the confidentiality of whistleblowers, extend the statute of limitations and enhance asset confiscation capabilities. </p>
<p>However, prosecutorial zeal has also led to controversial tactics that have raised <a href="https://globalanticorruptionblog.com/2016/03/10/guest-post-brazil-must-fight-corruption-but-preserve-the-rule-of-law/">concerns</a> about due process. We, for example, question the use of pretrial detention absent clear evidence of flight risk. Others <a href="http://www1.folha.uol.com.br/opiniao/2016/10/1821713-desvendando-moro.shtml">question</a> the high proportion of cases targeting the PT and other left-leaning political parties. While these concerns need to be addressed, we believe prosecutors and judges are proceeding as best as they can under challenging conditions.</p>
<p>The next, more difficult step should be structural reform of the political system. Brazil has over two dozen parties that produce a chaotic legislature in which lawmakers compete for payoffs in return for votes. As evidenced by Mensalão, presidents have used questionable tactics in order to <a href="https://muse.jhu.edu/article/614517/summary">sustain</a> governing coalitions. Political corruption might seem the inevitable result of Brazil’s constitutional structure. </p>
<p>Shifting to a parliamentary system, with a prime minister from the winning coalition, would solve some problems, but seems presently unrealistic. Alternately, requiring a higher proportion of the popular vote before a party can participate in the legislature would be a less draconian reform.</p>
<h2>Looking ahead</h2>
<p>Controlling corruption in Brazil is possible, but the system requires new rules to make politicians more accountable in the country and to reduce the incentives for corrupt payoffs. Reformers can help by leveraging the political crisis generated by the Petrobras scandal. </p>
<p>For the sake of their country, and to honor Zavascki’s memory, the Congress should embrace this critical moment in history and enact legislation that may finally break with the cycle of corruption for the good of Brazilian democracy.</p><img src="https://counter.theconversation.com/content/71968/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul F. Lagunes receives funding from the International Growth Center. He is a Visiting Scholar at the Inter-American Development Bank.</span></em></p><p class="fine-print"><em><span>Susan Rose-Ackerman is affiliated with Transparency International-USA.</span></em></p>By exposing, prosecuting and sentencing Brazil’s corrupt politicians, prosecutors, judges and citizens are draining the swamp that has overwhelmed the country for so long.Paul F. Lagunes, Assistant Professor of International and Public Affairs, Columbia UniversitySusan Rose-Ackerman, Henry R. Luce Professor of Jurisprudence (Law and Political Science), Yale UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/659392016-10-04T10:11:10Z2016-10-04T10:11:10ZAs Brazil tilts rightward, Lula’s leftist legacy of lifting the poor is at risk<p>The <a href="https://theconversation.com/us/topics/brazil-2153">Brazilian</a> senate’s <a href="http://www.nytimes.com/2016/09/01/world/americas/brazil-dilma-rousseff-impeached-removed-president.html">impeachment</a> of President Dilma Rousseff in August ended about 13 years of center-left government by the Workers Party (PT). Then in September, a federal judge dealt the party and its legacy an equally devastating blow <a href="http://www.reuters.com/article/us-brazil-corruption-idUSKCN11Q2QH">when he indicted</a> her predecessor and party icon, Luis Inacio “Lula” da Silva, on corruption charges.</p>
<p>Rousseff’s removal and Lula’s pending trial for participation in the corruption scheme that cost state oil company Petrobras billions of dollars <a href="https://theconversation.com/dilma-rousseff-two-views-of-democracy-and-the-battle-for-brazils-future-63668">have cast a shadow</a> on the future of the programs he launched and she sustained. </p>
<p>By far Lula’s most important achievement was incorporating the poor – politically and economically – into the nation. While in office, Lula pursued a pragmatic agenda balancing social reform with economic growth, which produced not only significant gains for the lower class but for the whole country. </p>
<p>On his eight-year watch, the <a href="http://www.economist.com/node/17147828">economy boomed</a>, poverty plunged and incomes and living standards soared. Lula left office in January 2011 with an <a href="http://www.bloomberg.com/news/articles/2010-12-19/brazil-s-lula-leaves-office-with-83-approval-rating-folha-says">83 percent favorability rating</a>. International recognition of his accomplishments resulted in Brazil being awarded the 2014 World Cup tournament and 2016 Olympic Games.</p>
<p>From 1999 through 2014, I produced an <a href="http://www.latam.ufl.edu/research--training/la-business-environment/publications/">annual assessment</a> of the environment for business and investment in Latin America’s 18 largest economies, of which Brazil is the biggest. During this study, I made frequent trips to Brazil and witnessed the remarkable rise of Lula and his Workers’ Party (PT). In 2009, <a href="http://www.economist.com/node/14845197">The Economist captured the spirit</a> I and many others felt at the time when it portrayed Rio’s famous Christ statue taking off like a rocket. Under Lula, it seemed, Brazil had finally turned the corner on the boom and bust cycles of the past. </p>
<p>Now, with Lula indicted, his successor impeached and the new president promising to take the country to the right, is his legacy as the president of poor Brazilians at risk? </p>
<h2>‘Leader of the poor’ learns market economics</h2>
<p>Lula got his start in politics during the military dictatorship, which ruled from 1964 until 1985, as a labor leader and founding member of the socialist PT. Prior to 2002, he had failed three times in bids to become president. </p>
<p>Heading into the 2002 election, Lula had the <a href="http://countrystudies.us/brazil/30.htm">overwhelming support</a> of the rural poor, urban working class and shanty town (favela) dwellers, or roughly 40 percent of the population (voting is is mandatory in Brazil). As the son of a poor family who migrated to Sao Paulo from the impoverished northeast, he was one of them. </p>
<p>But their support alone was not enough to win the election or govern the country. </p>
<p>So he sought to broaden his electoral appeal by moving his economic policies to the center. In his October 2002 “<a href="http://www.sep.org.br/artigos/download?id=1193&title=Assessing">Letter to the Brazilian People</a>,” Lula pledged to adhere to the market friendly policies that had been an anathema to the PT faithful.</p>
<p>Lula <a href="http://everything2.com/title/2002+Brazilian+Presidential+Election">narrowly missed a first round victory</a> but won in a landslide in the runoff and took office in January 2003. He had convinced the business community and investors that they could work with the new PT, while also maintaining the support of his base. </p>
<h2>Lula’s legacy</h2>
<p>Lula’s strategy won the presidency, but his supporters on the left grew concerned that promoting growth would take priority over deepening social justice. As it worked out, the two goals worked hand in hand for Lula.</p>
<p>While his appointment of a former banking executive to head the central bank <a href="http://www.cfr.org/brazil/lulas-surprise/p6062">reinforced their concerns</a>, Lula and his advisers argued that sustaining growth and lowering inflation were necessary to raise the living standards of all Brazilians, especially the poor. </p>
<p>The <a href="http://www.cepal.org/en/node/37887">strategy paid off</a>, positioning Brazil to fully profit from the global commodity boom. Exports and foreign investment soared. From 2004 to 2011, growth averaged over 4 percent a year and inflation moderated. </p>
<p><a href="http://www.bbc.com/news/world-latin-america-11458409">Growth generated good jobs</a>. Unemployment fell to historically low levels. Millions of workers moved into the formal sector with higher wages and full benefits. The expanding economy also meant more credit for low-income consumers.</p>
<p>The administration took additional steps to ensure poor Brazilians were fully incorporated into the growing economy. It strengthened the <a href="idl-bnc.idrc.ca/dspace/bitstream/10625/55285/1/IDL-55285.pdf">national minimum wage</a> and social security and unemployment insurance programs. These changes <a href="http://thebrazilbusiness.com/article/minimum-wage-in-brazil">protected</a> the living standards of nearly 50 million low-income Brazilians. </p>
<p>Lula used the economic boom to fund his signature social program, the Bolsa Familia. A conditional cash transfer program, it gives a monthly stipend to poor mothers who keep their children in school and make sure they get regular health checkups. The goal was to invest in future generations while raising the incomes of poor families. </p>
<p>On the 10th anniversary of the program in 2012, the <a href="http://www.worldbank.org/en/news/feature/2014/03/22/mundo-sin-pobreza-leccion-brasil-mundo-bolsa-familia">World Bank heralded</a> the Bolsa Familia as a “new lesson for the world” on poverty reduction. From 2003 to 2012, the poverty rate dropped from nearly 40 percent of the population to under 20 percent. Brazil was finally <a href="http://thebrazilbusiness.com/article/social-classes-in-brazil-1453802521">becoming a middle-class society</a>. </p>
<h2>A legacy sustained, then squandered</h2>
<p>Lula easily won a second term in 2006, continuing the same policies. When he left office in 2010, because of term limits, his popularity swept his fellow PT politician and handpicked successor into office. Rousseff became Brazil’s first female head of state. </p>
<p>During her first term, Rousseff followed the Lula model. But economic growth began to lag, dragged down by falling commodity prices, making it more difficult to fund Lulas’s social programs. And the Petrobras corruption scandal emerged as a major challenge for the government.</p>
<p>The heart of the scandal is a bribery scheme in which businesses paid off elected officials and Petrobras executives in return for inflated sweetheart contracts. The scandal has reached the highest levels of government and the corporate world. Although President Rousseff <a href="http://theconversation.com/why-brazils-post-olympics-hangover-will-hit-so-hard-61488">has never been accused of direct involvement</a>, it occurred on her watch. </p>
<p>Rousseff managed to narrowly win a second term in 2014, but a deep recession and the escalating scandal turned the public against her. And Vice President Michel Temer and the parties allied with the PT in Congress followed suit. Her position became untenable, and <a href="https://www.theguardian.com/world/2016/aug/31/dilma-rousseff-impeached-president-brazilian-senate-michel-temer">Rousseff was impeached</a>, not for corruption but unauthorized movement of funds to cover holes in the budget.</p>
<h2>Will the legacy survive?</h2>
<p>With her conviction, Temer of the center-right Brazilian Democratic Movement Party assumed presidency, a position he holds through 2018. </p>
<p>Rousseff charges that her impeachment was a “<a href="https://www.theguardian.com/world/2016/aug/31/dilma-rousseff-impeached-president-brazilian-senate-michel-temer">parliamentary coup</a>” carried out by conservatives to roll back progressive measures enacted by Lula and her. But Temer <a href="http://www.brazilgovnews.gov.br/news/2016/07/in-letter-to-congress-temer-re-affirms-his-commitment-to-social-programs">vowed to maintain</a> – even strengthen – the Bolsa Famiia and Lula’s other popular social programs. </p>
<p>Whether Temer’s commitment to can survive competing demands for diminished fiscal resources is questionable. More troubling, Temer’s <a href="http://www.forbes.com/sites/shannonsims/2016/05/12/brazils-new-president-michel-temer-fills-cabinet-with-only-men">all-white, all-male cabinet</a> announced a retreat from the inclusive politics of the Lula-Rousseff years (<a href="http://www.newsody.com/news/brazils-temer-adds-woman-to-all-male-cabinet/560396">he recently added a woman</a>).</p>
<p>For now, it seems voters are suspicious of both Temer and the PT leaders he succeeded. In the first round of national municipal elections held on Oct. 2, the PT <a href="https://www.ft.com/content/6a1c81ac-8975-11e6-8cb7-e7ada1d123b1">suffered its worst defeat</a> since Lula became president. It lost more than half of the municipalities it had controlled, among them four of five of the largest cities that had PT mayors.</p>
<p>President Temer’s party, however, was not the major beneficiary of the PT’s defeat. It was the center-right Social Democratic Party, Brazil’s third-largest party. </p>
<p>But in general, the high rates of abstention and null and blank ballots indicate the extent to which Brazilians <a href="http://oglobo.globo.com/brasil/declinio-do-pt-partido-perde-poder-em-374-cidades-20222813">are disgusted</a> with all parties and politicians. </p>
<p>Nevertheless, the PT is still the party of the poor, and Lula its leader. With Lula going on trial and the party widely discredited among those who gave it a mandate to govern in 2002, it is not clear who will represent Brazil’s poor going forward.</p><img src="https://counter.theconversation.com/content/65939/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Terry L. McCoy does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Luis Inacio ‘Lula’ da Silva’s center-left policies helped lift millions of Brazilians out of poverty, earning him the title ‘leader of the poor.’ It’s a legacy worth preserving.Terry L. McCoy, Professor Emeritus of Latin American Studies and Political Science, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/645102016-09-15T14:58:29Z2016-09-15T14:58:29ZRio Paralympics have overcome financial adversity to win over local hearts<p>Despite some serious trouble with finances, the Rio 2016 Paralympic Games seem to be bouncing back. The games narrowly escaped cancellation, when a <a href="http://www.bbc.co.uk/sport/disability-sport/37115609">£56m government grant</a> was released, having been held up by the Brazilian courts over concerns about transparency. <a href="https://www.theguardian.com/sport/2016/sep/03/rio-de-janeiro-paralympics-tickets-slashed">Fewer than half</a> of the tickets had sold before the opening ceremony, even though they cost as little as £2.50. </p>
<p>Although they have been <a href="http://www.sbs.com.au/news/article/2016/08/20/paralympics-go-ahead-amid-cash-crisis">significantly downsized</a> – with fewer staff, smaller venues and a scaled-back transport service – the Paralympics seem to have won over local audiences, with more than <a href="https://www.theguardian.com/sport/2016/sep/15/against-odds-brazils-paralympics-generates-contagious-enthusiasm">170,000 tickets purchased</a> on September 10 alone. </p>
<p>This is not the first time that the Paralympics have had to struggle with financial shortfalls. At Atlanta 1996, the Paralympics were run on a shoestring budget, in part because the American organisers were unwilling to risk financially supporting the games. Spectators stayed away, too, with the athletics stadium only about 10% full during events. It was concerns brought on by the instability of the 1996 Paralympics that led the International Paralympic Committee (IPC) to open discussions with the International Olympic Committee (IOC) about a formal partnership. </p>
<p>At Sydney 2000, both the Olympic and the Paralympic Games were incorporated into a very successful “sixty day festival of sport”. After that, the IPC and the IOC formally agreed that host cities would be required to stage the Olympic and Paralympic Games together. </p>
<p>This model has, until now, provided a road map for organising committees. Today, the formal bid process for hosting the Olympic and Paralympic Games requires that there is a detailed plan in place for the running and organisation of both events, before the bid can be put forward by nations eager to act as hosts. </p>
<p>Before the games began, it seemed that the organisers of Rio 2016 were on track to follow this precedent. Earlier this year, the IOC and IPC even <a href="https://www.olympic.org/news/ioc-and-ipc-sign-long-term-agreement-supporting-the-paralympic-movement">signed a long-term agreement</a>, to consolidate the relationship between the games and confirm that both the Olympics and the Paralympics are integral parts of a packaged event. Both organisations agreed to increase the visibility of the Paralympic Games, and to ensure their financial stability and viability. </p>
<h2>Less money, more problems</h2>
<p>But Brazil’s economic woes <a href="https://theconversation.com/why-brazils-economic-rollercoaster-is-far-from-over-57372">have been mounting</a> since the games were awarded in 2009. <a href="http://www.bloomberg.com/news/articles/2016-08-20/olympics-head-says-no-public-funds-used-for-rio-after-bailout">Despite promises</a> that the games would be privately financed, the state authority of Rio de Janeiro had to <a href="https://theconversation.com/rio-reaches-crisis-point-ahead-of-the-olympic-games-61819">elicit 2.9 billion Brazilian real (US$878m)</a> from the federal government, in order to cover security costs, while many of the infrastructure projects drew on both public and private funds. </p>
<p>Unfortunately, the problems didn’t stop after the Olympic Games had begun: the organisers were confronted with issues such as <a href="http://www.dailymail.co.uk/news/article-3719998/Chinese-brand-Rio-worst-Olympics-athletes-complain-called-London-total-failure-too.html">faulty accommodation</a>, <a href="http://www.bbc.co.uk/sport/olympics/37068357">poor attendance</a> and <a href="https://theconversation.com/going-for-green-why-rios-swimming-pools-are-changing-colour-63818">green diving pools</a>. </p>
<p>These issues, as well as poor ticket sales and a lack of sponsors, led to <a href="http://edition.cnn.com/2016/08/19/sport/paralympics-rio-budget-cuts/">a major budget shortfall</a> for the Paralympic Games. Although Rio’s mayor, Eduardo Paes, <a href="http://www.ibtimes.co.uk/rio-paralympics-2016-city-mayor-assures-ipc-that-cash-crunch-will-not-affect-games-1576228">was quick to deny</a> that the Paralympics would be cancelled, the atmosphere of uncertainty cannot have been good for the Paralympic brand. </p>
<h2>The bounce back</h2>
<p>The president of the International Paralympic Committee, Philip Craven, highlighted that the “Paralympic family” was used to dealing with adversity. And, true to form, the Paralympic spirit seems to have caught on. On Sunday September 11, attendance at the Paralympic Games surpassed any other day at the Olympics. The fact that tickets are much more affordable to the local population will have helped to bolster sales. </p>
<p>At the start of the games, I was concerned about the impact that the financial crisis would have on the stability and success of the Paralympic movement. But despite the blunders of the Brazilian organisers, the citizens of Rio have embraced the event – partly because they’re keen to see the Olympic venues that they will be paying for in years to come, but also because they love a party. </p>
<p>The exuberant support the local community has shown to Paralympians across all sports has been breathtaking. A carnival atmosphere can be felt in and around the stadiums. Travelling to and from venues on public transportation (one of the major cuts has been media transport) people openly marvel at the performances of the athletes they have seen compete at the games. </p>
<p>Yet I have found that people with disabilities are largely absent from view outside the competitive venues, except for beggars on the street corners. It seems that life in Rio is <a href="http://globalaccessibilitynews.com/2016/09/13/life-is-extremely-difficult-for-persons-with-disabilities-in-rio/">still very difficult</a> for people with disabilities. </p>
<p>Clearly, the Paralympics were not a priority to the Brazilian organisers. But from what has been observed on the ground in Rio there is hope that the courageous performances by the athletes, and the warm response from the locals, will, in the short to medium term, enhance the lives of people with disabilities in this nation and in doing so do the Paralympic brand a world of good.</p><img src="https://counter.theconversation.com/content/64510/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>P. David Howe does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>At one point, it looked like the games could be cancelled. But the carnival spirit has prevailed.P. David Howe, Reader in the Anthropology of Sport, Loughborough UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/614882016-08-01T03:08:19Z2016-08-01T03:08:19ZWhy Brazil’s post-Olympics hangover will hit so hard<p>On the eve of the Rio Olympic Games, host <a href="http://www.nytimes.com/2016/06/25/sports/olympics/as-the-olympics-near-brazil-and-rio-let-the-bad-times-roll.html?smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=0">Brazil is struggling</a> through one of the deepest crises in its history. </p>
<p>It wasn’t supposed to be this way.</p>
<p>In 2009, when the 2016 Games were awarded to Rio de Janeiro, Brazil was on a roll. President Luiz Inacio “Lula” da Silva <a href="http://www.cnn.com/TRANSCRIPTS/0903/29/fzgps.01.html">proclaimed</a>:</p>
<blockquote>
<p>“Now we are going to show the world we can be a great country.”</p>
</blockquote>
<p>And for a time, that almost seemed true for Brazil as its economy bounded ahead and social benefits reached much of the population. <a href="http://www.nasdaq.com/article/the-global-guru-the-country-of-the-future-cm362793">Long derided</a> as “the country of the future … and always will be,” Brazil seemed to be finally living up to its potential and global aspirations.</p>
<p>The <a href="https://theconversation.com/how-did-brazil-go-from-rising-bric-to-sinking-ship-57029">contrast</a> between 2009 and 2016 is stunning, especially given how rapidly Brazil reversed course. While the Olympics may provide a respite from the unremitting flow of bad news, any relief will be short-lived. </p>
<p>Unfortunately, there is no easy or quick exit from the trifecta of interrelated problems that constitute Brazil’s perfect storm: a deep recession, a massive corruption scandal and dysfunctional politics. </p>
<p>As a Latin American specialist, I am well-schooled in Brazil’s history of boom and bust and have witnessed several cycles up close as a regular visitor. In 2009, I joined many in thinking Brazil had finally “turned the corner,” but it’s now painfully evident that this conclusion was premature. </p>
<p>What went wrong?</p>
<h2>Glory days</h2>
<p>An impressive economic performance was key to Brazil gaining credibility on the world stage.</p>
<p>After years of stagnation and high inflation, the economy began a period of sustained growth with low inflation in the early 2000s. The high prices for Brazilian exports fueled by a global commodity boom were crucial to this growth. So too were the policies adopted by three successive governments to stabilize and open the economy. </p>
<p>Sustained growth produced significant social gains. It generated good jobs. And the government took measures to share the prosperity: increasing the minimum wage, expanding consumer credit and implementing a conditional cash transfer program (bolsa familia) for poor women and children. These and others <a href="http://www.madamasr.com/opinion/economy/how-did-brazil-reduce-poverty-and-inequality">lifted millions of Brazilians out of poverty</a> into the middle class.</p>
<p>For its accomplishments, Brazil – along with China, India and Russia – was anointed a leading emerging market, or one of the “BRICs.” The credit rating agencies <a href="http://www.marketwatch.com/story/sp-raises-brazils-rating-to-investment-grade">conferred</a> their coveted investment grade ranking on Brazil, making it a favored destination for foreign investment. </p>
<p>In his two terms (2003-2011), President Lula actively pushed his country into leadership positions in international organizations. Being selected host for both the <a href="https://theconversation.com/will-the-world-cup-leave-a-positive-legacy-in-brazil-27397">2014 World Cup</a> and <a href="http://www.npr.org/templates/story/story.php?storyId=113493385">2016 Olympics</a> seemed to confirm Brazil’s arrival as a “great country.”</p>
<h2>All downhill</h2>
<p>Since 2010, however, Brazil’s economic trajectory has been downhill. </p>
<p>Today it is in the <a href="http://www.focus-economics.com/countries/brazil">second year of a deep recession</a>, with only a painfully slow recovery on the horizon. Falling commodity prices are an important cause of the downturn, but so are government missteps. </p>
<p>Inflation (currently 9.23 percent) <a href="http://www.bloomberg.com/news/articles/2016-07-04/brazil-economists-forecast-slower-inflation-on-stronger-currency">persistently exceeds</a> the targeted rate, which forces the Central Bank to maintain <a href="http://www.bcb.gov.br/Pec/Copom/Ingl/taxaSelic-i.asp">one of the highest benchmark interest rates</a> (14.25 percent) in the world. In 2015, based on negative growth, high inflation and growing debt and deficits, the rating agencies <a href="http://www.reuters.com/article/us-brazil-ratings-s-p-idUSKCN0RA06120150910">downgraded</a> Brazilian debt to junk status. </p>
<p>The economic downturn is beginning to erode the social advances of the previous decade. Unemployment, which reached a historic low in 2013, now <a href="http://www.wsj.com/articles/brazils-first-quarter-unemployment-rises-to-10-9-1461932672">stands at 10.9 percent</a>. Consumer credit is drying up; household debt is skyrocketing. </p>
<p>The economic downturn and its social costs alone would be catastrophic, but there is more: the corruption scandal. </p>
<h2>Massive corruption</h2>
<p>Corruption is embedded in Brazilian culture as in most emerging economies. But the <a href="https://theconversation.com/will-brazil-be-able-to-overcome-domestic-turmoil-ahead-of-the-olympic-games-59326">current scandal</a>, which centers on the national oil company, Petrobras, is above and beyond. </p>
<p>Estimates are that the <a href="http://www.vox.com/2016/3/18/11260924/petrobras-brazil">bribes to public officials</a> in return for sweetheart deals for private contractors total over US$5 billion. The resulting loss to Petrobras is a drag on the economy and contributes to a growing fiscal deficit. </p>
<p>The scandal has reached the top echelons of business and government. The good news is that in contrast to the past, the <a href="http://theconversation.com/what-perus-new-president-can-learn-from-brazils-fight-against-corruption-61731">perpetrators are going to jail</a>. Thanks to an independent, activist judiciary, the heretofore untouchables are doing the “perp walk” on the nightly news. The bad news is that there is still no light at the end of the corruption tunnel.</p>
<p>One of the reasons Brazilians turned to Lula – who ran for the fourth time in 2002 – was the belief that he and his blue-collar Workers Party (PT) would break with the corrupt politics of the traditional political class. Instead the PT administrations of Lula and his handpicked successor, Dilma Rousseff, have turned out just as <a href="http://www.nytimes.com/2016/04/04/world/americas/insiders-account-of-how-graft-fed-brazils-political-crisis.html?_r=0">bad if not worse</a>. </p>
<p>It now falls on a discredited political class and government to revive the economy and prosecute the scandal to a satisfactory conclusion. As if these challenges were not enough, they must first pull off a successful Olympics under increasing security concerns and the <a href="http://theconversation.com/the-olympics-wont-spread-zika-around-the-world-62822">Zika threat</a>. </p>
<h2>A dysfunctional political class</h2>
<p>The political crisis is the final dimension of Brazil’s perfect storm. </p>
<p>Lula delivered economic prosperity for all Brazilians and gave them pride in their country. His <a href="http://en.mercopress.com/tags/dilma-rousseff-public-opinion">popularity</a> initially carried over to Dilma Rousseff. Although she had never held elected office, she was a trusted member of his inner circle. </p>
<p><a href="https://www.theguardian.com/world/2010/nov/01/dilma-rousseff-wins-brazil-president">Rousseff easily won</a> the 2010 election. But her popularity declined as the economy deteriorated and corruption became an issue. She <a href="https://theconversation.com/victorious-rousseff-must-now-pull-together-a-deeply-divided-brazil-33032">squeaked through for a second term</a> in 2014, but her public support plummeted in the first year. By the end of 2015, her <a href="http://en.mercopress.com/tags/dilma-rousseff-public-opinion">approval ratings</a> dropped into the low teens. There were street demonstrations demanding her impeachment. The parties allied with the PT in Congress abandoned her. </p>
<p>On April 17, the Chamber of Deputies voted to impeach President Rousseff. As specified in the constitution, her vice president and one-time ally, Michel Temer, became the acting president. The markets responded favorably to the change with both the stock market and currency making big gains, but the new government does not inspire confidence in its ability to roll back the perfect storm.</p>
<h2>The uncertain path ahead</h2>
<p>To begin with, Temer may not hold office for long. Should the Senate fail to convict Rousseff next month, she would immediately resume the presidency. </p>
<p>She and her PT supporters insist that the case against her – budgetary mismanagement, not corruption – is not an impeachable offense, that she was the victim of a <a href="https://theconversation.com/brazil-crisis-for-once-a-conspiracy-theory-turns-out-to-be-true-59921">conservative coup</a>. </p>
<p>Should Rousseff be convicted, Temer would serve out the remaining two years of her term. Despite the positive market reaction, his would be a weak, lame duck administration. </p>
<p>His centrist PMBD party is <a href="http://fortune.com/2016/04/18/brazil-dilma-rousseff-impeachment-5">deeply implicated</a> in the Petrobras scandal. Three members of his cabinet resigned because of allegations of corruption. The PMBD president of the lower house, who led the drive against Dilma, <a href="http://www.bbc.com/news/world-latin-america-36741532">was forced to step down</a> because of bribery allegations. </p>
<p>A recent poll found that only <a href="http://noticias.uol.com.br/politica/ultimas-noticias/2016/07/01/avaliacao-de-governo-temer-e-pior-no-nordeste-diz-ibope.htm">13 percent of the public</a> rated the Temer government good or excellent, not significantly higher than Rousseff. Most Brazilians would like to see national elections now, but they will have wait until the next scheduled election in October 2018 since the constitution does not provide for a special election.</p>
<h2>The post-Olympic Games hangover</h2>
<p>The Rio Olympics were supposed to showcase Brazil’s accomplishments. Instead of a breakthrough, they come amid another boom-bust cycle with no end in sight for the bust. </p>
<p>As for the Olympics themselves, <a href="http://z975.com/news/030030-poll-most-brazilians-expect-rio-olympics-to-hurt-brazil">most Brazilians now expect</a> the impact to be negative. That being said, Brazilians will use any excuse to throw a party, which they will surely do for themselves and their visitors. </p>
<p>Their post-games hangover, however, will be formidable.</p><img src="https://counter.theconversation.com/content/61488/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Terry L. McCoy does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Olympics may give Brazilians a respite from their perfect storm of recession, corruption and political dysfunction, but it won’t last long.Terry L. McCoy, Professor Emeritus of Latin American Studies and Political Science, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/570292016-06-15T09:51:58Z2016-06-15T09:51:58ZHow did Brazil go from rising BRIC to sinking ship?<figure><img src="https://images.theconversation.com/files/126366/original/image-20160613-29229-1f6jjlr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Brazil's economy was once considered ready to take flight. What happened?</span> </figcaption></figure><p>Most of the headlines in recent weeks have focused on Brazil’s troubling <a href="https://theconversation.com/with-dilma-rousseff-impeached-brazil-is-set-for-years-of-political-turmoil-57689">political crisis</a>. But the country is also in the midst of a deep economic recession.</p>
<p>The economy has been shrinking since the second quarter of 2014. It contracted by 3.8 percent in 2015 and is expected to shrink by a similar amount this year. Earlier this month, the Organisation for Economic Co-operation and Development (OECD) said it sees the <a href="http://www.wsj.com/articles/oecd-sees-brazils-economic-slump-stretching-into-2017-1464796561">recession continuing into 2017</a>.</p>
<p>Yet it was only in 2009 – in the middle of the global financial crisis – that the <a href="http://www.economist.com/node/14845197">Economist magazine featured a story</a> entitled “Brazil takes off,” with a photo of the Corcovado – the iconic statue of Christ that overlooks Rio de Janeiro – launching like a rocket. That article emphasized why Brazil deserved to be one of the “BRICs” – the rapidly growing economies including Russia, India and China that now account for nearly 25 percent of global GDP.</p>
<p>How could the outlook for Brazil have changed so rapidly? Is this sort of boom and bust unprecedented or a recurring theme in Brazil’s history?</p>
<p>In this article, we provide a historical perspective on the current economic crisis, relying on our own scholarship and years of analysis of the Brazilian economy.</p>
<h2>Brazil arrives</h2>
<p>Brazil has been knocking at the door of the developed world for quite some time.</p>
<p>It has been dubbed the “<a href="http://www.nytimes.com/2011/11/22/world/americas/stefan-zweig-viennese-born-writer-gets-fresh-look-in-brazil.html?_r=0">country of the future</a>” since Stefan Zweig coined the phrase in the title of his 1941 book. And that <a href="https://theconversation.com/brazil-no-longer-the-country-of-the-future-59505">future seemed attainable</a>.</p>
<p>From 1900 to 1980, Brazil had one of the fastest-growing economies in the world. <a href="http://www.ggdc.net/MADDISON/oriindex.htm">Income per capita rose faster</a> in Brazil than in the U.S. The country was transformed from a rural, agricultural economy – producing coffee, sugar and other products for export – into an urban, industrial powerhouse. </p>
<p>Yet a closer look at Brazilian economic history reveals frequent cycles of boom and bust, where considerable optimism fell by the wayside, leaving behind unfulfilled dreams. The future, it seems, has always been just around the corner. </p>
<p><a href="http://www1.folha.uol.com.br/mercado/2016/03/1749299-recessao-economica-atual-deve-ser-a-pior-da-historia-do-brasil.shtml">Several analysts</a> in Brazil have begun to repeat the claim that the current recession is likely to be worse than what Brazil faced in the 1930s. While technically correct, in our view, this is not the appropriate comparison. </p>
<p>Brazil did quite well in the 1930s relative to many other countries. After growing at over 10 percent a year in 1927 and 1928, the Brazilian economy only contracted in 1930 and 1931. The recession was then followed by eight years of fairly robust growth. </p>
<p>The 1980s and early 1990s were a much more painful time in Brazil, following a particularly potent boom known as the “Brazilian Miracle.” We return to a comparison with this period below.</p>
<h2>State-led industrialization and the ‘Brazilian Miracle’</h2>
<p>Following World War II, Brazil’s federal government began to plan for economic development and target industrialization and high rates of growth.</p>
<p>Juscelino Kubitschek became president in 1956 and <a href="http://www.pressreader.com/belgium/the-wall-street-journal-europe/20160425/281749858539213">promised to deliver</a> “50 years of progress in five.” This was a period of immense optimism, and Brazil seemed like an endless construction site, with highways, buildings and industries popping up throughout the country.</p>
<p>As a symbol of this progress, Brasilia was inaugurated in 1960 as a planned capital city with a modernist architecture. Yet the optimism of the 1950s quickly gave way to the political turmoil of the early 1960s.</p>
<p>When Jânio Quadros abruptly resigned the presidency in 1961, the left-leaning Vice President João Goulart took office. His support of labor rights, land reform and other populist policies led to his removal by the <a href="https://www.amazon.com/Politics-Military-Rule-Brazil-1964-1985/dp/0195063163">military in a 1964 coup</a>, with the support of the Brazilian elite and U.S. government. The generals would run the country until 1985. </p>
<p>Brazilian democracy and a more inclusive model of development were the principal victims. Growth, in contrast, quickly resumed, and this contributed to rapid poverty reduction. In what became known as the Brazilian Miracle, <a href="http://IPEAdata.gov.br">real GDP expanded</a> at over 8 percent annually in every year but one from 1968 to 1976. Poverty fell by over 20 percentage points from 1960 to 1980, even while <a href="http://www.worldcat.org/title/structure-and-structural-change-in-the-brazilian-economy/oclc/44851721">income inequality</a> continued to rise. </p>
<h2>What went wrong</h2>
<p>Unlike with the slowdowns of the 1930s and mid-1960s, the depth and length of the economic crisis of the 1980s were much more severe. </p>
<p>The global economy had changed in the 1970s and Brazil was slow to adapt. It relied on foreign debt to prolong the inward-looking industrialization model that had worked so well for decades, but this too came to an end in 1982 when a debt crisis erupted throughout <a href="http://www.dictionaryofeconomics.com/article?id=pde2011_L000243">Latin America</a>.</p>
<p>The optimism of the miracle years would be replaced by stagnation and hyperinflation. From 1981 to 1992, the economy experienced negative annual growth in five separate years, and <a href="http://IPEAdata.gov.br">annual inflation soared</a> into the thousands. Income per capita peaked in 1980 and would only permanently surpass this level again in 1994.</p>
<p>This was a “lost decade” for Brazil in terms of living standards, but popular discontent forced the military to exit power in 1985 and led to the writing of a new Constitution in 1988.</p>
<h2>Back to boom</h2>
<p>The foundations for the most recent cycle of growth and optimism were laid from 1994 to 2002.</p>
<p>First, after numerous failed attempts, in 1994 the government finally devised a stabilization plan – <a href="http://www.npr.org/blogs/money/2010/10/01/130267274/the-friday-podcast-how-four-drinking-buddies-saved-brazil">the Real Plan</a> – that succeeded in defeating hyperinflation. Then, from 1995 to 2002, a number of important policies were adopted under President Fernando Henrique Cardoso. <a href="http://www.brookings.edu/research/books/2011/startingover">These included</a> a modest reform of the public sector social security system, the creation of an anti-poverty conditional cash transfer program tied to kids going to school and the adoption of an important fiscal responsibility law that – 15 years later – would be used to justify removing President Dilma Rousseff from office. </p>
<p>Cardoso also made progress in adopting more sound macroeconomic policies as he let the exchange rate float in 1999 and then instituted a system of inflation and fiscal targets. While this was a period of slow growth and international turbulence, inequality began to decline for the first time in at least 30 years. </p>
<p>Luiz Inácio Lula da Silva <a href="http://www.livrariacultura.com.br/p/economia-brasileira-contemporanea-19452004-781630">pursued similar macroeconomic policies</a> during his presidency from 2003 to 2010, reformed the social security system and transformed and expanded the anti-poverty policies. With a much more favorable international environment, until 2009, and a strong commodity boom, the economy expanded at around 4 percent per year, and poverty declined by around one third. <a href="http://www.brookings.edu/research/books/2010/declininginequalityinlatinamerica">This was the first time</a> in at least 50 years that Brazil simultaneously experienced growth and a reduction in both poverty and inequality. </p>
<p>With rising living standards and falling poverty, Brazil once again entered a phase of considerable optimism. As Brazil paid off its debt with the IMF, the country began to discover large reserves of oil. International rating agencies elevated the classification of Brazilian foreign debt <a href="http://www.bloomberg.com/news/articles/2008-05-01/brazil-goes-investment-gradebusinessweek-business-news-stock-market-and-financial-advice">from speculative to investment grade</a>, clearing the way for U.S. pension funds to invest in Brazil. Among Brazilian policymakers, it became common to talk of “sustainable development.” </p>
<p>The optimism only intensified when Brazil <a href="http://edition.cnn.com/2007/SPORT/football/10/30/brazil.cup/">was chosen</a>, in 2007, to host the 2014 World Cup and the <a href="http://www.nytimes.com/2009/10/03/sports/03olympics.html">2016 Summer Olympics</a> two years later – in the middle of the global financial crisis.</p>
<h2>The financial crisis slowly grips Brazil</h2>
<p>President Lula initially dismissed the crisis.</p>
<p>In October 2008, <a href="http://oglobo.globo.com/economia/lula-crise-tsunami-nos-eua-se-chegar-ao-brasil-sera-marolinha-3827410">he said</a> that although it might be a tsunami in the U.S., by the time it arrived in Brazil it would just be a little wave. At a G20 Summit in London in 2009, President Barack Obama was caught on camera <a href="http://news.bbc.co.uk/2/hi/business/7978816.stm">calling his Brazilian counterpart</a> “the most popular politician on earth.” </p>
<p>At first it seemed as if Lula might be right. Brazil had a single year of recession in 2009, and the economy rebounded by over 7 percent the following year. </p>
<p>But it soon became clear, as in earlier periods, that Brazil’s fate is very much tied to the health of the world economy and its choice of public policies. The economy came to a screeching halt in 2014, with zero growth, and contracted severely in 2015 and 2016. Simultaneously, the government deficit ballooned to over 6 percent of GDP in 2014 and over 10 percent in 2015.</p>
<p>President Rousseff, who came to power in 2011, disguised the deteriorating fiscal situation during the election of 2014, just as the <a href="http://www.nytimes.com/2015/08/09/business/international/effects-of-petrobras-scandal-leave-brazilians-lamenting-a-lost-dream.html?_r=0">corruption scandal</a> at Petrobras widened. This, together with a debt downgrade, provided the economic backdrop that led to her removal from office as she awaits an impeachment trial later this year.</p>
<h2>Three lessons from the past</h2>
<p>It is too soon to tell if the current recession will be more like the downturn of the 1930s or the “lost decade” of the 1980s. But there are several lessons that can be drawn from recent history that allow us to conclude that Brazil’s rosy future is still out of reach. We highlight three.</p>
<p>First, investments in physical and human capital were a central component of the development success stories in China and the East Asian Tigers. Brazil, in contrast, has repeatedly fallen short on these fronts. Most recently, Brazil squandered the opportunity presented by the commodity boom to invest heavily in infrastructure.</p>
<p>Second, Brazil’s history of runaway inflation was, in part, a reflection of the inability of successive governments to make difficult policy choices. Similarly, while the commodity boom lasted, the government seemed able to satisfy all demands – from raising the minimum wage and subsidizing national business “champions” to expanding cash transfers to the poor – all while it built stadiums for international sporting events and cut debt as a share of GDP. Now that the boom years have ended, the time for reckoning has arrived. Unfortunately, it is often the poor who pay the price. </p>
<p>Finally, Brazil needs deep institutional reforms in order to lay the groundwork for a successful 21st century. One of the most challenging reforms relates to the country’s dysfunctional political system. With over two dozen parties in Congress, it is extremely difficult to govern. This fragmentation creates an environment ripe for the kinds of corruption scandals witnessed in 2005 – with the bribery scheme in Congress – and again with Petrobras today. It is this political and institutional environment that contributes to mismanagement and corruption at all levels.</p>
<p>Unfortunately, whether <a href="https://theconversation.com/what-is-brazilian-president-dilma-rousseffs-real-crime-59363">President Rousseff</a> returns to office or is permanently removed, there are few grounds for <a href="https://theconversation.com/is-dilma-rousseffs-impeachment-a-coup-or-brazils-window-of-opportunity-59362">optimism</a> that these deeper problems will be addressed any time soon.</p><img src="https://counter.theconversation.com/content/57029/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven M. Helfand has received funding for research from the USAID, USDA, IFPRI, World Bank, IDB, OECD, IFAD, FAO, and Brazilian academic and research sources. </span></em></p><p class="fine-print"><em><span>Antônio Márcio Buainain does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Only a few years ago, Brazil was considered the global economy’s shining star. How did it fall so far so fast?Steven M. Helfand, Associate Professor of Economics, University of California, RiversideAntônio Márcio Buainain, Professor of Economics, Universidade Estadual de Campinas (Unicamp)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/593262016-05-18T12:43:45Z2016-05-18T12:43:45ZWill Brazil be able to overcome domestic turmoil ahead of the Olympic Games?<p>When Dilma Rousseff received the Olympic Flame in Brasilia at the beginning of May, her intention was to attend the opening ceremony of the Rio 2016 Olympic and Paralympic Games as Brazil’s head of state. Now, the nation’s first democratically elected woman president <a href="https://theconversation.com/dilma-rousseff-suspended-so-whats-next-for-brazils-frayed-and-fragmented-democracy-59319">has been suspended</a> pending an investigation into <a href="https://theconversation.com/with-dilma-rousseff-impeached-brazil-is-set-for-years-of-political-turmoil-57689">allegations that</a> she intentionally concealed the size of the country’s budget deficit. </p>
<p>This is only the second time that an impeachment has been sought against a Brazilian president, and its legality <a href="http://www.nytimes.com/2016/04/20/world/americas/dilma-rousseff-impeachment-brazil.html">has been contested</a> by representatives from Rousseff’s government. The topic has divided the country, and millions of citizens have taken to the streets – either to call for Rousseff’s resignation, or to rally <a href="https://www.washingtonpost.com/news/worldviews/wp/2016/04/28/brazils-anti-impeachment-protesters-block-highways-at-rush-hour/">against her impeachment</a>. In some cases, <a href="http://www.irishtimes.com/violent-protests-in-brazil-ahead-of-impeachment-vote-1.2645271">violence has reportedly broken out</a> between civilians and the police, and it seems likely that more protests will follow. </p>
<p>Meanwhile, the nation continues to struggle with its deepest recession since the 1930s – not to mention outbreaks of mosquito-borne diseases such as <a href="https://theconversation.com/explainer-where-did-zika-virus-come-from-and-why-is-it-a-problem-in-brazil-53425">Zika Virus</a>, dengue fever and Chikungunya and the ongoing <a href="https://theconversation.com/how-the-massive-petrobras-corruption-scandal-is-upending-brazilian-politics-43939">Petrobras corruption scandal</a>. With fewer than 100 days to go until the opening of the games, some are <a href="http://www.dailymail.co.uk/news/article-3588239/Fears-Olympics-Brazil-plunges-political-chaos-Riot-police-clash-activists-streets-acting-president-installs-SECOND-sports-minister-two-months.html">starting to question</a> whether Brazil is still in a position to host the sporting mega-event. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/122587/original/image-20160515-10670-e8abi8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/122587/original/image-20160515-10670-e8abi8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=352&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122587/original/image-20160515-10670-e8abi8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=352&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122587/original/image-20160515-10670-e8abi8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=352&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122587/original/image-20160515-10670-e8abi8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=443&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122587/original/image-20160515-10670-e8abi8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=443&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122587/original/image-20160515-10670-e8abi8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=443&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Rousseff receives the Olympic Flame in Brasilia.</span>
<span class="attribution"><a class="source" href="http://fotospublicas.com/lanterna-contendo-a-chama-olimpica-chega-ao-aeroporto-internacional-de-brasilia/">Lula Marques/ Agência PT</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>In his first speech since becoming interim president, Michel Temer <a href="http://www.bbc.co.uk/news/world-latin-america-36283027">appealed to Brazilians</a> to “trust him” as he attempts to restore peace and prosperity. He assured citizens that recovery measures as deleting nine ministry in the government body, reviewing the social security and other conservative shifts will not be affected by preparations for the games. <a href="https://www.washingtonpost.com/world/the_americas/brazils-new-leader-has-to-deal-with-a-political-crisis--and-save-the-olympics/2016/05/13/5913f4e4-18a0-11e6-971a-dadf9ab18869_story.html">He said</a>: “Billions of people will watch the games, and journalists from different countries will be here to report on the host nation … we know that beyond sports, they will also focus on the political and economic conditions of the country.”</p>
<h2>The giant has woken</h2>
<p>This isn’t the first time that Brazil has experienced civil unrest while standing in the international spotlight. In 2013, protests against the rising cost of bus fares were met by police <a href="http://www.bbc.co.uk/news/world-latin-america-22930402">close to Maracanã Stadium</a>, where the Confederations Cup was taking place. But on the whole, well-organised security operations have usually ensured that such events have gone ahead without a hitch: neither the 2011 World Military Games, nor the 2014 FIFA World Cup, experienced any major incidents. </p>
<p>Strategies to ensure the <a href="https://www.rio2016.com/en/news/brazil-is-prepared-promises-security-chief-for-rio-2016-olympic-and-paralympic-games">smooth running</a> of the Olympic Games have been developed since last year, when <a href="http://g1.globo.com/distrito-federal/noticia/2016/03/jogos-olimpicos-terao-85-mil-homens-em-esquema-de-seguranca-diz-defesa.html">it was declared</a> that the military would be <a href="http://dialogo-americas.com/en_GB/articles/rmisa/features/2015/12/29/feature-04">responsible for security</a> throughout the event. More than 704m Brazilian reals (US$169m) have been invested to this end since the FIFA 2014 Cup. </p>
<p>Brazilian armed forces have been training with <a href="http://www.dailymail.co.uk/news/article-3488388/Brazilian-army-trains-U-S-soldiers-possible-terrorist-attack-ahead-Rio-Olympics.html">other specialist military bodies</a> from around the world, to avert <a href="http://www.express.co.uk/news/world/651978/isis-islamic-state-is-isil-daesh-olympic-games-rio-2016-brazil-zika-terror-attack">terrorist threats</a> like those seen ahead of the <a href="http://edition.cnn.com/2010/SPORT/football/05/31/football.world.cup.terror/">FIFA 2010 World Cup</a> and the <a href="https://www.theguardian.com/sport/2012/jun/05/mi5-wave-security-tipoffs-games">London 2012 Summer Olympics</a>. The Brazilian military will also provide a fallback security service, in case of strikes or understaffing by private security firms, to avoid the issues seen in <a href="http://www.bbc.co.uk/news/10329679">South Africa 2010</a> and <a href="http://edition.cnn.com/2012/07/26/sport/olympic-security-overview/index.html">London 2012</a>. The security forces are on high alert after <a href="http://www.ibtimes.co.uk/war-isis-brazil-warns-daesh-could-hit-rio-olympics-2016-paris-style-terror-attack-1555191">ISIS mentioned</a> that the next target is Brazil. </p>
<p>Open areas such as the <a href="https://www.rio2016.com/en/cultural-festival">cultural festival</a>, the country houses (spaces where competing countries promote their image) and major sporting venues will be key zones in the up and coming competition. Emergency plans have been developed for regions throughout Brazil, in case local police and security forces have trouble maintaining control. And the military will monitor social media and political groups, to produce a map of future protests planned around the whole country, as they did for the <a href="http://www.reuters.com/article/us-brazil-protests-insight-idUSBREA141JO20140205">2014 FIFA CUP</a>. </p>
<p>This may sound excessive, but in reality authorities will be cautious about using force against protesters. The new government will want to reassure citizens – for whom the memory of Brazil’s <a href="http://www.bbc.co.uk/news/world-latin-america-26713772">former military dictatorship</a> looms large – that the country is still a democracy, and that every military intervention will be made with proper oversight. </p>
<h2>The price of the games</h2>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/122873/original/image-20160517-17030-11j869r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/122873/original/image-20160517-17030-11j869r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=837&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122873/original/image-20160517-17030-11j869r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=837&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122873/original/image-20160517-17030-11j869r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=837&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122873/original/image-20160517-17030-11j869r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1052&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122873/original/image-20160517-17030-11j869r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1052&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122873/original/image-20160517-17030-11j869r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1052&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Fun, but not for everyone.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Parque_Ol%C3%ADmpico_da_Barra_da_Tijuca_em_2015_01.jpg">Tânia Rêgo/Agência Brasil/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
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<p>As well as the social and political unrest, the new government will also need to address Brazil’s economic collapse. The games have exposed the fault lines between rich and poor in Brazilian society. For less wealthy citizens, the impacts of the nation’s worst economic crisis since the 1930s have overshadowed the dazzle of the Olympics. Tickets and merchandise for the games are only really affordable for foreign visitors and the Brazilian upper classes: ordinary Londoners were likewise excluded from the <a href="https://www.theguardian.com/sport/2013/apr/24/london-2012-locog-olympic-tickets">2012 games</a>. </p>
<p>What’s more, most Brazilians do not expect the games to afford them any significant economic legacies. Indeed, the <a href="https://theconversation.com/five-reasons-why-your-city-wont-want-to-host-the-olympic-games-52289">high cost of hosting</a> the games is enough to put many cities off. For instance, Montreal struggled to pay off its 1976 Olympic bill <a href="http://edition.cnn.com/2012/07/19/world/canada-montreal-olympic-legacy/index.html">for 30 years</a> after the event, while costly infrastructure from previous games in <a href="https://www.youtube.com/watch?v=UTY9ZzXTyW4&feature=player_embedded">Athens (2004)</a> and <a href="http://www.citylab.com/work/2012/07/beijings-olympic-ruins/2499/">Beijing (2008)</a> has since been abandoned. </p>
<p>And Brazil has had bad experiences in the past: the 2007 Pan-American Games, held in Rio, left little aside from abandoned infrastructure and <a href="http://content.time.com/time/world/article/0,8599,1926094,00.html">unfulfilled promises</a>. Many of these public spaces were later privatised, to reduce the cost of maintaining them. Yet the government has sought to reassure citizens of Rio that Olympic investment will contribute to the public good, by opening spaces such as Madureira Park; a 90,000m² site in one of the city’s less affluent neighbourhoods, which has become a hub for families and friends who meet there to dance, play sport or simply enjoy the park. </p>
<p>The organising committee for the Olympics has promised to open the gates of the Olympic Park cluster after one year. This will mean that the 1.8m square metres of Olympic infrastructure is open to the public, including new transport links, a training centre, sports infrastructure for locals and an experimental Olympic school dedicated to delivering a mix of sports education and high quality teaching quality for over 850 students. </p>
<h2>Will everything be okay?</h2>
<p>The interim government is also arranging its affairs to ensure the smooth running of the games. As well as appointing a new cabinet, interim president Michel Temer has introduced Leonardo Picciani as the new minister for sport (which makes him the third person hold the role in 2016) – despite a reported <a href="http://sports.yahoo.com/news/sports-minister-denies-conflict-interest-olympic-works-170327239--spt.html">conflict of interest</a>. </p>
<p>But former <a href="http://www.brasil2016.gov.br/en/news/ricardo-leyser-takes-over-as-minister-of-sport">minister for sport Ricardo Leyser</a> – who has been with the ministry since 2003 – is likely to remain on the scene, to support the Rio 2016 Organising Committee, ensure continuity and help to maintain connections between the government, the organising committee and the International Olympic and Paralympic committees. </p>
<p>We know that Brazil has the capacity to host successful mega-events: it’s been doing so since the <a href="http://library.la84.org/SportsLibrary/JOH/JOHv16n1/JOHv16n1g.pdf">beginning of the 20th century</a>. Hosting the Olympic and Paralympic Games will be the nation’s biggest responsibility yet, but there are strategies in place to ensure that everything proceeds without incident. </p>
<p>Yet there are no such guarantees when it comes to restoring peace, growing the economy, addressing public health crises and fighting inequality. There’s a popular proverb among the locals of Rio de Janeiro: “Everything will be okay in the end. If it’s not okay, it’s not the end.” And while everything might be okay for the Olympics, it is certainly not the end of Brazil’s political and economic struggles.</p><img src="https://counter.theconversation.com/content/59326/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Leonardo Mataruna-Dos-Santos is also Visiting Lecturer at Advanced Programme of Contemporary Culture of Federal University of Rio de Janeiro in Brazil, and Visiting Professor at Universidad de Occidente in Mexico. He receives funding to investigate the legacies of mega events from Marie Curie Research Initiatives - CARNiVAL Project of European Union's Seventh Framework Programme FP7/2007-2013/under REA grant agreement n° 612614. </span></em></p>With an ongoing impeachment process and a deep economic recession, the host nation is on thin ice ahead of one of the world’s largest sporting mega-events.Leonardo Jose Mataruna-Dos-Santos, Associate Research Fellow, Coventry UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/593622016-05-15T21:00:42Z2016-05-15T21:00:42ZIs Dilma Rousseff’s impeachment a coup or Brazil’s window of opportunity?<p>“Brazil’s young democracy is being subjected to a coup,” <a href="http://www.ft.com/intl/cms/s/0/31afb096-17e2-11e6-b8d5-4c1fcdbe169f.html">said Dilma Rousseff</a> after the Senate on May 12 voted 55 to 22 to remove her as president and move forward with impeachment. </p>
<p>Is this really a coup, as Rousseff and her supporters believe? Coups usually entail the violent overthrow of a government or a trampling of constitutional rules and procedures. In Brazil, there has been no involvement by the military other than to keep the peace. </p>
<p>And the major players in this real-life Brazilian telenovela – Congress, the judiciary, the federal police and the <a href="http://portal.tcu.gov.br/english/home.htm">Federal Accounting Office</a> (TCU) – are all playing by the constitutional rules. This is testimony to strong institutions in Brazil and a victory for checks and balances. </p>
<p>Far from being a coup, the current tumult, I believe, offers a chance for Brazil, with the right leadership, to return to the policies initiated in the mid-1990s that put the country on a virtuous trajectory of rising growth and falling inequality. The middle class expanded dramatically and the political system became more transparent.</p>
<p>Such policies first and foremost conform to monetary and fiscal orthodoxy but also promote social inclusion through programs such as the <a href="http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21447054%7EpagePK:64257043%7EpiPK:437376%7EtheSitePK:4607,00.html">one that pays mothers</a> to keep their children in school. </p>
<p>I call this economic model “fiscally sound social inclusion,” and it’s a topic my coauthors and I explore in our <a href="http://press.princeton.edu/titles/10745.html">forthcoming book</a>, “Brazil in Transition: Beliefs, Leadership and Institutional Change.” Such policies helped make Brazil one of the <a href="http://www.bloomberg.com/news/articles/2014-07-21/brics-summit-a-show-of-economic-might-is-nothing-to-fear">world’s largest and fastest-growing economies</a>.</p>
<p>Can Brazil’s new leader, Vice President Michel Temer, use this window of opportunity to restore economic growth and also reduce inequality under the mantle of fiscally sound social inclusion?</p>
<h2>How we got here</h2>
<p>Prior to the reelection of President Rousseff in October 2014, two decades of economic and political development <a href="http://foreignpolicy.com/2016/02/10/brazil-rousseff-economy-recession/">were beginning to founder</a> on the shoals of a decline in commodity prices and a <a href="http://www.nytimes.com/2015/08/09/business/international/effects-of-petrobras-scandal-leave-brazilians-lamenting-a-lost-dream.html?_r=0">corruption scandal</a> involving Petrobras, the state-owned oil company. </p>
<p>With the country’s economy in decline and the election drawing nearer, the president submitted rather rosy-looking public accounts to the TCU – basically a federal budget watchdog similar to the U.S. General Accounting Office but with the power to approve or reject them. Rousseff’s accounts suggested the government’s finances, although deteriorating, were not far off track.</p>
<p>But in a <a href="http://www.ft.com/intl/cms/s/0/41303b94-6d6f-11e5-8608-a0853fb4e1fe.html">historic ruling</a> following her narrow election victory, the TCU unanimously rejected the accounts, asserting that Rousseff understated the public deficit in the year prior to the election.</p>
<p>It is plausible, as her critics have argued, that Rousseff would not have won reelection had the voters known the true fiscal state of Brazil. </p>
<p>Although the impeachment trial technically entails prosecution for violating the <a href="http://www.forbes.com/sites/kenrapoza/2016/04/21/the-real-reason-behind-the-impeachment-of-brazils-president-dilma-rousseff/#22b08bef6759">fiscal responsibility law</a>, in the eyes of the public, more is at stake, including the mismanagement of the economy and the corruption scandal at Petrobras, where Rousseff was board chair prior to her election. </p>
<h2>Markets remain optimistic</h2>
<p>Where does Brazil go from here? </p>
<p>Again, playing by the rules, former Vice President Temer, who belongs to a different party than Rousseff, <a href="http://www.usatoday.com/story/news/world/2016/05/13/brazils-new-acting-president-temer-calls-unity/84321378/">is now the interim president</a> while the impeachment prosecution proceeds. If Rousseff is impeached or resigns (<a href="http://www.wsj.com/articles/brazils-president-dilma-rousseff-reiterates-that-she-wont-resign-1458677495">never, she claims</a>), Temer’s position will become permanent, and he will serve out her term, which expires in 2018. </p>
<p>Impeachments (and certainly coups) generally send economies into a tailspin. Yet, this hasn’t happened in Brazil. As the impeachment gained steam this year, the Brazilian real (the national currency) <a href="http://www.xe.com/currencycharts/?from=BRL&to=USD">actually appreciated</a>, as did the <a href="http://money.cnn.com/2016/03/07/investing/brazil-argentina-stocks-on-fire/">stock market</a>. </p>
<p>Since the beginning of the year, the real is up by 10 percent and the <a href="http://finance.yahoo.com/echarts?s=%5Ebvsp+Interactive#%7B%22allowChartStacking%22:true%7D">stock market by 23 percent</a>. And even when the real was tanking in late 2015, <a href="http://www.tradingeconomics.com/brazil/foreign-direct-investment">foreign direct investment surged</a>, a sign of confidence by outside investors in the underlying fundamentals of the economy despite the political turmoil. </p>
<p>It may also signal confidence that Temer will institute market-friendly reforms. It’s important to note that in Brazil presidents have much stronger agenda-setting powers than in the U.S. </p>
<p>Temer <a href="http://www.bbc.com/news/world-latin-america-36283027">is not popular</a> in Brazil, but he is known as a “dealmaker,” one who is capable of managing a coalition in a multiparty Congress. </p>
<p>This all sounds promising, but before looking forward it is important to understand the past.</p>
<h2>From military rule to fiscally sound social inclusion</h2>
<p>From 1964 until 1985, Brazil was ruled by a military regime. </p>
<p>The military imposed order in its early years and embarked on an <a href="http://www.nytimes.com/1983/11/26/business/brazil-s-economic-miracle-and-its-collapse.html?pagewanted=all">ambitious top-down development plan</a> that turned Brazil into a “miracle economy” in the 1970s. However, growth began to sputter by the end of the decade, and inflation soared. </p>
<p>As growth weakened and the opposition became more vocal, the military’s oppressive reaction failed to suppress a growing populism, forcing it to pave the way for a return to democracy. </p>
<p>This helped usher in a new belief: social inclusion, which meant everything for everyone. The constitution of 1988 is one of the most detailed in the world, especially in terms of human rights. The decision-making process codified these beliefs around social inclusion as every interest group got to hang its ornament on the <a href="https://books.google.com/books?id=wVOzAQAAQBAJ&pg=PA12&lpg=PA12&dq=brazil+constitution+1988+christmas+tree&source=bl&ots=mZ9nRJG74H&sig=Arc7qmatoufeG5qCiPuQ4JmqiS0&hl=en&sa=X&ved=0ahUKEwjumYTB9NfMAhVF_IMKHRc6B1oQ6AEIIDAA#v=onepage&q=brazil%20constitution%201988%20christmas%20tree&f=false">“Christmas tree” constitution</a>. </p>
<p>Unfortunately, this didn’t work so well for the economy. From 1986 through 1993, governments spent generously on wasteful pork barrel projects, financed by printing money, leading to <a href="http://www.sjsu.edu/faculty/watkins/brazilinfl.htm">hyperinflation in the thousands of percent</a>. Social inclusion was great in principle but bad in practice. </p>
<p>Several stabilization plans aimed at reining in inflation dramatically failed, and Brazil’s first democratically elected president since military rule, Fernando Collor, <a href="http://articles.latimes.com/1992-12-30/news/mn-2585_1_vice-president">resigned during an impeachment trial</a> in 1992.</p>
<p>This marked a turning point for Brazil and its economy after Fernando Henrique Cardoso, a self-exiled socialist during the military regime, was appointed finance minister by Collor’s replacement. </p>
<p>Cardoso and his team swiftly tamed inflation and instilled confidence, especially among businesses. This helped him win reelection, following which he passed the cornerstone of fiscally sound social inclusion: the <a href="http://www1.worldbank.org/publicsector/pe/BudgetLaws/BRLRFEnglish.pdf">fiscal responsibility law</a>, aimed at ensuring that state governments could no longer spend more than their budgets allowed. </p>
<p>At the same time, Cardoso never abandoned the concept of social inclusion. Rather he merged it with his orthodox fiscal and monetary policies, such as keeping inflation in check, reforming pensions and controlling the budget. This led to <a href="http://press.princeton.edu/titles/10745.html">modest economic growth</a> and a growing middle class. </p>
<p>Yet his party lost the 2002 election to the charismatic <a href="http://www.economist.com/node/17147828">Lula da Silva</a>, who campaigned on a platform of largesse for the lower class and workers in general. Fortunately, high commodity prices helped da Silva run successive fiscal surpluses during his two terms, even as he expanded programs for the poor started by Cardoso. In other words, he continued and solidified a policy of fiscally sound social inclusion. </p>
<p>It was on da Silva’s crest of popularity and economic growth that Rousseff took the helm in 2010. But she abandoned many of his “fiscally sound” policies by increasing government expenditures and subsidies as well as expanding the role of state-run companies like Petrobras and the Brazilian Development Bank. And as commodity prices plunged, the economy fell with them, eventually exposing the holes in the government’s finances.</p>
<h2>The traits of a leader</h2>
<p>So the question now is will (and can) Temer restore those socially inclusive yet fiscally sound policies that put Brazil on course to becoming a truly developed country? </p>
<p>So far, foreign and domestic investors <a href="http://www.wsj.com/articles/businesses-signal-approval-of-brazil-leadership-change-1463059352">have reacted favorably</a>. But Temer faces a difficult task in resurrecting trust amongst the population and investors. Meanwhile he also faces <a href="http://www.theguardian.com/world/2016/apr/05/brazil-vice-president-michel-temer-impeachment-dilma-rousseff">his own allegations of corruption</a>.</p>
<p>To me, whether he can successfully navigate the ongoing bumps in the road and stay the course of reform or not depends on whether he has the necessary attributes of a leader to rise to the occasion. </p>
<p>In “Brazil in Transition,” my coauthors and I pose three questions to help us assess whether a leader such as Temer has what it takes: does he know what policies are needed to recover from the shock? Can he coordinate a coalition that includes economic and political actors as well as citizens to embrace those policies? And is he trusted and does he possess moral authority? </p>
<p>To this, I add two more: can he adapt to unforeseen bumps to stay the course? Does Temer (including his policy team) possess imagination to see solutions that were not on the table? </p>
<p>Temer has recognized the heart of Brazil’s dilemma: policies need to be fiscally sound. This means <a href="https://nacla.org/news/2016/02/08/argentina%E2%80%99s-painful-return-%22economic-orthodoxy%22-0">accepting some austerity</a>, as Argentina recently did. On this score <a href="http://www.wsj.com/articles/brazils-new-government-to-name-henrique-meirelles-as-finance-minister-1463072579">he wins points</a> for naming Henrique Meirelles, a well-respected former head of the central bank and a Wall Street veteran, as finance minister. </p>
<p>Can Temer coordinate among Congress and other powerful players in Brazil, such as industry and unions, and convince them to play ball? Being known as “the dealmaker” means he should be able to “coordinate and adapt” as opportunities arise. Temer was also trained as a constitutional lawyer, which means he knows well both the law and rules of the game in Congress. </p>
<p>However, he lacks the moral authority of both Cardoso, who was a vocal critic of the military regime, and da Silva, who with a fourth-grade education rose to the presidency as a strident union leader. But leaders can build moral authority; they need not come to the job with it in hand. (Not everyone can be a Nelson Mandela.)</p>
<p>Finally, does Temer have the “imagination” to come up with extraordinary ideas capable of breaking through the gridlock and bringing about reform? In his first hours in office, he demonstrated imagination by cutting his cabinet by a third, to 22 from 31, and, controversially, he <a href="http://www.forbes.com/sites/shannonsims/2016/05/12/brazils-new-president-michel-temer-fills-cabinet-with-only-men/#111241c440c6">picked only white men</a>. This move could backfire, but it at least shows he’s willing to take risks and is not afraid of some controversy.</p>
<p>So does this suggest he has the “right stuff” to seize the window of opportunity of a new government and return Brazil to its virtuous trajectory? </p>
<p>His early moves may please markets, but to satisfy Brazil’s diverse citizenry, he will need to demonstrate that he is not abandoning social inclusion. On this as well as his own fate in the ongoing corruption scandals: the jury is still out.</p><img src="https://counter.theconversation.com/content/59362/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The larger book project upon which some of this article is based got off the ground thanks to the Rockefeller Foundation hosting the authors as residents in Bellagio. They received valuable comments provided by the anonymous reviewers for Princeton University Press and from a book conference at Northwestern University, funded by President Schapiro at Northwestern University and Princeton University Press.</span></em></p>Whatever you call it, the new leader, Michel Temer, has an opportunity to return Brazil to policies that promote growth through fiscally sound social inclusion. Can he do it?Lee Alston, Professor of Economics, Indiana UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/593632016-05-13T10:02:52Z2016-05-13T10:02:52ZWhat is Brazilian President Dilma Rousseff’s real crime?<p>Dilma Rousseff, Brazil’s first female president, is <a href="http://www.nytimes.com/2016/05/13/world/americas/dilma-rousseff-brazil-impeachment.html">about to go on trial</a>. She is temporarily suspended from office while Brazilian politicians debate whether she broke the country’s laws.</p>
<p>Her crime is she <a href="http://www.nytimes.com/2016/04/20/world/americas/dilma-rousseff-impeachment-brazil.html">allegedly borrowed</a> about US$11 billion from Brazil’s state banks – about one percent of GDP – to fund long-running social programs for small farmers and the poor while trying to get reelected, which concealed a budget deficit.</p>
<p>The impeachment hearings come amid a <a href="http://www.huffingtonpost.com/entry/brazil-corruption-scandal_us_56fbf5dae4b083f5c6063e80">wide-ranging corruption scandal</a> and an economy that is in tatters. Rousseff is <a href="http://www.cnn.com/2016/05/12/americas/brazil-rousseff-impeachment-vote/index.html">calling it a coup</a> and urging her supporters to march in the streets. </p>
<p>So why is it a crime for the Brazilian president to borrow money from one part of the government – state-owned banks – in order to allow the executive branch to spend more? The answer lies in Brazil’s history of debt and hyperinflation. </p>
<h2>Brazil’s debt problem</h2>
<p><a href="http://english.tse.jus.br/arquivos/federal-constitution">Brazil’s constitution</a> expressly forbids spending money that has not been allocated in the budget and also forbids the government from borrowing money without prior authorization. </p>
<p>Other countries have similar clauses. The <a href="http://www.senate.gov/civics/constitution_item/constitution.htm#a1_sec8">U.S. Constitution</a>, for example, gives only Congress, not the president, the power to borrow money, and the amount that can be borrowed is subject to a <a href="https://www.treasury.gov/initiatives/Pages/debtlimit.aspx">debt ceiling</a> (which isn’t in the Constitution). But beyond that, the document sets no specific limits. </p>
<p>So why does a country like Brazil enshrine in its constitution such strict limits on borrowing and spending? The simple reason is that Brazil has had a very troubled financial history. Past governments have borrowed too much and then been unable to pay off the country’s debts. </p>
<p>Since 1824, <a href="http://www.nber.org/papers/w9908.pdf">Brazil has defaulted</a> on its debts seven times. In roughly one-quarter of all years since 1824, the Brazilian government was either in default or working on restructuring its loans. If Brazil were a person who lived for two centuries, she would have spent about one out of every four years of her life dealing with upset creditors, bill collectors and bankers!</p>
<p>When a country defaults on its debt, it is often shut out of international credit markets. This means that the defaulting country is not able to borrow money. </p>
<p>Argentina, Brazil’s neighbor, last defaulted on its debt in 2001. <a href="http://www.wsj.com/articles/argentina-returns-to-global-debt-markets-with-16-5-billion-bond-sale-1461078033">Argentina was shut out</a> of borrowing from international credit markets for 15 years while dealing with bondholders. It was only able to borrow again starting this past April.</p>
<h2>Covering a shortfall</h2>
<p>Of course, many governments spend more than they take in as revenue. If a government has this kind of shortfall, there are primarily <a href="http://businessmacroeconomics.com/">four methods of handling</a> the situation. </p>
<p>First, the government can cut back on spending so that the books become balanced. Rousseff did reduce government spending after becoming Brazil’s president, but this occurred well after the alleged borrowing. A second way is to increase taxes, fees and licenses so that the government brings in more revenue. This is harder to do because it’s naturally not very popular with voters.</p>
<p>A third way of handling a budgetary shortfall is to borrow money either from locals or people outside the country. This is what Rousseff allegedly did. </p>
<p>Throughout history numerous governments have wanted to spend more money than they take in but for one reason or another were not able to effectively tax their citizens, cut back on spending or borrow money.</p>
<p>That leads to a fourth solution, one that many countries including Brazil have resorted to: print money. This can fund spending in the short term, but in the long run it risks putting the country through hyperinflation – and arguably, this is a worse way to cover a shortfall than borrowing money.</p>
<h2>The scourge of inflation</h2>
<p><a href="http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators">World Bank data</a> show that in 1993, when Brazil’s government deficit was about seven percent of GDP, inflation was over 1,900 percent. The following year, when the country again ran large government deficits, citizens experienced approximately a 2,100 percent annual inflation rate. Two thousand percent annual inflation means items purchased at the beginning of the year cost 20 times more by year’s end. </p>
<p>This kind of inflation robs citizens of their ability to spend money. In countries with high inflation, holding cash, even overnight, can be extremely costly. For example, when an economy has <em>just</em> a 70 percent annual inflation rate, holding cash for seven days means losing about 1 percent of that cash’s value.</p>
<p>As a result, many businesses and people quickly learn that they must keep all cash balances in the bank – even if they plan to use it the next day – to earn interest and avoid inflation destroying the money’s value. Nevertheless, avoiding this wealth destruction is impossible for people who work in restaurants, bars, clubs, theaters and businesses that remain open after banks close.</p>
<p>Inflation of the magnitude Brazil saw in the early 1990s is very similar to theft. It is like theft because high inflation steals the value of a person’s money and leaves people less able to make purchases. </p>
<p>Brazil has tried numerous methods to prevent the government from overspending. For example, it has a special organization called the Federal Court of Accounts, which audits all government spending. The current crisis was triggered when this organization rejected the government’s accounting <a href="http://www.bloomberg.com/news/articles/2015-10-07/rousseff-accounts-rejected-fueling-impeachment-talk-in-brazil">for the first time since 1937</a>, setting legal grounds for impeachment.</p>
<p>So did Rousseff in fact violate the law? Other Brazilian legislators will determine that at her trial over the next few months. </p>
<p>What is especially interesting to me, however, is that while Rousseff is charged with breaking laws that are designed to prevent inflation, her alleged misdeeds did not cause inflation to spiral out of control. During her presidency <a href="http://www.inflation.eu/inflation-rates/brazil/historic-inflation/cpi-inflation-brazil.aspx">Brazil’s inflation rate</a> has been less than 11 percent a year.</p>
<h2>Helicopter money</h2>
<p>At the same time she is charged with these crimes, leading newspapers like the <a href="http://www.wsj.com/articles/what-comes-after-negative-rates-helicopter-money-1460646993">Wall Street Journal</a> and magazines like the <a href="http://www.economist.com/news/finance-and-economics/21697227-get-out-slump-worlds-central-banks-consider-handing-out-cash-money">Economist</a> are suggesting that other countries like Japan and areas like Europe should immediately enact “Helicopter Money” policies.</p>
<p>This bizarre sounding phrase simply means that governments should borrow money from their central banks and use the borrowed money to fund extra government spending, without plans to pay the money back. These articles suggest that political leaders in other countries should enact policies similar to what Rousseff is charged with employing!</p>
<p>Whatever the outcome of Brazil’s impeachment trial, it is doubtful that any Japanese or European leader who enacts the similar policies as Rousseff is charged with using will get impeached. Instead, they might be hailed as an economic savior.</p>
<p>This all makes one wonder, what is really the crime that Rousseff committed?</p><img src="https://counter.theconversation.com/content/59363/count.gif" alt="The Conversation" width="1" height="1" />
Rousseff is about to go on trial for allegedly borrowing $11 billion to fund social programs and conceal a budget deficit. Why is that a crime?Jay L. Zagorsky, Economist and Research Scientist, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/593412016-05-13T08:57:21Z2016-05-13T08:57:21ZDilma Rousseff impeachment: Brazil threatens to descend into a disguised police state<p>The Brazilian senate has voted for Dilma Rousseff to be suspended from the presidency and begin her impeachment trial. Rousseff has <a href="http://www.bbc.com/news/world-latin-america-36279937">called the process a “coup”</a>, denying the charges against her.</p>
<p>The main basis for the impeachment is her alleged use of a campaign financing trick considered to be illegal, although previous administrations have used it unquestioningly. The political fact is that the president could no longer form a majority in parliament and she has had to face huge protests calling for her impeachment. </p>
<p>Never mind that the impeachment process was led by the president of the lower house, <a href="http://www.wsj.com/articles/dilma-rousseff-impeachment-politician-leading-charge-on-brazils-president-has-his-own-legal-tangles-1460748160">Eduardo Cunha</a>, who is known to have secret accounts abroad, and who is being investigated for involvement in high corruption. As soon as Cunha had done his job in starting the impeachment, the Supreme Court <a href="http://www.theguardian.com/world/2016/may/05/speaker-of-brazils-lower-house-eduardo-cunha-suspended">removed him from his duties</a>. </p>
<p>The senate vote that confirmed the impeachment was likewise led by a politician who faces corruption charges, <a href="http://www.telesurtv.net/english/news/Brazilian-Senate-Leader-May-Be-Charged-with-Corruption--20160511-0038.html">Renan Calheiros</a>, a former supporter of the government.</p>
<h2>The end of an era</h2>
<p>While the debate in the senate went <a href="http://www.bbc.com/news/world-latin-america-36273916">for more than 20 hours</a>, the suspension was the culmination of political conflicts that have been building since mid-2013. </p>
<p>These troubles followed ten years of relative social peace. During this period, there was an implicit pact in the nation around a programme of national development led by the state, which sought to articulate the interests of national business sectors to workers, especially the poorest. A kind of mass capitalism flourished, largely thanks to an injection of consumer credit by the government, giving access to consumer goods to sectors of the population hitherto excluded, even if no deep socialising economic reform was carried out. </p>
<p>Living conditions generally improved, and a relative reduction of social inequalities took place in parallel to enormous entrepreneurial gains. The social pact lasted as long as Brazilian exports were highly valued, and the global financial crisis had not reached the country. When it did, the model of high public spending and social integration by consumption of goods collapsed. </p>
<p>The end of this era was visible in the last presidential elections and the recent street demonstrations. Rousseff was re-elected in a fierce campaign in 2014, by a small margin of votes, on a centre-left platform defending social achievements and refusing neoliberal measures. </p>
<p>That changed when the economy suffered further. Austerity measures, led by <a href="http://www.economist.com/news/americas/21684538-joaquim-levys-resignation-reason-alarm-brazils-worrying-change-finance-ministers">then-finance minister Joaquim Levy</a>, left electors felt betrayed. Nor did Rousseff manage to convince the opposition, which was always looking for an excuse to impeach her. Now Brazil faces one of its <a href="https://www.theguardian.com/business/2016/mar/03/brazil-economy-low-oil-prices-inflation">deepest recessions ever</a>.</p>
<h2>Endemic corruption</h2>
<p>An illicit gains scheme where companies collude with politicians has long been a tradition in Brazilian politics.</p>
<p>In the early 2000s, opposition politicians were given bribes to vote for government legislation, a process known as “<em>mensalão</em>”, which led to the <a href="http://www.economist.com/blogs/economist-explains/2013/11/economist-explains-14">conviction of several figures</a>. The social pact and the economy, however, were so strong that the Workers’ Party survived the scandal.</p>
<p>Without proposing political reform that would limit private funding of political campaigns, the Workers’ Party went on to benefit from the resources of private contractors who were suppliers for the state-controlled oil company, <a href="https://theconversation.com/how-the-massive-petrobras-corruption-scandal-is-upending-brazilian-politics-43939">Petrobras</a>. This latest scandal has already led to <a href="http://agenciabrasil.ebc.com.br/en/politica/noticia/2016-03/760-million-diverted-returned-petrobras-operation-car-wash-two-years">93 politicians and important business leaders</a> being sent to prison.</p>
<p>The party’s opponents in congress and the judiciary have been exploiting this fact to exhaustion, with wide coverage in the <a href="https://theconversation.com/how-brazils-media-is-hounding-out-the-president-56819">mainstream media</a>, itself concentrated in the hands of six families. They present corruption problems as if they exist mainly in the federal government and the Worker’s Party, with less emphasis on scandals involving other parties and administration.</p>
<h2>The march of the right</h2>
<p>Realising the advancement of the right and extreme right – represented in Congress by the benches of “the bible” (evangelicals), “the cattle” (large landowners) and “the bullet” (advocates of police repression) – the left has staged significant street demonstrations for democracy and against Rousseff’s impeachment (“against the coup”), even if many of its sectors are critical of the government. </p>
<p>Vice-president <a href="http://www.bbc.com/news/world-latin-america-36070366">Michel Temer</a>, from the Democratic Movement Party (PMDB), who recently broke with the government, has assumed the presidency temporarily after the senate. Rousseff will have up to six months to prove her innocence and come back to office, which is unlikely to happen.</p>
<p>One may ask if Temer will have legitimacy, since he is also i<a href="http://www.nytimes.com/2016/05/04/world/americas/brazils-vice-president-michel-temer-wont-face-inquiry-over-petrobras.html">mplicated in the Petrobras scandal</a>. He has also faced charges of <a href="http://www.nytimes.com/2016/05/04/world/americas/brazils-vice-president-michel-temer-wont-face-inquiry-over-petrobras.html">violating campaign finances</a>. But congress is <a href="http://www.nytimes.com/2016/05/04/world/americas/brazils-vice-president-michel-temer-wont-face-inquiry-over-petrobras.html">unwilling to extend</a> to the vice-president the impeachment process. </p>
<p>After all, the conservative majority of the parliament and the press supports him, blaming only Rousseff and her party for the crisis. They are eager to implement economic reforms with a strong market focus, which include heavy cuts in public spending. That will be hard to swallow for the majority of the population, whose reaction is still uncertain. The smell of a disguised police state is in the air.</p><img src="https://counter.theconversation.com/content/59341/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>I received a grant from Fulbright and Columbia University to be a visiting professor there ( Ruth Cardoso Chair at ILAS – Institute of Latin American Studies, Columbia University, 2014-2015). I have received also funds from Brazilian research agencies: Fapesp, CNPq, Capes.</span></em></p>Dilma Rousseff is the victim of her government’s failures, and a vicious opposition.Marcelo Ridenti, Professor of Sociology, Universidade Estadual de Campinas (Unicamp)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/584572016-04-28T21:52:47Z2016-04-28T21:52:47ZHow Brazil hurtled into a preordained political tragedy<p>After a brief intermission, Brazil’s gripping political drama is entering a new act. The Senate has <a href="http://www.buenosairesherald.com/article/213300/brazil%E2%80%99s-senate-picks-impeachment-commission">chosen the members of a special commission</a> that will decide whether to move forward with impeachment proceedings against President Dilma Rousseff, and the first hearings have begun.</p>
<p>Early projections suggest that the majority of the senate favours full impeachment. If a trial is launched to judge the merit of the case, Rousseff will be suspended for up to 180 days, and her vice-president and coalition partner, the PMDB party’s <a href="http://www.bbc.co.uk/news/world-latin-america-36070366">Michel Temer</a>, will become the acting president.</p>
<p>If found guilty of the crimes of which she’s accused, Rousseff will be permanently removed from the presidency. If acquitted, she will return as president to finish her mandate – but with more than two thirds of the lower house having voted to investigate her, her position would be untenable.</p>
<p>If it comes off, this will be a spectacular feat of political assassination. When the lower house authorised the initiation of proceedings against Rousseff and sent the matter to the senate, it ostensibly did so based on “crimes of responsibility”. But these grounds were merely a technical necessity, offering Rousseff’s opponents what they had been looking for for some time: a legal opportunity to remove an unpopular president.</p>
<p>The vote marked the culmination of what started as an improbable impeachment request that then developed into a national campaign. <a href="http://www.reuters.com/article/us-brazil-rousseff-protests-idUSKCN0WF0IX">Millions of Brazilians</a> have taken to the streets. Many demonstrations were also carried out to protest against the ousting of the president, seen by government supporters as a “white coup”.</p>
<p>This saga certainly has all the elements of a classic tragedy: the fatal flaw or weakness that ultimately leads to the hero’s downfall, the hero falling victim to manipulative characters and betrayed by those close to them. And most of all, this is not a sudden turn of events: the seeds of Rousseff’s downfall were planted a long time ago.</p>
<h2>Doomed from the start</h2>
<p>Rousseff’s government has been embroiled in a fierce political dispute ever since the <a href="https://theconversation.com/dilma-must-fight-second-term-blues-as-she-tries-to-revive-brazils-flagging-economy-33486">2014 presidential elections</a>, which her Workers’ Party (PT) won by a margin of only 3.3%. The opposition never fully accepted this result, and still claim the election was a fraud.</p>
<p>This was an inauspicious start to the centre-left’s fourth consecutive term in power, which has left the public frustrated with its handling of the economy. And not without reason: in February, Brazil’s <a href="http://saladeimprensa.ibge.gov.br/en/noticias?view=noticia&id=1&busca=1&idnoticia=3144">unemployment rate</a> hit a record high of 10.2%, with an estimated 10.4m people out of work.</p>
<p>This resentment turned to anger when it became clear that the government had used so-called “creative accounting” to delay scheduled debt payments and create a budget surplus – giving a falsely positive impression of the country’s financial situation.</p>
<p>That situation is <a href="https://theconversation.com/why-brazils-economic-rollercoaster-is-far-from-over-57372">not good</a>. Brazil’s GDP shrank by 3.8% in 2015, and it’s expected to drop further in 2016. According to <a href="http://brazilianchamber.org.uk/civicrm/event/info?id=98&reset=1">Goldman Sachs</a>, Brazil is on track to record its deepest recession since 1901. As the private sector lost confidence in the president and her government, investments began to decline.</p>
<p>This all took place against the backdrop of a national ethical and moral crisis generated by several massive corruption scandals. <a href="http://www.reuters.com/article/us-brazil-corruption-ethanol-idUSKCN0WI03J">Plea bargains</a> in verious cases revealed the involvement of politicians of Rousseff’s Workers Party (PT), as well as other parties, top executives of construction companies and Petrobras, Brazil’s state oil company. The corruption scandals whipped up public outrage at the government and the political establishment in general, egged on by a hostile campaign against the government in parts of the mainstream media.</p>
<p>Rousseff’s attempts to manage these problems and to put up a fight against the proceedings have come to little. She seems to be being consumed by her fatal flaw: political inexperience. </p>
<h2>Be on your guard</h2>
<p>Rousseff entered the 2010 presidential campaign with no previous electoral experience, and was perceived as vulnerable to other people’s scheming. All the way back in 2009, the historian Luiz Felipe Alencastro <a href="http://www1.folha.uol.com.br/fsp/opiniao/fz2510200908.htm">warned</a> of a potential problem for the PT-PMDB coalition: the risk of having a much more experienced politician such as Temer as vice-president. </p>
<p>“It’s a partisan ticket of someone who knows everything and has under his command the largest number of seats in congress, with someone who has everything to learn,” <a href="http://revistapiaui.estadao.com.br/materia/a-cara-do-pmdb/">said Alencastro</a>. He <a href="http://www1.folha.uol.com.br/fsp/opiniao/fz2510200908.htm">pointed out</a> that Temer could, in a moment of crisis, make a manoeuvre to push for a constitutional amendment to establish a parliamentary system in Brazil, under which he would be prime minister.</p>
<p>To make matters worse, Temer himself is hardly free from associations with corruption. One of the PT’s reasons for its original resistance to Temer as vice-president was his close ties to the lawmaker Eduardo Cunha, the current speaker of the lower house. </p>
<p>Cunha was already known back then in Congress for his voracity and his tricky ways of nabbing top government posts. Accused of hiding millions in offshore accounts and now under indictment by the Supreme Court, Cunha was instrumental in <a href="http://www.nytimes.com/interactive/2016/04/04/world/americas/Brazil-Impeachment-Listy.html?_r=0">initiating the impeachment process</a>. The government argues that he was out for revenge after the PT refused to support him at his expulsion proceedings before the Ethics Committee. If Temer becomes president, Cunha will technically become vice-president.</p>
<p>So one could argue that the prospect of a political takeover was right there from the start. When the right opportunity came, the plot for the downfall of a democratically elected president was set in motion and the likely culprits already cast in their roles.</p>
<p>There may be some improvised twists and turns yet to come, but Rousseff’s tragic political end has been foretold – and the script now seems complete.</p><img src="https://counter.theconversation.com/content/58457/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Geraldo Cantarino does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Conspiracy, betrayal and prophecies of doom have all played their part in Dilma Rousseff’s looming downfall.Geraldo Cantarino, PhD Candidate at Brazil Institute, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/573722016-04-13T09:43:49Z2016-04-13T09:43:49ZWhy Brazil’s economic rollercoaster is far from over<p>Brazil has gone from an <a href="http://eu.wiley.com/WileyCDA/WileyTitle/productCd-1118006631.html">impressive economic boom</a> to the <a href="http://www.bloomberg.com/news/articles/2016-01-04/brazil-analysts-ring-in-new-year-with-deeper-recession-forecast">worst crisis in its modern history</a> in less than a decade. The country’s situation appears even bleaker due to the <a href="http://socialistregister.com/index.php/srv/article/view/25598#.Vw0WfvkrKUk">deep and complicated political crisis</a>, with the president, Dilma Rousseff, facing impeachment in congress. But a wider look at the trends shows the economy is in for an upswing.</p>
<p>If a traveller from the future had gone back to 2010 and warned their friends against the risks of investing in Brazil, they would certainly be dismissed. The economy was <a href="http://estadisticas.cepal.org/cepalstat/WEB_CEPALSTAT/Portada.asp">growing by 7.6% a year</a>, and major agencies had given the country an investment grade rating. Brazil – together with Russia, India and China – was a key member of the BRICs, then seen as the new powerhouse of the world economy.</p>
<p>Yet, Brazil’s economy proved not to be as solid as suggested by the famous acronym. In 2015, the country’s GDP <a href="http://www.bcb.gov.br/?INDECO">shrank by 3.8%</a>. Forecasts for 2016 indicate a further contraction <a href="http://www.bcb.gov.br/?MARKETREADOUT">of 3.5% to 4.0%</a>. The Brazilian currency, the real, has lost around 40% of its value against the dollar and other major currencies <a href="http://www.bcb.gov.br/pt-br/#!/home">between January 2014 and January 2016</a>. Unemployment is on the rise. The main index of the Sao Paulo stock market indicated losses <a href="http://www.nasdaq.com/article/should-you-add-bric-stocks-to-your-portfolio-cm585343">amounting to 13.31% in 2015</a>. More importantly, recent advances in poverty reduction are under threat.</p>
<p>Now, I do not come from the future, but my advice would be to brace yourself. Brazil’s economy is a rollercoaster that is due an upward swing.</p>
<p>Brazil has passed through a perfect storm over the last three years. Prices of export commodities have <a href="http://www.bloomberg.com/news/articles/2015-08-24/bloomberg-commodity-index-slides-to-lowest-level-in-16-yearslink">plummeted globally</a>. A severe water shortage <a href="http://www.nytimes.com/2015/02/17/world/americas/drought-pushes-sao-paulo-brazil-toward-water-crisis.html?_r=0">drove domestic energy costs up</a> as the country heavily relies on hydroelectricity. Investments in the oil industry <a href="http://www.reuters.com/article/us-brazil-petrobras-plan-idUSKCN0W35F5">proved costly</a> in the aftermath of the recent fall in oil prices. At the same time, corruption scandals have affected the country’s biggest construction companies, a sector that did spectacularly well in the previous years thanks to generous state contracts.</p>
<p>And, of course, there is the political crisis. A recent document leak revealed what public opinion in Brazil knew all too well: the <a href="https://theintercept.com/2016/03/18/brazil-is-engulfed-by-ruling-class-corruption-and-a-dangerous-subversion-of-democracy/">deep symbiosis</a> between the political class and the corporations now facing corruption allegations. </p>
<p>The document, known as the “<a href="http://fernandorodrigues.blogosfera.uol.com.br/2016/03/23/documentos-da-odebrecht-listam-mais-de-200-politicos-e-valores-recebidos/">Odebrecht list</a>”, includes the names of more than 200 politicians from around 20 parties who allegedly took money – in both legal and illegal ways – from Odebrecht, Brazil’s largest construction company. The firm has promised <a href="http://www.theguardian.com/world/2016/mar/23/odebrecht-engineering-cooperate-brazil-corruption-investigation">to fully cooperate</a> with the huge ongoing investigation by authorities, but the list only adds extra fuel to a political scene already on fire. Despite being also implicated, the opposition is <a href="https://theconversation.com/lula-charged-brazil-seems-ungovernable-but-its-more-robust-than-it-looks-55905">trying to destabilise the government</a> and remove the president, Dilma Rousseff, from office – a move of questionable legality.</p>
<h2>What goes around comes around</h2>
<p>At this moment, it is difficult to untangle the political from the economic crisis. The bad shape of the economy weakens the government and emboldens the opposition in its attempts to replace the elected president. At the same time, the continued political instability discourages investment. Afraid of the uncertainty ahead, consumers spend less, driving the whole economy in a downward spiral. For these reasons, many <a href="http://www.valor.com.br/politica/4489400/para-fhc-impeachment-e-unica-saida-para-crises-politica-e-economica">analysts</a> <a href="http://economia.estadao.com.br/noticias/geral,brasil-nao-sai-da-crise-economica-se-nao-resolver-a-crise-politica,10000023324">believe</a> there will be no solution to the economic crisis without a solution to the political crisis.</p>
<p>They are wrong. It is very likely that the economy will start growing again next year, no matter the outcome of the political crisis. What is more, chances are that 2018 will be a very good year for Brazilian economy, with growth rates approaching 5% again.</p>
<p>The explanation for this reversal in fortunes is simple enough. The perfect storm is dissipating. Agrarian commodities and oil prices <a href="http://www.ft.com/cms/s/0/7126ec00-e149-11e5-9217-6ae3733a2cd1.html#axzz458fAmHHO">cannot get much worse</a>. Indeed, since the devaluation of the real, Brazil’s balance of trade is already <a href="http://www2.anba.com.br/noticia/21869891/global-trade/trade-surplus-to-double-in-2016-says-minister/?indice=0">showing positive results</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/118337/original/image-20160412-15871-yapkdk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/118337/original/image-20160412-15871-yapkdk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118337/original/image-20160412-15871-yapkdk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118337/original/image-20160412-15871-yapkdk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118337/original/image-20160412-15871-yapkdk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118337/original/image-20160412-15871-yapkdk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118337/original/image-20160412-15871-yapkdk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Brazil relies heavily on hydroelectric power.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/deniwlp84/17174796329">Deni Williams</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>The rains are back, filling the dams and lowering energy prices. Furthermore, some of the questionable state investments in infrastructure are finally maturing – the best example is the Belo Monte hydroelectric plant, whose first turbine has <a href="https://www.emis.com/blog/belo-monte-hydroelectric-plant-activates-its-first-turbine">just become operational</a>. After two years of deep recession, a fast recovery can happen based on the existing capacity of factories, without requiring a significant increase in investments. We have seen this pattern before. </p>
<p>I am not suggesting that the political and the economic crises are totally detached. On the contrary, the fast recovery of the economy predicted for the next two years will put whoever emerges victorious in the current political dispute in an excellent position to go on and win the 2018 elections. The different party strategists will be aware of this. It is the real reason behind the irrational and fratricidal dispute that is taking place between Brazil’s major political parties for command of the country. </p>
<p>Will the recovery finally result in a stable and long-lasting growth trend? Or should we expect the Brazilian economy to drop again in the not so distant future? With Brazil it is hard to look too far ahead. I would suggest that this up and down rollercoaster is actually the normal pattern of economies like Brazil’s, which sit on the periphery of global capitalism. Unless substantial changes happen in Brazilian society or the world system, there is no reason to expect this pattern to disappear.</p><img src="https://counter.theconversation.com/content/57372/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Felipe Antunes de Oliveira is a Brazilian civil servant. The article expresses his own ideas. He explicitly does not claim to represent the views of Brazilian government.</span></em></p>Brazilian politics may be in turmoil but its economy is due an upswing.Felipe Antunes de Oliveira, Doctoral Researcher, University of SussexLicensed as Creative Commons – attribution, no derivatives.