tag:theconversation.com,2011:/uk/topics/petrobras-18440/articlesPetrobras – The Conversation2018-10-11T13:07:32Ztag: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/594332016-05-19T01:26:26Z2016-05-19T01:26:26ZWhat Rousseff’s impeachment means for Brazil’s struggling millions<p>In Brazil, right-wing parties and politicians are following constitutional procedures to oust the country’s democratically elected president, Dilma Rousseff. They claim that she made improper use of budgetary procedures to bolster her 2014 reelection campaign. </p>
<p>The left calls it an illegitimate coup. They believe the ultimate goal is gutting the welfare, housing and affirmative action <a href="http://www.reuters.com/article/us-brazil-poverty-idUSBRE91I14F20130219">policies</a> that Rousseff’s Workers Party put in place to address the needs of Brazil’s poor majority. They argue that the president herself has not been accused of illicit personal gain and that the budgetary irregularities are not sufficient grounds for removal from office.</p>
<p>Both sides are right.</p>
<p>As an <a href="https://www.upress.pitt.edu/BookDetails.aspx?bookId=36546">interdisciplinary scholar</a> studying Brazilian democracy from the <a href="https://www.dukeupress.edu/sustaining-activism">ground up</a>, I have interviewed scores of activists in social movements and seen firsthand the many ways in which, since the 1980s, the people of Brazil have come on the scene. The <a href="http://www.cnn.com/2016/04/17/americas/brazil-impeachment-dilma-rousseff/">spectacle</a> of one corrupt congressman after another demanding the ouster of a female president who has implemented successful antipoverty and affirmative action programs has riveted Brazilians and gained global attention. The twists and turns of Supreme Court rulings and annulments and reinstatements of the impeachment vote obscure what is truly at stake – the arc of democracy that has empowered Brazil’s citizens and improved their lives. </p>
<h2>The Brazilian people coming on the scene</h2>
<p>Brazil has the sixth largest economy, the fifth largest population, the fourth largest democracy and the second largest black population in the world. Over the past three decades – in contrast to much of the world – Brazil has been largely free of political terrorism, ethnic violence and religious fundamentalism. </p>
<p>If there are countries in the global south where sustainable and inclusive democracy may take root and flourish, Brazil is foremost among them.</p>
<p>Over the past three decades, virtually all the country’s citizens – middle class, poor people, indigenous people, blacks, women, residents of mega-cities and landless peasants – have been voting in <a href="https://freedomhouse.org/report/freedom-world/2015/brazil">free and fair elections</a>. They’ve been working, protesting, forming community associations and nongovernmental organizations, and <a href="http://www.enduringreform.org">fighting</a> for decent jobs, housing, education and health care. Brazilians have struggled to gain rights and articulate what those rights should be.</p>
<p>The deepening of Brazil’s current democracy has been a rich and robust process. It began with the end of a military dictatorship in 1985 and the writing of a new constitution in 1988. This constitution, with its provisions for civil society’s participation in governing, reflects the strength of grassroots mobilization and protest that has marked modern Brazil.</p>
<p>While the resulting democracy has been shot through with violence from gangs, traffickers and police – and with corruption and injustice on all sides, not least from politicians – it has <a href="http://www.newyorker.com/magazine/2011/12/05/the-anointed">delivered</a>.</p>
<p>Brazilian politics since the 1990s has provided first steps toward meaningful citizenship, rising living standards and daily lives <a href="https://www.oxfam.org/sites/www.oxfam.org/files/rr-brazil-experience-food-nutrition-security-190214-en.pdf">without hunger</a> for all Brazilians. This inclusion has fostered a rough-and-tumble public sphere with meaningful guarantees of free speech, where political ideas about what society should look like have been debated and voted upon.</p>
<h2>Decades of democratic progress hang in the balance</h2>
<p>This is not the first time ordinary people have played an active role in politics in Brazil. In the late 1950s and early 1960s, Brazilians elected leaders who addressed issues such as housing, wages and education for ordinary people. The democratic move to the left was cut short by <a href="http://www.theguardian.com/world/2014/dec/10/brazil-president-weeps-report-military-dictatorship-abuses">a brutal military coup</a> in 1964. </p>
<p>Brazilian economic elites and military officers, with <a href="http://nsarchive.gwu.edu/NSAEBB/NSAEBB118/">the support of the U.S.</a> government, quashed progressive policymaking and tortured and imprisoned activists. Among them was <a href="http://www.nytimes.com/2012/08/05/world/americas/president-rousseffs-decades-old-torture-detailed.html?pagewanted=all">Dilma Rousseff</a>. The generals then governed Brazil from 1964 to 1985.</p>
<p>The same thing happened across Latin America in the 1960s and 1970s. Leftist candidates secured electoral victories when ordinary people made claims for economic and political rights. This brought military coups and <a href="http://nsarchive.gwu.edu/NSAEBB/NSAEBB8/nsaebb8i.htm">dirty wars</a> of torture and disappearance across the continent. </p>
<p>The second coming of the people on the scene in Latin America, from the 1980s to the present, mirrors the first in many ways. Several decades of fair elections have brought progressive policies, movements, and new political voices across the continent. These range from worker-run factories <a href="http://www.theguardian.com/sustainable-business/argentina-recovered-factory-movement">in Argentina</a> to indigenous governments in <a href="http://www.bbc.com/news/world-latin-america-29686249">Bolivia</a>, from Brazil’s redistributive <em><a href="http://www.theguardian.com/global-development/2013/dec/17/brazil-bolsa-familia-decade-anniversary-poverty-relief">bolsa familia</a></em> to nationwide support for victims of violence and disappearance <a href="https://news.vice.com/article/these-protesters-want-mexican-police-prosecuted-for-being-generally-terrible">in Mexico</a>. </p>
<p>The process of economic inclusion under democratic governments was bolstered over the past decade by the dynamism of <a href="http://www.bbc.com/news/world-latin-america-30982544">China’s economy</a>, which paid high prices for Latin America’s mineral and agricultural exports. China’s current economic slump has pressed Brazil into recession. </p>
<h2>Rollback going forward</h2>
<p>Now that President Rousseff has been impeached, Brazilians face uncertainty at a tense moment, with the economy in free-fall and the Olympics just months away. The country’s democratic progress and the future of the people who have come on the scene are once again at stake. </p>
<p>Will the presence of newly empowered citizens claiming, voting for, and implementing inclusive policies continue through this tempestuous time? Or, will right-wing politicians and business people again succeed in turning back these achievements, at great cost to poor majorities and a democratic government? </p>
<p>The key issue right now is less who is governing than how they are governing. The prospects are not encouraging.</p>
<p>As the unfolding “Car Wash” scandal has demonstrated, Brazil’s democracy is intertwined with corruption <a href="http://www.nytimes.com/2015/08/09/business/international/effects-of-petrobras-scandal-leave-brazilians-lamenting-a-lost-dream.html">across the political spectrum</a>. Congressmen who amassed fortunes through bribery and graft have used the impeachment to denounce the policies and programs of the country’s leftist government. Hoping to avoid prosecution themselves, they are calling for a turn to the right.</p>
<p>Upon assuming the presidency, Rousseff’s vice president, Michel Temer, appointed an <a href="http://www.theguardian.com/world/2016/may/13/michel-temer-brazil-president-rebuild-impeachment">all white, all male</a> cabinet. He has vowed to turn the economy around by slashing social programs and favoring business – positions that were rejected in presidential elections in 2014. In office less than a week, Temer announced plans to privatize public enterprises and roads, cancel increases in minimum benefits for retirees and <a href="http://www.ft.com/intl/cms/s/0/a605d872-8bf5-11e5-8be4-3506bf20cc2b.html#axzz492ZSnycR">revoke legislation</a> that mandates minimum government investments in education and health care.</p>
<p>The current crisis has multiple causes. If Worker’s Party representatives in Congress had not stolen money, then President Rousseff would have been less vulnerable to impeachment. If the right in Brazil had fiercely critiqued Rousseff’s policies, and prepared strong positions and constituencies to oppose them in future elections – rather than impeach her on questionable grounds – that would have advanced the democratic process. It would also have been a step forward for democracy if Brazilian politicians were railing against corruption across the political spectrum and demanding that all the criminals in Congress resign.</p>
<p>Instead, we are faced with the smoke and mirrors of impeachment. And the rhetoric, political appointments and policy proposals of President Temer display every sign of rollback for the people on the scene.</p><img src="https://counter.theconversation.com/content/59433/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeffrey W. Rubin has received funding for his research from The MacArthur Foundation, The Ford Foundation, The Open Society Foundations, The American Philosophical Society, The Boston University Center for the Humanities, The David Rockefeller Center for Latin American Studies at Harvard, and the Fulbright Program.</span></em></p>A BU professor walks through the turmoil of Brazil’s political past to explain why there’s more at stake than you might think.Jeffrey W. Rubin, Associate Professor of History, Boston 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/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.tag:theconversation.com,2011:article/559052016-03-08T13:12:00Z2016-03-08T13:12:00ZLula charged: Brazil seems ungovernable, but it’s more robust than it looks<p>Brazil’s former president Luiz
Inácio Lula da Silva (Lula) has been charged with money laundering, just days after about 200 federal policemen and 30 tax auditors raided his apartment and took him to Congonhas airport for a three-hour interrogation. </p>
<p>Lula’s arrest is part of Operation Car Wash, a set of investigations begun two years ago into <a href="https://theconversation.com/how-the-massive-petrobras-corruption-scandal-is-upending-brazilian-politics-43939">corruption in Petrobras</a>, the partially state-owned oil company. These latest development raise some critical questions not just about the survival of Lula’s successor, President Dilma Rousseff, but about the rule of law and the state of Brazil’s democracy.</p>
<p>Re-elected to a second term in 2014, Rousseff is now dealing with five major problems: Brazil’s worst economic recession in <a href="http://www.bloomberg.com/news/articles/2016-01-04/brazil-analysts-ring-in-new-year-with-deeper-recession-forecast">over a century</a>; a congressional push to <a href="http://www.bloomberg.com/news/articles/2016-03-04/brazil-assets-poised-to-rally-as-lula-targeted-in-police-raid">impeach</a> her; a review of her <a href="http://www.reuters.com/article/us-brazil-corruption-rousseff-idUSKCN0W35CZ">campaign finances</a> by the Federal Electoral Court (which could see the anullment of her electoral victory); the Car Wash investigation, and the spread of the <a href="https://theconversation.com/explainer-where-did-zika-virus-come-from-and-why-is-it-a-problem-in-brazil-53425">Zika virus</a>.</p>
<p>But while this deep crisis might seem new, several of these problems actually reflect long-term changes. </p>
<p>From 1995 to about 2012, it was taken for granted that Brazilian presidents could forge a working majority in Congress, despite an electoral system of open-list proportional representation with very large districts, a dizzying array of parties (28 in today’s Congress) and the fact that the president’s party has always held less than 20% of congressional seats. </p>
<p>This is called “coalitional presidentialism”. To work properly, it relies on the president’s various informal and formal governing powers. The president can issue provisional measures (executive decrees) when a congressional majority for a bill is not assured. She can offer coalition partners ministries (sometimes with the power to appoint hundreds of their subordinates in the ministry), and she can direct federal spending in ways that benefit political partners.</p>
<p>But the system is now in crisis. While the government has a majority in the Senate, Rousseff has been unable to cobble together a working majority in the lower house of Congress, where she is facing a showdown. The lower house’s president, Eduardo Cunha, is trying to remove her via impeachment, but he himself could be removed because of <a href="http://www.bbc.co.uk/news/world-latin-america-35101785">corruption charges against him</a>. </p>
<p>In short, Brazil has never looked so hard to govern.</p>
<h2>The rule of law</h2>
<p>Lula’s detention and interrogation also raise questions about the way the judges, prosecutors and police involved in the Car Wash investigations are using their power. After Lula was interrogated, Supreme Court Justice Marco Aurélio Mello publicly questioned Judge Sérgio Moro’s decision to make the interrogation coercive, meaning that the police came unannounced to Lula’s residence and demanded that he accompany them to a secure location for questioning. </p>
<p>Aurélio Mello said that coercive interrogations were usually employed only when the suspect or witness refused to testify voluntarily, something that did not apply in Lula’s case. Moro, a federal judge and a key player in the Car Wash investigations, claimed his decision was taken to avoid public demonstrations for and against Lula – which happened anyway once the news broke.</p>
<p>Anti-corruption investigators have used other questionable tactics. Indefinite detention has been used to force people to testify, as in the case of Odebrecht CEO <a href="http://www.nytimes.com/2015/06/20/business/international/brazil-arrests-head-ofodebrecht-in-petrobras-scandal.html">Marcelo Odebrecht</a>, who has been held for almost nine months so far. Similarly, plea bargains can allow self-interested witnesses to shift responsibility to former co-conspirators. </p>
<p>Witness testimony has been selectively leaked to a willing media, which then exposes details of claims and counter-claims in a storm of publicity, doing little to help the due process of resolving these highly complicated charges.</p>
<p>As the Brazilian political scientist Leonard Avritzer <a href="http://www.travessa.com.br/impasses-da-democracia-no-brasil/artigo/0707c608-72c3-4dfb-a93f-91aebb44c935">argues</a>, media-driven anti-corruption campaigns tend to demonise certain culprits while remaining uncritical of others. This is a serious problem for the rule of law, regardless of individuals’ guilt or innocence.</p>
<h2>The quality of democracy</h2>
<p>Still, most Brazilians probably care less about the survival of the Rousseff government than they do about getting out of the recession and improving the quality of government. Brazil suffers from a serious legitimacy problem: its people mistrust their politicians and political parties, who they see as a group of insulated, self-interested hacks engaged in illicit deals with business, ripping off the public purse, lining their own pockets, and doing nothing for the common good.</p>
<p>According to the political scientist <a href="http://www1.folha.uol.com.br/poder/2016/02/1741508-numero-de-eleitores-anti-pt-cresce-no-pais-aponta-estudo.shtml">David Samuels</a>, about 60% of the Brazilian electorate do not identify with a party. About 10-15% identify with Lula and Rousseff’s Workers’ Party (PT), while about 11% of the electorate are “pure” anti-Petistas: they hate the PT, but they also don’t like other parties. They’re much more likely to be white than PT supporters are, and they’re much more likely to be wealthy and to resent the poor, who did well under PT policies until the recession. </p>
<p>So politically, economically and socially, the picture is one of division, conflict, and inertia. But while Brazil’s government is in crisis, its democracy is not – and it’s easy to miss the enormous strides the country has made.</p>
<p>Over the last 30 years, Brazil has managed to establish communication and recognition between whites and non-whites, rich and poor, young and old, and a plethora of other groups, all across an enormous and diverse territory. And for all that Brazilians are disgusted by their corrupt and inept leaders, the country’s institutions are robust. </p>
<p>The federal police, the public ministry, and the federal judiciary may use questionable tactics, but their autonomy from the government and capacity for action are not in question. Unlike in 1993, after the impeachment of President Fernando Collor de Mello, nobody is seriously speculating about a military intervention. </p>
<p>Serious changes will probably have to wait until 2017. This year, Congress will be tied up with impeachment, the Olympic Games will start on August 5, and municipal elections are set for October. New demonstrations for and against the impeachment of President Rousseff are being organised, but as long as Brazil’s hard-won values of tolerance and equanimity can be preserved, the current stalemate can eventually be overcome.</p>
<hr>
<p><em>This article has been updated to reflect the news of Lula’s indictment.</em></p><img src="https://counter.theconversation.com/content/55905/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 for research on and in Brazil. </span></em></p>A massive corruption scandal is engulfing Brazil’s political establishment – but reports of the country’s imminent collapse are greatly exaggerated.Anthony Pereira, Director, King's Brazil Institute, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/531492016-01-14T13:01:51Z2016-01-14T13:01:51ZWhy the commodities crunch could hurt stability in Latin America<figure><img src="https://images.theconversation.com/files/108169/original/image-20160114-2365-193adax.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>Much of Latin America has seen an unusually long period of relative political stability since the early 2000s. With the exception of Cuba, democratically elected governments seem embedded throughout the region. The political rules of the game largely seem to be followed. Indeed, the international outcry following the 2009 coup <a href="http://news.bbc.co.uk/1/hi/world/americas/8123126.stm">that removed Honduras’ president, Manuel Zelaya,</a> served to reinforce how much Latin American politics had changed since the 1970s, when military dictatorships were the dominant form of government.</p>
<p>It is no accident that political stability has been accompanied by an extended period of high prices for the natural resources that Latin American countries export. The region has benefited from a prolonged surge in demand for its commodities from China <a href="http://repositorio.cepal.org/bitstream/handle/11362/11471/103073087I_en.pdf?sequence=1">and other large emerging markets</a>. </p>
<p>This raises the question of whether this period of political stability, and commodity-led economic growth has changed Latin America fundamentally. Has political stability strengthened institutions and rule of law, for example? And has economic growth led to sustainable development and a reduction in the region’s traditionally <a href="http://www.nber.org/digest/jun15/w20915.html">exceptionally high levels of inequality</a>.</p>
<p>Certainly, commodity revenues have driven a drop in inequality. But it still remains high throughout the region. An important reason for this is that governments of all ideological persuasions have used windfall revenues to bolster welfare spending, particularly using <a href="http://ftp.iza.org/pp49.pdf">conditional cash transfer schemes</a>. These involve low-income families being given cash payments in return for meeting conditions such as sending their children to school or immunising them.</p>
<p>The commodity boom also coincided with a period of financial prudence. Both governments and – more importantly – <a href="https://www.imf.org/external/pubs/ft/wp/2013/wp13259.pdf">international financial institutions</a>, learned from debt crises and hyperinflation in the 1980s and 1990s. This means that Latin America was able to weather the global financial crises relatively robustly. Even countries with economies closely aligned to the US, such as Mexico, suffered <a href="http://www.economist.com/node/16231470">only short-lived downturns</a>.</p>
<h2>Longstanding problems</h2>
<p>The region does continue to grapple with longstanding problems, however. Relatively free and fair democratic elections may now be widespread, but there is little evidence of the institutions that are <a href="http://www.isp.org.pl/uploads/filemanager/BuildingInstitutionsonWeakFoundationLessonsfromLatinAmericaLevitskyMurillo.pdf">fundamental to stable democratic systems</a>. </p>
<p>Stable political parties, for example, have been notably absent from much of Latin America. Instead, short-lived political movements are created <a href="http://www.idea.int/americas/pp.cfm">around individuals</a>. Moreover, judiciaries and police forces <a href="https://www.ciaonet.org/attachments/14366/uploads">remain inefficient and often corrupt</a>. Indeed, the rise of drug-related violence and organised crime in much of the region has exposed these challenges and meant that, despite economic growth, much of the region is more dangerous than <a href="http://www.nytimes.com/2015/05/16/world/americas/latin-america-and-us-split-in-drug-fight.html?_r=0">in the past</a>.</p>
<p>High commodity prices and buoyant economic growth were able to mask some of these challenges. After several years of boom, commodity revenues fed through into increased construction and consumer spending, a widespread <a href="http://www.wsj.com/articles/colombias-economy-grows-4-3-on-construction-spending-1410886237">increase in living standards</a> and a <a href="https://www.imf.org/external/pubs/ft/wp/2014/wp14124.pdf">decline in inequality</a>. In oil-producing countries – notably Venezuela – high prices fuelled heavy spending on social programmes that <a href="http://news.bbc.co.uk/1/hi/world/americas/7694757.stm">guaranteed government support</a>.</p>
<p>This might suggest that Latin America has suffered from a classic case of <a href="http://www.bloombergview.com/quicktake/resource-curse">resource curse</a> where a natural resource boom funds corrupt politicians and leads to profligate spending and irresponsible policy making. In many countries that suffer from the resource curse, enough natural resource wealth filters through to the wider population that the extent of politicians’ negligence is not clear – particularly as the international community <a href="http://bigstory.ap.org/article/06497b24c44845eabb0b4bfba60d0398/celebration-perus-economic-boom-comes-late">frequently lauds apparent economic success stories</a>.</p>
<h2>Boom and bust</h2>
<p>The recent decline in commodity prices, however, is already beginning to expose issues of corruption and poor governance that have been simmering for a number of years. The Brazilian government, for example, has been badly undermined by a corruption scandal involving its state-controlled oil company <a href="http://www.nytimes.com/2015/08/09/business/international/effects-of-petrobras-scandal-leave-brazilians-lamenting-a-lost-dream.html">Petrobras</a>. </p>
<p>In Venezuela, the collapse of oil revenues following the death of its charismatic former president, Hugo Chavez, has <a href="http://www.aljazeera.com/news/americas/2015/01/maduro-admits-venezuela-economy-crisis-201512223852341922.html">exposed systematic government incompetence and abuse</a>. In Peru, allegations of corruption against the current government and its predecessors are undermining public confidence in politics in the run-up to presidential elections <a href="http://www.buenosairesherald.com/article/206558/peru-set-for-presidential-vote-as-candidates-formall">later this year</a>. </p>
<p>Latin America has seen commodity booms in the past. Invariably <a href="http://www.voxeu.org/article/commodity-booms-bust-evidence-1900-2010">the collapse of commodity prices</a> has led to serious economic crisis, which has undone any gains achieved, thanks to the short-termism of governments. There is a significant risk of this happening again, potentially exposing the fragility of state institutions. </p>
<p>Given that much of the region’s population is now urban, a key to the region’s outlook will be whether the decline in commodity revenues affects consumer spending in cities. This has <a href="http://www.ft.com/cms/s/0/d3272242-57d5-11e5-a28b-50226830d644.html#axzz3x8tc9ONB">already begun</a>. And if it continues, the drop in domestic demand would likely lead to significant economic slowdown. In turn, this would likely lead to a significant and widespread backlash against corruption – as was seen last year <a href="http://www.theguardian.com/world/2015/aug/14/honduras-guatemala-protests-government-corruption">in parts of Central America</a>.</p><img src="https://counter.theconversation.com/content/53149/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Neil Pyper 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>There could be trouble ahead.Neil Pyper, Associate Head of School, Coventry UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/460932015-08-18T05:32:33Z2015-08-18T05:32:33ZRousseff shaky as Brazilians march for change (but can’t decide which way to go)<p>Hundreds of thousands of Brazilians took to the streets on August 16 to speak out against their government. On São Paulo’s Avenida Paulista, protesters dressed in the yellow and green colours of the Brazilian flag carrying banners that called for president Dilma Rousseff to be removed from office.</p>
<p>The numbers were lower than the protest organisers had hoped (and the government feared), but nevertheless they point to a crisis unfolding in Brazil. Rousseff finds herself on increasingly shaky political ground while the country’s economic turmoil deepens and accusations of corruption intensify. </p>
<p>But while the protesters are unified by their rejection of the current government, they remain divided over their long-term objectives. Some want Rousseff to resign while others won’t be content until she is impeached for corruption. Then there is the question of what happens after she is gone – an issue causing no small amount of <a href="http://www1.folha.uol.com.br/poder/2015/08/1669199-queda-de-dilma-e-o-que-une-grupos-a-frente-das-manifestacoes.shtml">division</a>.</p>
<p>Rousseff may well be able to capitalise on this lack of a shared vision to ride out the storm.</p>
<h2>Origins of unrest</h2>
<p>These latest protests are a resurgence of the dissent that began in 2013. Mass demonstrations erupted in June that year as the public called for government spending on health, education and transport. The unrest came as a surprise after years of economic growth and significant improvements in living standards.</p>
<p>Another three mass rallies have taken place in 2015, during which protesters called for Rousseff to be impeached. A vocal minority is even demanding military intervention to get her out of power.</p>
<p>The scandals go to the heart of Brazil’s recent economic success. Many Brazilians, both rich and poor, have benefited from economic growth and the public spending that has come about as a result, but some are turning against the government as the economy slows down.</p>
<p>The current protests have adopted a popular but unhealthy Brazilian snack called coxinha (essentially a chicken nugget) as their emblem. For the protesters, coxinha signifies the honest, hard-working everyman who pays taxes and wants nothing to do with corruption.</p>
<p>Meanwhile, adversaries see the protesters as small-minded conservatives with contradictory opinions. They criticise Venezuela as a socialist dictatorship while supporting military intervention in their own country. According to a <a href="http://datafolha.folha.uol.com.br/opiniaopublica/2015/03/1604284-47-foram-a-avenida-paulista-em-15-de-marco-protestar-contra-a-corrupcao.shtml">survey conducted during the March 2015 demonstrations</a>, the profile of this year’s protester is predominantly white, roughly 40 years old and with an above average income and level of education.</p>
<h2>Dilma’s demise</h2>
<p>Although her approval ratings have reached a record low of 8%, Rousseff rejects any suggestion that she will resign, while referring to the dangers of a growing <a href="http://noticias.uol.com.br/politica/ultimas-noticias/2015/08/12/nao-antecipo-situacoes-diz-dilma-sobre-impeachment-em-entrevista-ao-sbt.htm">coup culture</a> and a climate of intolerance. Social movements have mobilised in support of democracy and the government – although they have also used the opportunity to try to push the governing Workers’ Party (PT) to the left, criticising its neo-liberal policies.</p>
<p>Corruption scandals, linked to oil company <a href="https://theconversation.com/how-the-massive-petrobras-corruption-scandal-is-upending-brazilian-politics-43939">Petrobas</a>, have troubled the PT since 2005, implicating key political figures close to the president. The opposition alleges that Rousseff may have been aware of the corruption when she was energy minister under former president Luiz Inácio “Lula” da Silva.</p>
<p>But there is plenty of political opportunism at work as Rousseff’s opponents decide whether she should be investigated.</p>
<p>The PT’s coalition partner, the Brazilian Democratic Movement Party (PMDB), could benefit from impeachment as the vice-president, Michel Temer, would become president. But with several of its key politicians accused of corruption too, the party cannot assume a straightforward handover of power either.</p>
<p>For its part, the main opposition party, the Brazilian Social Democratic Party (PSDB), openly supports the demonstrations. Its leader, Aécio Neves, even spoke at an anti-government protest in Belo Horizonte. He narrowly lost the 2014 elections to Rousseff and initially called for her to be impeached. He now appears to support a resignation instead, since impeachment would mean waiting until 2018 for a chance to stand in an election. The PSDB is a divided party, as presidential hopefuls position themselves for the 2018 elections – calculating that their chances will increase in parallel with a further weakening of the PT.</p>
<h2>An opposition divided</h2>
<p>During the demonstrations, the different protest groups used sound trucks to deliver their message to the protesters. Loud as the sound systems were, the speeches, music and slogans became blurred, an apt metaphor for their own ideological and strategic fragmentation.</p>
<p>Rogério Chequer of the “Come to the Streets” movement views Rousseff’s resignation as preferable but Marcello Reis of “Revoltados Online” prefers impeachment. Groups such as the Nationalist Democratic Union call for a military intervention. The protesters have also been selective in their allegations, accusing PT politicos and appointees of corruption but ignoring <a href="http://www.cartacapital.com.br/politica/entenda-porque-o-201cfora-corruptos201d-nao-ajuda-o-pais-2854.html">opposition transgressions</a>.</p>
<p>The outcome of all this will partly depend on Rousseff’s ability to strike a deal with her coalition partners to avoid an impeachment vote in Congress. As opposition politicians supporting the protests are acutely aware, the protests put pressure on the government – which could be to their medium-term benefit, but Rousseff’s unpopularity does not necessarily justify impeachment.</p>
<p>In Brazil’s relatively young democracy, various actors are seeking to maximise their advantage and to limit potential damage. The confusion reminds us that a question mark remains over the status of the country’s political culture – and exactly who can lay claim to legitimacy when so many stand to gain from the fall of the current president.</p><img src="https://counter.theconversation.com/content/46093/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marieke Riethof 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>Opposition to president Dilma Rousseff is growing, but there is division over what her fate should be.Marieke Riethof, Lecturer in Latin American Politics, University of LiverpoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/439392015-07-07T11:03:59Z2015-07-07T11:03:59ZHow the massive Petrobras corruption scandal is upending Brazilian politics<p><a href="http://www.bbc.co.uk/news/business-30129184">Operation Car Wash</a>, the investigation into the misuse of funds within Brazil’s partially state-owned oil company Petrobras, is little over a year old – but it has already taken as many twists and turns as a Brazilian <a href="http://thebrazilbusiness.com/article/most-popular-brazilian-telenovelas">telenovela</a>. </p>
<p>Federal judge, <a href="http://uk.reuters.com/article/2014/11/20/brazil-petrobras-judge-idUSL2N0TA0C520141120">Sergio Moro</a>, and federal prosecutors are investigating a complicated scheme in which construction companies allegedly bribed Petrobras executives in return for contracts. These contracts were said to have been inflated in order for kickbacks to go to politicians and political parties. </p>
<p>On June 19, Operation Car Wash entered into its <a href="http://agenciabrasil.ebc.com.br/node/964164">14th phase</a> with the arrest of 12 executives from the construction companies Odebrecht and Andrade Gutierrez. These arrests involved the alleged payers of bribes, not just the recipients, and led to the imprisonment of some big fish – among them Marcelo Odebrecht, the CEO of Brazil’s fifth-largest company and a conglomerate with an international presence.</p>
<p>Billions of dollars were involved. The first Petrobras executive to testify in return for a reduced sentence, Paulo Roberto Costa, had $23m stored in Swiss bank accounts; he says that this money was a bribe from Odebrecht. </p>
<p>In a recent twist, Moro ordered the arrest of Bernardo Freiburghaus, a Brazilian-Swiss dual national who is believed to have organised Odebrecht payments to Petrobras through overseas bank accounts, and who has fled to Geneva. In addition, Moro and his prosecutors have <a href="http://www.reuters.com/article/2015/07/01/braskem-lawsuit-new-york-idUSL1N0ZH2TP20150701">called in the US Department of Justice</a> to investigate Odebrecht’s use of offshore accounts.</p>
<p>It’s easy to get lost in the staggering sums and arcane detail of the Operation Car Wash saga and to miss its enormous implications for Brazil. It threatens to upend the corrupt way Brazilian politics is funded and to shatter the political hegemony of the Workers’ Party (Partido dos Trabalhadores, or PT) and the whole structure of Brazil’s political economy.</p>
<h2>Chilling effect</h2>
<p>Operation Car Wash will have a serious chilling effect on campaign finance – and the consequences could be perverse. In the 2014 elections, ten large companies (including Odebrecht) donated <a href="http://thebrazilbusiness.com/article/funding-of-political-parties-in-brazil">massive sums</a> to members of the Camara, the lower house of the national Congress. It’s unlikely that these same firms will be making donations to candidates in the 2016 mayoral and city council elections. </p>
<p>Although such donations are legal, they throw up major conflicts of interest, since most large firms that donated to political campaigns in the past received government contracts and/or subsidised credit from state banks. With all the pressure to implement the lessons of Operation Car Wash, future donations could fall foul of Brazil’s strict new <a href="http://www.economist.com/blogs/schumpeter/2014/01/brazil-s-new-anti-corruption-law">anti-corruption law</a>, passed in 2013 and implemented via presidential decree in March 2015.</p>
<p>With no public financing for campaigns, and in the absence of other political reforms, Brazil’s politicians may increasingly resort to illicit sources of money. Illegal campaign funding, already endemic, could well get worse. Holders of cash in need of money laundering will be tempted to fill the breach left by the withdrawal of corporate donations to finance politicians and parties who favour their interests. So in the short term, Operation Car Wash might actually make Brazilian elections less transparent and more corrupt.</p>
<p>The corruption investigation could also have a significant impact on the rule of the Workers’ Party at the federal level, now in its fourth consecutive presidential term. </p>
<p>Although the government of Brazilian president, Dilma Rousseff, has been badly weakened by the economic slowdown and the corruption scandal, she is fighting resolutely to see out her term. <a href="http://edition.cnn.com/2015/04/12/americas/brazil-protests/">Protests to have her impeached</a> have so far come to nothing. Nonetheless, the opposition is hoping that the 2018 presidential election could definitively end PT rule at the national level.</p>
<p>Even though there is evidence that the pattern of corruption in Petrobras predates PT rule, many in the opposition still believe that the PT’s corruption is somehow more insidious than that of other parties because it is party-political, not personal. Rather than being motivated solely by greed, the argument goes, this corruption is a strategy to perpetuate the PT’s power. </p>
<p>Sure enough, there are signs that PT power is waning. The scandal is even threatening to engulf the PT’s previous president, the highly popular Luiz Inácio “Lula” da Silva, who served two terms between 2003 and 2010 and may well run again in 2018. Some observers think that by arresting Marcelo Odebrecht, Moro is hoping to induce him to give evidence against Lula – a nightmare for the struggling Rousseff administration.</p>
<h2>“Capitalismo do compadrio”</h2>
<p>Some involved in Operation Car Wash think that the investigation is aimed at nothing less than the reform of the commanding heights of Brazil’s political economy. </p>
<p>In Brazil’s current system, state institutions and private corporate interests are closely entwined. Politicians and government agencies use power to promote “national champions” by granting them large government contracts, lending them subsidised credit and helping them to win bids for large projects overseas. </p>
<p>Odebrecht is one of these champions and is a household name to Brazilians, having completed highly visible projects such as the building of the international airport and the Petrobras headquarters in Rio, the restoration of the opera house in Manaus, and the new stadium for the Corinthians football team (of which former president is a loyal follower) in São Paulo.</p>
<p>Patience with the excesses of this system is running out. Prosecutor Carlos Fernando dos Santos Lima, for example, <a href="http://politica.estadao.com.br/blogs/fausto-macedo/vivemos-em-uma-falsa-republica-diz-procurador-da-lava-jato/">claimed in a recent interview</a> that Brazil’s honest and silent majority should no longer put up with being taken advantage of “by structures of power that block real competition between economic agents and … are responsible for the cyclical crises of our crony capitalism” (“capitalismo do compadrio”).</p>
<p>Despite the likely impact of Operation Car Wash on campaign finance and the electoral prospects of the Workers’ Party, it is hard to imagine dos Santos Lima’s lofty vision becoming reality. Many large firms around the world are highly dependent on government favours, in a global capitalist system that is more unequal and perhaps more competitive and predatory than ever. </p>
<p>Fighting for stronger laws and better enforcement is all very well, but it’s hard not to see the prosecutor’s words as a middle-class morality tale about a scandal in which – as in corruption scandals of the past – some private and party interests will prevail over others.</p><img src="https://counter.theconversation.com/content/43939/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Pereira has received funding for research from the Economic and Social Research Council (ESRC). He is the Director of the Brazil Institute at King's College London and is a member of the Council of the Brazilian Chamber of Commerce of Great Britain.</span></em></p>Brazil is being rocked by a graft scandal of titanic proportions. Could it bring down Dilma Rousseff?Anthony Pereira, Director, King's Brazil Institute, King's College LondonLicensed as Creative Commons – attribution, no derivatives.