{"id":6115,"title":"Three Things To Watch in Brazil","link":"https:\/\/bst-europe.eu\/de\/globalization\/three-things-to-watch-in-brazil\/","date":"26. M\u00e4rz 2016","date_unix":1458994178,"date_modified_unix":1458994178,"date_iso":"2016-03-26T12:09:38+00:00","content":"
\"Sam<\/a>
Sam George \/ GED<\/figcaption><\/figure>\n

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On the morning of March 2, I met with former Brazilian President Lula da Silva at the Instituto Lula in Sao Paulo in the context of the Latin America at the Crossroads<\/em><\/a> video series. He seemed tired and apprehensive. He asked if I would visit the beach, and I said only if you promise not to tell my boss.<\/p>\n

Two days later, in scenes that played out on live TV, federal police raided his house and detained him for hours of questioning regarding percolating corruption charges stemming from his period as president. A federal indictment followed days later, and the opposition to the Partido dos Trabalhadores (PT) government \u2013 both elected officials and regular Jo\u00e3os in the street\u2014smelled blood. Lula is inexorably linked to his prot\u00e9g\u00e9e and successor, President Dilma Rousseff, who herself faces impeachment charges regarding fudged fiscal figures.<\/p>\n

The situation continues to unravel as if out of a telenovela; not an altogether uncommon characteristic of Brazilian politics. With competing street protests as a backdrop<\/a>, President Dilma offered Lula the opportunity to join her administration as a Chief of Staff, a position that entails broad legal protection from prosecution. However, just as Lula formally accepted the position, a federal judge in Brasilia issued an injunction that would prevent the realization of the appointment.<\/p>\n

Forecasting what could happen next is a fool\u2019s errand. However, a couple of underlying trends are important to monitor. While these issues may not indicate tomorrow\u2019s headline, they can help us understand the trajectory of the perennial country of the future.<\/p>\n

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  1. I hope you like jamming <\/strong><\/li>\n<\/ol>\n

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    Regardless of what happens in the next weeks, the Brazilian political system has hit a log-jam. As a result, any policy implementation is unlikely, and critical reforms will remain sidelined.<\/p>\n

    Identifying corruption is one thing; eradicating it is quite another. Both the brazen nature and the scope of the Petrobras scandal<\/a> underscore the deep-seated roots of graft, fraud and bribery in Brazil\u2019s public sector\u2014a pedigree not particular to any one party.<\/p>\n

    In a sentence, the scandal involves billions of dollars of public sector contracts awarded by Petrobras, the state oil company, with a few percentage points tacked on top for kickbacks. But such institutionalized malfeasance does not occur in a vacuum. Since transitioning to democracy in the in late-1980s, political parties have been unable to consolidate power. Instead, Brazilians vote for individuals as opposed to platforms, and party affiliation is tenuous. For years, the best way to maintain a coalition (or support on a given issue) was through favor-granting, or, in more vulgar moments, cash.<\/p>\n

    Even many opposition partisans admit that the first one-and-a-half terms of Lula\u2019s presidency were rather successful. From 2003 through 2010, Brazil averaged over four percent annual growth, while conditional cash transfer programs helped lift around 40 million people from poverty. Only later did it come to light that the congressional coalition that supported Lula\u2019s program was funded by monthly bribes \u2013 hence that previous scandal\u2019s nickname, mensal\u00e3o<\/em> \u2013 or \u201cthe big monthly\u201d.<\/p>\n

    The scheme was effective, but hardly original. Many in the upper-echelon of Brazilian politics on both sides can and are being implicated in corruption scandals. Dilma faces impeachment, but the House Speaker bringing the charges, Eduardo Cunha, himself faces charges of receiving upwards in US$ 40 million in bribes.<\/p>\n

    No cow is sacred. Lula\u2014the man behind Brazil\u2019s \u201crise\u201d\u2014faces federal charges. His predecessor, Fernando Henrique Cardoso, a darling of Washington technocrats, has his own dirty laundry<\/a> aired in every newsstand along Avenida Paulista.<\/p>\n

    As a result of the finger-pointing, the already tenuous coalitions have fragmented, undermining anyone\u2019s ability to implement economic reform. This is unfortunate because the country badly needs it. Brazil\u2019s fiscal deficit has surpassed ten percent. Inflation, a pest that has plagued the country long before anyone heard of Zika, is back above ten percent. Joaquim Levy, the market-trusted finance minister appointed by Dilma in February 2015, has left the government having been unable to reign in the country\u2019s spending.<\/p>\n

    Dilma may remain in power, but she will lack a mandate. Even if she could push through reform, the incentive to do so is unclear. She needs her core constituency now more than ever; slashing the budget in the midst of a recession carries significant risk. If Dilma can save her presidency, the current government will likely muddle on until general elections in 2018. The alternative is not much better. A great success of the PT governments has been to give a voice to millions of poorer Brazilians that previously had none in the political realm. An impeachment would undermine that voice, and create deep fissures in increasingly divisive political discourse.<\/p>\n

    A Dilma-led government will struggle to implement reform. A government instituted via impeachment will have dubious legitimacy and would struggle as well. Either option is unlikely to break the impasses in Brazilian politics. Thus far, financial markets have reacted positively to increased pressure on President Rousseff. These markets may be disappointed to find that even a replacement government will be hardpressed to address the economic conundrum.<\/p>\n

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