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Brazil’s political crisis explained

(Originally published in Folha English)

There is no easy explanation as to why, just under a year after being reelected by a narrow margin, President Dilma Rousseff runs the risk of not completing her term in office. It took respected consultancy firm Eurasia months, for example, to weigh up all the factors and raise the chances of her resigning or being impeached from 30% to 40%. But one thing is easy to predict: whatever the outcome, the current climate of polarization is here for a while – perhaps even until after the next elections.

Although opposition militants argue that Rousseff has only herself to blame for her troubles, pro-government forces place the blame on kingmaker party the PMDB, and defeated PSDB presidential candidate Aécio Neves. Leftist groups continue to defend Rousseff’s mandate but oppose her fiscal policies. While it is difficult to know where the saga will end, there are clear reasons behind Brazil’s political crisis.

The aggressive, toxic campaigns waged by both candidates in last year’s elections are as good a place to start as any. Rousseff came close to defeat against Neves, who himself only made it to the second round run-off on the final straight – environmentalist Marina Silva had been running second in the polls until then. And the contest was only so tight in the first place because of a sluggish economy and the emergence of a new wave of scandals involving key members of the government. In 2013 most bets had been on Rousseff’s reelection.

After a narrow defeat, Neves barely recognized his opponent’s victory in his concession speech. Such a tight margin, the closest in Brazilian history, had two immediate effects: a smaller mandate for the winner and more sore loser griping from the other side. Impeachment talk emerged right after Rousseff was proclaimed the victor, and today it often feels as though the election never ended.

After a leftist-sounding campaign, the president turned her attention to the financial markets in a manner that shocked many of her voters. After much indecision, she picked American-trained Bradesco Bank economist Joaquim Levy to be her Finance Minister, and appointed a number of other conservative ministers, some of whom would have been more comfortable in a Neves cabinet. Before the end of the year she had managed to lose touch with her base, while at the same time failing to win over her adversaries.

Since then the crisis has all been about the government’s controversial ally, the PMDB. The centrist party, which has itself been associated with scandal more than a few times in the past, was never 100% on Rousseff’s side, and today it would be a push to argue that even 50% of its deputies and senators are still with the president. During the campaign some of the party’s key figures were already placing their bets on Neves, and the division has remained even after the president’s victory.

But it got much worse. Congressman Eduardo Cunha, her main adversary in the party, decided to fight for the role of Speaker of the Lower House until February 2017. Government forces chose someone else. Cunha prevailed anyway and now the opposition decided to play ball with him.

Rousseff believed that her decisions would restore the credibility she had lost in her first term thanks to growing spending and the use of backpedaling, a form of delaying repayments to lenders who had provided money to pay for welfare programs, making the country’s books appear more robust than was actually the case – a breach of fiscal responsibility laws say the opposition, but common accounting practice according to the government.

But in fact those unpopular steps, which contradicted profoundly with the tone of Rousseff’s campaign, were eating away at her popularity. The Lower House, led by Cunha, began to think of ways to put further pressure on an already unpopular president.

The lack of enthusiasm for the new administration had been evident since January 1st, when Rousseff’s somewhat flat inauguration was attended by less than 5,000 people – around 10 times fewer than at the start of her first term. Rousseff picked a number of ministers that patently had few qualifications for their positions, solely to maintain the support of their parties in Congress. Cunha’s election as speaker may have been the first sign that the strategy had failed, but others have followed.

Despite being involved in multiple scandals, including the Petrobras investigation, Cunha is a wily strategist. With the speakership he had the power to define the Lower House voting schedule, and to choose which congressional inquiries would move forward. This latter power includes what is described as “an atomic bomb” in Brasilia: in other words, whether or not to allow an impeachment process against the president to progress.

When Rousseff’s popularity sunk to single digits, all the opposition, which had been repeatedly stirring up protests against the president, needed was a motive to seek impeachment, and in Cunha they had found a willing ally.

Three possibilities have now emerged. One is to find a direct link between the president and the Petrobras scandal, while another option is for the Superior Electoral Court to strip both her and Vice-President Michel Temer of their positions because of the use of supposedly illegal funds in their election campaign. The third potential outcome, meanwhile, is to accuse Rousseff of breaking fiscal responsibility laws in the form of the aforementioned backpedaling.

All these three possibilities remain in play, but none are conclusive. If proven, they would also result in different outcomes: in the first and the third cases, Temer would take over from Rousseff, although rumors have suggested the vice-president himself may be implicated in the Petrobras scandal – something he has already denied.

If both Rousseff and Temer go, runner-up Neves would take over, with even those in opposition recognizing that such a decision by the Superior Electoral Court would not necessarily give them the legitimacy they would need to govern. Since the restoration of democracy in Brazil in 1985, impeachment charges have been brought only against President Fernando Collor de Mello, in 1992, when he was directly linked to corruption scandals that had emerged during his term, showing the difference between the two cases.

Rousseff has relied on a number of factors to keep her job. The first is her turbulent yet enduring relationship with former president Luiz Inácio Lula da Silva, the main power behind the Worker’s Party. She also hopes to maintain her alliance with the president of the Senate, Renan Calheiros, who could also yet be implicated in the Petrobras scandal. The third is the pragmatism of many business leaders, who think impeachment would represent a major setback for a young democracy.

Further complicating matters is that in the event that impeachment proceedings are instigated in the Lower House, Rousseff may decide to take her case to the Supreme Court. Unlike congressmen, Brazilian supreme court justices have little interest in the polls and nor are they yet much concerned with the discussion about investigations of the Petrobras scandal — they just care about the facts. It appears impossible to tell what the outcome of such an action might be. Brazil is not for beginners, as the songwriter Tom Jobim once memorably said – and the complexities of the current political crisis show that his words are as true now as ever.


Brazil’s opposition plays with impeachment as if it were a walk in the park

President Dilma Rousseff narrowly won the elections in October last year. Her cabinet is very likely the worst ever. The titanic corruption scandal at Petrobras will deprive her from important aides, ministers, key Congressmen and Senators. Perhaps even her Vice President. The economy is bound for another sluggish growth cycle and all that her Finance minister can think of is cutting expenses. She has had clear difficulties in dealing with politicians and in being more proactive in her second term. Sounds like bad governance. Still not enough for Brazil’s opposition to suggest she should be impeached.

No, there is no link between Rousseff and any of the corruption cases in the media these days. It is nothing like the days in which former President Fernando Collor got thrown away from office, in 1992. But there are opposition members who mention the I word as if her being involved were a given. It is actually far from that. The Petrobras a scandal dates back to when opposition’s Fernando Henrique Cardoso was president. It got a major boost under her predecessor Luiz Inácio Lula da Silva. It surely ran unopposed in the first two years of the incumbent’s first term. But it was a decision of hers in 2012 that stopped it.

Still, some opposition politicians and activists (including many in the press and in the business community) speak of impeachment as if it were just a matter of finding the right way to frame Rousseff. Generic accusations of her not stopping the scheme before or being unaware of it have gained traction as a reason to dethrone her. The 3 million vote advantage she had seems meaningless to a growing number of Brazilians who went for the opposition. Neither does it matter the fact that those next in line are much more likely to be deeply entrenched in the scandal — the speaker of the House, the chairman of the Senate, the Vice President…

For now there are more threats and excited wackos than proper initiatives to take Rousseff out. But it could quickly escalate to something else if the voices of reason remain low — and they have been surprisingly low in the last couple of months. On March 15th there will be a march in favor of the president’s impeachment with the tacit approval of the opposition. Newspaper columnists have argued for and against it without taking much into account the sheer fact there is no direct link between the president and the scandal. A direct link; it takes that for a Brazilian president to be impeached, as our history shows.

So what does the opposition want? Firstly there is a line that separates the two main contenders in the opposition for 2018. Defeated candidate Aecio Neves is playing the role of sore loser and say no to all, by organizing forces in Congress to keep the impeachment talk going. He needs to have some attention in the next few years since he doesn’t have a powerful state to govern anymore (he had Minas Gerais until recently). On the other side is a man full of suggestions of moderation, São Paulo governor Geraldo Alckmin. He interprets the guy who won’t jump on board with impeachment because it levels the field in his party.

The group that is more seen is obviously the most vocal one. It is hard to say they don’t want a coup, since they are playing their cards accordingly, although in a very early stage. But the better deal for those seems to be to wear former President Lula out so he has less leverage in a more and more likely candidacy for the Palácio do Planalto. To be competitive then, Neves needs Lula to admit, openly or not, that he made a mistake in appointing Rousseff as his successor. Alckmin does better if Rousseff doesn’t do so well, but he has had Brazil’s powerhouse state for the last 20 years — that won’t change until the next elections. Impeachment doesn’t help him.

Wackos that will take to the streets will be counted. Opposition leaders have said nothing against their march and even tolerate those who want the military to come back to power. By March 15 everyone will know who are the 54 people listed in the Petrobras corruption scandal — the vast majority of those are politicians, some are in the opposition too. The divide that was formed in the last elections might go even deeper. But depending on who is shamed by Brazil’s Attorney-General, there can be a boost to the impeachment talk. It is no walk in the park, but those who lost the election seem keen to go that way if they can.

P.S. – Thanks for your patience, it has been long without your company and I surely missed it. I couldn’t keep up with my weekly posts because I was taking part of the very intense and U.S. State Department sponsored International Visitors Leadership Program. My group was focused on transparency and accountability and the main reason I was chosen for this was your interest in this blog. That means I have to thank you for giving me this amazing experience. I mean it. Unfortunately I can’t tell much about our interesting meetings in DC, LA, Sacramento and Dallas — it is all off the record.