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Brazil's broken system | The World Weekly

When Brazil’s interim president Michel Temer revealed his cabinet on May 18, it was met by a flurry of positive press. Mr. Temer’s own appointment, following the impeachment of President Dilma Rousseff, had already led to a small bounce in the value of Brazil’s currency, the real, and market observers were further buoyed by news of his swiftly selected cabinet, which included several veteran bankers and economists. In a column that dubbed the new cabinet ‘superstars’, the FT’s Joe Leahy noted the appointments had been “universally applauded”, though its diversity was criticised, staffed as it was entirely by white men. 

Yet less than three weeks later, that goodwill has seemingly evaporated as a succession of corruption scandals have engulfed Mr. Temer’s fledgling administration, with two senior cabinet members resigning at the president’s request, other senior party members implicated, and thousands taking to the street in protest against the government’s perceived efforts to shut down investigations into political corruption. In a withering summary of the most recent revelations, the Guardian’s Latin American correspondent Jonathan Watts suggested the new government’s reputation had “slipped from fragile to farcical”.

Two sets of tapes are behind the recent controversies. In both, senior ministers have been recorded discussing with their colleagues how they might be able to shut down the sprawling Lava Jato graft investigation centred around the state oil company Petrobras. The investigation, running since March 2014, exploded at the end of 2015 after a senior senator, Delcídio do Amaral - himself already caught out by the investigation - decided to blow the whistle on former colleagues including both then-president Dilma Rousseff and her mentor former-President Luiz Inácio Lula da Silva, opposition leader Aecio Neves and Mr. Temer, the then vice-president, who Mr. de Amaral accused of being involved in an illegal ethanol-purchasing operation.

As a consequence of Mr. Amaral’s evidence - and those of many other politicians seeking leniency in exchange for information - Lava Jato has so far led to the arrests of over 160 members of the country’s establishment and investigations into many others across the political spectrum, including high profile businessmen, as well as senior politicians and party fixers.

People protest against interim President Michel Temer in Rio de Janeiro on May 22

No less than seven members of Mr. Temer’s new cabinet - charged with bringing order to the political system after Ms. Rousseff’s controversial suspension - were already under investigation before taking up their posts. That figure includes the two men to have resigned: Romero Juca, the interim planning minister and a close adviser to the president, who went last week, and Fabiano Silveira, who resigned on Monday and who, in a telling irony, had held the post of minister for transparency, monitoring and control, and effectively had political oversight of the corruption investigation.

Both cabinet ministers had been recorded in wiretapped conversations months earlier with a compromised ex-senator Sergio Machado, the head of a Petrobras subsidiary, who as part of his own plea deal was working with investigators to gather evidence against former colleagues. 

The conversations, leaked to leading news networks Folha and Globo, have added fuel to the accusations made by former president Dilma Rousseff that Mr. Temer had overseen a coup against her presidency.

Mr. Juca was recorded in March saying of the investigation: “We have to stop this shit. We have to change the government to be able to stop this bleeding.” He then suggested that the ascension of Mr. Temer to office could sideline investigations.

Mr. Silveira was recorded criticising the Lava Jato investigation, while trying to find out details of bribery allegations against Brazil’s Senate President Renan Calheiros, a party colleague of Mr. Temer, who is believed to have personally recommended Mr. Silveira for the position of anti-corruption tsar. 

The politicians... seem to be flailing around looking for some way to stop the investigations or derail them, but no amount of effort - either by Lula and Dilma or by the Temer government and its lackeys in Congress - has been sufficient or effective. In many ways, what we are witnessing is the rule of law and order working the way it must to identify and eliminate corruption from a still-young democracy.” - Alfred Montero, Frank B Kellogg Professor of Political Science, Carleton College

A coup?

While the latest stories have cast further doubt over the motivations of the politicians who led the impeachment of President Rousseff, who is formally suspended over accusations of false accounting related to the 2015 federal budget, political analysts are wary of describing her removal from office as a coup.

“The process was legal in general,” Professor Alfred Montero of Carleton College told The World Weekly. “Though it can be contested within the legal system in Brazil and it is being challenged by Dilma's lawyers and the Workers' Party... Dilma herself followed the process by stepping down once the Senate voted to try her.” 

Mr. Temer arrives for the inauguration of the new presidents of state companies in Brasilia on June 1

Nevertheless, the perception of political skullduggery is now widespread. “The most important thing to recognise is that a portion of the Brazilian population thinks that it was a coup and continues to protest against the interim government,” Professor Anthony Pereira, director of the Brazil Institute at King’s College London, tells The World Weekly. 

The new government is attempting to enact economic liberalisation reforms very different from those of Ms. Rousseff’s administration, including the privatisation of state-owned firms, an end to the mandatory expenditures on health and education, an end to indexation for salaries and pensions and an increase in the minimum retirement age.

Professor Pereira notes it “is the kind of programme that the majority of the Brazilian electorate would never vote for in a presidential election”, but the removal of Ms. Rousseff appears less of an ideological intervention than a desperate attempt by senior politicians to avert investigations into their own affairs.

Professor Montero’s assessment of the conspiracy theories is blunt: “Instead of listening so much to what people in Brazilian politics say, it is important to see what they are able to do”.

“So far, conspiracies of media-sponsored ‘coups’ and the manipulation of the law have been merely pablum for those already ideologically predisposed to believe in such things. But the crisis is too unstable and has gone too far for anyone to seriously and fairly believe that any institution or force is calling all of the shots and is ‘in control’... that is either too optimistic or naively fatalistic about Brazilian democracy. The current situation is best described as ‘volatile’". 

Some analysts do accede to the view that Ms. Rousseff’s removal has an ideological bent. “Temer is already implementing the ‘Bridge to the Future’ platform of the Brazilian Democratic Movement Party (PMDB), his own party and the PT’s former ally,” argues Sabrina Fernandes in the Jacobin. “Ministries and secretariats responsible for human rights, minority rights and gender politics have been cut. Anything related to social policy will have its budget slashed… yet the campaign against corruption, which was the key instrument of the impeachment drive, has come to a halt.”

A collapsing house of cards?

Rather than suggesting an ideological takeover, the revelations of recent weeks appear to confirm the view that an endemic apparatus of corruption and graft structures Brazilian politics from top to bottom, across all the major parties. 

“It is a patronage system that the former president and sociologist, Fernando Henrique Cardoso, once termed ‘bureaucratic rings’,” Professor Montero argues. “What we political scientists got wrong about Brazil these past two decades is that we underplayed or ignored the extent to which business, and particularly construction companies (the empreiteiras) were systematically corrupt and corrupting of Brazilian politics. The role of the empreiteiras in virtually every major corruption scandal since Collor was president and since we learned more about the shadow campaign finance system was largely ignored by domestic and foreign political observers.”

Ministerial staff demand the resignation of Fabiano Silveira on May 30

However, things are changing. “We see greater autonomy now in the Federal Police, judiciary, and prosecutors' offices, and the old assumption that white collar criminals in Brazil have impunity is no longer valid,” Professor Pereira suggests, pointing towards the recent 19-year sentence handed down to Marcelo Odebrecht, CEO of the multinational construction company that bears his family name.

Yet if the old order is dying, the new one is still struggling to be born. Professor Montero suggests there is a long way to go “to get Brazil to ‘the next level’ as a democracy” where a greater degree of accountability might be taken for granted.

“The non-transparent processes that generated and sustained the illegal and criminal cartels among the empreiteiras and the shadowy connections among the political parties and key executive bureaucrats in the state oil company, Petrobras, are probably more common than just this particular example,” he says. “All of that needs to be uncovered and the guilty must be made to pay. We are talking about nothing less than the transformation of the Brazilian developmental state and the political class.”

Where next?

While Mr. Temer’s government lacks popular support - in spite of the welcome from the press, a poll taken at the time of his appointment suggested just 2% of Brazilians supported his leadership - and there are ever increasing questions over both its integrity and legitimacy, it is likely to struggle on.

Professor Pereira notes the chances of fresh elections remain slim: “Many people in the cabinet of the interim Temer government, and in Congress, and in powerful interest groups outside of government, don't want them. With regard to Temer and his team, they invested a lot in impeaching Dilma and want to serve the rest of the presidential mandate. This mentality applies to members of Congress too, many of whom won seats in 2014 and don't want to have to face the electorate again so soon… new elections would be complicated.”

“There would have to be a constitutional amendment allowing a plebiscite on new elections. This would need 3/5 of both houses in two separate votes. Then, if a majority voted yes in the plebiscite, new elections would have to be organised. A proposal to only have presidential elections would have more chance of passing in Congress. It's an interesting idea, and would be quite popular with the public, but I doubt it would happen.”

Meanwhile, with further scandals almost certain to be revealed, Mr. Temer is likely to face an uphill battle to pass any of the social and economic reforms his government has so far proposed.

“Juggling an internal power struggle within the PMDB and an unstable congressional support base would be extremely detrimental for Temer,” Jimena Blanco, head of Latin America at Verisk Maplecroft, tells The World Weekly. “[Mr. Temer] lacks the charisma required to turn around his low levels of public support in order to survive a protracted political crisis.”

The likely consequence is that “policy making could be paralysed for the next two years,” she warns.

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