What a year for Brazil

What’s happening today is complicated to explain in every possible sense of the word. There are cultural, political and criminal issues just to name a few.
To explain what’s going on this year we have to go back in time a little and explain some facts about the Brazilian culture. Brazilian politicians are well known for corruption and impunity, no matter how hard law enforcement works; the slow and complicated justice system nearly assures that no one faces any penalty. In 2005 there was a big political scandal called mensalao, when former President Luis Inacio Lula da Silva paid Congressmen to vote according to Silva’s best interest disregarding the nation’s needs. Surprisingly, justice worked and 18 Congressman, some of them party leaders, had to pay huge fines and went jail. Silva himself got away with it though. This scandal alone was one of the biggest in the Brazilian history.
Since 2014, the Federal Police started investigating a money laundry scheme in a fairly small size currency exchange dealer that worked in the black market in Brasilia, the capital of Brazil. He worked next to a lava jato (car wash) so this operation was suggestively named Lava Jato. So, as the operation developed, the police found connections of this dealer with politicians and evidence he was helping to launder money with a few other fairly unknown politicians, one of them is Paulo Roberto Costa. According to the police, Costa was taken away for questioning and he was afraid of the consequences after what happed in 2005. So Costa agreed to a plea bargaining deal and that’s when things started to get hot.
According to insiders, the police had proof about links between the dealer and Costa in one contract, but had evidence of two other fraudulent auctions for contracts in the State run oil company Petrobras. Since Costa said he was involved in fraud in ten contracts, he also accused the involvement of many lobbyists, party leaders, politicians, construction companies and named several offshore bank accounts in tax havens. After this, it was a just matter of time until bigger fish could be caught.
As if a corruption scandal isn’t bad enough, the economy of Brazil is sinking. The country’s GDP reduced 3.8% in 2015 (according to the International Monetary Fund only Venezuela did worse in the world) and the forecast for 2016 is even worse. Unemployment is expected to be at 10% by the end of the year and inflation is projected at over 10% a year. In 2014, which is an electoral year for president, congress and other positions, President Rousseff got loans from State run banks to solve a multi millionaire cash flow problem. The bigger problem is that according to a federal law, this is an illegal financial operation. But, remember, the country has a culture of politicians getting away for breaking the law so everyone was sure about impunity.
With this economic and political crisis as the backdrop, President Dilma faces an incredible approval rate of only 62% So the President of the lower house of representatives decided to take action and used these government loans to start an impeachment process. In her defense, Rousseff claims that every president acted the same way since that law was created; sadly, the facts show it’s true. Maybe, if she was facing less problems with the terrible economy, she could have gotten away with it. But the fact is the country is facing both problems at once and the President has a sky high disapproval rate. So, it’s very likely that deputies will vote in favor for the impeachment this weekend.
Roussef and her party, the Workers Party, claim that the ongoing impeachment process is, in fact, a coup because there is not really a crime and, again, all her predecessors acted in the same manner. Lucky for her, most of the parliament is for sale; they accept cash (literally) and/or important positions in the Federal Government. A Congressman said on TV that she is being paid R$400,000 (roughly $111,000 dollars) to vote against the impeachment or R$2 million ($555,000 dollars) for the congressman to not show up to vote. What is interesting about this particular movement is that nobody questioned him. Even so, most of the lawyers say it’s hard to validate such poor arguments from the President’s defense and, again, it’s likely Congress will accept the charges and send the process to the Senate.
Another relevant issue is what is happening to former President Lula. He is being accused of having received money to benefit the same construction companies of lava jato in two different forms: while in office Lula was paid to issue executive orders and, after leaving office, received money to give speeches, each speech costing roughly $200,000 dollars. Lula said his price reference was how much former U.S. President Bill Clinton charged to speak at a public event. In his words: “I accomplished more than Clinton did, so I think it’s just fair. Besides, I was the best President in the Brazilian history and the world’s best president during my time in office. People pay to listen to me”. The catch is that there is absolutely no proof – audio, video, agenda, flight info, etc – that Silva actually gave the speeches he was paid for.
As if this wasn’t enough, the police also discovered Lula received real estate as bribes. He has two properties, one ranch and a high end apartment, which combined are worth roughly $2 million dollars. Although none of the properties officially belong to Lula, he spends a lot of time in both and the police found over a thousand personal items in both places – such as personalized shirts, shampoos and dishes with Lula’s name printed on the label, even a small boat with his name on – and absolutely nothing that belonged to the official owners.
As soon as news of the ranch and apartment were in the media, roughly six million Brazilians left their homes to protest on the streets against Lula, Rousseff and their party. At the same time, there was also massive support for the Federal police work and justice.
When the police was ready to arrest Lula, President Rousseff named Lula as Minister of State. The direct consequence is that, by law, only a Supreme Court judge can prosecute a state minister. So an association filed another impeachment process against President Rousseff for obstruction of justice. While Lula’s case is being analyzed by the Supreme Court, he legally can’t assume office. Since the attempt to name Lula as Minister, people are protesting in the cities asking Dilma to leave office nearly every night.
So, it’s likely this weekend the Brazilian parliament will be deciding if President Dilma Rousseff will be impeached or not. The most likely immediate consequence is the arrest of former president Lula. Any attempt to predict what the future holds for the country is a mere guess; let’s just hope for the best for Brazil and expect that other highly corruptive Latin America countries will follow the lead to prosecute corruption.


2 thoughts on “What a year for Brazil

  1. mariana brun says:

    Hi Joao. I find that a point to be highlighted is that not only Dilma is defending herself about the over uszge of decrees but the Supreme Court allowed the Impeachment process only based in this accusation. And would add same situations used by former presidents like FHC specially when had a huge interest in privatise Brazilian companies like Vale. Well done mate!


    • Thank you for your time reading and your insight.
      Your points are valid, specially the Supreme court. But the post, as it is, has over 1100 words, it is difficult to add anything else.


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