Tag Archives: petrobras

After vote to impeach Rousseff, what happens next?

The fight over whether to impeach Brazil's president Dilma Rousseff has left the country deeply divided. (Renato S. Cerqueira/Futura Press/Folhapress)
The fight over whether to impeach Brazil’s president Dilma Rousseff has left the country deeply divided. (Renato S. Cerqueira/Futura Press/Folhapress)

No one has accused Brazil’s president, Dilma Rousseff, of any personal impropriety in the sweeping investigations of kickbacks to politicians in Brazil from the state oil company, Petrobras.brazil

Nevertheless, a two-thirds majority of the Câmara dos Deputados (Chamber of Deputies) decided to impeach Rousseff anyway, based on an obscure theory — that Rousseff fudged the budget numbers in the lead-up to the 2014 election to hide the  precarious condition of Brazil’s budget deficit and reduce the need to cut spending in an election year.

No one had any doubts in 2014 that the country’s increasing debt burden was weighing down its economic outlook and even Rousseff, after her reelection, shook up her cabinet, bringing in Joaquim Levy as finance minister, and Nelson Barbosa, now Levy’s successor, to introduce greater budget discipline as the country sinks further into recession.

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RELATED: Collor faced Brazilian impeachment crucible
25 years before Dilma

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In reality, it’s the Petrobras scandal that’s swept up Rousseff, along with nearly 320 members of the Brazilian congress. Operation Car Wash has uncovered a wide-ranging scheme whereby leading politicians accepted kickbacks on the basis of inflated public contracts granted from Petrobras. The scandal implicates Rousseff’s own Partido dos Trabalhadores (PT, Workers Party), but it has also snared politicians from across the ideological spectrum. The scandal took an even sharper turn this spring when former president Luiz Inácio Lula da Silva, Rousseff’s mentor who first won power in 2002, was also accused of taking kickbacks. The speaker of the Chamber of Deputies, Eduardo Cunha, among many, many others, are also under investigation. Brazilians refer to the scandal as the petrolão, which translates to the ‘big oily.’

The battle moves to Brazil’s Senate

Complicating the impeachment vote is the fact that Rousseff herself is personally and politically unpopular. A collapsing economy has left her with an approval rating in the teens. In one sense, Rousseff was impeached on Sunday because she’s so widely reviled by Brazilians. Rousseff’s opponents, even though many of them are under investigation themselves, blatantly admit that they supported impeachment just to remove her from office for political reasons. The Brazilian right has lost four consecutive elections to either Lula or to Rousseff, though Rousseff only narrowly won reelection in October 2014.

The nakedly political considerations involved explain why Rousseff and her left-leaning supporters have been quick to label the impeachment vote as an undemocratic coup. But it’s more complicated than either side would like to admit. Rousseff is correct when she argues that the Brazilian media is, largely, anti-PT, and the business elite has increasingly turned against her and Lula.

But Rousseff herself served as the chairwoman of the Petrobras board between 2003 and 2010, and her critics believe it’s risible that she knew nothing about the kickbacks. Moreover, she blatantly attempted to appoint Lula to her cabinet last month as a way of offering him immunity from prosecution. (Rousseff’s supporters subsequently attacked the lead prosecutor, Sérgio Moro, for releasing the audio recording of a conversation between Lula and Rousseff).

Rousseff is now almost certain to face a prolonged trial before the upper house of the Brazilian Congress. With just a majority vote in the 81-member Senado (Senate), she can be suspended for office for 180 days. Her vice president, Michel Temer, the 75-year-old leader of the Partido do Movimento Democrático Brasileiro (PMDB, the Brazilian Democratic Movement Party), will almost certainly take over temporarily and, if not impeached himself, will take over if Rousseff is formally removed. The next elections are scheduled for 2018.

Temer and the PMDB broke with Rousseff earlier this month, in a step that now seems likely to have doomed Rousseff’s fate. Temer has already indicated that, as Brazil’s new president, he will pursue a much more center-right orientation that will look to assure markets and business elites. He has also indicated that he might attempt to rein in the Petrobras investigations that have thoroughly discredited a country’s worth of institutions. The PMDB is a ‘big tent’ party whose sole ideology seems to be proximity to power — it has provided support to every sitting Brazilian government, of the center-right or the center-left, since 1994. Temer, Cunha and other leading pemedebistas are under the same clouds of corruption as many of the leading petistas, so a Temer presidency would not wipe the political slate clean. 

Rousseff will, however, survive if she can muster more than one-third of Brazil’s senators in a trial that might not begin until May.

Her removal isn’t a fait accompli.

Note, however, that Rousseff (and Temer, as her 2014 running mate) still faces the possibility that her reelection will be vacated by Brazil’s supreme electoral court, which is reviewing whether the Rousseff campaign received illegal campaign funds. If the court decides to vacate the election, Cunha (the scandal-plagued speaker of the Chamber of Deputies) will temporarily replace Temer as president before a fresh presidential vote later this year.

Brazil’s hyper-partisan future looks grim

The legacies of Lula and Dilma are now bound together through the high-stake impeachment process. (Facebook)
The legacies of Lula and Dilma are now bound together through the high-stake impeachment process. (Facebook)

Even if Rousseff survives the Senate trial, she will have virtually no power as a wildly unpopular lame-duck president — just the second in modern Brazilian democracy to be impeached. Rousseff will continue fighting to protect the legacy of lulismo and the PT’s four terms in power, most notably the massive programs that have reduced extreme poverty and inequality that have made Lula, Rousseff and the PT extremely popular among Brazil’s poor. Moreover, even as Lula himself faces criminal liability for his own possible role in the Petrobras scandal, he remains extremely popular in Brazil (much more so than Rousseff) and on the Latin American left, generally.

Indeed, if an election were held today, Lula would be competitive to win, as incredible as it seems. He’s essentially tied with the other top-tier contenders from the 2014 election, Marina Silva (an alternative leftist with socially conservative positions on abortion of LGBT rights and with roots in Brazil’s green movement) and Aécio Neves, a Brazilian senator and the former two-term governor of the state of Minas Gerais. Neves today is the leader of Brazil’s main center-right opposition party, the Partido da Social Democracia Brasileira (PSDB, Brazilian Social Democracy Party), which has long supported Rousseff’s removal.

But the impeachment process and its aftermath are already making Brazil’s hyperpartisan divide even worse. A small glimpse of the ugliness came on the floor of the Chamber of Deputies Sunday night when one member, Jair Bolsonaro, who also hopes to run for president in 2018, dedicated his vote in favor of impeachment to the leader of a torture unit during Brazil’s military dictatorship whose victims included, among others, Rousseff herself. Other far-right deputies also voiced praise Sunday night for some of the leaders of Brazil’s military dictatorship from 1964 through 1985.

Though a majority of Brazilians (including both wealthy and poor Brazilians) supported Rousseff’s impeachment, the battle has left many voters divided sharply. Moreover, a compromised Temer-led interim presidency also seems unlikely to unite a country that still faces incredible challenges, including a nasty economic downturn, the rising threat of the Zika virus and the difficulty of hosting the first Summer Olympics in South American history later in 2016.

Brazil’s democracy has already survived one impeachment, when former president Fernando Collor resigned a day before the Brazilian senate voted formally to remove him from office in December 1992. But Collor, at the time, was more personally and, potentially, criminally implicated in the corruption scandal that spurred his impeachment, which the Chamber of Deputies passed in a near-unanimous vote. In contrast, the impeachment battle against Rousseff has been far more colored by partisan opinion.

Collor faced Brazilian impeachment crucible 25 years before Dilma

Fernando Collor de Mello left office in January 2013 after his removal as president by the Brazilian Senate (O Globo / Roberto Stuckert Filho)
Fernando Collor de Mello left office in January 2013 after his removal as president by the Brazilian Senate (O Globo / Roberto Stuckert Filho)

As Brazil’s congress votes on president Dilma Rousseff’s impeachment today, it’s not the first time that the Câmara dos Deputados (Chamber of Deputies) will consider a president’s impeachment.brazil

It’s not even the first impeachment since the return of civilian, democratic rule in the 1980s.

Before Rousseff, there was Fernando Collor de Mello, who was impeached nearly a quarter-century ago, and who resigned a day before a formal vote to remove him from office.

Commentators ruefully said during Collor’s impeachment crisis that the process showed Brazil’s institutions, from its media to its judiciary, were robust enough to stop impunity in a newly democratic Brazil, even when corruption went all the way to the presidential palace.

But as Operation Car Wash wreaks havoc on the entire spectrum of Brazilian politics, and commentators are saying the same thing today, the corruption within the Collor administration now seems quaint compared to the current scandal, which involves massive kickbacks from Petróleo Brasileiro SA, the state oil company, to hundreds of politicians within many Brazilian parties.

If anything, the lessons of the Collor impeachment viewed in the context of the current Petrobras scandal — informally nicknamed , ‘petrolão’ (the ‘big oily’) — show just how tenacious the roots of corruption are in Brazil, as much today as 20 or 30 years ago. Continue reading Collor faced Brazilian impeachment crucible 25 years before Dilma

Brazil might not be better off in a post-Dilma world

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Michel Temer, Brazil’s vice president, comes from an ideology-free party devoted primarily to remaining in power. (Facebook)

It’s looking increasingly likely that Brazilian president Dilma Rousseff might not make it through the end of her term in January 2019.brazil

On March 12, Rousseff’s main coalition partner, the Partido do Movimento Democrático Brasileiro (PMDB, the Brazilian Democratic Movement Party) announced that it would take a full month to reconsider its support for Rousseff, currently in her second term and what amounts to the fourth consecutive term of the Partido dos Trabalhadores (PT, Workers Party) that began with Luiz Inácio Lula da Silva’s 2002 election victory.

Since mid-March, the drive to impeach Rousseff has only intensified, with prosecutors seeking to interview and possibly detain Lula da Silva himself, the godfather of not just the Brazilian left but the entire Latin American left. Rousseff attempted to appoint Lula da Silva as her chief of staff to give him the kind of ministerial role that he would need to evade potential investigation, though Brazil’s supreme court blocking the appointment in short order. Though Rousseff herself has not been personally implicated in the Petrobras scandal (whereby officials gave kickbacks to politicians in exchange for inflated construction contracts), investigators believe that Lula da Silva might be more deeply involved.

Lula da Silva, incredibly, might be arrested at any moment, which would almost certainly accelerate the push to impeach Rousseff on obscure charges about obfuscation of Brazil’s state finances during the 2014 election campaign. Also, incredibly, impeachment isn’t the only way that Rousseff might be forced from office. If it emerges that she won the 2014 presidential election through illicit money, she and the vice president could be removed through the cassação process that could vacated the election altogether.

Either way, the presidency would end up in either the hands of the PMDB: in the case of impeachment, vice president Michel Temer or, in the case that the 2014 election is annulled, the speaker of the Brazilian congress’s lower house, the Chamber of Deputies (Câmara dos Deputados), Eduardo Cunha.

Neither result would give Brazilians much comfort about the state of their country’s government.
Continue reading Brazil might not be better off in a post-Dilma world

What are the chances of Dilma Rousseff’s impeachment?

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Despite headlines that are raising eyebrows both in Brazil and abroad, talk of Dilma Rousseff’s impeachment is still more smoke than fire.brazil

But the risk of impeachment proceedings will only increase as the corruption scandal surrounding Petróleo Brasileiro S.A. (‘Petrobras’), the state oil company, intensifies. Though impeachment talk may be premature today, it will not be so farfetched if Rousseff is  personally linked to the Petrobras kickbacks or if it’s found that illegal funds financed Rousseff’s reelection campaign last year.

Nearly two million Brazilians have now signed a petition demanding her impeachment, and rising protests throughout a handful of Brazilian cities could spread more widely — perhaps even to levels seen during the 2013 protests.

As Brazil readies to host the first-ever South American Summer Olympics in 2016, Rousseff will brace for more criticism that the country can ill afford new stadiums at a time when many Brazilians, especially in Rio de Janeiro and its largest cities, still live in poverty. The real‘s value has dropped by more than 25% in the last year, inflation is rising, GDP growth is expected to stall in 2015 and Rousseff has committed to new austerity policies to allay fears in the bond markets about Brazil’s budget. More ominously, as her approval ratings plummet, and she faces emboldened domestic opposition, Brazilians have a ready precedent in the impeachment of Fernando Collor 23 years ago.

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RELATED: Petrobras scandal highlights 12 years of Brazilian corruption

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Rousseff, who narrowly won reelection last October, served as Brazil’s minister for mines and energy between 2003 and 2005, when the alleged corruption abuses are said to have begun. Even if Rousseff doesn’t face formal impeachment hearings, the whiff of scandal surrounding her adds to the sense that Rousseff and her party, the Partido dos Trabalhadores (PT, Workers Party), now in its fourth consecutive term in power, have become hopelessly corrupt. That could undermine Rousseff’s efforts to accomplish much in her second presidential term, including efforts to turn around Brazil’s stumbling economy. It could also complicate any efforts by beloved former president Luiz Inácio Lula da Silva (pictured above with Rousseff) to make a comeback bid in 2018. Continue reading What are the chances of Dilma Rousseff’s impeachment?

Five things Neves must do to win the Brazilian presidency

aecioascendant

Fresh off a surprising victory in the first round of Brazil’s presidential election, Aécio Neves suddenly seems like a man with a real chance at leading the first center-right administration in 12 years. brazil

As Brazilian voters focus on the campaign for the October 26 runoff, the second post-election Datafolha poll gives Neves, the former governor of Minas Gerais and the candidate of the Partido da Social Democracia Brasileira (PSDB, Brazilian Social Democracy Party), a slight lead of 45% to 43%.

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RELATED: Four things Dilma must do to win the Brazilian presidency

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It’s not the first time, however, that a poll has showed a challenger leading incumbent Dilma Rousseff, who is hoping to win a fourth consecutive term for her governing, center-left Partido dos Trabalhadores (PT, Workers Party). For much of the month and a half preceding the October 5 vote, Rousseff trailed Marina Silva, who unexpectedly finished in third place after vaunting to the top of polls, when she suddenly replaced Eduardo Campos, who died in an August 13 airplane crash. As the presidential candidate of the Partido Socialista Brasileiro (PSB, Brazilian Socialist Party), Silva hoped to thread a third way between the traditional left and right.

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RELATED: Five reasons why one-time frontrunner Silva tanked

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But a steady stream of negative advertising successfully beat back the Silva challenge, and Rousseff is now counting on the same machine to defeat Neves. Unlike in the first round, however, Neves will enjoy equal access to television airtime, so he’ll be on much more solid footing against Rousseff than Silva was.

Fresh off their first debate, however, Neves is still very much in the game. Here are the five things he needs to do between now and October 26 to become Brazil’s next president.

Continue reading Five things Neves must do to win the Brazilian presidency

Brazil election results: Neves will face Rousseff in runoff

dilmaaecioPhoto credit to Ricardo Moraes/Reuters.

It’s a stunning resurrection for a politician who spent most of the past two months languishing in third place.brazil

But Aécio Neves, a Brazilian senator and the center-right candidate of the Partido da Social Democracia Brasileira (PSDB, Brazilian Social Democracy Party), will face incumbent president Dilma Rousseff, the candidate of the center-left governing Partido dos Trabalhadores (PT, Workers Party), in an October 26 runoff.

Rousseff led with around 41.5% of the vote to just 33.5% for Neves and 21% for Marina Silva, the one-time frontrunner and the candidate of the Partido Socialista Brasileiro (PSB, Brazilian Socialist Party). Silva became the party’s presidential candidate only in late August after her original running mate, former Pernambuco governor Eduardo Campos, died in an airplane crash on August 13.

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RELATED: In Depth — Brazil

RELATED: Will Marina Silva be squeezed out of the Brazilian runoff?

RELATEDNeves struggles to puncture the Dilma-Marina Show

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In the days and weeks after Campos’s death, Silva, a former environmental minister and a one-time Rousseff ally, vaunted to the top of the polls, which showed for weeks that she would easily advance to the runoff against Rousseff, and that she had a shot at defeating Rousseff in a one-on-one contest.

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Instead, Rousseff will face Neves, the former governor of Minas Gerais, who suddenly seems to have the best chance of unseating the PT in the 12 years since it first came to power under the still popular former president Luiz Inácio Lula da Silva. Continue reading Brazil election results: Neves will face Rousseff in runoff

Petrobras scandal highlights 12 years of Brazilian corruption

petrobrasPhoto credit to Geraldo Geraldo Falcão.

The most striking thing the latest sensational scandal involving Brazil’s state oil company is that president Dilma Rousseff’s poll standing has actually increased since the story broke three weeks ago.brazil

If Rousseff, as polls predict, wins the first round presidential vote on October 5, it will be largely because Brazilian voters have shrugged off the latest scandal involving Petrobras and several leading Brazilian figures, along with 12 years of scandals that have now accumulated after three consecutive terms of rule by Rousseff’s Partido dos Trabalhadores (PT, Workers Party).

Former Petrobras executive Paulo Roberto Costa, who was arrested in the spring during an investigation into money laundering, has allegedly testified that dozens of top officials, mostly within Rousseff’s own party, routinely took a 3% kickback on some of the company’s contracts dating back to 2004, when Rousseff, then the minister for energy and mines, technically oversaw Petrobras’s operations.

Among the politicians that Costa singled out was former Pernambuco governor Eduardo Campos, the former presidential candidate who died in a plane crash in August; Henrique Eduardo Alves, the president of the Câmara dos Deputados (Chamber of Deputies), the lower house of the Brazilian congress; and Edison Lobão, the minister for energy and mines, and a member of the centrist Partido do Movimento Democrático Brasileiro (PMDB, Brazilian Democratic Movement Party).

Campos’s alleged involvement may be why the allegations haven’t apparently hurt Rousseff’s ratings against Marina Silva, Campos’s former running mate and now the candidate of the Partido Socialista Brasileiro (PSB, Brazilian Socialist Party). Campos’s party spent much of the past 12 years supporting the governments of both Rousseff and her predecessor, Luiz Inácio Lula da Silva, and Marina Silva, then a member of the Workers Party, served for five years as environmental minister.

But Rousseff’s other major rival, former Minas Gerais governor Aécio Neves, the candidate of the center-right Partido da Social Democracia Brasileira (PSDB, Brazilian Social Democracy Party), has been unable to generate much success by emphasizing the scandal. Neves generally trails both Rousseff and Silva in polls ahead of Sunday’s first-round presidential vote. If, as expected, no candidate wins 50% of the vote, the top two candidates will advance to a runoff on October 26.

But as audacious as the Petrobras scandal could turn out to be, it will take its place under a penumbra of troubling corruption that dates back to Lula da Silva’s first term as president. Continue reading Petrobras scandal highlights 12 years of Brazilian corruption

Will Venezuela or Argentina be the first to crumble into economic crisis?

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I write tomorrow for The National Interest about the dual economic crises in Venezuela and Argentina.argentinaVenezuela Flag Icon

The similarities between the two economic crises are uncanny — inflation, capital controls, dollar shortages, overvalued currencies, shortages, etc.

But the similarities don’t stop there.  Both countries currently fee political limitations to force policy changes to avert crisis — and that limit the political capital of the leaders of both countries, Venezuelan president Nicolás Maduro and Argentine president Cristina Fernández de Kirchner, to enact reforms:

Accordingly, normal political channels seem blocked through at least the end of 2015, despite the fact that both countries should be considering massive economic policy u-turns that will require significant amounts of political goodwill neither Maduro nor Fernández de Kirchner possess. But there’s an even greater inertia lurking beyond even the routine political impasse—a kind of political dead-hand control in both countries, on both a short-term and long-term basis.

First, both Venezuela and Argentina remain tethered to the political ideologies of chavismoand kirchnerismo, even though their proponents, Chávez and Néstor Kirchner, are now dead. Those policies may have worked over the last decade to achieve certain goals, including greater social welfare and poverty reduction in Venezuela and a rapid return to economic growth and competitive exports for Argentina. But it should be clear by now that chavismoand kirchnerismo are unable to provide answers to their respective countries’ economic woes today.

Even more broadly, I argue that beyond the shortcomings of chavismo and kirchnerismo, Venezuela faces a long-term resources curse and Argentina faces the long-term legacy of protectionism and statism of peronismo, which in each case underlie the current economic crises.  What’s more, the IMF-sponsored reforms in 1989 that led to the massive Caracazo riots in Venezuela and the IMF-approved lending tied to Argentina’s 1990s ‘convertibility’ crisis that led to the 1999-2001 peso crisis have undermined orthodox economic policymaking:

What’s more, ill-conceived attempts to rupture those dominant paradigms through orthodox ‘Washington consensus’ reform processes led to economic and political disaster. In both countries, leaders experimented with neoliberalism, facilitated by the misguided zeal of the International Monetary Fund, without enacting any corresponding safety nets or shock absorbers. The resulting crises led both countries to double down on their prevailing ideologies, thereby, ironically, making economic reform today even more difficult.

In both cases, the political, historical and economic legacies have prevented the broadly moderate, business-friendly, social democratic middle courses that much of the rest of South America has embraced to wide success, including Colombia, Peru, Chile, Brazil.