By Alberto C. Lourenço-Pereira, PhD (ABD) Urban Planning ’90
On Aug. 31 the Brazilian Senate voted 61 to 20 to impeach President Dilma Rousseff of the Worker’s Party (PT), who had been reelected in 2014 with more than 54 million votes. Vice President Michel Temer of the Brazilian Democratic Movement Party (PMDB) will be the acting president until January 2019. Although keeping the appearance of legality, president Rousseff’s ousting was a “parliamentary coup d’etat” orchestrated by a powerful coalition of conservative politicians, business “associations, segments of the federal bureaucracy and the media.” The silver lining, if there is one, was the distance the Brazilian military kept from the coup d’etat. At stake was not only the respect for the popular vote as the basis of political power, but also a center left project to reduce Brazil’s abysmal social inequalities.
In the late 1960s, young Dilma Rousseff joined revolutionary Marxist guerrilla groups and was arrested and tortured by the military regime’s security apparatus. Once released, she moved to the state of Rio Grande do Sul and joined the Worker’s Democratic Party (PDT), founded and commanded by Leonel Brizola, Brazil’s charismatic leftist politician of the time. Rousseff became a prized, hard-working technocrat in PDT’s state and city governments. Years later, in 2003, an even more charismatic politician, PT founder and leader Luis Inácio Lula da Silva, was elected president. He appointed Rousseff to be Minister of Mines and Energy and she soon became one of Lula’s most trusted advisors and, eventually, his choice to be PT’s candidate in the 2010 election. Despite her utter lack of charisma, Rousseff was elected by a large margin. At the time, people often remarked that Lula could “elect a lamppost”, such was his prestige and so favorable was the economic scenario.
Rousseff is a very authoritarian person, infamous for shouting at and publicly humiliating her subordinates. She did not hide her aversion to “deputados” (congresspeople) and senators, even those belonging to her coalition. Inflexible, charmless and rude, she was disliked by most politicians, and they rejoiced in voting to oust her once the impeachment procedures started. But ironically, in a country where most politicians are either tainted by accusations of corruption or at least tolerant of it, Dilma is a rare example of personal integrity and of categorical intolerance to graft and backstage deals.
THE ECONOMIC BACKGROUND TO THE COUP D’ETAT
Since 2004, the Brazilian economy has been strongly propelled by China’s insatiable demand for both mineral and agriculture commodities. Huge trade surpluses led to an overvalued currency that, if on one hand had a devastating impact on industrial production (industry’s share of the GNP dropped from 16.9 percent in 2003 to 12.3 percent in 2013), on the other hand reduced inflation and significantly increased purchasing power. Lula unleashed a series of innovative public policies aimed at the very poor. The Gini coefficient of inequality fell from 0.589 before Lula was elected to 0.518 at the end of Dilma’s first term as president, a spectacular performance in a country known for its horrific gap between the rich and the poor. Not even the global crisis of 2008 arrested Brazilian economic performance. In 2010, when Dilma Rousseff was first elected, the GNP increased 7.5 percent.
Dilma’s first years as president, however, coincided with the end of China’s economic miracle: Commodity prices plummeted and the Brazilian currency dropped almost 40 percent to the dollar at the end of her first term. The counter cyclical economic measures so effective for Lula in 2008 no longer worked for Rousseff. Inflation returned and the vulgar Keynesian strategy to beef up demand by expanding credit was constrained by deteriorating expectations. A long cycle of economic expansion based upon consumption and financed by favorable terms of trade was clearly exhausted at the end of Rousseff’s first term.
THE POLITICAL BACKGROUND
Brazil’s party system is perhaps the most fragmented in the world. There are 25 parties with representation in Congress, of which 13 are considered effective, i.e. capable of influencing decisions. Most of these parties are “for rent” (partidos de aluguel). They lack any coherent ideology or reasonable policy agendas. Most of them are always ready to support any president in exchange for a few key positions in the ministries or at the board of state-owned companies. As if party fragmentation was not enough, deputados and senadores also organize themselves in blocks around specific issues, regardless of party affiliation. The bible block standing against abortion and gay marriage, the agriculture block (ruralistas) against land reform, and the health block defending the interests of private hospitals are some well-known examples. Generally, the most powerful issue-based blocks in Brazilian Congress are also conservative.
In 2013, the cyclical downturn provoked a series of street protests that, starting as a reaction to rising transportation costs, evolved into massive demonstrations against poor public services while spending billions of reais on new stadiums for the 2014 World Cup. Rousseff’s ratings dropped substantially one year before the next presidential election.
The 2014 election was tough. Dilma Rousseff and the PT-PMDB coalition faced two strong opposition candidates: Aécio Neves, the conservative grandson of a legendary politician and a skilled one himself; and Marina Silva, a former rubber tapper from Amazonia, running on a platform that combined a green agenda of alternative politics with neoliberal economic policy. Coming from behind in the polls, Rousseff’s spin doctor ran a brutal campaign of negative ads that, although having worked, left the losers harboring a bitter grudge. Dilma Rousseff was reelected president with less than a 2 percent edge over Aécio Neves. Post-election Brazil was a nation deeply divided between pro-PT and anti-PT crowds.
By the end of 2013, what started as a trivial federal police investigation of small scale money laundering revealed an iceberg of corruption involving the giant state-owned oil company, Petrobras, and its chain of suppliers and politicians from the governing coalition. This became known as “operation LavaJato,” using slang that refers to the high-powered pressure hoses that are used to wash cars. Corruption involving politicians and companies seeking privileged treatment is a well-known story: Brazilian election campaigns are extremely expensive, even more per capita than the American ones. The only possible source for funding them on such a massive scale is through backstage deals with large construction companies in exchange for overpriced contracts.
The difference between the Lavajato Operation and many other previous scandals was the alliance between the media, a rebellious federal police, the Ministério Público (Brazil’s very autonomous public prosecutor’s office), and a federal judge from the Paraná state circuit. Judge Sergio Moro was an enthusiast of Italy’s Operazione Mano Politi. Together with the young turks of the Ministério Público, they started a messianic crusade to free Brazil’s political system from deeply ingrained corruption.
Their method was disturbingly unorthodox. Judge Moro would order the arrest of politicians and CEOs. Federal police agents would follow up through spectacular operations leaked to the media and shown on prime time TV to a public fed up with the chronic impunity of powerful people and eager to scapegoat corrupt politicians for the economic malaise. Those put under “temporary arrest” by judge Moro would remain in jail until ready to plea bargain with the Ministério Público prosecutors. The plea bargain depended on naming names, but oddly enough, mostly involved naming the “right names”, i.e names of PT politicians or people related to Lula, which were immediately leaked to the media, feeding public outrage. Singling out the PT as emblematic of the corruption cancer and blocking Lula from being a candidate in the 2018 presidential election, while sparing possible candidates from the opposition, seemed to be their ultimate goal. Although it was obvious that keeping suspects under indefinite temporary arrest and (selectively) leaking their information to the media was unconstitutional, the Brazilian Supreme Court did not interfere. Many observers suggested that such a passive position was caused both by some of the justices being strongly anti-PT themselves, and because the independent ones were bullied by an aggressive media, ready to portray them as complacent with corruption.
ROUSSEFF’S SUICIDE BY AUSTERITY
When Rousseff began her second term, the economy was rapidly deteriorating. In order to win the election, public expenditures grew significantly. The public deficit was rising, driven in part by a stagnant economy, but more importantly by the hawkish Central Bank’s move to raise interest rates in response to an inflation surge caused by the devaluation of the real.
Under strong pressure from the press, Rousseff picked a director of one of Brazil´s biggest private banks, Joaquim Levy, to be her economic czar. Levy, a University of Chicago economist, had been secretary of the treasury under Lula. He was known as “Joaquim Scissorhands” for his primal urge to cut government expenses. Levy added a strong fiscal contraction to the already draconian monetary policy. As a result, the economy nosedived. The GNP shrank 3.8 percent in 2015, the second-worst performance in Brazilian history.
It could be easily predictable that such a level of austerity would be particularly damaging to the poor, the PT voter base. Unemployment rose from 4.1 percent in 2013 to 9.0 percent at the end of 2015. Rousseff also agreed to major increases in energy prices and to cutting energy subsidies for the very poor, a move that further alienated PT’s loyal base in exchange for tiny budget gains. In a few months Rousseff’s approval rating dropped to an abysmal 12 percent. Unsurprisingly, such extreme levels of austerity had no effect on an inflation process caused not by excessive demand but by the cost impacts of a 25 percent currency devaluation. An exemplary case of “austericide,” or political suicide by austerity.
One cannot talk about the Brazilian media without mentioning the Globo Network. One of the biggest media empires in the world, second only to ABC in gross revenues, Globo has the most-watched open TV in Brazil, as well as satellite and cable companies, a dozen cable channels broadcasting their own productions, radio stations throughout the country, one of the three national newspapers, and many magazines. It is estimated that about 90 million Brazilians watch Globo TV at some point every day. Its signal reaches 98.6 percent of Brazilian territory. Thus, it is not surprising the extent of Globo’s capacity to influence public opinion.
The Globo network is also known for its direct involvement in several dark moments of Brazil’s political history. It was a key player in the conspiracy leading to the 1964 military coup and a major source of media support to the military regime. In 1982, Globo was accused of being an active player in the conspiracy to adulterate voting results and steal the election for governor of Rio de Janeiro state from the left wing candidate, Leonel Brizola. In the first presidential election after the end of the military dictatorship, two candidates qualified for the run-off: Lula and Fernando Collor. Globo actively influenced the decisive vote results by heavily editing scenes from the last debate to favor the latter.
The Globo Network’s role in the impeachment process was decisive. From the beginning of Rousseff’s second term, Globo TV and its main radio network, CBN, would tirelessly produce news linking the PT with corruption. It also selectively leaked unproven testimony of politicians and businessmen arrested by Operation Lavajato against Lula and the PT. The other big media conglomerates follow suit. President Rousseff suffered an everyday media massacre that kept her approval ratings under 15 percent and made her extremely vulnerable.
The law puts in the hands of the president of the House of Representatives (Câmara dos Deputados) the power to accept or not accept accusations of crimes that could lead to a President’s impeachment. Of the hundreds of such accusations in Brazil’s recent history, only twice have they been green-lit to proceed: Fernando Collor de Melo was the target of the first, in 1992. Rousseff was the target of the second. The president of the House was Eduardo Cunha, a skilled deputado from the state of Rio de Janeiro and a strong figure in the PMDB, PT’s partner in the coalition. Rousseff fiercely opposed Cunha’s election as president, despite him being evidently unbeatable, such was his prestige with the hundreds of less influential deputados, also known as “the low clergy,” most of them first-timers. Cunha easily won and became a formidable obstacle to Rousseff’s need to pass legislation.
However, Cunha was eventually accused of receiving bribes related to the Petrobras corruption scandal in his Swiss bank accounts. His subsequent denial of the existence of such accounts was soon proven false and, having lied under oath, the House’s Ethic Committee started impeachment procedures against him. Under fire from Rede Globo (Cunha sided with the big phone companies against TVs when Congress was deciding about internet neutrality), Cunha offered a deal to President Rousseff: He would block any impeachment accusation in exchange for PT deputados to vote for him in the Ethics Committee. PT refused and voted against Cunha, starting his impeachment process. In retaliation, Cunha accepted the accusations against Rousseff and commanded the vote that, by a large margin, suspended President Rousseff until a final Senate vote would decide her fate. Michel Temer, the vice president from PMDB, took her place as acting President of Brazil.
THE FINAL ACTS
A few days before the House of Representatives overwhelmingly voted to start the impeachment, Dilma Rousseff tried a radical move: She agreed to appoint Lula as a minister. The idea was that Lula, a master of political seduction, would negotiate with Congress (especially with the Senate, whose president, Renan Calheiros, also from PMDB, was not close to either Cunha or Temer) a sort of “unofficial parliamentary regime” with Lula as a prime minister and Dilma Rousseff as “queen of England.” A subsidiary gain would be to block Judge Sergio Moro’s alleged desire to arrest Lula, for only the Supreme Court can authorize the arrest of a minister. That move was aborted by a brutal counterpunch: Judge Sergio Moro authorized Polícia Federal to tap Lula’s cellphone and recorded a conversation between him and Dilma about their plan. That was obviously an illegal act, as only the Supreme Court can authorize the tapping of a President. But judge Moro went even beyond this: He promptly leaked the recording to Globo, which immediately aired the conversation. Globo’s pundits condemned Rousseff’s plan, declaring it illegal and opportunistic. The coup de grace was administered by Gilmar Mendes, a conservative Supreme Court justice who, in a provisional decision based on the tap, suspended Lula’s nomination as unlawful (which, clearly, it was not). The court never reviewed Mendes’ decision. A few weeks later, another Supreme Court justice declared the phone tap illegal and publicly censored judge Moro’s decision to leak it, but the damage was done.
After that, the coup d’etat proceeded as planned. After the House vote, the Senate started to examine the accusation. To impeach the President, the law requires that he/she is guilty of crime de responsabilidade, i.e that he/she personally breaks the law. To say that the accusations against Rousseff were lame is to soften the absurd: She was accused of spending without Congress’ authorization, but she only did what every President before her had done, with no opposition from the Budget Court (Tribunal de Contas da União). Even the Ministério Público, which distinctly opposes the PT administration, after examining the charges, declared them not valid. But the Senate voted 61 to 20 to impeach her, more than the two-thirds of the body required by the Constitution. Some senators who voted against Rousseff were quoted as saying that they knew she had not broken the law, but that their vote was based on her mistakes and out of respect for public opinion. To add insult to injury, two days after the impeachment, Congress voted to adjust the fiscal law, and the formal cause of Rousseff’s removal was openly declared as legal once again.
Vice President Temer’s presidency has been plagued by his own set of errors. His cabinet does not have a single woman or a black person. Three of the most important ministers resigned days after Temer’s inauguration, as new leaks accused them of bribery or as plotting to abort Operation Lavajato before it went deeper into PMDB and other parties of the coalition. Eduardo Cunha, the president of the House, who single handedly allowed President Rousseff´s impeachment trial to start, was himself impeached by a huge majority of “deputados” in early September, a sacrificial lamb to public opinion.
The media’s frantic calls for austerity suddenly became surprisingly tame. While Dilma Rousseff’s budget proposal for 2016 was considered catastrophic for admitting a $35 billion deficit, Michel Temer’s $50 billion deficit was considered a “healthy change toward realistic accounting.” On the one hand, the prime interest rate is still the highest in the world (currently 14.25 percent a year for a 6 percent inflation). On the other hand, Temer’s minister of social affairs plans to eliminate 10 percent of the beneficiaries of the Bolsa Família, an internationally prized program focused on providing bottom level income (from $30 to $50 per month) to the poorest families, the majority of which are headed by women. Foreign policy has also changed. Now, a compliant attitude toward the United States contrasts with an aggressive posture against the Latin American leftist regimes of Bolivia, Ecuador, Cuba and Venezuela, including an alleged attempt by the Brazilian foreign affairs minister, José Serra, to bribe Uruguay to vote against Venezuela’s turn to preside Mercosul trade bloc.
Unlike Dilma Rousseff, Michel Temer is a skilled politician. Twice the president of the House of Representatives and president of PMDB for the last two decades, Temer knows how to deal with Congress. His coalition has a comfortable majority in both houses, and he is cushioned by Rede Globo and by the other big media groups. His finance team enjoys the sympathy of the financial market, which translates into a cautious optimism, a slightly stronger currency and a slightly lower inflation. However, the road to the general elections in 2018 will be bumpy and a worsening scenario should not be excluded.
On the economic front, there is no chance of a strong economic recovery. Huge idle capacity in most industries makes any recovery in private investments unlikely. There is no perspective of a significant reduction on the high level of unemployment, a key variable for political stability. A significant part of Temer’s political base demands more austerity as a response to budget deficits and threatens to disembark from the government if he fails to administer the neoliberal poison pills. A large part of Brazilian society does not accept what they clearly see as a coup. As I write, massive demonstrations are demanding general elections. Opinion polls show Temer with only 13 percent of approval, the same dismal rating Dilma Rousseff had in her final weeks in power. Meanwhile, in spite of incessant attacks by Rede Globo, Lula is by far the favorite candidate for the 2018 presidential elections. But he may not be a candidate because of his poor health and also because he may be considered guilty by judge Moro and by an appeal court, which would make him legally unelectable. However, any candidate from the left he may support would certainly secure a place in the runoff.
The day after the impeachment, Joaquim Barbosa, a retired black Supreme Court justice, tweeted his opposition to the coup d’etat, which he called “a fake impeachment.” At the end he added: “But you know what? They do not have votes!”
Alberto C. Lourenço-Pereira was a PhD student (ABD) from the UCLA Urban Planning Department – GSAUP in 1990. Since his time at UCLA, Alberto has served as a Public Policy Executive in the Brazilian Federal Government, having spent most of that time both as a Director at the Ministry of Environmental Affairs and as Under Secretary at the Ministry of Strategic Affairs. His main areas of work include: Development Policies; Urban and Regional Development; and Sustainable Development of the Amazon Region.