Brazil – Beneath the Mist of Corrupt Politics

by Diego Ramiro Lattes


The current political-economic situation in Brazil is very tense. I aim to be impartial to the best of my ability. However, objective data on the subject is hard to obtain, not only due to manipulation by all factions involved in the present crisis – but also due to how veiled Brazilian politics tend to be. The involvement of a Nobel Peace Prize Laureate and a special investigative organism on opposite sides have done nothing to assert which side is actually the honest one, not until more data surfaces. With this in mind, I present this tentative reflective piece.

The root of all: The PT’s ascension

The PT (Partido dos Trabalhadores – Worker’s Party) is currently Brazil’s ruling party. It was not always so. It, and Brazil’s current major opposition party PSDB (Partido da Social Democracia Brasileira) came about after a military coup d’etat removed João Goulart’s democratic government from power in ‘64. Since then, the Worker’s Party and the Social Democrats have been bitter rivals and have refused any form of cooperation and sympathy towards each other.

The origins of this rivalry can be found in their ideological composition: The PSDB is centrist and follows orthodox economic dogma, although it often does so with a pinch of Brazilian nationalism. The PT, meanwhile, is center-left, and is not afraid to ignore concerns about excessive interventionism – although I should clarify it is not necessarily heterodox on the economic front. The divide is clear, then: The PT appeals to the lower classes, the PSDB to the upper ones.

Since the PSDB does little to actually eradicate poverty, it should come as no surprise that “Little-Lula-peace-and-love” (this was an actual campaign slogan) managed to win the 2003 elections. Luiz Inácio Lula da Silva ruled Brazil from 2003 to 2011, and Dilma Rousseff took over that same year, and would rule until 2016. In May that same year, corruption charges got her suspended. Three months later she was removed from office. Michel Temer, who served as her vice-president, sits now as the incumbent 37th President of Brazil.

A brief look at the economics, and the PEC 55

We already established that, economics-wise, there is little deviation in Brazil’s path from Neoliberalism. Several world-renowned companies are state-owned, particularly Petrobras – but there exists not a shred of doubt over the dogma of free trade or the idea that the budget should be balanced. Temer himself, despite his party having been in a coalition with the PT, made a key priority to pass the PEC 55 while he still had congressional support.

What is the “PEC 55”? Put simply, it is a radical austerity package that freezes state spending for 20 years on healthcare, education, and social security. The Washington Post called it “the mother of all austerity plans.” It was praised by Western Neoliberal circles, but criticized by virtually everybody else. It is so bad that even human rights groups have deemed it a potential humanitarian crisis. There is even talk of privatizing Petrobras “one day” as Temer himself stated, although his ministers have waived the idea for the time being.

But perhaps the best way to look at Brazil’s economics is through the eye of its society. Whereas most Latin American countries have a middle class of varying health, Brazil has a clear-cut rich-poor divide. You can see Sao Paulo’s condos – and from the windows of these you can directly observe Favelas, Brazil’s shanty towns. It got to the point that even Michael Jackson made a song about it, “They Don’t Care About Us,” back in 1996.

It is inevitable that such a socio-economic climate will be mired with corruption and backroom backstabbing, since the stakes are so great. The rich do not want to give up their positions of control, the poor might face death due to lack of support.

Lava Jato, the “Car Wash” corruption scandal

The gist of the corruption scandal appears to be this: High-ranking members of the PT have, through Petrobras, engaged in illicit self-enrichment, money-laundering and bribery – among other insidious activities.

The prosecution is being carried out by the Public Prosecutor’s Office and Federal Police – these two now practically forming an independent branch of the government separated from the traditional three and while the charges appear to be legitimate, actual data on the subject comes only from popular media, so there is no telling which is actual fact and which is the yellow press in action.

But there is a major problem here: All parties involved appear to have a vested interest in upsetting the status quo. Lula received the support of Nobel Peace Prize Laureate Adolfo Pérez Esquivel, and still has quite a following in his country. He has even announced his intention to run for the 2018 elections, although going to prison would render him unable to legally receive the vote.

The PSDB wants the reins of Brazil back, and it is no wonder it is so eagerly supporting the prosecution of the PT. Worse is the fact that while the PT is falling, several groups – including Temer’s party, the Brazilian Democratic Movement (Movimento Democrático Brasileiro) – are doing their best to push the country back towards ‘proper’ orthodox economic thought. It should be noted that Temer himself was also implicated in the corruption scandal and yet is not facing the same charges Lula is – no doubt fueling the growing unrest in Brazil.

The Brazilian public itself seems divided. Most seem to support the prosecution of corrupt public ministers, but also seem to support the PT’s policies. If austerity is continued, the PT (or another party farther to the left) might see a comeback. Whether they will get a fair deal out of this mess is yet to be known.

The future 2018 elections

The PT still appears to have a significant following, but unlike Argentina or other countries Brazil appears to have many major and active parties trying for the office of President. Temer’s MDB has significant support despite the charges against the Incumbent President, and he himself could be a candidate; I already stated Lula’s position above. The PSDB wants to see a President of their own as well.

But where will Brazil go from here on? I will be surprised if Lula is allowed to run – it would make more political sense to let him face his corruption charges, since “surrogate candidates” are never as popular as the figures they represent. At the same time, I think the Brazilian public should not put any trust in Temer’s MDB. At this point, he has not only made overtures towards moving the country far into Neoliberal territory, but he has even made an effort to repeal laws protecting the Amazon rainforest.

Brazil’s history of hyperinflations and currency changes (from 1980 until 1994) are the result of supply side factors (1970’s oil crisis) and ruling class conflicts (political instability). As a fellow Latin American I can only comment on one thing: Latin Americans have, in their many years during and since military dictatorships, learned very little about politics, let alone economics.

Diego Ramiro Lattes is from South America, Argentina, and has a low tolerance for nonsense, be it left wing or right wing. He can be reached over Twitter and is open to direct messages.