Brazil’s political crisis ||| The great betrayal ı The darkest hour ı Dilma, out!

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Dilma Rousseff has let her country down

But so has the entire political class

BRAZIL’S Congress has witnessed some bizarre scenes in its time. In 1963 a senator aimed a gun at his arch-enemy and killed another senator by mistake. In 1998 a crucial government bill failed when a congressman pushed the wrong button on his electronic voting device. But the spectacle in the lower house on April 17th surely counts among the oddest. One by one, 511 deputies filed towards a crowded microphone and, in ten-second bursts broadcast to a rapt nation, voted on the impeachment of the president, Dilma Rousseff. Some were draped in Brazilian flags. One launched a confetti rocket. Many gushed dedications to their home towns, religions, pet causes—and even Brazil’s insurance brokers. The motion to forward charges against Ms Rousseff to the Senate for trial passed by 367 votes to 137, with seven abstentions.

The vote comes at a desperate time. Brazil is struggling with its worst recession since the 1930s. GDP is expected to shrink by 9% from the second quarter of 2014, when the recession started, to the end of this year. Inflation and the unemployment rate are both around 10%.

The failure is not only of Ms Rousseff’s making. The entire political class has let the country down through a mix of negligence and corruption. Brazil’s leaders will not win back the respect of its citizens or overcome the economy’s problems unless there is a thorough clean-up.

Ditching Dilma   Sunday’s vote was not the end of Ms Rousseff, but her departure cannot now be far off. Brazil ought not to mourn her. Incompetence in her first term in office, from 2011 to 2014, has made the country’s economic plight incomparably worse. Her Workers’ Party (PT) is a prime mover behind a gargantuan bribery scheme centred on Petrobras, the state-controlled oil company, which channelled money from contractors to politicians and parties. Although Ms Rousseff has not been personally implicated in the wrongdoing, she tried to shield her predecessor as president, Luiz Inácio Lula da Silva, from prosecution.

What is alarming is that those who are working for her removal are in many ways worse. If the Senate votes to put her on trial, probably by mid-May, Ms Rousseff will have to step aside for up to 180 days. The vice-president, Michel Temer, who comes from a different party, will take over and serve out her term if the Senate removes her from office (seearticle). Mr Temer may provide short-term economic relief. Unlike the hapless Ms Rousseff, he knows how to get things done in Brasília and his Party of the Brazilian Democratic Movement (PMDB) is friendlier to business than the PT.

But the PMDB is hopelessly compromised, too. One of its leaders is the speaker of the lower house, Eduardo Cunha, who presided over Sunday’s six-hour impeachment spectacle and has himself been charged by the supreme court with taking bribes through the Petrobras scheme. In announcing their “no” votes, some of Ms Rousseff’s allies denounced Mr Cunha as a “gangster” and a “thief”.

The taint of corruption is spread across many Brazilian parties. Of the 21 deputies under investigation in the Petrobras affair, 16 voted for Ms Rousseff’s impeachment. About 60% of congressmen face accusations of criminal wrongdoing.

There are no quick ways of putting this right. The roots of Brazil’s political dysfunction go back to the slave-based economy of the 19th century, to dictatorship in the 20th and to a flawed electoral system that both makes campaigns ruinously expensive and also shields politicians from account.

In the short run, impeachment will not fix this. The charge that is the basis for trying Ms Rousseff—that she manipulated accounts last year to make the fiscal deficit look smaller than it was—is so minor that just a handful of congressmen bothered to mention it in their ten-second tirades. If Ms Rousseff is ousted on a technicality, Mr Temer will struggle to be seen as a legitimate president by the large minority of Brazilians who still back Ms Rousseff.

In any other country, such a cocktail of economic decline and political conflict might be combustible. Yet Brazil has remarkable reserves of tolerance. Divided as they are over the rights and wrongs of impeachment, Brazilians have kept their anger in check. The past three decades suggest that theirs is a country which can endure a crisis without resorting to coups or collapses. And here, perhaps, is a shred of hope.

The fact that the Petrobras scandal has ensnared some of the country’s most powerful politicians and businessmen is a sign that some institutions, especially those that enforce the law, are maturing. One reason politicians are in such trouble is that a new, better-educated and more assertive middle class refused to put up with their impunity. Some of the statutes now being used to put away miscreants were enacted by Ms Rousseff’s government.

One way of capturing this spirit would be for the country to hold fresh elections. A new president might have a mandate to embark on reforms that have eluded governments for decades. Voters also deserve a chance to rid themselves of the entire corruption-infested Congress. Only new leaders and new legislators can undertake the fundamental reforms that Brazil needs, in particular an overhaul of the corruption-prone political system and of uncontrolled public spending, which pushes up debt and hobbles growth.

Second best   True enough, the path to renewal through the ballot box is strewn with obstacles. Given its record, Congress is unlikely to pass the constitutional amendment required to dissolve itself and hold an early general election. The electoral tribunal could order a new presidential ballot, on the ground that Petrobras bribe money helped finance the re-election of Ms Rousseff and Mr Temer in 2014. But that is far from certain.

There is thus a good chance that Brazil will be condemned to muddle on under the current generation of discredited leaders. Its voters should not forget this moment. Because, in the end, they will

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The economy is in freefall

The president is likely to be impeached

Brazil’s democracy faces its toughest moment since the end of dictatorship

ON THE night of April 17th Brazil stood still. In the streets, hundreds of thousands held their breath, many sporting the yellow-and-green jerseys of the national football team, brandishing Brazilian flags, vuvuzelas at the ready. Millions more were glued to television screens in homes, bars and restaurants across the country.

Contrary to appearances it was political, not sporting, history that was being made. At 11.07pm it was all over. Bruno Araújo of Pernambuco state, a federal deputy for the centre-right opposition Party of Brazilian Social Democracy (PSDB), cast the 342nd vote in Congress’s 513-seat lower house in favour of sending impeachment charges against the president, Dilma Rousseff, to the Senate for trial. That breached the necessary threshold of two-thirds; Ms Rousseff’s foes in the chamber burst into song. Outside Congress, and in dozens of cities, car horns blared.

By the time voting ended, the government had been trounced by 367 votes to 137 (plus seven abstentions and two absentees). In ten-second speeches during a rowdy, six-hour roll-call vote, pro-impeachment lawmakers railed against economic mismanagement and corruption under Ms Rousseff’s Workers’ Party (PT). Brazil is suffering its worst recession since the 1930s, and the PT and its allies are embroiled in a vast bribery scandal centred on the state-run oil company, Petrobras. They were voting for their families, many proclaimed, or their constituents, or God (see article). Others nodded to the special interests that got them elected. Few mentioned the specific charge against Ms Rousseff: that she had fiddled government accounts to disguise a big budget deficit.

The next morning Brazil awoke to a changed political landscape. Ms Rousseff looks likely to follow in the ignominious footsteps of Fernando Collor, the country’s first directly elected president after two decades of military rule ended in the mid1980s. He was impeached for corruption in 1992, less than three years into his term.

Ms Rousseff’s departure would bring to an end the PT era, which began 13 years ago under her predecessor and patron, Luiz Inácio Lula da Silva. It would upend Brazil’s politics—and increase uncertainty—even as the country struggles to halt an economic crisis. This is perhaps the most dangerous moment for the still-evolving democracy since the generals stepped down in 1985.

Ms Rousseff and her party denounced the lower-house decision as a coup d’état—like the one in 1964, but with the role of the generals played by biased media, a “selective” judiciary and compromised legislators. Forty of the congressmen who voted against her have been indicted for various crimes; 15 more are under investigation in Lava Jato (Car Wash), as the Petrobras corruption investigation is known. She compared her ordeal to the torture she suffered as a left-wing guerrilla under the dictatorship, and vowed to fight on.

But she looks unlikely to win over the Senate, which began to set up a commission to analyse the lower-house motion on April 19th. The Senate’s make-up is somewhat more friendly to her than that of the lower house: larger and richer states in the south and south-east, where she and her party are widely loathed, account for half of lower-house seats but only a quarter of the Senate’s. But only a bare majority is required for the Senate to accept the impeachment motion for trial. Estado de São Paulo, a newspaper that has been tracking voting intentions, reckons that 46 out of 81 senators want an impeachment trial (and 20 are against).

The Senate is likely to vote by mid-May. If the result is as expected, Ms Rousseff would have to step aside and the vice-president, Michel Temer, would take her place for up to 180 days. Should two-thirds of senators then vote to remove Ms Rousseff from office, he would serve until her term ends in December 2018.

In office, Mr Temer would have to tackle several Herculean tasks. Brazil’s economy is tanking, chiefly as a result of interventionist mismanagement during Ms Rousseff’s first term from 2011 to 2014. Output fell by 3.8% in 2015 and could do so again this year, the IMF reckons. Per person, output could be down by a fifth since its peak in 2010. Since the start of Ms Rousseff’s second term 1.8m jobs have been lost. Some 10m Brazilians, or one in ten workers, are out of work, and unemployment is likely to increase further, as businesses struggle under debt incurred in the boom years. Inflation has eased slightly but remains near 10%, further eroding incomes.

Cleaning the stables   To restore confidence Mr Temer would need urgently to cut the budget deficit. On Ms Rousseff’s watch it ballooned from 2.4% of GDP to a terrifying 10.8%. Restoring public finances would take a combination of spending cuts and tax rises, neither of which is popular—and some measures would require constitutional changes. In November Mr Temer outlined business-friendly reforms that would mark a break with the PT’s left-wing programme.

But he would struggle to push them through. Ms Rousseff tried similar, smaller measures several times, and appointed a market-friendly finance minister, Joaquim Levy, on her re-election. The real jumped when he was named, and again whenever reforms looked likely to make it through Congress (see chart)—only to slump again when they were stymied by politics. Mr Levy stepped down late last year, having achieved less than he had hoped. The markets’ spirits recovered as the odds of impeachment improved.

Just because 72% of the lower house backed impeachment does not mean Mr Temer would be assured of simple majorities in both houses to pass legislation, let alone the three-fifths in each needed to amend the constitution. He could not even rely on his own centrist Party of the Brazilian Democratic Movement (PMDB): seven of its congressmen backed Ms Rousseff in the impeachment vote, including its leader in the chamber.

Even more worryingly, many PMDB leaders are beholden to business interests that back reform in principle but not always in practice. A tangle of tax breaks is unlikely to be relinquished without a fight, and the coddled manufacturing sector cherishes the subsidies and trade barriers that shield it from foreign competition. Austerity would hardly be a vote-winner in October’s local elections. These are especially important to the PMDB, which is more a coalition of regional bigwigs than a grouping of politicians with similar ideas about how to run a country.

The vice-president’s party is not only fractious but tarnished by allegations of corruption. It was the PT’s main ally until it pulled out of the governing coalition last month, and several of its congressmen have been accused of involvement in the Petrobras affair. On April 18th a former executive at the company claimed that Renan Calheiros, the PMDB speaker of the Senate, had taken $6m in bribes from a supplier of oil rigs. The supreme court has already indicted his opposite number in the lower house, Eduardo Cunha, for corruption and money-laundering. Four other senior PMDB congressmen are under investigation. (All deny wrongdoing.) Meanwhile, the electoral authority is investigating whether Ms Rousseff and Mr Temer took money from the Petrobras scheme for their re-election campaigns. If it concludes they did, it could call a new election for both president and vice-president.

With friends and donors thus tainted, Mr Temer would struggle to attract talent to his government. Arminio Fraga, a former Central Bank governor close to the PSDB, is reported to have spurned Mr Temer’s advances, though the PSDB itself has hinted that it might unofficially support his government. And he would have to balance the pressing need for competence against the steps required to build a coalition in a Congress that houses 27 parties.

Brazilian analysts forecast that GDP would shrink by 3-4% this year with Mr Temer at the helm. That is better than 4-6% under Ms Rousseff, but still horrible. Inflation might be a shade lower than otherwise, and the currency a touch stronger. But few see growth returning before 2018, and then only sluggishly. Unemployment could reach 11% by the end of the year—and stay there. João Castro Neves of Eurasia Group, a consultancy, speaks of a slew of “unknown unknowns”. The PT has vowed “total” opposition in Congress to a government led by Mr Temer. Its allies among trade unions and social movements are considering roadblocks and perhaps a general strike—especially if Mr Temer were to pursue the measures needed to stabilise the economy, which they dub “neoliberal”.

Unlike Mr Collor, who had no popular or political backing to speak of, Ms Rousseff still enjoys some. And the third of Brazilians who oppose impeachment see the vice-president as a usurper. During the house vote, 26,000 of Ms Rousseff’s supporters gathered in front of Congress, separated from 53,000 pro-impeachment protesters by a steel fence erected by the police. Similar scenes—minus the fence—were repeated across Brazil. Some fear that they symbolised a country rent asunder—and a democracy at risk of tearing apart. All this leaves Mr Temer vulnerable to discontent and puts Brazil at risk of further turmoil and decline.

But there are reasons to think that the damage will be limited. The country’s institutions have shown an ability to withstand the twin traumas of the impeachment process—even one as contested and flawed as Ms Rousseff’s—and the Lava Jato investigation.

Even in the rush for impeachment the supreme court, despite being packed with PT appointees, set out guidelines but did not second-guess the legislature on the merits of the case against the president. All involved obeyed the rules; though the vote was decried by her supporters in the lower house, no one suggested that it should be overturned by force. Emotions ran high during the voting, and some of the rhetoric was intemperate, but the deputies mostly observed parliamentary decorum. “Few countries could have pulled this off,” marvels Matthew Taylor, a political scientist at American University in Washington, DC.

The protesters outside also behaved well. There was no violence that warranted intervention by the police, let alone the army. Crowds dispersed peacefully. The next morning, normal life resumed.

Students of democracy


Brazilians are not given to revolutions; they have never had a bloody one. The “coalitional presidentialism” that grew out of the system enshrined in the constitution adopted in 1988, in which a strong executive co-exists with a multiparty legislature, both reflects and reinforces a cultural affinity for consensus. Since 1995 the sitting president’s party has never held more than 20% of all seats in Congress, points out Saulo Porto of Prospectiva, another consultancy. To secure backing for policy measures, a leader must coax and cajole a broad range of allies.

This has sometimes taken an unseemly form: in the mensalão (big monthly) scandal in Lula’s first term, the government paid small coalition parties regular kickbacks in exchange for their support in Congress. The petrolão (big oily), as the Petrobras affair is known, appears to have had a similar aim. Alliance-building also tempers any radical instincts. Brazil was slower than some of its neighbours to embrace—and then only half-heartedly—the “Washington consensus” of liberal reforms in the 1990s, notes Mr Castro Neves. But it also resisted the siren song of the far-left “Bolivarian revolution” led by the late Hugo Chávez in Venezuela in the following decade.

In choosing between political boldness and stability, Brazil generally plumps for the latter. It is no surprise that its most revered post-war presidents were not visionaries but wheeler-dealers: from Juscelino Kubitschek in the 1950s to Lula himself. Mr Temer is also comfortable in smoke-filled rooms. Fernando Henrique Cardoso, Lula’s two-term predecessor from the PSDB, was enough of a political operator to be unfazed when the PT forced an impeachment motion (over helping out troubled banks) onto the lower-house agenda after his re-election in 1999. It was roundly defeated by 342 votes to 100. Dozens of other attempts to oust Mr Cardoso and Lula never got that far.

“Presidentialism doesn’t work without a strong president,” says Nilson Leitão, a PSDB leader in the house. Ms Rousseff is singularly weak. She has barely tried to hide her disdain for Congress—or her lack of interest in political horse-trading. On her watch coalitional presidentialism turned into “collision presidentialism”, jokes Murilo de Aragão, a political scientist. Congressmen punished her by elevating Mr Cunha, for years a thorn in her side, to the position of house speaker in February 2015. He accepted the impeachment motion last December partly to divert attention from his own mounting legal woes, but also because of personal animosity. Without him, her position would probably have been secure.

A glimmer of dawn   Ms Rousseff’s likely downfall is the result of a string of personal failures—economic errors, tolerance of sleaze and political ineptitude. That is not to say that Brazilian democracy will function well without her: absurd electoral rules, for instance, force would-be federal deputies to campaign across entire states, the largest of which is home to 44m people. That is a recipe for corruption. And with no minimum vote-share required to enter Congress, parties are excessively fragmented, weakly led and clientelistic. These are flaws in the design of democracy, but not threats to democracy itself.

Lava Jato, too, revealed the seriousness of Brazil’s situation—and the resilience of its institutions. Public prosecutors and judges have wielded their constitutionally guaranteed independence with gusto. They have also gained new tools. Ms Rousseff pushed through laws rewarding plea bargains and mandating stiff penalties for corporate bribery. These have been essential in uncovering the corruption at Petrobras; dozens of defendants collaborated in return for leniency. And firms are now shutting bribery departments, quips one consultant, to replace them with compliance offices.

While denouncing the Lava Jato investigators as coup-mongers, Ms Rousseff has not tried to stop them—much to the dismay of many of her allies. (An attempt in March, shortly after he was detained for questioning, to shield Lula from prosecutors by naming him chief of staff with ministerial immunity was a rare lapse.) A PMDB-led administration could try to rein in Lava Jato. Yet such is Brazilians’ weariness with dirty politics that Mr Cardoso, the former president, was surely right when he intimated recently that they would rebel.

After decades of passive acceptance, Brazilians are fed up with graft. Despite the weak economy, corruption has replaced health and security as their top concern. As Lava Jatoprogresses from businessmen to politicians—the supreme court is expected soon to indict congressmen, who are protected from prosecution in lower courts—politics could be purged of its dirtiest practitioners. Even before sentencing, which could take years, voters may punish the worst at the ballot box.

After 13 years of PT rule, during the first decade of which rising prosperity and enlightened social polices turned millions of poor people into consumers, Ms Rousseff’s mistakes and her party’s moral collapse are now helping to turn Brazilians into citizens. It will not happen quickly. One executive of a big investment bank likens Lava Jato to chemotherapy: “It may weaken Brazil now but will help it survive in the long run,” he says. The catastrophe of Ms Rousseff’s presidency has given Brazilians an invaluable political education. Eventually, that should strengthen the country’s democratic foundations.

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Few pro-impeachment congressmen cited the specific charges






DILMA ROUSSEFF, Brazil’s embattled president, is accused of fiddling government accounts. But the congressmen who voted in favour of impeachment on April 17th mostly cited other reasons. The lowest point came when Jair Bolsonaro, a hard-right ex-soldier, dedicated his vote to the torturer-in-chief of the dictatorship that imprisoned thousands in the 1960s and 1970s—including Ms Rousseff herself.

The majority invoked the Brazilian version of motherhood and apple pie. Only a handful referred to the charges. Others cited special interests and fringe causes. A smattering is given here.