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Brasil in Crisis - 2015-2016

Until recently, resource-rich Brazil benefited from the Chinese economic bubble. But then the intensity of Brazil’s downturn, with no parallel in the country’s history, sent the government of President Dilma Rousseff to the brink of collapse.

Brazil benefited from the commodities boom, and used these gains to finance social programs, formalize the labor market and raise minimum wages. But the downturn in the commodities sector exposed the structural flaws in the economy, which ws dependent on Chinese growth. Brazil suffered its steepest contraction in more than three decades in 2015. This was the worst annual fall in GDP since 1990, when the economy dipped 4.3 percent. GDP shrank by 3.8 percent in 2015, and may decline by a further 3 percent in 2016.

Brazil was heading into its longest and deepest recession since records were first taken in 1901. Brazil suffered from rising unemployment and a drop in investor confidence. The country’s inflation gained steam in late 2015. Food prices picked up amid sharp currency devaluation in the country as well as impacts of severe weather conditions in the south. All three main credit rating agencies have downgraded Brazil to junk status.

Billions were stolen in a huge kickback scheme at the national oil company Petrobras. Petrobras profits were funnelled to members of Rousseff’s PT and its allies. A prosecutor's motion 03 March 2015 to open investigations against 54 individuals, including the leaders of both chambers of Congress, meant a swath of Brazil's political elite now felt threatened. About a dozen executives from some of Brazil's biggest construction and engineering firms had been under "preventive arrest" since late 2014. The prevailing view is that the scandal has taken on a life of its own and will spread further if any of the numerous parties under pressure buckle.

Dilma Rousseff was Petrobras board chair during much of the decade-long period when politicians allegedly benefited from huge kickbacks via inflated contracts struck between the oil firm and dozens of companies. Rousseff’s approval rating had fallen by around 20 percentage points since the beginning of the year as the country struggled with a stagnant economy, rising inflation, and a major corruption scandal at the state-run oil company. Forty-two percent of Brazilians thought the left-wing president was doing a “good” or “excellent” job when she narrowly defeated conservative candidate Aécio Neves in a runoff poll on October 26. That figure remained unchanged in December 2014, but plummeted to 23 percent in February 2015.

Close to a million demonstrators marched in cities and towns across Brazil on 15 March 2015 to protest the sluggish economy, rising prices and corruption - and to call for the impeachment of leftist President Dilma Rousseff. The marches across the continent-sized country come as Brazil struggles to overcome economic and political malaise. Rousseff was unlikely to resign or face the impeachment proceedings called for by many opponents. The protests were a sign of a polarized country increasingly unhappy with its leadership.

By mid-March 2015 Rousseff, elected for a second term in 2014, lacked the approval of the majority of Brazilians for the first time since taking over the presidency in January 2011. About 62 percent of Brazilians said they found her rule either "bad" or "terrible," according to Datafolha's. Only 13 percent of respondents are satisfied with the current president, the survey said.

Tens of thousands of protesters across Brazil called on President Dilma Rousseff to step down 16 August 2015, blaming her and the leftist Workers' Party for the corruption and economic troubles besetting Latin America's biggest country. Austerity measures replaced the economic go-go years fueled by Chinese demand for commodities, while an ever-expanding bribes and embezzlement probe centered on state oil company Petrobras ripped through the country's elite. In April, at least 600,000 people turned out against Rousseff and her Workers' Party (PT) and more than a million in March. It initially appeared the August protests, the third of their kind this year, had drawn relatively modest crowds.

Rousseff’s popularity ratings have fallen to a level not seen since 1992, when President Fernando Collor de Mello was forced from office after being impeached for corruption. A poll in August 2015 showed only 8% of those surveyed considered Brazil’s government to be “great” or “good.” By contrast, 71% said the government was a “failure.”

The investigations into the Petrobras corruption scheme showed that politicians from many parties — not only the governing Workers' Party — were involved in the illegal network, including some from the main opposition party, PSDB, and others from former presidential candidate Marina Silva's Socialist Party (PSB). Most of the politicians participating in the scheme come from the right-wing Progressive Party.

Brazil was led by a shaky governing alliance of the Workers' Party and the Brazilian Democratic Movement Party (PMDB). This alliance was being torpedoed by the President of Congress Eduardo Cunha, a leading PMDB member, but one who was closely allied with the opposition. Many believe he was seeking to exploit the issue to strengthen his own power base.

Eduardo Cunha, the speaker of the lower house of Brazil's parliament, said on 02 December 2015 that impeachment proceedings had been opened against President Dilma Rousseff. Cunha said he officially accepted an impeachment petition, which was filed by opposition figures on the grounds that Rousseff manipulated the budget to fill budget holes.

An impeachment trial was still a long way off, however, as the procedure must pass several stages before it can reach a vote to oust the leader. As part of the next step, two-thirds of the lower house must approve the impeachment process for it to then move forward. There are not enough votes in Congress to initiate an impeachment process.

Cunha said that the current alliance in Congress will not hold until the 2018 election, in a clear message of warning to the governing Workers' Party. His party mate and head of the Senate, Renan Calheiros broke with the ruling party in a similar fashion.

The 1994 constitutional revision reduced the Presidential mandate to four years, and in 1997 Congress approved an amendment allowing reelection. Cunha announced a constitutional reform proposing changing the presidential system to a parliamentary one.

Rousseff and her predecessor Luiz Inacio Lula da Silva were exonerated of all responsibility in the Petrobras scandal in a report released 29 February 2016 by the parliamentary commission in charge of the investigation. Commission spokesperson, Deputy Luiz Sergio Nobrega de Oliveira said “there was no proof” against Rousseff or Lula in any of documents examined by the parliamentary commission.

President Rousseff's re-election in 2014 marked the fourth consecutive victory for the Workers Party, a fact that did not sit well with the country's elites and their right-wing allies, who immediately started to conspire against the president. The Workers Party (PT) governments provoked Brazil’s elites to the point that they were willing to try to mount a coup to oust Rousseff. Her supporters see the impeachment as an effort to retroactively win the 2014 election through non-democratic means.

  1. The Federation of Industries is backing the coup in order to rollback worker friendly policies enacted by the Workers' Party. One of the major forces behind the push for impeachment has been the Federation of Industries of São Paulo, which represents the richest state's largest businesses. It is led by Paulo Skaf, a supporter of the PMDB, the party of Vice-President Michel Temer, who would take over the president's duties should she be impeached.
  2. The efforts to oust the PT were partially driven by contempt. Brazil, since the colonial era, has been a highly stratified society. The powerful classes are afraid because (the poor) are occupying spaces that were once reserved for them. This is the intolerance that upper classes have always had in Brazilian history. Few know that Brazil actually received ten times as many slaves as the US and is home to the largest Black population in the world outside of Africa. Brazil was the last country in the Western hemisphere to abolish slavery, in 1888. The protests backing the ouster of President Rousseff have been overwhelmingly white, revealing the racial divide of the current political crisis. In Brazil, where race and class are nearly indistinguishable, the weight of reactionary policies will fall heaviest on the country's predominantly Black and low-income population.
  3. Secret phone recordings between Brazil's planning minister and the former president of Transperto have revealed that the minister suggested a “change” in the government to “stop the bleeding” caused by an investigation into Petrobras. The March 2016 conversation between Planning Minister Romero Juca and former Transperto President Sergio Machado took place just weeks before impeachment proceedings were launched against Brazilian President Dilma Rousseff.
  4. The PT developed innovative and widely praised social programs such as Fome Zero, which virtually eliminated malnutrition, and Bolsa Familia, which saw millions lifted out of poverty. The Brazil Without Misery program is credited with lifting at least 22 million people out of extreme poverty. Poverty fell from 35.8 percent in 2003 to 15.7 percent in 2013, whereas extreme poverty fell from 11.5 percent in 2003 to 4.5 percent in 2013. Under PT government’s public spending on education grew from US$17 billion in 2002 to US$94 billion in 2013. This represents a significant bump as a percentage of total government expenditure, from 10.4 percent in 2004 to 15.6 percent in 2012. Spending on health grew from US$28 billion in 2002 to US$106 billion in 2013. Represented as a percentage of GDP, health spending increased from 7.0 percent in 2004 to 9.7 percent in 2013. The country's infant mortality rate, a key social indicator, dropped from 22.5 deaths per 1,000 live births in 2003 to 14.6 in 2015. Many of those who oppose the leftist governments of Lula and Rousseff alleged that the reason they continue to be reelected is due to clientelism, that the poor vote for the Workers Party only because they stand to gain from wealth distribution programs.

Brazil's most influential broadcast and print outlets - like Globo, Abril and Folha - are media powerhouses owned by a handful of the country's richest families. Those outlets have been called out for their selective and strategic coverage of this impeachment story and accused of trying to use the corruption scandal to unseat a government that 50 million Brazilians voted for less than two years earlier.

On 02 March 2016 a majority of Brazil's Supreme Court voted to accept corruption charges against lower house speaker Eduardo Cunha, putting him on trial for allegedly accepting bribes on contracts for two drill ships leased by state oil company Petrobras.

The Brazilian Democratic Movement Party, PMDB, remained the main ally of the ruling Workers' Party. Its leader, Michel Temer, was Rousseff's vice president. In addition to the vice presidency, it held six cabinet posts. The drive to impeach Rousseff could come to a vote in both chambers of Congress after it passes a committee in the lower house in April 2016. One benefit for the party, which plans to field its own candidate in the 2018 presidential election, is that Temer would become president.

The momentum for a leadership change in South America’s largest country gathered steam. Rousseff’s popularity rating was 10 percent and 60 percent of Brazilians would support her impeachment. Rousseff’s government scrambled to contain the fall-out from the largest protests in Brazil’s history: Brazilian police said more than three million people in 100 cities, from Manaus in the north to Curitiba in the south, took to the streets Sunday 13 March 2016 to demand her impeachment. Sergio Praca, a political analyst at the Getulio Vargas Foundation in Rio de Janeiro said the demonstrations "were very powerful" and were "the worst scenario possible for the government."

On 16 March 2016 Former Brazilian President Luiz Inacio Lula da Silva agreed to take over as chief of staff for his successor Dilma Rousseff, potentially marking a shift away from austerity measures in efforts to stimulate the struggling economy. Lula’s return to government may mark a shift in economic policy, as the former president has openly criticized austerity efforts and called for more public spending to end Brazil's worst recession in decades.

The new position came after federal judge Sergio Moro was given jurisdiction to rule over money laundering charges presented against Lula. Accepting a cabinet position gave Lula immunity from Moro, though not from Brazil's Supreme Court. The opposition branded Rousseff's appointment of her charismatic political mentor as a desperate bid to shore up support in her Workers Party against impeachment proceedings.

The opposition request to impeach Rousseff alleged that her government manipulated accounts in 2014 to allow her to boost public spending in the run-up to her re-election in 2014. The president had 10 sessions in the lower house to present her defense and the decision to hold a session on 18 March 2016 meant the clock has started on those, even though the special impeachment committee did not meet. The case against her centers on allegations that Rousseff broke budget rules to boost spending as she campaigned for re-election in 2014. Lula and Rousseff both deny any wrongdoing.

Luiz Inacio Lula da Silva vowed 24 March 2016 to help President Dilma Rousseff to govern the country "if it is the last thing I do in life." The socialist leader affirmed that he can do so even though the country's Supreme Court maintains veto power over his appointment as Rousseff's chief of staff. The Supreme Court banned Lula because it maintained that Rousseff offered him the position in her cabinet in order to prevent a possible arrest over allegations of corruption linked to the Petrobras scandal.

On 17 April 2016 the 513-member lower house of Congress voted 367 to 137 in favor of the impeachment. Seven lawmakers abstained and two did not show up to vote. Rousseff’s supports needed 172 votes to block the impeachment from going forward. The issue passed to the senate to determine whether to open an investigation against Rousseff on possible removal from office. If approved by the senate, the president would be suspended from office and Vice President Michel Temer, also facing low approval ratings and corruption charges, would step in to fill the country’s top office. About 60 percent of the members of Brazil’s Congress face major charges for corruption and other crimes such as bribery, electoral fraud, kidnapping, and more.

The impeachment was payback for Rousseff permitting investigations of powerful lawmakers in the Petrobras corruption scandal that also implicated Lula. In fact, hundreds of lawmakers who cast a vote for impeachment were themselves under investigation.

Brazilian senators voted 12 May 2016 to suspend President Dilma Rousseff from office for breaking budgetary laws. She faced an impeachment trial, and her vice president, Michel Temer, took over her post in the interim. A simple majority was all that was needed to open a trial, and the 55–22 vote was one vote more than the 54 votes needed to convict her and remove her from office. It was not immediately clear how many of the senators who voted to put her on trial would also vote to convict her.

Rousseff used money borrowed from state banks to cover budget deficits and pay for social programs. She engaged in some creative accounting to try and make the situation look better, though it was questionable whether or not her actions were illegal. The push for impeachment was largely fueled by other lawmakers’ desires to deflect attention from themselves.

Right-wing foundations in the United States that fund attacks on labor and popular movements, and fund Zionist lobby organizations in the West for anti-Palestinian campaigns, are also funding the Brazilian right-wing elites campaign against the government of Dilma Rousseff, the Popular Front for the Liberation of Palestine (PFLP) said in a statement 18 May 2016. The PFLP, Palestine’s main secular Marxist-Leninist and revolutionary socialist organization, slammed the Senate-imposed government of Michel Temer over its removal of ministries for human rights, women, and social justice as well as its planned austerity policies that will mostly affect the poor. The group argue that the move against the leftist government of Rousseff is a “coup … orchestrated by the most right-wing, elite, major capitalist sectors of the Brazilian economy, in league with global capital and U.S. imperialism.”

“This coup is not like usual coups in Latin America, which normally involve weapons, tanks in the streets, arrests and torture. The current coup is happening within the democratic framework, with the use of existing institutions in support of indirect elections not stipulated in the Constitution. This coup is carried out by hands tearing apart the Brazilian Constitution,” Rousseff said. “If there is no crime, an impeachment is illegal. And since it’s illegal, it’s a serious problem for the interim government. I’m living proof of this unlawfulness and injustice,” she added.

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Page last modified: 24-05-2016 19:33:37 ZULU