Corruption and Controversy in Brazil

As corruption charges plague both sides of the political spectrum, a slew of controversial austerity proposals from the Temer government exacerbate polarization in Brazil. 

March 28, 2017

Acting president Michel Temer in his first ministerial meeting in May 2016 (Agencia Brasil/ Wikimedia Commons)

On March 15, 2017, approximately 1,500 activists occupied the Ministry of Finance building in Brasília to oppose a government proposal to restructure Brazil’s massive social security program. This was linked to a huge day of actions against labor reforms and the proposed social security changes, organized by a long list of social movements and trade unions, which drew up to a million people to the streets across Brazil. This and other recent protests reflect an ongoing effort by left-wing forces to block the neoliberal economic and social policies of the government of Michel Temer, who undemocratically came to power last year after the impeachment of President Dilma Rousseff.

Two weeks later, on March 26, thousands of right wing opponents of the former Rousseff government participated in demonstrations throughout the country to support ongoing investigations about alleged corruption during the previous administrations of Workers’ Party (PT) Presidents Luiz Inácio Lula da Silva and Dilma Rousseff. These rallies, however, failed to acknowledge charges against current government ministers from their own parties who have been accused of influence peddling, kick-backs, and bribery. Although the turnout was notably smaller than the massive demonstrations they organized in 2015 and 2016, the country remains politically polarized with conservative politicians still holding the upper hand.

The right wing wave that has swept Brazil is part of an international trend. But in Brazil, it has taken a particularly nefarious national toll, as the country’s economy and political institutions have deteriorated significantly over the last two years. After the Party of the Brazilian Democratic Movement (PMDB)’s wrangling of power from the Worker’s Party, it has been difficult for the Temer government to establish or maintain legitimacy. Plus, he has proposed a number of unpopular austerity packages in order to carry out a series of controversial structural reforms. His approval rating hovers around 10%. Ongoing conflicts among the executive, legislative, and judicial branches and the now routine arrests of prominent businessman and politicians charged with corruption in the midst of the ongoing economic crisis have dampened the optimistic predictions of recent years that Brazil was becoming an emergent twenty-first century world power.

The economy was already showing signs of slowing down during the 2014 presidential elections, which gave Rousseff only a narrow win over Aécio Neves, her center-right opponent. But the 2016 impeachment proceedings of the former revolutionary on grounds of failing to comply with budgetary regulations deepened the country’s crisis. Leaked telephone conversations among members of the Party of the Brazilian Democratic Movement (PMDB), President Temer’s party— formerly part of Rousseff’s own political coalition— revealed that its leaders sought to oust Rousseff to deflect and block ongoing corruption investigations into their own financial handlings. There has been no evidence presented that the Worker’s Party was more mired in corrupt dealings that its right-wing opponents.

Nevertheless, Temer managed to convince a majority of the Congress that as President he would both fix the country’s economic and political problems while at the same time put a stop to government corruption. But so far, he has failed to fulfill any of his promises. Recently released figures from 2016 indicate that since 2014 the Gross Domestic Product has dropped 7.2% in absolute terms and 9.1% per capita. Having plunged into the worst recession in recent memory, specialists calculate that if the economy continues at its current sluggish rate, Brazil won't again reach 2013 growth levels until 2024.

Contrary to his promises, Temer’s initiatives seem to have actually deepened the country’s economic woes. Conservative fiscal measures have targeted many of the social guarantees set forth in the 1988 Federal Constitution. Among his most controversial actions has been Constitutional Amendment 55, which freezes all federal government expenditures for twenty years, allowing only for adjustments based on inflation. This means that health and education, two underfunded areas that are seriously in need of investment, will deteriorate even more.

The current government has also rapidly moved ahead—and with little public discussion—to modify the social security system by increasing the retirement age and restricting benefits, among other provisions. At the same time, proposed labor legislation would weaken existing protections. These measures have been sold to the public as necessary steps to solve the current economic crisis, but if they are implemented, it will mean the further dismantling of a complex set of labor and social guarantees that working people have gained over the last eighty years.

While the forces pushing for Rousseff’s impeachment used revelations about large-scale corruption involving private companies and government officials to mobilize their supporters in the streets, the current administration has done little to address endemic corruption. Five of Temer’s ministers have been forced to resign from office after charges surfaced that they were involved in illegal activities and five others are currently being accused of committing crimes. On March 30, Eduardo Cunha, former lower house speaker who was instrumental in orchestrating Dilma Rousseff's impeachment, was convicted in Operation Car Wash and given 15 years in prison.

Moreover, Temer recently appointed his close friend, Alexandre do Moraes, to the Supreme Court to replace Justice Teori Zavascki, who died in an airplane crash in January 2017. Zavascki was the justice responsible for overseeing the corruption investigations against current and former government cabinet officials, known as Operação Lava Jato (Operation Car Wash). Moraes formerly served briefly as Brazil’s Minister of Justice and before that was the Secretary of Security for the State of São Paulo. He is known for his tough “law and order” stance, especially against student protesters. But it seems unlikely that he will move against his political allies in the current government— even though many are mentioned in serious fraud and corruption allegations— because of his close relationship to the president.

Operation Car Wash, which began in March 2014 as an investigation into kickbacks and bidding manipulations in private contracts signed with Petrobras, the state-owned oil conglomerate, has now moved to the epicenter of Brazil’s political crisis. Several top executives from Odebrecht, the multi-billion-dollar construction conglomerate, as part of plea bargain agreements, have provided information about multi-million dollar bribes given to Brazilian politicians to secure government contracts. These accusations have implicated politicians across the political spectrum.

The burgeoning number of accusations against various government actors has resulted in the increased power of the Brazilian judiciary, which has arguably become the country’s most important political actor. Brazil’s 1988 Constitution, combined with the de-legitimization of the executive and legislative branches, has led to greater power in the hands of the Supreme Court, which has taken on a significant role as overseer and mediator of the political process. However, this does not necessarily translate into increased judiciary independence: Even though denunciations against corruption have been made against players across the political spectrum, investigations have largely targeted the Left, and media coverage has been largely one-sided. Hopes for an independent judiciary seem thwarted as prosecution after prosecution focuses primarily on members of the Workers’ Party. With the PMDB in power – and having come to power in the manner it did – this can hardly be surprising.

In addition, the Car Wash Operation has indiscriminately used preventative detention as a way to obtain plea-bargain agreements, a matter of deep concern for civil liberties. There is evidence that some executives and politicians have made false accusations against others in order to deflect attention from their own potential criminal prosecutions. Moreover, because many of the investigations involve construction companies involved in major infrastructure projects, many of which have been frozen, there has been a noted decline in the country’s contracting and construction sector.

Although efforts to root out corruption have won significant popular support, the measures adopted so far don’t address the more profound challenges of enacting comprehensive political reforms that might eliminate these practices once and for all in good faith across the political spectrum. A more comprehensive effort would require the confidence, participation and support of large sectors of Brazilian civil society. This approach to fixing the system is certainly not on the current government’s agenda – and even if it were, the Left, feeling increasingly under attack, would be understandably skeptical about coming to any kind of negotiation table.

For the immediate future, it seems likely that center-right politicians will simply try to tread water in anticipation of the 2018 presidential elections in order to come to power via democratic elections and therefore be seen as a more legitimate government. They still face a problem, however, with former President Luiz Inácio Lula da Silva. Although Lula continues to face corruption charges, he remains the most popular presidential candidate – though highly unpopular among his critics. Most observers, however, think it is unlikely that he will be able to shirk his way out of all of the convictions against him, which will prevent a presidential bid in 2018.

With the Workers’ Party significantly weakened due to the involvement of some of its leaders in recent scandals, and the forces to the left of the Workers’ Party still reduced in size and divided, there is no apparent progressive and viable presidential alternative to Lula on the horizon. Yet, in Brazil’s turbulent political climate, 2018 is a long way off for anyone to make any clear predictions about what might unfold this year and next.

James N.  Green is the Carlos Manuel de Céspedes Chair in Latin American History at Brown University.

Renan H. Quinalha holds a Masters’ degree in law from the University of São Paulo and is currently completing his doctorate in International Relations at the University of São Paulo.

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