What’s Next For Brazil’s Political Crisis

Every week, The WorldPost asks an expert to shed light on a topic driving headlines around the world. In this edition, we speak with Brian Winter, editor-in-chief of Americas Quarterly, about Brazil’s critical state of political uncertainty.

With the 2016 Olympic Games around the corner, Brazil is contending with a massive corruption investigation and a dangerous Zika virus epidemic. Now, the country’s newly appointed interim president, Michel Temer, is assuming the daunting responsibility of fortifying the nation’s fragile democracy as a global audience watches closely. 

Brazilian senators voted Thursday to begin an impeachment trial against President Dilma Rousseff, amid widespread accusations that she broke budgetary laws — a crime the embattled leader denies committing.

“I have made mistakes, but I have not committed any crimes,” she said shortly after her trial and resulting suspension were announced, calling it a coup. “I am being judged unjustly, because I have followed the law to the letter.”

Temer, Rousseff’s former vice president who is also viewed highly unfavorably, assured Brazilians that the nation would overcome its state of political instability and dire economic recession — the worst in eight decades.

“Political parties, leaders, organizations and the Brazilian people will cooperate to pull the country from this grave crisis,” he said upon taking office. His white, entirely male Cabinet has announced ambitious plans to grow the economy and balance the budget.
 

The WorldPost spoke to Brian Winter, vice president of policy of Americas Society/Council of the Americas and the editor-in-chief of Americas Quarterly, about the political, social and economic challenges that lie ahead for Brazil.

What is Rousseff’s political future? Can she survive the impeachment trial?

I think the odds of her surviving impeachment are very slim. Very, very few people in Brazil expect that she will come back, and that’s in part because this impeachment process is — right or wrong — as much about the economy and politics as it is about the accusations against her. Particularly on the economy, considering that it’s the worst recession in 80 years, there just aren’t a whole lot of Brazilians who want to see her come back.

What sort of political action or maneuvering can we expect from Rousseff and her allies over these next few months? 

She’s going to try very hard to defend herself during the trial. I see almost zero possibility of her resigning. She’s going to say that she was the victim of a coup. She’s going to travel Brazil and make this claim. Her supporters will stage street protests and also potential road blocks and more disruptive demonstrations in order to both call attention to her plight and also make life for her successor as difficult as possible. 

But there are many people who think that her party’s main objective in doing this will be to position themselves for the next election, which is currently scheduled for October 2018. The narrative of a coup and the “illegitimate neoliberal” Temer government is going to be a powerful one for a segment of Brazilian society.

This is a complete shift in political ideology. Is this the end of the Brazil’s political left for the foreseeable future?

It is a substantial shift in political ideology. The Temer government is going to maintain many of the policies, including the social welfare policies that have been implemented over the last 14 years, largely because they are extremely popular. The Temer government also comes in with very low popularity. Prior to his taking office, just as many Brazilians said they wanted to see Temer impeached as they wanted to see Rousseff impeached.

As far as the long-term possibilities for the left, I think they can be back in office in some form or another as soon as 2018. It’s hard to have a country that has as much inequality as Brazil has and not have a government that takes that into account. In recent history in Brazil, what’s that meant is a government that’s left or center-left, whether it openly calls itself that or not.

Can Temer earn back Brazilians’ trust and respect in the political class?

Yes, I do think he can earn back their trust, but it’s going to be very hard for him. Neither he nor Rousseff are charismatic, easily lovable people. Unfortunately, the task that awaits him will involve a lot of bitter medicine.

Brazil’s budget deficit last year was 10 percent of GDP. That is comparable to the worst budget deficit that we had in the United States during the financial crisis. Closing that budget gap, which is at the core of Brazil’s current economic problems, is going to be deeply unpleasant. Brazilians are not going to like it. Trying to do that in a context where his legitimacy is being questioned, and where he’s not the most personally sympathetic politician in Brazil, is going to be really hard.

How will the political turmoil affect Brazil’s efforts to recover from its economic crisis?

There is nothing fundamentally broken about Brazil. It has an economy that four years ago, everybody thought was going to continue to do really well for the foreseeable future. People were predicting growths of 3, 4, 5 percent into perpetuity. That may have been too optimistic, but there’s nothing unfixable about it now.

The problem is that it does have structural problems that a government is required to fix. It has the world’s most complicated tax code, according to the World Bank. It takes your average company, according to the World Bank, 2,600 hours a year just to calculate what it owes.

Bureaucracy and red tape, even by the standards of the emerging world, are atrocious in Brazil. Infrastructure, despite having made some strides this decade, is also bad. And what it all adds up to is, according to the World Bank, a country that is in the bottom half of countries in the world in terms of the ability and ease of doing business.

Those are the reasons, in addition to the issues I mentioned with the budget deficit, why investment in Brazil has contracted for 10 straight quarters now. And until investment turns around, the economy is not going to get back on the path to growth.

All of those things that I mentioned — the taxes, the infrastructure, the bureaucracy — they’re all fixable, but fixing them is politically difficult in the short term for a variety of reasons. To fix them you need a certain degree of political consensus, and marshaling that consensus is going to be difficult for a Temer government. It’s possible, but very difficult.

Brazil’s new finance minister, Henrique Meirelles, has plans for economic reform, including the country’s generous pension system. This has long been an area of concern in Brazil. What sort of cuts can we expect? 

We’ve seen very clearly in the United States how difficult that reform is. Everybody knows here in the United States that we have a problem with our Social Security system. Politicians have been talking about it for 20 or 30 years. Everybody knows what’s needed to solve it, but no politician is willing to do it, because it’s so politically explosive.

Will he be able to fundamentally address that big pension gap that Brazil has? I don’t know. How much will he be able to do? I don’t know. The problem is big. In fact, some economists say that the pension gap proportionally is much bigger in Brazil than in the United States, but the reasons are the same. People are living longer, and Brazil is also a place that has some incredibly indulgent standards on when people can retire, for example.

Does the crisis have ramifications for the country’s ability to host the Olympic Games amid concerns about the Zika epidemic?

There was a lot of concern about Brazil prior to the World Cup in 2014, and a lot of bellyaching in the international media about all the problems that might occur. I know this because I was one of the bellyachers as a member of the foreign press based in Brazil.

As it turns out, everybody believed that the World Cup would be a disaster logistically, but the Brazilian soccer team would do well. It ended up being the opposite. The execution of the Cup went great — 87 percent of foreign visitors said they wanted to come back to Brazil one day — but Brazil lost 7-1 to Germany in the semi-final and it was a debacle.

I’ve tried to be cautious this time around about the risks to the Olympics. Brazil and Rio de Janeiro in particular do a really good job hosting parties. They have a deluge of visitors, both local and foreign, every year for New Year’s and then for Carnival. I think they’ll be fine, but it’s worth being concerned about a government that has many issues on its plate.

It’s valid to worry about them taking the eye off the ball in terms of security in particular. Brazil’s a country with 60,000 homicides a year, there’s the Zika epidemic that you mentioned, but I think that visitors will go to the Olympics and have a really good time.

The impeachment of Rousseff has laid bare major political and social divisions in Brazil. What would it take to unify the country?

I think to speak of unification right now, in a classical sense, is probably unrealistic. I think it’s true in the United States, too. Sometimes when times are tough, you’re going to have healthy debate, especially within a democracy. I don’t see a Temer government being able to get 85 to 90 percent of the country on its side.

There are too many difficult things to be done, and I think the last few years have just been too contentious. I believe the debate instead will be focused on getting enough consensus in Congress and from society to do the things that can start healing the economy and ensure that important pillars of Brazil’s democracy, such as the investigation of the Petrobras corruption scandal, remain in place.

If the Temer government can begin to fix the economy and show that justice will still be done and that democratic institutions are working, I think that will begin the process of politically healing the country.

This interview has been edited and condensed for clarity.