As focus shifts to fixing Brazil economy, its political problems are set to endure

Dilma Rousseff, Brazil’s first woman head of state, has cleared her office at the Palácio do Planalto after a special Senate session voted to put her on an impeachment trial

Written by Hari Seshasayee | Updated: May 14, 2016 9:10:22 am
Brazil's President Dilma Rousseff speaks during the opening of the National Conference of Women, in Brasilia, Brazil, Tuesday, May 10, 2016. The impeachment proceedings against Rousseff took another hairpin turn Tuesday after the acting speaker of Congress' lower house Waldir Maranhao put the impeachment process back on track a day after he sparked chaos and sowed further discord among Brazil's fractious political class by annulling an April 17 vote by the Chamber of Deputies for impeachment. (AP Photo/Eraldo Peres) Dilma Rousseff speaks during the opening of the National Conference of Women, Brazil. (Source: AP)

Dilma Rousseff, Brazil’s first woman head of state, has cleared her office at the Palácio do Planalto after a special Senate session voted to put her on an impeachment trial. Although Rousseff and the Workers’ Party (PT) have tried everything in their arsenal to stay in power, Brazil now has a new interim president in Michel Temer, Rousseff’s former vice president and member of the Brazilian Democratic Movement Party (PMDB). The Senate has 180 days to decide Rousseff’s fate: A two-thirds majority vote would result in a formal impeachment, anything less means Rousseff could be reinstated.

A multitude of factors coalesced to push for Rousseff and her party’s removal from power. This includes a restless opposition that has spent 13 years on the sidelines, a breakdown of political alliances and the forging of new ones, an emboldened Congress aided by a fierce judiciary, an expectedly biased local media, millions of frustrated Brazilians protesting on the streets or from their homes (called Panelaços), and the government’s mismanagement of the economy.

No one comes out of this unscathed. As the ruling party, the PT is seen to be the root cause of the political and economic crisis. They tried but failed to change Brazil’s corrupt politics and left the economy in a shambles. The PMDB and the opposition Brazilian Social Democracy Party (PSDB) come out of this looking like opportunistic overlords.

The whole process has been marked by division and hypocrisy. This was most apparent during the impeachment vote on April 17. Outside the National Congress building, a kilometre-long wall divided Rousseff’s supporters and detractors. Inside, the 513-member Chamber of Deputies — more than 60 per cent of whom face serious charges like bribery and embezzlement — voted to proceed with the impeachment. This also highlights the folly of a weak coalition in a presidential system: A president, elected directly, can be removed by Congress. This is underscored by the fact that a majority of Brazilians, 62 per cent, want new elections rather than an interim government.

Rousseff’s suspension will have significant immediate and long-term consequences. As interim president, Temer will look to consolidate power in the early phase of his short tenure. He has already handpicked seasoned politicians like José Serra for his cabinet. The interim government will look to win support by passing some quick, investor-friendly reforms, including a hike in the FDI limit in the aviation sector and a reversal of a 2010 law that gives Petrobras a minimum 30 per cent stake in all pre-salt oil fields.

The new administration will encounter a recalcitrant PT and protests by thousands of its supporters. The PT’s image has certainly been tainted, but neither Rousseff nor former president Lula da Silva will go down easily. They will fight through the ballot box. However, it’s a pity that the PT will now be remembered less for strengthening state institutions, banning corporate campaign financing or bringing 40 million Brazilians out of poverty, and more as the party that brought down the economy and whose president faces impeachment.

In the long run, Brazil’s structural and political problems will remain. The political class is likely to be more cautious. Current investigations, like the Petrobras or Lava Jato (Car Wash) scandals, may slow down and die out. The focus is likely to shift to seemingly more important things like fixing the economy. Political reform will have to wait.

Average Brazilians are the most affected by the current crises. The economy is expected to contract 4 per cent in 2016; inflation and unemployment are already in double digits. But all is not gloomy. This is a good time for some businesses. The UNICA, the sugarcane industry union, is optimistic about this year’s harvest. Low asset prices and a weakened Brazilian real has helped attract $75 billion in FDI in 2015.

Despite the drama, democracy will endure. Brazil is now in its longest democratic run of 27 years, its institutions are arguably stronger than before.

(This article first appeared in the print edition under the headline ‘A new moment in Brazil’)

The writer, a Latin America analyst, is currently with the CII. Views are personal

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