Dilma’s Crimes No Longer Pay

State-run oil giant Petrobras, in the eye of the current corruption storm in Brazil, once ranked among the top 10 largest public companies, according to Forbes. Now it ranks 416th.
State-run oil giant Petrobras, in the eye of the current corruption storm in Brazil, once ranked among the top 10 largest public companies, according to Forbes. Now it ranks 416th. (EconomiaPersonal)

PortuguêsThe successive Workers’ Party (PT) governments of Luiz Inácio “Lula” da Silva (2003-2011) and Dilma Rousseff in Brazil boosted the welfare programs for low-rent income families begun by the preceding administration of Fernando Henrique Cardoso (1995-2011).

These increasing handouts garnered great popularity for both of them, but they benefited from a boom period in the world economy which they failed to take lasting advantage of.

Instead of investing in the infrastructure necessary to spur ongoing growth, they chose instead the easy populist path and expanded the Bolsa Familia program, winning the gratitude of the needy, but flunking macroeconomic policy 101 by betting exclusively on internal consumption.

This unleashed inflation which, coupled with pitiful GDP growth, negatively affected both Brazil’s poor, who can now barely sustain their expected standard of living, as well as those middle-income earners laid off during the current recession, particularly in 2015.

But Brazilians are most indignant over one of the greatest scandals in the republic’s history: the Petrolãoa complex scheme of bribery, over-invoicing, and purchase of over-valued assets abroad, centered around state oil firm Petrobras. This all took place with the goal of funneling public funds to the Workers’ Party campaigns, as well as the ruling coalition’s fellow members the Brazilian Democratic Movement Party (PMDB) and the Progressive Party (PP).

Federal judge Sérgio Moro, in conjunction with the Prosecutor’s Office and Brazil’s Federal Police, first uncovered the network of politicians and financial operators that facilitated the pillage of Petrobras. The investigation, codename Lava Jato (Car Wash) led to the arrest of top executives from multiple firms involved in the illegal contracting cartel. Brazil’s Supreme Federal Court (STF) has only released them to house arrest pending trial in the last few days.

So far the corruption has cost the whole country R$6.2 billion (US$2.1 billion), just in losses at Petrobras. Brazil’s former flagship firm has dropped to 416th position on Forbes’ ranking of the world’s biggest public companies, down from the top 10 in 2012.

The Brazilian people are outraged over the mismanagement of their money. Brazil has one of the heaviest tax burdens, all without an efficient return in public health, transportation, education, safety, and infrastructure. Unrest came to a head when, on March 15, around 2 million Brazilians took to the streets nationwide to demand the impeachment of Rousseff, just 75 days after she was sworn in for her second term.

The Rousseff administration, surprised by the unexpected avalanche of protesters, set up an impromptu press conference that evening: only for two ministers to attempt to claim that protests had been limited to opposition strongholds, the states where the Workers’ Party had lost the presidential elections. In reality, the vote was neck-and-neck, with Rousseff scraping 51.6 percent over Aecio Neves’s 48.36 percent in the final round only through divisive rhetoric that split the country.

Immediately after the press conference, Brazilians went to their windows and began a panelaço, a common protest technique involving banging pots and pans, demonstrating for the second time that day their disapproval of the PT government. On April 12, a second round of popular non-partisan protests gathered 700,000 people across the country.

This goes to show just how fed up Brazilians are over endemic corruption. The penny began to drop with the Mensalão scandal in 2005, labelled by the Supreme Court judge Celso de Mello as a “criminal enterprise of power.”

The ruling PT was caught in the eye of the storm and its main leaders were tried and jailed. The whole country followed with rapt attention, witnessing how judges labored to unravel the case and punish the culprits.

The Brazilian people soon realized how every democratic institution, along with covert actors in the media, internet, justice system, and every organization with influence over public opinion, collaborated to create a single positive image of the PT and its achievements. That worked until 2014, but not anymore. The disruption of this hegemonic discourse has now seen the government’s political support evaporate.

In Brazil, May 1 is usually a day when presidents address the nation with a grandiose speech. Rousseff, perhaps fearing another panelaço, chose to stay away. Senate President Renan Calheiros broke ranks from the PMDB’s usual unconditional support for the PT, branding Rousseff’s silence “ridiculous,” and claimed that the president no longer had anything to say to Brazilian workers.

When on May 5 the ruling party did appear on national TV and radio, there was indeed another panelaço while former President Lula spoke. The next day, the ruling party coalition in Congress passed a series of measures that reduced labor benefits, such as an unemployment safety net, salary bonuses, and sick pay, betraying their campaign promises and the very same workers the party claims to represent.

Article 1 of Brazil’s 1988 federal constitution says that all power emanates from the people, and their representatives can only exercise it in their name. The Brazilian people have now opened their eyes and are demanding justice and an end to impunity. Let’s see what their representatives do next.

Translated by Daniel Duarte.

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