Scandals in Brazil Prompt Fears of a Return to Turmoil

Source: By SIMON ROMERO, New York Times • Posted: Thursday, August 13, 2015

President Dilma Rousseff speaking in Brasília. Her approval rating has plunged since her re-election to a second term last year. Credit Ueslei Marcelino/Reuters 

RIO DE JANEIRO — The president is battling calls for her impeachment. The speaker of Brazil’s lower house is grappling with accusations that he pocketed a $5 million bribe. The former treasurer of the governing Workers Party is in jail.

Even former President Luiz Inácio Lula da Silva, Brazil’s most towering political leader in recent decades, is under the cloud of an investigation into claims of influence peddling.

A sweeping anticorruption crusade in Brazil is ensnaring one major political figure after another, throwing the country into upheaval at a time when the national mood is souring and the economy is reeling from a painful downturn.

Large segments of the political establishment are maneuvering against President Dilma Rousseff, a rebellion led by some figures embroiled in corruption scandals who are deflecting scrutiny away from their own legal problems. For many Brazilians, the broadening sense of political uncertainty ranks among the worst since democracy was re-established in the 1980s after a long military dictatorship.

Dilma Rousseff CreditEvaristo Sa/Agence France-Presse — Getty Images 

“I’ve seen Brazil stalled and frightened in many crises, but I’ve never seen it so hopeless as I see it today,” Paulo Cunha, 75, the chairman of Ultra, a fuel distributor and chemical manufacturer that is one of Brazil’s largest conglomerates, said this week. Among the most vexing aspects of this impasse, Mr. Cunha said, is “the complete absence of leaders.”

Such turmoil was supposed to be a thing of the past in Brazil, a democracy that reduced poverty and greatly increased its global profile during the previous decade.

But a colossal graft scandal is upending the political system, engulfing politicians, business leaders and a vast web of others surrounding Petrobras, the government-controlled oil company. An estimated $3 billion in bribes were paid in a labyrinthine scheme to Petrobras executives, who enriched themselves and shared the ill-gotten gains with political figures, according to testimony from conspirators.

Companies paid the bribes to win lucrative contracts with the oil company. Though Ms. Rousseff has not been charged, the bribery flourished while she was chairwoman of the board at Petrobras, and it continued during the first years of her presidency, opening her to claims that she was, at best, negligent in overseeing the company and its tendrils throughout government.

As the revelations of corruption continue to come out, the country is showing deep signs of shock and outrage, with some of the same political figures accused of wrongdoing trying to use the upheaval to their advantage.

“Awaiting greatness from the political dwarfs who dominate the Brazilian scene is awaiting the impossible,” said Clóvis Rossi, a columnist for the newspaper Folha de S.Paulo.

Street protests are being organized for this Sunday against Ms. Rousseff, in an echo of the widespread demonstrations against corruption and wasteful government spending that shook the nation before the 2014 World Cup.

“The country is terrible with Dilma, but it would get worse without her,” said Ronaldo Doria, 53, a math teacher, referring to the president by her first name.

“The solution is not disrupting democracy,” Mr. Doria added, arguing that some critics overlooked the long struggle to allow freedom of expression to flourish in Brazil. “At least those who criticize Dilma can do so without fear of getting arrested.”

The political flux is all the more pronounced because the opposition seems nearly as adrift as Ms. Rousseff.

The Brazilian Social Democracy Party, founded partly by leftist intellectuals who had opposed the military dictatorship, now embraces an amalgam of centrist, conservative and socially liberal views. Its leaders seem content to let Ms. Rousseff dangle in the wind, even if that means aggravating the uncertainty in the capital, Brasília, and the reverberations it has sent through the economy.

Two of the party’s leaders, Aécio Neves, the senator who ran against Ms. Rousseff in 2014, and Geraldo Alckmin, the governor of São Paulo, said this week that it was not up to them to solve the political mess.

Ms. Rousseff won a second term less than a year ago, but she is now struggling with sharply circumscribed powers. Some of Brazil’s most powerful men are pushing her into a corner, defecting from the governing coalition and greatly reducing her ability to pass legislation, while her own vice president signals that his time to lead may be coming.

Ms. Rousseff’s adversaries include figures who have been tarnished by the Petrobras graft scandal, like Eduardo Cunha, the speaker of the lower house, who recently broke from her coalition, and Fernando Collor de Mello, the former president who resigned in 1992 under suspicion of corruption and later resurrected his career as a senator.

Opposition legislators are seeking to start impeachment proceedings against Ms. Rousseff. The president seemed to have a respite this week when Renan Calheiros, the head of the Senate, who is also under investigation in the Petrobras scandal, expressed opposition to impeaching her. But in doing so, Mr. Calheiros managed to increase his own bargaining power, with Ms. Rousseff speaking favorably about his proposals to mend the economy.

Only months after her re-election, Ms. Rousseff has watched her approval ratings plunge into the single digits in 2015, the lowest of any Brazilian president in decades, as the economy comes under stress, with the gross domestic product seen shrinking more than 2 percent this year.

But a declining economy is not an impeachable offense, and no testimony has surfaced suggesting that she received any bribes, complicating the efforts to oust her. The courts are examining whether Ms. Rousseff’s campaign received illicit donations and whether she improperly used funds from state banks to cover budget shortfalls.

Either way, many voters hold her responsible for failing to curtail corruption in her own government and for policies viewed as worsening the economic slump. A successful but poisonous re-election campaign last year may be partly to blame, when Ms. Rousseff disputed the depth of economic problems and rejected her opponent’s proposals for fixing them.

Once she won, Ms. Rousseff chose a finance minister who is pursuing some of the same austerity measures she had previously avoided, generating scorn within her leftist Workers Party. It has not helped that some of her party’s leaders are expressing despondence over disclosures of illicit enrichment by party members who rose to power claiming that they would battle corruption.

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Analysts say that Ms. Rousseff has failed to mount an effective counterattack. Her predecessor, Mr. da Silva, anointed her as his political heir even though she had never held elected office. She sailed to victory in 2010, when Brazil’s economy boomed with 7.5 percent growth and Mr. da Silva enjoyed widespread popularity.

Five years later, her supporters contend that a “coup” is being put into motion by her opponents, echoing the polarizing politics of Venezuela, Paraguay and Honduras, Latin American countries where leftist leaders were toppled this century.

Still, some observers say that the political upheaval is a sign that Brazil’s democratic institutions are actually growing stronger, especially in a system long defined by the impunity enjoyed by powerful figures.

Former Petrobras executives have been arrested. The billionaire chief executive of the construction company Odebrecht is in jail as investigators examine his company’s role in the graft scandal. The navy admiral who oversaw Brazil’s secret nuclear program, one of the nation’s most powerful military figures, has been arrested, too, as the scandal spreads to the nuclear energy sector.

The arrests of such highly influential people reflect a crucial streak of judicial independence achieved by the Public Ministry, a body of independent prosecutors, analysts note.

Ms. Rousseff has refrained from interfering in the prosecutors’ work, while emphasizing that no one should be above the law in Brazil. She is supporting a new term for Rodrigo Janot, the prosecutor general overseeing the investigation into Petrobras. That has put her on a collision course with Mr. Cunha, the house speaker, who is emerging as the president’s most prominent nemesis and says he is being targeted unfairly by investigators.

Political analysts say that if Ms. Rousseff is ousted by her opponents without any explicit evidence of wrongdoing, Brazil’s democracy may be more fragile than once thought, inviting comparisons to an era that many Brazilians thought they had vanquished.

Before 1964, when the armed forces toppled a civilian president in a coup supported by the United States, Brazil endured several successful coups after the overthrow of Emperor Pedro II in 1889, historians point out. That is in addition to various unsuccessful efforts by the military to intervene in national politics.

Brazil has changed considerably since the dictatorship, which lasted from 1964 to 1985. It left behind an economy in disarray and a record of human rights abuses.

“Turmoil since then has been generated within a democratic context in which the military has not been a significant political actor,” said Colin Snider, a historian at the University of Texas at Tyler.

But many Brazilians have dim or nonexistent memories of the hyperinflation, debt crises and coups of the past. About half of the country’s 204 million people are under 30.

Forty-seven percent of Brazilians say the current political crisis is the worst the country has experienced, according to a public opinion survey by Data Popular this month.

On a street level, many watching the intrigue in Brasília express dismay over both Ms. Rousseff and her opponents.

“The problem is that I don’t see anyone who can take her place because all of the options are pathetic,” said Gabriela Souza, 30, a cosmetics saleswoman. “I feel anguished because there is no exit from this.”

The assessment of some in Brazil’s elite seems almost as glum.

“We need to fix the plane while it is in flight,” Luiz Carlos Trabuco, the chief executive of Bradesco, one of the country’s largest banks, said in televised comments. “We cannot wait for it to land.”