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Alex Cuadros, New York Times – 02/09/2016
On Wednesday, thousands of people packed Paulista Avenue, in central São Paulo. Many were there to celebrate the impeachment of Dilma Rousseff, Brazil’s first female President. They posed for photographs while holding plastic champagne flutes and servings of cake with yellow, green, and blue frosting—the colors of the Brazilian flag. Meanwhile, many others had turned out to condemn what they called a golpe: a coup. Earlier in the day, the country’s senators had voted overwhelmingly to remove Rousseff from office, but this apparent consensus belied a deep national rift, and on the street the crowds were bitterly divided. As night fell, lines of riot police separated the opposing groups, and officers used tear gas to disperse anti-impeachment demonstrators.
A majority of Brazilians had wanted Rousseff out, but few in the country appear to fully grasp the technical grounds for her impeachment: she was convicted of breaking budgetary laws by decreeing minor outlays without congressional approval and delaying payments to state banks. In practice, the impeachment trial served as a vote of no confidence in a President who had led the country into its longest recession in decades. The party she belongs to, the left-leaning Workers’ Party, had also been implicated in a corruption scheme that funnelled billions of dollars into political campaigns and offshore bank accounts during its thirteen years in power. The irony here is that many of the lawmakers who voted for Rousseff’s impeachment are themselves suspects in the scheme.
Editorial Staff, BBC Mundo – 09/01/2016
“After a process of more than eight months, 61 of the 81 Brazilian senators voted on Wednesday in favor of dismissing Dilma Rousseff as a president.
The Senate majority considered that Rousseff violated tax rules, committing “crimes of responsibility” to disguise the budget deficit, charges that she denies.
Rousseff, who was suspended from office in May, never completed half of her second term as a president.
The person who will instead replace her is the same who did in these past months, Michel Temer. The former vice president is now effective in office until the next elections in 2018.”
Joe Leahy, Financial Times – 08/25/2016
Brazil’s senators on Thursday begin the final phase of impeachment proceedings against leftwing President Dilma Rousseff as the nation’s chief justice Ricardo Lewandowski warned them of the gravity of the decision they were about to take.
The senate will hold several days of debates, with Ms Rousseff due to appear before a final vote next week that is expected to lead to the president’s replacement with her former centre-right deputy, Michel Temer.
Ms Rousseff was suspended in May after the Senate voted overwhelmingly to open a formal impeachment process. Mr Temer, her vice-president, has since acted as interim president.“The parliamentarians gathered in this house have been transformed by the law into judges and should as a consequence, as far as is humanly possible, leave aside their opinions, ideologies, political preferences and personal inclinations,” said Judge Lewandowski, who is presiding over the session.The final round of the impeachment process, in which Ms Rousseff has been accused of manipulating the budget, comes four days after Brazil closed the 2016 Olympics in Rio de Janeiro.Ms Rousseff has attacked the process as a parliamentary coup and her Workers’ party has tried to generate opposition to it at home and abroad, but proponents of the impeachment say it is being conducted according to the constitution.Mr Temer, a skilled insider in Brasília’s arcane political world, will have been hoping for a boost to his low popularity rating from the feel-good atmosphere after the Olympics, in which Brazil won its first football gold medal.The impeachment is expected to pass by more than the necessary two-thirds margin of the 81-seat senate, putting Mr Temer into the hot seat, with business and markets expecting rapid advances on the economy once he takes over.
“Mr Temer’s challenge is about restoring domestic and foreign investor confidence and citizens’ trust in the government, which is a very tall order,” said Paulo Sotero, director of the Brazil Institute at the Washington DC-based Wilson Center. “But there is no alternative.”
The benchmark Bovespa index has gained nearly 70 per cent in dollar terms since the opening of impeachment proceedings in April against Ms Rousseff, whose interventionist policies were seen as partly to blame for Brazil sinking into its deepest recession on record over the past two years.
Brazil looks to build on goals beyond football success
Hopes rise that the national team’s path to the Olympic final presages a broader economic revival
In particular, markets want to see Mr Temer’s finance minister, Henrique Meirelles, deliver reforms to rein in Brazil’s ballooning budget deficit and place public finances on a sustainable track.
The keystone reform is a new law that would rule out real increases in public spending for the foreseeable future.
Solid progress on reforms would coincide with a nascent economic recovery that economists predict will begin in Brazil next year.
Capital Economics forecast in a note that Brazil’s gross domestic product would grow 1.5 per cent next year after an expected 2.5 per cent in 2016 — a more optimistic forecast than many other economists, who are expecting a fall of 3 per cent or more this year.
“Brazil’s economy is bottoming out and, while the recovery will be slow going, our 2017 GDP forecast is slightly above the consensus,” said Capital Economics.
One of the biggest threats to Mr Temer is that his fiscal reforms could be watered down in congress, with resistance already under way to efforts to include health and education in the budget cap.
While he has been able to use the impeachment as an excuse for his not getting reforms through until now, the clock will start ticking if Ms Rousseff is removed next week as expected and he is formally installed as president until the next elections in 2018, analysts said.
Mr Sotero of the Wilson Center said that whatever happens, Brazil will be forced to confront its problems over a lack of accountability in public finances and budget overspending.
Public spending in Brazil constantly rises no matter whether tax revenues increase or fall, with public debt on track to reach 90 per cent of GDP by 2018, considered unsustainable given Brazil’s high interest rates.
“Now we are finally going to have the good debate and the necessary fight we have been postponing for years,” said Mr Sotero.
Paulo Sotero, Brazil Institute Director
Huffington Post – 08/25/2016
In the end, most Brazilians saw the Rio Olympics as a waste of money well worth it for bringing the country a measure of hope and joy — none greater than winning the first gold medal in man’s soccer to complete the nation’s unsurpassed record of achievement in the world’s most popular sport. A victory in man’s volleyball over Italy in the final day added to the celebration of Brazil’s best Olympic performance, with seven gold and a total of nineteen medals. It did not, however, move public opinion about the wisdom of hosting the event.
By a margin of two to one, Brazilians said, quite realistically, that the cost of the Olympics far exceeded its benefits and, by implication, will not contribute to ease the deep recession the country has faced for more than two years. At the same time, a majority believe the Olympics will help improve Brazil’s international image, a welcome psychological shot in the arm at a time of crisis.
“A waste of money that worked out well”
“It was waste of money that worked well”, wrote columnist José Roberto de Toledo, summing up the contradictory feelings Brazilians displayed in a national opinion poll released in the games’ closing day. The nightmares of crime, contamination of athletes and tourists by Zika and polluted waters at the nautical venues never materialized. Nor did the threat of terrorism or the catastrophic scenarios of infrastructure collapse and political protests that preoccupied local and foreign media for months.
Ironically, the worst case of violence reported during the games never took place. It was quite embarrassing only for the four American swimmers who fabricated it after a night of drinking and partying, and to foreign journalists who bought their story and pontificated about Brazilians’ insecurities after they angrily reacted to the swimmers obviously false allegations.
With the games done, the country will now turn its attention to the Olympic -size domestic crisis it needs to confront. The recession has cost the jobs to more than 11 million and exposed the flaws of Brazil’s political system. On August 25th the Senate will resume the impeachment trial of president Dilma Rousseff, who was suspended from office in May after 70 percent of the Congress Chamber of Deputies indicted her of violating the budget and fiscal responsibility laws by making non-authorized expenditures and creating an explosive fiscal deficit of 10 percent of GDP at the root Brazil’s current troubles.
Her opponents say that 59 senators, five more than the needed majority of two thirds required, will vote to remove Rousseff from office, probably on August 31st. This outcome is expected even among leaders of her Workers Party, who have positioned themselves against a Rousseff proposal to call for early elections in the unlikely case she survives the vote. The disgraced leader vowed to appear in person in Senate on August 29th to defend herself against the charges, a gesture that will undermine her argument that the impeachment amounts to a congressional “coup d’état”. The impeachment proceedings enjoy public opinion support and will follow a ritual approved by Brazil’s Supreme Court last December, after weeks of debate. It will be chaired by the country’s Chief Justice.
Herculean task ahead
Vice-president Michel Temer, a former Rousseff ally who has replaced her as acting president after the impeachment vote, has now the Herculean task of fixing the country’s fiscal mess and revive economic growth after he is sworn in as president before Congress in early September. Measures already announced include establishing a ceiling for federal expenditures, that have gone up for the past two decades and exploded to more than 10 percent of GDP in 2015, reforming an unsustainable social security system and aggressively privatizing state assets to reduce public debt. These policies are aimed at gaining confidence from local and foreign investors, essential to revive an economy now in an unprecedented third year of recession. The alternative of doing nothing and watch the economy collapse to new lows is a political suicide. Complicating matters, however, an ongoing federal investigation that uncovered massive corruption two at state oil giants Petrobras will remain as a potential liability to key ministers of the new government and to Temer himself.
In his favor, the president can count on an opposition in disarray and the lack of alternative to the austerity measures the government wants to push forward. Temer has the support of the business community, which sees in him a seasoned politician capable of mobilizing support in Congress to negotiate the difficult compromises necessary to move legislation that will get Brazil out of the economic swamp and back on a path of economic growth. Forecasters from banks see GDP in positive territory next year. The good vibes left by the Olympics may help yield that scenario, by reminding the country of its resilience and capacity to face uphill battles in time of adversity, such as hosting a successfully Olympics in the midst of a major national crisis.
Carlos Eduardo Lins da Silva – Wilson Center Fellow
Geopolitical Information Service – 08/23/2016
Brasilia, Aug. 11, 2016: acting President Michel Temer meets representatives of Brazil’s construction companies as he tries to restore confidence in the economy and boost private investment (source: dpa)
Upstaged by the Olympic Games in Rio, the impeachment procedure of President Dilma Rousseff in Brazil’s National Congress will likely conclude by early September, nine months after it formally started. The Senate will enter the final phase of the process, a trial, on August 25. The session will last five to seven days and will be presided over by the chief justice of the Supreme Court, as stipulated in the country’s Federal Constitution.
A two-thirds majority vote, 54 out of the 81 senators, is necessary to convict the president, but odds are that this threshold will be surpassed. On August 9, 59 senators approved the Impeachment Committee’s final report recommending Ms. Rousseff’s conviction; only 21 senators voted in her favor. Back on April 17, the lower chamber in congress voted for impeachment by a 367-137 vote – well above the 342 needed for a two-thirds majority.
At that point, Vice President Michel Temer became acting president and Ms. Rousseff was suspended in her duties. If convicted, she will be barred from running for public office for eight years and Mr. Temer will serve out the rest of her term, until December 31, 2018. If acquitted, Ms. Rousseff will resume her office.
Playing it safe
As interim president, Mr. Temer talks a good game about the urgent need to improve conditions for the Brazilian economy. Little, however, has happened in the form of legislation or other significant steps to advance promised reform. A sense of uncertainty persists in the business community and in society as a whole, despite strong market rallies and tranquility on the streets. The government continues to postpone the announcement of specific action plans and timetables for bills to be sent to congress.
Mr. Temer’s excuse has been that his mandate as acting president is too weak to institute change. He appears to be waiting for Ms. Rousseff’s conviction, which would give him full presidential status. Most measures necessary to contain the worst economic crisis in the country’s history are bound to be unpopular and Mr. Temer is probably wary of losing support if he enacts them before the final impeachment vote.
A recent public opinion poll showed 58 percent in favor of Ms. Rousseff’s impeachment and 35 percent against. But the acting president’s approval rating was only 14 percent, just one percentage point above Ms. Rousseff’s when she was suspended from office. Mr. Temer’s disapproval rating, however, was less than half as much as Ms. Rousseff’s at 31 percent. A solid majority of Brazilians (62 percent according to the polls) would rather have an immediate presidential election than suffer either of those two politicians in office.
Constitutional roadblock
Ms. Rousseff has promised that, if acquitted, she would give up the rest of her term and call a referendum on moving up the 2018 presidential elections to an earlier date. There are serious legal and practical obstacles to this, however. In Brazil, a constitutional amendment is required to change the date of a presidential ballot. To win passage in congress, such an amendment would need to gain the support of three-fifths of the members of both chambers, in two separate votes. Politically, this would be almost impossible to achieve, given the deep divisions on Brazil’s political scene.
Even Ms. Rousseff’s own Workers Party (PT), which has held the presidency for the last 13 years, has discarded the idea of trying to move forward the 2018 elections. The reason for that is the municipal elections scheduled for October 2, 2016 in 5,570 Brazilian cities. The party leadership fears a backlash caused by Ms. Rousseff‘s huge unpopularity and numerous corruption scandals. Under these conditions, the PT’s best strategy might be to lead the opposition against a Temer government.
Looming austerity
The strategy has merits, since the only feasible way for Brazil to crawl out of its current fiscal hole is slashing government spending and increasing revenue. That means adopting policies which, at least initially, will not be welcome to most of society. Whoever opposes austerity stands to gain electoral support, and that is PT’s only hope at this moment.
There is another way, however, to accelerate a presidential ballot: charges of illegal campaign financing. Such charges were filed against the Rousseff-Temer slate in the 2014 election. If the Supreme Electoral Court finds the winners guilty as charged, the 2014 election would be nullified and a new one could be held immediately.
In the event of a verdict this year (an unlikely scenario, given the deliberate pace of proceedings in the electoral court), the new president would be chosen in a normal election, by popular vote. If the ruling came in 2017 or later, congress would pick a candidate to serve out the Rousseff-Temer term.
Although the legal decision would ordinarily be made on technical grounds, the case is so delicate that political considerations are expected to play a role, too. If the Temer cabinet makes progress on stabilizing the situation and its popularity improves in coming months, the court will probably bide its time, postponing a ruling as long as possible. The chances of Mr. Temer staying in office until the end of 2018 would be quite large under this scenario.
How the acting president fares depends mainly on the economy’s performance. There are signs that Brazil’s crisis has bottomed out. Some analysts predict that gross domestic product (GDP) may resume growing in the fourth quarter. Estimates for this year’s contraction have been revised from 3.6 percent to a notch above 3 percent. For 2017, the consensus opinion is for growth after three consecutive years of contraction, the latest prediction for 2017 is a 1.6 percent GDP increase. From 2018, barring the unexpected, Brazil could resume its normal annual growth rate of 2.5 to 3 percent.
Signs of revival
The depreciation of the Brazilian real has led to a healthy trade surplus ($23.6 billion in the first half of 2016) and attracted foreign capital. In an international environment of high liquidity and few attractive assets, foreign direct investment (FDI) in Brazil is projected to reach $70 billion this year.
For many Brazilians, however, the situation remains dire. Unemployment has reached 11.3 percent; among youth in the city of Sao Paulo, it stands at 36 percent. There are almost 12 million people without jobs, most of whom have already exhausted their unemployment benefits. Average pay this year will recede to the 2012 level.
Under such conditions, acting President Temer will find it especially difficult to push austerity plans through congress. Markets have put considerable hope in his economic team, led by Finance Minister Henrique Meirelles, who had a successful stint as president of the country’s central bank during the Luiz Lula da Silva administration (2001-2009).
May 17, 2016: Brazil’s Finance Minister Henrique Meirelles announces his new economic team, which was well received by the financial world (source: dpa)
Mr. Meirelles has already prepared a fiscal adjustment plan that features as its centerpiece a bill that would cap public spending. This implies less public money for basic sectors such as education and health. Measures to contain social security expenditure and cut labor costs are also part of the Meirelles scheme. Fierce opposition from labor unions and social movements is virtually assured.
Although the finance minister has not talked about raising taxes yet, this will be his only option if alternative sources of new revenue, especially sales of state-owned assets, do not materialize. Brazilians, it must be noted, are not fond of privatization and any proposals of this kind are also certain to bring controversy.
Leadership vacuum
In a congressional vote, Mr. Temer can count on support from the former opposition, his Brazilian Democratic Movement Party (PMDB) and, initially at least, most of the “big center” (centrao) – a group of opportunistic deputies from several small parties formerly led by Eduardo Cunha, who lost his job as parliamentary speaker in July 2016 after he was implicated in a bribery scandal. The centrao group is particularly volatile, however, and Mr. Temer will always need to tread carefully.
Should the acting president prove successful against the odds, Mr. Meirelles – as the leader of his economic team – would be a natural candidate for the presidency in 2018. Back in the 1990s, when Brazil impeached a president for the first time (Fernando Collor de Mello, 1990-1992), the administration of his successor, Itamar Franco (1992-1995), turned the economy around in a situation almost as dire as the present one. The then Finance Minister Fernando Henrique Cardoso managed to put out hyperinflation and became so popular as a result that he moved on to become Brazil’s president and then was reelected for a subsequent term; he won both races in the first round.
If Mr. Temer proves less lucky and Brazil’s economy deteriorates further, all bets are off. The country is now suffering from an acute leadership vacuum. Almost all of its best-known political figures have been ensnared in a sweeping anticorruption operation by the federal police code-named Car Wash, which started with an investigation of bribery at the national oil company Petrobras; several other large state companies were later implicated as well.
Next watershed
Former President Lula da Silva, who handpicked Ms. Rousseff as his successor (she had never run for office before), is still Brazil’s most popular politician. That counts for little, however, since polls show him leading potential rivals in the 2018 election with only 20 percent support, as opposed to almost a 50 percent disapproval rating. Mr. da Silva also faces a charge of obstructing justice and has been implicated in three cases of bribery and failure to disclose assets.
Other possible candidates for 2018 are also problematic. Mr. Temer has pledged not to run and may not be allowed to for legal reasons; the environmental activist Marina Silva (who finished third in the last two elections) has not been able to form a strong party of her own; and Aecio Neves, the runner-up in 2014, did not perform well in the opposition and now faces bribery charges himself. The same applies to Foreign Minister Jose Serra, a former presidential candidate. If the charges against him are dropped, however, Mr. Serra looks capable of making a strong run in 2018.
The October municipal elections may bring more clarity to the picture, especially if one of the political parties emerges as the clear winner in key cities. But making predictions at this point is foolhardy. Both the impeachment process and the Olympics have been monopolizing public attention. Starting in September, the municipal elections will become a big issue for most Brazilians and the political pulse in the country will quicken.
Scenarios
Baseline: Congress approves enough of the government’s economic program to give Mr. Temer credibility and spur economic growth. That makes Finance Minister Meirelles or Foreign Minister Serra probable candidates for a 2018 presidential run. New leaders may emerge from the October municipal elections to offer fresh alternatives to the country.
Less likely: Mr. Temer fails to push his reform package through congress. The economic situation worsens, solidifying opposition to the acting president, who either gets impeached, resigns or has his election nullified in court. In any of these scenarios, an indirect presidential election in congress would almost certainly follow.
Least likely: Dilma Rousseff is acquitted in the Senate. She resumes her responsibilities as president and calls new presidential elections.
Jonah Busch – Center for Global Development, 08/18/2016
From 2004-2013, Brazil reduced climate emissions by more than any other country on earth, thanks to its success cutting Amazon deforestation by 80 percent. Now, a new study in Ecological Economicsfinds that actions to protect the Amazon were affordable too, costing Brazilian governments at the federal, state, and local levels just $2.1 billion over nine years—one-third the estimated $6.2 billion price tag of the 2016 Olympic Games in Rio de Janeiro.
Felipe Arias Fogliano and the paper’s other authors arrived at this finding by estimating the incremental budget increase in dozens of government programs once forest conservation efforts began in earnest after 2004. Their analysis of actual government expenditures adds an important new strand of evidence to a large body of published research suggesting that conserving forests is one of the lowest-cost ways to reduce climate emissions. (Previous evidence has come from opportunity cost-based models, integrated assessment models, and site-specific case studies.)
Will Carless – Global Post, 08/18/2016
You’ve probably heard by now about the robbery scandal in Rio de Janeiro involving the United States’ 12-time Olympic medalist Ryan Lochte and his swimming friends — and how Brazilian officials accuse them of lying.
The details are really fuzzy, but here’s a 25-second synopsis of what’s believed to have happened (if you already know the basics, skip down below the video):
Lochte and three other Team USA swimmers went out drinking in Rio on Saturday night. They left a party in the early hours of Sunday morning, and got back to the athletes’ village just before 7 a.m. Later that day, Lochte claimed that their taxi had been held up by men calling themselves police. The robbers took Lochte’s money but left his cellphone, he told NBC News. Rio police started investigating.
Rodrigo Viga & Jeb Blount – Reuters, 08/18/2016
Brazil TV aired a video on Thursday that showed four U.S. Olympic swimmers did not tell the whole truth when they said they were robbed at gunpoint in an incident that has marred the image of South America’s first Olympic Games.
The security-camera images broadcast on Globo TV appeared to show the swimmers, including Olympic gold medallists Ryan Lochte and Jimmy Feigen, in a dispute with staff at a Rio gas station, a fact they did not mention to police in their accounts.
“The athletes lied to us about their story,” a top Rio police official told Reuters on Thursday, declining to be identified because the matter was still under investigation.
Brazil Portal 