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All Signs Point to Worsening Crisis for Brazil’s Rousseff
Thousands of demonstrators take part in a protest against the government of Brazil’s President Dilma Rousseff in front of the Brazilian National Congress in Brasilia, March 15, 2015 (AP photo by Eraldo Peres).
By Frida Ghitis, , Column
Dilma Rousseff has faced worse. Nothing that happens to her as president of Brazil could compare with the physical pain inflicted on her by professional torturers from the military dictatorship she fought to topple as a young revolutionary. But now that she is the one holding power, she is facing an avalanche of troubles, including the wrath of the people, the perils of a global economy and the stubbornly uncooperative forces of nature.
Sadly for Rousseff, all signs indicate her problems are only about to grow worse.
The dire signals started emerging a long time ago. But the evidence that this is a crisis of massive proportions is becoming increasingly visible with each passing day.
On March 8, Dilma, as most Brazilians refer to her, went on national television to defend her latest raft of unpopular austerity measures, which came with her approval ratings plummeting, the economy nose-diving and a giant corruption case building into a political crisis.
As Rousseff spoke on that warm evening, it was reported, drivers in several cities honked their car horns, and many Brazilians banged pots in their open windows to express their anger.
A week later, the opposition organized a march to protest the corruption that has engulfed the country’s state-run oil company, Petrobras, and leading members of Rousseff’s ruling Workers’ Party (PT).
The demonstration’s success surprised even its most optimistic organizers. Marchers, at least 1 million of them, took to the streets in two dozen Brazilian cities. Their calls for the president to step down or face impeachment resonated across the country.
Few expect that Rousseff, who narrowly won re-election last October, will step down. But there is little doubt that the problems besetting the president are more likely to increase than to ease. That may bring some glee to her political opponents, but the unavoidable reality is that much of what ails Rousseff is what ails Brazil. A worsening crisis for her is bad news for the country.
That’s because her most urgent mission now is to take the country out of an economic slump and prevent an even more damaging acceleration of the situation. The weaker she becomes, the more difficult her task, and the greater the chances that a mild recession will turn into a deep one.
The most immediate cause of the discontent is the Petrobras scandal, but the problems go wider and deeper, which explains why Brazil’s season of discontent will be a long and difficult one.
First, the scandal: Petrobras, the national oil company, is the country’s largest and most important firm. It is mostly state-owned, and it manages Brazil’s vast and economically vital oil resources. As part of the so-called “Car Wash” investigation, prosecutors have discovered that Petrobras illegally funneled billions of dollars toward briberies and illegal contributions to political campaigns.
The company’s value has collapsed. Petrobras’ CEO and several top executives have already resigned, and prosecutors have arrested several people as the investigation expands to the highest reaches of Rousseff’s party. Making matters worse, Rousseff herself was chairman of the Petrobras board when the illegal activities allegedly occurred. Just this week, prosecutors officially charged the treasurer of PT and more than two dozen others. The Supreme Court has authorized the investigation of some 50 politicians, most of them from the president’s party, in connection with the case, which also involves some of the country’s top construction and infrastructure firms.
So far, the president has not been directly implicated. She insists she knew nothing about the irregularities and is vowing to push for a thorough investigation and a complete housecleaning.
The timing of the case could not be worse. It coincides with a reversal in Brazil’s economic fortunes, which makes Brazilians much less favorably disposed toward the government. Making matters worse, a sharp drop in rain totals means Brazil will probably face water shortages and electricity blackouts in the months ahead, which is sure to make the population more irritable and less likely to support the bitter medicine Rousseff and most experts prescribe.
The massive anti-Rousseff demonstrations will make one of the president’s most difficult tasks even more complicated.
The drop in global demand for commodities, partly the result of a slowdown in Chinese and European growth, has hit Brazil hard. Amid slower exports and economic contraction, the Brazilian currency is plunging. The collapse in oil prices makes it all even worse.
The country’s fiscal deficit is widening, creating one of the least palatable situations for a leftist government.
Rousseff needs to close the fiscal gap to avoid seeing Brazilian debt downgraded by credit ratings agencies. That means raising taxes and cutting social spending. Her first steps in that direction have stirred anger in the streets and resistance in the legislature. The massive marches last weekend mean legislators will be even less inclined to support her.
Already, a round of subsidy cuts has slashed her approval ratings. Even before the events of the past couple of weeks, polls showed her ratings down to the low 20s, the lowest of any Brazilian president since 1999.
To be sure, Rousseff is not the first Brazilian president to govern amid major corruption scandals. In fact, her predecessor and mentor, Luiz Inacio Lula da Silva, also saw the PT embroiled in an embarrassing and wide-ranging corruption case, which reached all the way to his office but never touched him. Lula, however, had the advantage of governing during a time of spectacular prosperity. That was partly the result of global conditions, which allowed him to spread the wealth and expand social spending.
For Rousseff, the convergence of scandal, spending cuts, rising unemployment and accelerating inflation leave no easy way out.
If she cannot push through her spending cuts and tax increases, Brazil’s sovereign debt will be downgraded. That will make borrowing more expensive, widen the deficit and worsen the recession and the unemployment rate. If she does succeed in passing the legislation, she will likely become even less popular. It’s an old-fashioned catch-22, Brazilian style. Bad news for Dilma; bad news for Brazil.
Frida Ghitis is an independent commentator on world affairs and a World Politics Review contributing editor.
Sadly for Rousseff, all signs indicate her problems are only about to grow worse.
The dire signals started emerging a long time ago. But the evidence that this is a crisis of massive proportions is becoming increasingly visible with each passing day.
On March 8, Dilma, as most Brazilians refer to her, went on national television to defend her latest raft of unpopular austerity measures, which came with her approval ratings plummeting, the economy nose-diving and a giant corruption case building into a political crisis.
As Rousseff spoke on that warm evening, it was reported, drivers in several cities honked their car horns, and many Brazilians banged pots in their open windows to express their anger.
A week later, the opposition organized a march to protest the corruption that has engulfed the country’s state-run oil company, Petrobras, and leading members of Rousseff’s ruling Workers’ Party (PT).
The demonstration’s success surprised even its most optimistic organizers. Marchers, at least 1 million of them, took to the streets in two dozen Brazilian cities. Their calls for the president to step down or face impeachment resonated across the country.
Few expect that Rousseff, who narrowly won re-election last October, will step down. But there is little doubt that the problems besetting the president are more likely to increase than to ease. That may bring some glee to her political opponents, but the unavoidable reality is that much of what ails Rousseff is what ails Brazil. A worsening crisis for her is bad news for the country.
That’s because her most urgent mission now is to take the country out of an economic slump and prevent an even more damaging acceleration of the situation. The weaker she becomes, the more difficult her task, and the greater the chances that a mild recession will turn into a deep one.
The most immediate cause of the discontent is the Petrobras scandal, but the problems go wider and deeper, which explains why Brazil’s season of discontent will be a long and difficult one.
First, the scandal: Petrobras, the national oil company, is the country’s largest and most important firm. It is mostly state-owned, and it manages Brazil’s vast and economically vital oil resources. As part of the so-called “Car Wash” investigation, prosecutors have discovered that Petrobras illegally funneled billions of dollars toward briberies and illegal contributions to political campaigns.
The company’s value has collapsed. Petrobras’ CEO and several top executives have already resigned, and prosecutors have arrested several people as the investigation expands to the highest reaches of Rousseff’s party. Making matters worse, Rousseff herself was chairman of the Petrobras board when the illegal activities allegedly occurred. Just this week, prosecutors officially charged the treasurer of PT and more than two dozen others. The Supreme Court has authorized the investigation of some 50 politicians, most of them from the president’s party, in connection with the case, which also involves some of the country’s top construction and infrastructure firms.
So far, the president has not been directly implicated. She insists she knew nothing about the irregularities and is vowing to push for a thorough investigation and a complete housecleaning.
The timing of the case could not be worse. It coincides with a reversal in Brazil’s economic fortunes, which makes Brazilians much less favorably disposed toward the government. Making matters worse, a sharp drop in rain totals means Brazil will probably face water shortages and electricity blackouts in the months ahead, which is sure to make the population more irritable and less likely to support the bitter medicine Rousseff and most experts prescribe.
The massive anti-Rousseff demonstrations will make one of the president’s most difficult tasks even more complicated.
The drop in global demand for commodities, partly the result of a slowdown in Chinese and European growth, has hit Brazil hard. Amid slower exports and economic contraction, the Brazilian currency is plunging. The collapse in oil prices makes it all even worse.
The country’s fiscal deficit is widening, creating one of the least palatable situations for a leftist government.
Rousseff needs to close the fiscal gap to avoid seeing Brazilian debt downgraded by credit ratings agencies. That means raising taxes and cutting social spending. Her first steps in that direction have stirred anger in the streets and resistance in the legislature. The massive marches last weekend mean legislators will be even less inclined to support her.
Already, a round of subsidy cuts has slashed her approval ratings. Even before the events of the past couple of weeks, polls showed her ratings down to the low 20s, the lowest of any Brazilian president since 1999.
To be sure, Rousseff is not the first Brazilian president to govern amid major corruption scandals. In fact, her predecessor and mentor, Luiz Inacio Lula da Silva, also saw the PT embroiled in an embarrassing and wide-ranging corruption case, which reached all the way to his office but never touched him. Lula, however, had the advantage of governing during a time of spectacular prosperity. That was partly the result of global conditions, which allowed him to spread the wealth and expand social spending.
For Rousseff, the convergence of scandal, spending cuts, rising unemployment and accelerating inflation leave no easy way out.
If she cannot push through her spending cuts and tax increases, Brazil’s sovereign debt will be downgraded. That will make borrowing more expensive, widen the deficit and worsen the recession and the unemployment rate. If she does succeed in passing the legislation, she will likely become even less popular. It’s an old-fashioned catch-22, Brazilian style. Bad news for Dilma; bad news for Brazil.
Frida Ghitis is an independent commentator on world affairs and a World Politics Review contributing editor.
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