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 The penultimate Brazilian President to resign was Jânio Quadros in 1962. Eventually, leftist leaning Vice President Jango Goulart was allowed to take office. He was later removed during a bloodless coup on March 31, 1964. The military remained in power for the next twenty-one years.
Fernando Collor de Mello, the first President to be elected by popular vote in 1990, lasted less than two years when he resigned during impeachment proceedings that would have been successful had they continued. The corruption in which he was involved was peanuts compared to the figures that are being thrown around at the moment.
Brazilian institutions have matured to the point that a military takeover seems out of the question regardless of what Lula does or does not do. The constitution will be respected even if it means that Severino Cavalcante, the president of the Lower House of Congress, should be installed as president if both Lula and vice president Alencar should be forced out by impeachment or decide to resign. This possibility is not entirely out of the realm of reality, in my opinion.
The three parliamentary investigations taking place at the moment plus hearings of the ethics committee in Congress are beginning to tire the public. For nearly three months, accusations, testimony, denials and declarations of wrong doings have led to pages and pages of somewhat repetitive reporting in the media.
The hearings are broadcast on TV. But there seems to be a lack of focus. Attention is concentrated on the mechanism of how funds were allegedly passed to politicians in return for support and to political parties to pay campaign bills.
So far very little concrete evidence has been produced. The informers as a rule are not to be wholly trusted as in several instances they are attempting to reduce time they themselves might have to spend in jail.
It would be interesting if lie detectors could be used when informants testify and those accused make their vehement denials. Obviously someone lies. But most observers believe that there is a substantial element of truth in what is being unearthed.
At present, it is convenient to make believe that Lula was unaware of what was going on around him. No one, including the opposition, wishes to precipitate an institutional crisis or have the economy negatively affected by the political turmoil.
The ideal scenario would be for Lula to display enough leadership to govern the country and move ahead with the many reforms that are necessary if Brazil is to achieve sustainable growth. However, he shows few signs of being capable of accomplishing this.
Everyone's a Suspect
It was inevitable that Finance Minister Antonio Palocci's past as mayor of Ribeirão Preto, an important city in São Paulo State's productive interior, would come under scrutiny. A former member of Palocci's team during his first term as mayor, Rogério Buratti, on Friday, August 19, stated that kickbacks from a company that was awarded the garbage collection contract were used to fatten the Workers Party coffers.
Buratti had recently been arrested and is accused of several crimes. Over the past weekend, Palocci eloquently denied such accusations during a 2-½ hour press conference, something that Lula has yet to do.
But where there is smoke there is fire. It should be remembered that Ribeirão Preto, before privatizations were begun in earnest by federal and state governments, sold a municipally owned phone company to private investors.
Palocci, a former Trotskyite, was mayor at the time. Palocci's remarks have somewhat assuaged the markets for the time being. He said the right things. But the investigations in Ribeirão Preto will continue and Buratti is to testify this week at a congressional committee that is looking into scandals involving bingo operators.
It would not be the end of the world if eventually Palocci were to leave his post as there are many capable people in the ministry who can carry on the sensible, if austere, fiscal and monetary policies that Palocci has implemented with Lula's approval.
The danger in affecting the economy lies in the uncertainty of what will happen in the near term future. With Palocci now tainted, his ability to pursue policies that are not popular with other ministers and most factions of the Workers Party may be impaired.
The congressional investigations are due to finish October 15. That is a long time for the situation to be in limbo. So far the investigations have not looked into the origin of the funds that allegedly were used to pay politicians and finance the campaigns.
It would appear that over invoicing of advertising contracts for government companies and agencies provided funds to Marcos Valério, the Belo Horizonte businessman who acted as a cashier for the Workers Party along with the former treasurer. Also kickbacks from suppliers to the Post Office system are another source. The surface has just been scratched.
How much longer the responsible opposition will refrain from starting impeachment proceedings is an unknown. With Lula's popular support eroding, his removal might not cause as much opposition from the masses as some Workers Party leaders, mainly José Dirceu, the fallen Chief of Staff, predict.
Should impeachment become a solution to the present stalemate, we could expect several months more of inaction on the part of the federal government and congress.
On the other hand should Lula see the handwriting on the wall and resign, perhaps Alencar or Cavalcanti could get Brazil back on track until the 2006 elections. It will be difficult for the fractured and bankrupt, both financially and morally, Workers Party with or without Lula to regain the presidency.
There is a saying among Brazilians that "Brazil grows at night when the politicians are asleep." The present circumstances certainly bear this out. The GNP may grow as much as 4% this year and unemployment is stable, according to government released figures.
This is in spite of archaic labor laws, excessive taxation and sky-high real interest rates. We can only hope that the economy continues to ignore the political mess caused by chronic dishonesty, fraud, corruption, inefficiency, incompetence, nepotism and waste on the part of the federal government, some states and many cities.
Richard Edward Hayes first came to Brazil in 1964 as an employee of Chase Manhattan Bank. Since then, Hayes has worked directly and as an advisor for a number of Brazilian and international banks and companies. Currently he is a free lance consultant and can be contacted at 192louvre@uol.com.br.
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