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From Friends to Foes. The Split Between Temer and Lula Is a Mirror of Brazil

President Michel Temer and former president Lula - Ricardo Stuckert/PT President Michel Temer and former president Lula - Ricardo Stuckert/PT

In the film Jerry McGuire, Tom Cruise exhorts, “Show me the money.” In Brazil, a similar cry is fanning out across the country – where are the billions of dollars lost in the Lava Jato scandal?

Today, just ten months after impeaching and removing from office its president, Dilma Rousseff, the country faces another possible impeachment proceeding of Rousseff’s vice president, Michel Temer, who is the interim president.

Brazil’s political parties, nearly 30 of them represented in federal congress in Brasília, can only function by forming coalitions. President Temer’s party (PMDB) and Rousseff’s party (PT) once formed a powerful coalition that resulted in Temer running on the same ticket with Rousseff in 2014, when she was elected for her second term.

Rousseff was elected as Brazil’s first female president, the hand-picked successor of former president Lula, the co-founder of PT, and one of Brazil’s most charismatic presidents. However, now Temer and PT are on opposing sides.

As the bond between Temer and Lula has broken, their rancorous split has succeeded in splitting the country. Not a day goes by without protestors carrying signs declaring, “Temer Out” in support of his impeachment, or “Lula in Prison” to encourage federal prosecutor Sérgio Moro to pursue Lula on no less than five separate criminal indictments.

Ironically, Temer is indebted to PT, as the removal of Rousseff is the sole reason Temer became president last year. However, Temer is now fighting for his political life by distancing himself from PT and the Lava Jato investigation, which has already ensnared hundreds of businessmen and politicians in its sticky web of bribes, kickbacks, payoffs, hush money, and offshore money laundering.

The scale of the Lava Jato scandal is so grand it’s impossible to estimate its cost. As an example of the amount of money involved, one currently jailed businessman has agreed to return US$ 100 million he received in illegal money. Also, the courts recently fined a large corporation for its involvement to the tune of US$ 3.2 billion.

While Lula and his lawyers battle Sérgio Moro in Curitiba, trying desperately to keep Lula out of jail long enough to run for president again in 2018, Temer fights to avoid impeachment. For the Brazilian populace, these are confusing and terrifying times, to say the least. Amid record unemployment levels and a two-year recession, it takes more than a scorecard to tell the good guys from the bad guys.

Many Brazilians are demanding Temer’s impeachment, while others support his continuing in office. Some are expecting Lula’s imprisonment, while others expect Lula to return as Brazil’s next president.

Lula and PT supporters believe the gains recorded by the poor and working class during the 14 years of the PT administration outweigh whatever financial skullduggery PT is guilty of, especially as it’s becoming clearer through the Lava Jato investigations that Lula was running the country in the manner of ‘business as usual.’

Thanks to the creation in 2012 of the judicial weapon of plea bargaining (delação premiada), politicians and wealthy businessmen, such as 77 indicted Odebrecht executives, are being provided the opportunity to tell the truth finally about the extent of corruption in Brazil, which covers every aspect of the country’s economy from meatpacking to infrastructure, including World Cup and Olympic stadiums.

Only recently has Brazil’s legal system had sufficient power to place politicians and businessmen in jail like Eduardo Cunha, former Speaker of the House or billionaire Marcelo Odebrecht, former CEO of the company that bears his name and is the largest construction company in Latin America. Mr. Odebrecht has been in prison for over a year in Curitiba under the watchful eye of Sérgio Moro.

Meanwhile, with Congress accepting a request by the Brazilian Bar Association for interim president Temer’s impeachment, Brazil faces the prospect of impeaching two presidents during the same term. This political upheaval has not only divided the country, but it has wreaked havoc on the financial markets.

Immediately following a Temer debacle in May resulting from a secretly taped conversation with an indicted Joesley Batista, an agribusiness mogul, trading on the São Paulo stock market was halted from sliding further by the automatic electronic trigger.

Brazil’s currency, the real, fell sharply against the dollar after Batista’s revelations. A few days later, the Banco Central (equivalent to the US Federal Reserve) stepped in and lowered the prime lending rate (Selic) by a full percentage point, which stabilized the real, at least for now.

As if that weren’t enough, the stock market in Brazil had been solid for the last six months, thanks primarily to financial reforms instigated by Temer and his allies. This explains why many Brazilians, particularly in large urban centers like São Paulo, do not want to see Temer impeached – it’s bad for business.

While unemployment remains dangerously high (13.7%), inflation has dropped to a 10-year low, and until the threat of Temer’s impeachment, the real had been holding steady on world currency markets.

On the other side of the political fence are those supporters of PT who would like nothing better than to see Temer impeached. They blame him and his supporters for Rousseff’s impeachment and believe Lula should be re-elected in 2018.

(If Lula remains free from jail, he would be entitled by law to run again next year, even after already serving two terms as president.) In one famous incident, the director and actors of a Brazilian film, including Sônia Braga, showed their support for PT on the red carpet entrance to the Cannes Film Festival in May 2016.

As strong as Lula’s support is among the rural population, the working class, and the Unions, an equal number of Brazilians would like to see Lula in jail. Besides the obvious dirty questions surrounding the relationship between Lula and Odebrecht/Petrobras/BNDES, etc., many Brazilians believe his leftist policies overly supported social welfare programs, thereby bankrupting the government when economic growth began to slow in Lula’s second term and finally crashed with a massive recession under Rousseff.

Although trained as an economist, Dilma Rousseff lacked Lula’s leadership skills, owing to the fact that she had never held elected office.

Then there are still others who support the social welfare programs of Lula’s PT party, but believe the corruption scandals uncovered by Lava Jato are responsible for bankrupting the country. They would like to see new elections this year without Lula or Temer involved.

If you’re still with me, here’s more of this labyrinth: Lava Jato is far from over. There are still those 77 Odebrecht executives I mentioned earlier who are waiting to finalize their plea arrangement, making it the largest plea bargain in world history.

Also, let’s not forget Eduardo Cunha, currently jailed, who in his powerful role as Speaker of the House was in charge of initiating the impeachment proceedings against Dilma Rousseff.

According to the recently surfaced secret tape of Temer, which sparked the public outcry for his impeachment two weeks ago, Cunha has apparently been receiving a great deal of “hush money” while in prison.

Joesley Batista, CEO of JBS, made the tape of Temer as part of his plea bargain. With Temer in the crosshairs, it’s likely those payments to Cunha in jail have stopped, which means Cunha could join his colleagues in search of the perfect plea bargain and begin “singing like a canary.”

Similarly, we’ll soon be hearing more gory bribery details from billionaire Marcelo Odebrecht in his plea bargain with Sérgio Moro. (Moro has thus far found a way to keep Marcelo in prison for over a year, but Marcelo is tired of beans and rice in Curitiba’s prison and ready to sing.)

While the country and the rest of the world is already overwhelmed by the scope of Lava Jato, this may only be the tip of the iceberg, although just the tip appears to be sufficient to remove two presidents in the same term.

What is certainly most devastating about Lava Jato is the unavoidable realization that corrupt ties between powerful politicians and large corporations, accompanied by impunity and nepotism, are not new to Brazil. The entrenched system of oligarchy has been in place in Latin America since colonial days and slavery, thanks to the Spanish and Portuguese monarchies.

Needless to say, it’s more than a challenge searching for the labyrinth’s exit. Brazilians, particularly young people, have been mobilizing on the streets thanks to social media. They have provided a powerful incentive to politicians to check their ways, and strong federal prosecutors are providing additional incentive with the previously unknown prison experience.

The central enigma that lies unspoken in the thousands of news stories about Lava Jato, the largest political scandal in Brazil’s history, is this: Why is Brazil’s political system so corrupt? If there’s one theme all Brazilians can agree on, a rallying point to unite left and right, rich and poor, it’s anti-corruption.

Together, honest judges and mobilized youth have the power to change history in Brazil. However, there are no easy fixes. Social movements have a history of morphing and sometimes producing the opposite results than originally intended.

For example, a populist movement focused on anti-corruption could produce a strong government with fewer democratic values and less freedom – in other words, a giant swing to the right from the days of the leftist PT.

This possibility is evident on the street from protestors who support a return to a military government or a far-right presidential candidate, such as Congressman Jair Bolsonaro.

Additionally, if Temer leaves office this year, since there is no sitting vice president, the Brazilian Constitution states Congress chooses his replacement.

That opens a Pandora’s box of political maneuvering: Is there an honest presidential candidate with the power to form a productive coalition in Congress among his/her dishonest peers?

Equally vexing, can Brazil’s economy survive all the social/political upheaval? (The current situation is so grave that Brazilians living in New York were seen protesting in Union Square.)

As of this week, (who knows what next week will bring?) here’s the layout of the labyrinth:

It’s not likely Temer will be impeached because the process would need to be officially initiated by the current Speaker of the House, Rodrigo Maia, who is a trusted friend of Temer’s.

If Temer is removed from office, it is more likely to occur through the Superior Electoral Court, which on June 6 began deliberating the case of illegal campaign financing in the 2014 election that brought Dilma Rousseff and Temer to lead the country.

If Temer is removed, most Brazilians are opposed to the idea of Congress selecting the next president and would prefer to see direct elections held. However, that would require a constitutional amendment, which would need a 3/5 vote of approval in both the Senate and Lower House.

Both pro- and anti-PT forces are pushing for open elections before those scheduled in October 2018. Pro-PT supporters are clamoring for an election now because Lula leads all other potential candidates, according to a recent DataFolha poll.

However, if an election is delayed for a few months, there may be enough evidence of criminal intent connected to Lula to suspend him from running for office.

(This comes in the form of a Court mandate, which has been levied against one or two other convicted politicians whereby a politician avoids jail by accepting a disqualification from holding elected office for eight years.)

All five of Brazil’s living former presidents are under investigation thanks to Lava Jato. Additionally, 44 of Brazil’s 88 senators, plus 155 federal deputados (representatives) are under investigation. One third of President Temer’s Cabinet ministers are subjects of investigation or already indicted.

In the most recently finalized plea bargain with JBS, Brazil’s largest meatpacking company, executives from JBS stated they made illegal payments to 1,829 politicians from 28 political parties, of whom 179 became federal deputados, 28 became senators, and 16 became governors.

There is no excuse for uninformed voters to support corruption and re-elect indicted politicians. In a recent study, the literacy rate in Brazil has climbed above 90 percent. Additionally, seventeen percent of Brazilians have college degrees, and the most populated state, São Paulo, has 500 universities.

What Lies Ahead?

Resignation: Temer feels too much pressure from within his own party and recognizes he lacks the power to push through the economic reform policies he’s been championing, such as a major overhaul of the pension system, and he chooses to resign. This scenario is the least likely.

Impeachment: Rodrigo Maia must propose it in the Lower House and the process, whether it succeeds or fails to remove Temer, would take months. This is an unlikely scenario, also.

Removal: The Superior Electoral Court annuls the 2014 election that made Temer vice-president. Illegal campaign contributions are traced back through Lava Jato and the Court strips Temer of his elective mandate. This is a more likely scenario than Temer’s impeachment or resignation.

However, there is the possibility that the Court will decide it lacks sufficient evidence to prove Temer knew about the illegal contributions and instead place the blame on PT. The Court could also rule Temer knew about the illegal contributions but this is not grounds for removing him from office.

If ruled against, Temer can also file an appeal. In other words, the Court may quietly recognize, for one reason or another, that there are advantages to keeping Temer in office.

Open Elections: Many Brazilians support this resolution to the current situation, whether they are left, right, or center. However, a direct election would require a constitutional amendment and thus a problematic vote by all of Congress, which has no motivation to follow this course and surrender the opportunity to choose the president.

Open elections are only likely if Temer is removed and there are massive demonstrations this year that mobilize millions into the streets in support of an election.

Social Unrest: Should the Electoral Court decide not to remove Temer, believing Temer to be Brazil’s best bet for economic recovery, social protests could follow.

(Another general strike is already being planned for June 30. Organizers of the general strikes are in favor of Temer’s departure.) Should mass demonstrations turn violent, as happened in May when the military was called out in Brasília to support police and security forces, the decision by the Electoral Court to keep Temer in office would backfire.

The images of large-scale riots in the country’s capital spread across the pages of the international media would have a devastating effect on Brazil’s economic recovery. Economic stability and lowering unemployment are the country’s best bet to avoiding social unrest and returning to some level of normalcy.

Brazilians can only shake their heads in disgust and wonder what happened to the billions of dollars from the Lava Jato scandal. “Show me the money,” and then give it back to the Brazilian people, who have suffered under the crushing weight of endemic corruption since the days of colonialism.

B. Michael Rubin is an American living in Curitiba.

This article appeared originally in Curitiba in English – http://curitibainenglish.com.br

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It seems the future never arrives in Brazil What Lies Ahead in Brazil? Brazil Has No Exemplary Past or Present. But What Lies Ahead for the Country? Europeans, US, developed country, developing country. Bolsonaro, future B. Michael Rubin For years, experts have debated what separates a developing country from a developed one. The GDP (Gross Domestic Product) of a country is one simple way to measure its economic development. Another way to measure a country's progress is the extent of public education, e.g. how many citizens complete high school. A country's health may be measured by the effectiveness of its healthcare system, for example, life expectancy and infant mortality. With these measurement tools, it's easier to gauge the difference between a country like Brazil and one like the U.S. What's not easy to gauge is how these two countries developed so differently when they were both "discovered" at the same time. In 1492 and 1500 respectively, the U.S. and Brazil fell under the spell of white Europeans for the first time. While the British and Portuguese had the same modus operandi, namely, to exploit their discoveries for whatever they had to offer, not to mention extinguishing the native Americans already living there if they got in the way, the end result turned out significantly different in the U.S. than in Brazil. There are several theories on how/why the U.S. developed at a faster pace than Brazil. The theories originate via contrasting perspectives – from psychology to economics to geography. One of the most popular theories suggests the divergence between the two countries is linked to politics, i.e. the U.S. established a democratic government in 1776, while Brazil's democracy it could be said began only in earnest in the 1980s. This theory states that the Portuguese monarchy, as well as the 19th and 20th century oligarchies that followed it, had no motivation to invest in industrial development or education of the masses. Rather, Brazil was prized for its cheap and plentiful labor to mine the rich soil of its vast land. There is another theory based on collective psychology that says the first U.S. colonizers from England were workaholic Puritans, who avoided dancing and music in place of work and religious devotion. They labored six days a week then spent all of Sunday in church. Meanwhile, the white settlers in Brazil were unambitious criminals who had been freed from prison in Portugal in exchange for settling in Brazil. The Marxist interpretation of why Brazil lags behind the U.S. was best summarized by Eduardo Galeano, the Uruguayan writer, in 1970. Galeano said five hundred years ago the U.S. had the good fortune of bad fortune. What he meant was the natural riches of Brazil – gold, silver, and diamonds – made it ripe for exploitation by western Europe. Whereas in the U.S., lacking such riches, the thirteen colonies were economically insignificant to the British. Instead, U.S. industrialization had official encouragement from England, resulting in early diversification of its exports and rapid development of manufacturing. II Leaving this debate to the historians, let us turn our focus to the future. According to global projections by several economic strategists, what lies ahead for Brazil, the U.S., and the rest of the world is startling. Projections forecast that based on GDP growth, in 2050 the world's largest economy will be China, not the U.S. In third place will be India, and in fourth – Brazil. With the ascendency of three-fourths of the BRIC countries over the next decades, it will be important to reevaluate the terms developed and developing. In thirty years, it may no longer be necessary to accept the label characterized by Nelson Rodrigues's famous phrase "complexo de vira-lata," for Brazil's national inferiority complex. For Brazilians, this future scenario presents glistening hope. A country with stronger economic power would mean the government has greater wealth to expend on infrastructure, crime control, education, healthcare, etc. What many Brazilians are not cognizant of are the pitfalls of economic prosperity. While Brazilians today may be envious of their wealthier northern neighbors, there are some aspects of a developed country's profile that are not worth envying. For example, the U.S. today far exceeds Brazil in the number of suicides, prescription drug overdoses, and mass shootings. GDP growth and economic projections depend on multiple variables, chief among them the global economic situation and worldwide political stability. A war in the Middle East, for example, can affect oil production and have global ramifications. Political stability within a country is also essential to its economic health. Elected presidents play a crucial role in a country's progress, especially as presidents may differ radically in their worldview. The political paths of the U.S. and Brazil are parallel today. In both countries, we've seen a left-wing regime (Obama/PT) followed by a far-right populist one (Trump/Bolsonaro), surprising many outside observers, and in the U.S. contradicting every political pollster, all of whom predicted a Trump loss to Hillary Clinton in 2016. In Brazil, although Bolsonaro was elected by a clear majority, his triumph has created a powerful emotional polarization in the country similar to what is happening in the U.S. Families, friends, and colleagues have split in a love/hate relationship toward the current presidents in the U.S. and Brazil, leaving broken friendships and family ties. Both presidents face enormous challenges to keep their campaign promises. In Brazil, a sluggish economy just recovering from a recession shows no signs of robust GDP growth for at least the next two years. High unemployment continues to devastate the consumer confidence index in Brazil, and Bolsonaro is suffering under his campaign boasts that his Economy Minister, Paulo Guedes, has all the answers to fix Brazil's slump. Additionally, there is no end to the destruction caused by corruption in Brazil. Some experts believe corruption to be the main reason why Brazil has one of the world's largest wealth inequality gaps. Political corruption robs government coffers of desperately needed funds for education and infrastructure, in addition to creating an atmosphere that encourages everyday citizens to underreport income and engage in the shadow economy, thereby sidestepping tax collectors and regulators. "Why should I be honest about reporting my income when nobody else is? The politicians are only going to steal the tax money anyway," one Brazilian doctor told me. While Bolsonaro has promised a housecleaning of corrupt officials, this is a cry Brazilians have heard from every previous administration. In only the first half-year of his presidency, he has made several missteps, such as nominating one of his sons to be the new ambassador to the U.S., despite the congressman's lack of diplomatic credentials. A June poll found that 51 percent of Brazilians now lack confidence in Bolsonaro's leadership. Just this week, Brazil issued regulations that open a fast-track to deport foreigners who are dangerous or have violated the constitution. The rules published on July 26 by Justice Minister Sérgio Moro define a dangerous person as anyone associated with terrorism or organized crime, in addition to football fans with a violent history. Journalists noted that this new regulation had coincidental timing for an American journalist who has come under fire from Moro for publishing private communications of Moro's. Nevertheless, despite overselling his leadership skills, Bolsonaro has made some economic progress. With the help of congressional leader Rodrigo Maia, a bill is moving forward in congress for the restructuring of Brazil's generous pension system. Most Brazilians recognize the long-term value of such a change, which can save the government billions of dollars over the next decade. At merely the possibility of pension reform, outside investors have responded positively, and the São Paulo stock exchange has performed brilliantly, reaching an all-time high earlier this month. In efforts to boost the economy, Bolsonaro and Paulo Guedes have taken the short-term approach advocated by the Chicago school of economics championed by Milton Friedman, who claimed the key to boosting a slugging economy was to cut government spending. Unfortunately many economists, such as Nobel Prize winner Paul Krugman, disagree with this approach. They believe the most effective way to revive a slow economy is exactly the opposite, to spend more money not less. They say the government should be investing money in education and infrastructure projects, which can help put people back to work. Bolsonaro/Guedes have also talked about reducing business bureaucracy and revising the absurdly complex Brazilian tax system, which inhibits foreign and domestic business investment. It remains to be seen whether Bolsonaro has the political acumen to tackle this Godzilla-sized issue. Should Bolsonaro find a way to reform the tax system, the pension system, and curb the most egregious villains of political bribery and kickbacks – a tall order – his efforts could indeed show strong economic results in time for the next election in 2022. Meanwhile, some prominent leaders have already lost faith in Bolsonaro's efforts. The veteran of political/economic affairs, Joaquim Levy, has parted company with the president after being appointed head of the government's powerful development bank, BNDES. Levy and Bolsonaro butted heads over an appointment Levy made of a former employee of Lula's. When neither man refused to back down, Levy resigned his position at BNDES. Many observers believe Bolsonaro's biggest misstep has been his short-term approach to fixing the economy by loosening the laws protecting the Amazon rainforest. He and Guedes believe that by opening up more of the Amazon to logging, mining, and farming, we will see immediate economic stimulation. On July 28, the lead article of The New York Times detailed the vastly increased deforestation in the Amazon taking place under Bolsonaro's leadership. Environmental experts argue that the economic benefits of increased logging and mining in the Amazon are microscopic compared to the long-term damage to the environment. After pressure from European leaders at the recent G-20 meeting to do more to protect the world's largest rainforest, Bolsonaro echoed a patriotic response demanding that no one has the right to an opinion about the Amazon except Brazilians. In retaliation to worldwide criticism, Bolsonaro threatened to follow Trump's example and pull out of the Paris climate accord; however, Bolsonaro was persuaded by cooler heads to retract his threat. To prove who was in control of Brazil's Amazon region, he appointed a federal police officer with strong ties to agribusiness as head of FUNAI, the country's indigenous agency. In a further insult to the world's environmental leaders, not to mention common sense, Paulo Guedes held a news conference on July 25 in Manaus, the largest city in the rainforest, where he declared that since the Amazon forest is known for being the "lungs" of the world, Brazil should charge other countries for all the oxygen the forest produces. Bolsonaro/Guedes also have promised to finish paving BR-319, a controversial highway that cuts through the Amazon forest, linking Manaus to the state of Rondônia and the rest of the country. Inaugurated in 1976, BR-319 was abandoned by federal governments in the 1980s and again in the 1990s as far too costly and risky. Environmentalists believe the highway's completion will seal a death knoll on many indigenous populations by vastly facilitating the growth of the logging and mining industries. Several dozen heavily armed miners dressed in military fatigues invaded a Wajãpi village recently in the state of Amapá near the border of French Guiana and fatally stabbed one of the community's leaders. While Brazil's environmental protection policies are desperately lacking these days, not all the news here was bad. On the opening day of the 2019 Pan America Games in Lima, Peru, Brazilian Luisa Baptista, swam, biked, and ran her way to the gold medal in the women's triathlon. The silver medal went to Vittoria Lopes, another Brazilian. B. Michael Rubin is an American writer living in Brazil.

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