Exit Rousseff: The Acrimonious Future of Brazilian Politics

All in all, a staggering number of Brazilian politicians are currently under investigation for their suspected links to the Petrobras corruption scandal, as well as other corruption allegations. Of the 513 members of Congress, 303 face charges or are being investigated for serious crimes; in the Senate, the same goes for 49 of 81 members. This includes politicians from all sides of the political spectrum, including former president Lula da Silva and right-wing 2014 presidential candidate, Aécio Neves. At its current pace, the Lava Jato investigations look set to shake up the entire Brazilian political establishment, potentially creating a leadership vacuum. With so many politicians on both sides of the political divide either in jail, awaiting trial, or completely discredited, it is difficult to see who could pull Brazil out of its political and economic crisis. Brazilians appear increasingly disenchanted with their political options. According to recent opinion polls in Brazil, 62 percent of respondents want new elections. However, only eight percent of respondents think Temer would effectively address Brazil’s crisis. This juxtaposition of overwhelming desire for change and complete dissatisfaction with their political choices is a recipe for long-running political instability. Little wonder another recent poll revealed that 48 percent of Brazilians are reportedly “not satisfied” by democracy. 

Nevertheless, Temer and his allies have already started preparing for a post-Rousseff Brazil, provisionally selecting government ministers, writing up inauguration speeches, and even making appearances in the international media. However, a PMDB-led government would inherit the poisoned chalice of a sinking economy and a paralysed legislature. To save Brazil’s economy, Temer’s administration may attempt to push through unpopular austerity measures, open Brazil to trade, and reduce the size of Brazil’s infamous bureaucracy. But even though 72 percent of Brazil’s Congress backed Rousseff’s impeachment, that does not necessarily mean they will automatically support Temer. The PMDB itself is also divided. Further, approximately 90 percent of federal government spending is ring-fenced by the constitution or legislation, and most amendments would require a three-fifths majority in both houses of parliament, which is a significant hurdle for reform. An acrimonious PT has already vowed a “prolonged war” against the PMDB in Brazil’s houses of parliament. According to reports, various trade unions and social movements, which form the bedrock of PT support, are considering roadblocks and perhaps a general strike in opposition to Temer and any planned austerity measures. 

Rousseff’s impeachment is unlikely to spell the end of Brazil’s economic and political woes. Instead, as the Lava Jato investigation digs deeper into Brazil’s political fabric, popular dissatisfaction with the direction of the country is likely to place further stresses on Brazil’s political leadership. Temer and the PMDB will likely recognise this, and will attempt to trim down the government budget while ruffling as few feathers as possible among the PT and its supporter base. A USD 9 billion infrastructure investment package, recently announced by Temer, is likely to be one of many stop gap measures. Investors would also welcome efforts to address excessive government red tape and bureaucracy, and observers will be watching closely for signs of progress. Satisfying the thousands in the streets, and the holders of the capital that might revive Brazil’s economy, will be the defining challenge of Brazil’s next three years.

On 17 April, amid cheers and patriotic songs, members of Brazil’s Congress voted to impeach President Dilma Rousseff. Although the impeachment bid against Rousseff still has several more hurdles to overcome, it is increasingly likely that her presidency won’t survive beyond 2016. It has been a tale of frustrated protesters across Brazil’s major cities, and of fratricidal politics in Brazil’s houses of parliament. Squeezed between a burgeoning government corruption scandal and a crumbling economy, Rousseff and her Workers’ Party (PT) have ultimately come unstuck. Yet the initial pro-impeachment cheers have now given way to some probing questions about Brazil’s future. Rousseff’s anticipated successor, Vice-President Michel Temer, does not have popular support and is embroiled in his party’s own corruption scandals. Nor are Rousseff and the PT, backed by the country’s unions and social movements, likely to go down without a fight. In the next 12 months, the Brazilian government’s ability to manage the impending acrimony between the PT and Temer will be a key determinant of both public and investor confidence. 

In her victorious 2014 election campaign, Rousseff and the PT made two core promises, both of which they have failed to keep: tackling deep-seated government corruption, and ensuring Brazil’s economic recovery. Brazil’s economy is now deep in recession, having contracted 3.8 percent in 2015, and likely to contract by a similar margin this year. Three million Brazilians have lost their jobs since the start of 2015, and the unemployment rate is expected to exceed 10 percent this year, a significant increase from 6.5 percent at the end of 2014. On top of Brazil’s economic collapse, Rousseff has had to weather the Petrobras corruption scandal. The so-called Lava Jato corruption probe has engulfed numerous high-level PT politicians, including the party treasurer, João Vaccari. Former president, Lula da Silva, once Brazil’s political darling, has now also been implicated. The PT’s reputation is in tatters, and Rousseff has become the scapegoat for much of the public ire. 

Ostensibly, the push for Rousseff’s impeachment is based on accusations that she manipulated the 2014 government budget. But it has also come to encompass a range of public grievances, most notably anger over widespread corruption and an economy in freefall. Away from the streets though, the pro-impeachment movement has been largely orchestrated by high-level political jockeying in Brasília, where competing political parties vie for power. Temer and his Brazilian Democratic Movement Party (PMDB), formerly the PT’s principal ally, have led the movement against Rousseff, initially covertly. In the weeks prior to the congressional impeachment vote, one by one, the PT’s allies abandoned the governing coalition. When the PMDB left the governing coalition in late March, it effectively hammered the final nail into the Rousseff government’s coffin. In the end, the pro-impeachment vote easily passed the two-thirds threshold needed to send the impeachment motion to the Senate, which will vote on whether to impeach Rousseff in early May. Polls indicate that the pro-impeachment lobby already has enough votes to pass, which would see Rousseff’s presidency suspended for 180 days. In the interim, Temer would assume the presidency until the senate votes whether to permanently strip Rousseff of her mandate.

For Temer, the impeachment motion against Rousseff is a race against time. His own mandate could be terminated if investigations related to a parallel impeachment motion find that the 2014 election campaign – in which he was Rousseff’s running mate – was funded by money linked to the Petrobras corruption scandal. Another Supreme Court judge recently ordered Brazil’s Congress to start impeachment proceedings against Temer himself, further complicating the situation. Separately, the PMDB’s Eduardo Cunha, the President of Brazil’s Congress and one of the chief anti-Rousseff plotters, is also being accused of receiving at least USD 5 million in relation to the Petrobras graft scandal.