Brazil’s corruption crisis

You couldn’t make this stuff up.

On April 17, Brazilian President Dilma Rousseff faces an impeachment vote in the lower house of congress. The charge? That she manipulated government accounts to make the deficit look smaller than it really was before the last election.

But that’s ridiculous. Governments always try to downplay the deficit before an election. I’ve covered dozens of elections, and at least one-third of the time it later came out that the government had been hiding how bad the financial situation was. It’s naughty, but it’s not a hanging offence.

Never mind. The knives are out for Rousseff in Brazil, and if she loses the congressional vote this weekend she is heading straight for impeachment. That would mean that she would be suspended for 180 days even if she ultimately survived the process. So who would take over while Rousseff is on trial?

Vice-President Michel Temer, of course, and he would be more than happy to do that. In fact, a recently leaked audio tape reveals him rehearsing the speech he would make after Rousseff was suspended. “Many people sought me out so that I would give at least preliminary remarks to the Brazilian nation, which I am doing with modesty, caution and moderation...” he modestly begins.

Rousseff was furious, accusing Temer of betrayal (he only led his party out of her coalition government last week), and she now talks about him as the chief conspirator in a coup plot against her democratically elected government. But she shouldn’t worry too much about Temer, because he is also facing impeachment, on the very same charge of cooking the government books to hide the scale of the deficit.

Who would take over if Temer was also impeached? The speaker of the lower house of congress, Eduardo Cunha, is next in line – but he is facing money-laundering and other grave charges connected with an immense scandal in the state-owned oil company, Petrobras (his secret Swiss bank accounts hold over $5 million).

So the job of running Brazil would go to the speaker of the senate, Renan Calheiros – except that he is also being investigated on the same charges. Indeed, more than 150 members of congress and government officials are currently facing charges of bribery, corruption and money laundering as part of the “Operation Lava Jato” (Car Wash) investigation into the affairs of Petrobras.

This is not some banana republic. This is Brazil, a country of 200 million people with the sixth biggest economy in the world. Yet the entire political class is under suspicion of criminal behavior, apparently with good reason, and day after day the streets are full of angry demonstrators.

Brazil has been fully democratic for the past three decades, yet Rousseff now worries openly about a coup. Some of the anti-government demonstrators are openly calling for a military takeover. This is a country in meltdown – but why now? Because the economy has gone belly-up.

The global economy was booming when Rousseff’s Workers Party first came to power in 2003 under the leadership of Luiz Inácio “Lula” da Silva, and Brazil’s economy was booming with it. There was money then for huge social spending – enough to lift 40 million Brazilians out of poverty – and Lula was beloved by all.

But the crash of 2008 had already taken the bloom off the rose before Rousseff succeeded Lula in 2011, and Brazil’s export-dependent economy has taken a terrible beating since then. It was growing at 3.5 percent annually under Lula. It was already down to 2.2 percent in Rousseff’s first term, but it shrank at the rate of 4 percent annually in 2014 and 2015.

It’s mostly not Rousseff’s fault, although she could have done better. China, Russia and South Africa have seen similar declines as commodity prices plunged and exports dwindled.

Indeed, among the BRICS, the big, fast-growing economies of the former Third World, only India has escaped. And this collapse in growth is why opinion polls show that 68 percent of Brazilians now want to see Rousseff removed from power.

There is unquestionably a major political crisis in Brazil, but it may not be quite as bad as it looks. The latest head-count suggests that the vote in the lower house of congress may not produce the two-thirds majority of votes that is needed to impeach Rousseff.

Even if it does, Rousseff can appeal to the supreme court. If that fails, the senate must vote on impeachment – and if it also votes yes, Rousseff can appeal to the supreme court again. And so far the military show no signs of wanting to seize power again.

So Rousseff may still be lumbered with the miserable and deeply unpopular task of running a large and boisterous country that is going through a severe cyclical economic downturn for another two and a half years. She’ll probably be glad when her term is up.