Brazil in crisis: Behind the impeachment

oglobo


Protesters wearing yellow and green, the colors of the Brazilian flag, began calling for the impeachment of President Dilma Rousseff soon after her reelection in the fall of 2014. One of the first large demonstrations took place on March 15, 2015.
In this photo, Rogério Martins, a red-clad supporter of the national movement for housing, was knocked off his bicycle and was nearly lynched by a hostile crowd, some of whom were calling for a military coup.

by Eudes Prado Lopes

The impeachment proceedings that suspended the mandate of Brazil’s President Dilma Rousseff in May mark the climax of an ongoing process of the radical polarization of the political class that began in the lead-up to the October 2014 presidential elections.

Back in 2014, the Workers’ Party (PT), despite scandals and a weak economy, still maintained massive appeal as the exemplars of the consolidation of a democratic social compact in Brazil, reflected back to society in the name of social inclusion and equality.

No one knew at the time how significant would be the election cycle for the beginning of the dismantling of the then dominant “neodevelopmentalist” turn, which reasserted the protagonism of the state with and for economic development.

This opening was made possible in the wake of the financial crisis, which began in 2007 in the United States and reached global dimensions by 2009. It was received at the federal level in Brazil as a broad “national” threat, and it was articulated as such nationwide. In turn, intellectuals and the policy elites from all ends of the political spectrum showed solidarity for the seemingly inevitable new “counter-cyclical” moment.

What seemed initially to be a technical stimulus effort — a policy direction long informed by the Keynesian tradition —would result in a much more consequential political-economic reorientation inspired by the powerful “nationalist-developmentalist” legacy in Brazil, the second largest emerging market in the world.

The emergence of the “new developmentalism” was not viewed as exclusive to the Dilma Rousseff administration, which only began in 2011. However, her increased political prominence during the last two years of the Luiz Inácio Lula da Silva administration, as his chief of staff and the key architect of the federal social programs, rendered her a particularly salient icon in defense of the consolidation of the Party’s new legacy.

In this context, the renewed centrality of the state in the economy became fashionable. Even influential financial journals and magazines embraced the so-called new “state-capitalism” turn, featuring stories of Brazil “taking off” — an international euphoria that would prove short-lived.

rio

Transposição Rio São Francisco, a massive canal to bring water to the dry sertão region across four states in northeast Brazil, is an example of the many infrastructure megaprojects taken on by the Brazilian Workers’ Party (PT), which has won the four presidential elections since 2002. The collapse of global oil and commodity prices has had dire implications in Brazil. It severely affected the government’s income through large state-run enterprises, crippling its ability to follow through on many promises.

Though for some, the beginning of the end of the PT mandate might be traced to the mighty June 2013 protests, the politicization of the intellectual critiques accelerated swiftly during the 2014 elections.

The focal points of the new contestation ranged from questions surrounding the lack of full independence of the central bank to fierce disagreements regarding the proper role of public banks in the economy and their implications for what an adequate balance between revenue and expenditures for the national treasury should be. While these positions were stylized and simplified in accordance with the demands of the campaign trail, their effects awakened an oppositional discourse that had been largely silenced since the financial crisis.

The sharp sound of alarm rang from all directions and prompted an elaborate and coordinated response from the PT, whose base took to the streets in support of the basic tenets of the neodevelopmentalist experiment. Emotional testimonies of recipients of subsidized housing and technical training programs circulated nationwide. Those whose personal and professional lives had been improved by PT programs were accompanied by stock images of massive infrastructure projects such as interstate railroad tracks, hydroelectric dams, wind farms, ambitious inter-continental electrical transmission lines, among others.

While the campaign strategy yielded initially promising results, another change in the sea-tide was underway.

An audio recording leaked from the Federal Police Department accused prominent PT members of participating in a massive kickback scheme that took shape around Petróleo Brasileiro, or Petrobras, the national oil company. Petrobras is the largest public company in Brazil, and social movements have long rallied around it as a perennial symbol of national sovereignty.

In just weeks, the opposition party —bolstered by the media — redefined more successfully the PT-led neodevelopmentalist turn not as an outlet for social and national emancipation, but as a deeply contradictory fantasy. With the constant prospect of new allegations surfacing, the PT was cut off from the force of its own narrative.
Their images of dynamic industrial projects were challenged by the opposition, which repeatedly dumped alarming figures of debt and project delays, as well as corruption liabilities, which they vowed in figuratively very expressive terms to “clean up”
if elected.

nannybrasil


This image of a couple who brought their uniformed nanny to care for their two children during a protest went viral on social media during the impeachment demonstrations in Brazil. It is emblematic of social-class elements present in protests against the Workers’ Party and its leader, Dilma Rousseff.

In the fall of 2014, the three weeks leading up to the final round of voting were embittered. The results, which ultimately showed a slim margin of victory to the PT, were received as underwhelming to its supporters, and enraging — if not unacceptable — to its detractors.

It was in this divided context that the calls for Rousseff’s impeachment began, the significance of which grew quickly as the PT suffered a number of politically devastating setbacks.

First, in just a matter of weeks after the elections, the Central Bank announced that the country had accumulated its first primary deficit within a 12-month interval. Second, as the price of oil and other key commodities collapsed at an unprecedented rate, Petrobras was made to formally announce that it would not be releasing its third quarter earnings as its auditors refused to sign off on the company’s financial statement without a write down of the value of key compromised assets.

Finally, amidst the general discontent, the lower-house of the Brazilian Congress elected an ultra-conservative leader, Eduardo Cunha, whose rise to the presidency of the lower-house hinged in large part on his pledge to his colleagues that a new era of relations between the executive branch and the Brazilian Congress would be forged. This laid the groundwork for divided government, in the wake of a campaign that had just been elected on a mandate for the expansion —not the dismantling — of federal power.

Ultimately, while the PT did not abandon its broader post-crisis neodevelopmentalist ambitions, by the time these successive defeats culminated in the massive anti-corruption and impeachment protests, it became clear that the political spectrum narrowed in ways so as to render that vision moot.

The shift in discourse was clear. Until then, the political economy was premised on a collaborative relationship between the treasury and the private sector. Private and public entities would work together to strengthen the labor market, increase overall wages and deepen social inclusion.

The rupture was marked in political terms by the nomination of Joaquim Levy, a technical monetarist economist to the Ministry of Finance, which made all but inevitable the highly explicit revival of a politics of austerity. While this shift did not go uncontested, in the context of substantial revenue losses resulting in part from a free-fall in commodity prices, the new PT administration was made to subscribe to a new discourse of costs.
This entailed a radical defense of its own budget against the private sector, Congress and even the unions, all the while claiming not to be abandoning its mandate of federal expansion — a position that sounded to many as impossible and ironic.

The conditions were set for the hollowing out of the neodevelopmentalist experiment. Indeed, as the impeachment protests were gaining force, a presidential address was scheduled to air to communicate the reasons for the economic difficulties that were surfacing.

It is telling that such a pronouncement triggered a panelaço — that is, a coordinated social act that involves the banging of pots and pans as a form of protest.

What is striking about this particular social act — which took place mostly in upper middle class neighborhoods nationwide — was how it negated the language of developmentalism. It did not matter that the presidential announcement would go on to explain that the collapse in commodity prices had weakened the investment capacity of the largest state-enterprises, and that the exacerbation of one of the largest droughts in the country’s history had imperiled the harvest season and the public hydroelectric energy production, which in turn, put heavy pressure on public accounts. What circulated instead via the press and social media in response to that moment was not the actual words of the president but rather the videos of the loud clinking noises of the panelaços in neighborhoods all over the country.

It was thus deemed that the timid efforts beginning to call for austerity politics had to be more fully embraced. Yet there was resistance from within the government, which only at times would concede to the new consensus among the business elite. This led to more radical measures from the opposition, for whom the results of the elections were dismissed as illegitimate for having favored a vision of the country that would be deemed illusory soon thereafter.

Ultimately, however, it was determined that the conditions would need to be set
for the legal destitution of President Dilma Rousseff. What started as a spectacular popular revolt turned into a more technical probe to legitimize her fall.

By April 17, the Brazilian lower-house of Congress approved her impeachment on the charge of the violation of a technical budget management law. Much of the elite class celebrated the decision as marking the end of the PT era. For others, however, it signaled a darker turn in Brazilian politics, one which called into question the strength of Brazil’s democratic institutions.

A reconfiguration of the opposition to the conservative turn is now underway. What is striking about the emerging new left is that they are less organized around,
or even concerned with, the defense of a singular party platform. Rather, what is fomenting this grassroots resistance to the political class is its ill-reflection of the country’s broad diversity. A new politics of representation is taking hold.

In the meantime, for those who characterize the events leading up to Rousseff’s suspension as a soft coup, there is widespread anxiety with regards to the resilience of the social policies that were the hallmark of PT era. Whether or not the economic deterioration becomes the pretext for the dismantling of the key pillars of the populist governments of the last decade both in Brazil and across the region remains an open question.

Eudes Prado Lopes is a PhD candidate in the anthropology department at Cornell University. His focus is on finance and politics in Brazil. 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s