Will Dilma Rousseff be able to foster foreign direct investment to save the fiscal package and resume economic growth?

by Cassiano Alves and Leticia Corrêa

On June 28th, President Dilma Rousseff landed in the United States for an official visit, leaving behind an economy in imminent recession and a country in political crisis after the corruption scandal involving state-owned oil company Petrobras.

Speculation over Mrs. Rousseff’s impeachment resurfaced after a national magazine reported that Ricardo Pessoa, the owner of construction company UTC Engenharia, told authorities that the president’s campaign in 2014 received illegal donations. UTC Engenharia is one of the firms accused of forming a cartel and paying kickbacks to politically appointed directors at Petrobras.

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New Infographic Series on the Economic and Political Situation in Brazil

Brazil is in crisis. The economy shrank 0.2 percent in the first quarter, and the forecast is for negative growth of 1.2 percent this year. Unemployment rate reached 6.4 percent in April, its highest level in four years. There is also pessimism on consumer prices, raising the 2015 inflation forecast from 7.93 percent to 8.12 percent, above the central bank’s inflation target rate of 4.5 percent.

Politically, there is not much cause for optimism for Brazilian President Dilma Roussef, whose approval rating is at a record low 13 percent, according to an April 10 Datafolha poll. The government has lost influence over the legislative agenda and has been struggling to pass tax increases and cuts to social benefits meant to shore up fiscal accounts. Eduardo Cunha, speaker of Camara dos Deputados, Brazil’s lower house, is the man behind controversial actions that have threatened to derail the government coalition just months into Ms. Rousseff’s second term. Mr. Cunha is from the Brazilian Democratic Movement Party, supposedly the government’s most important ally; but he was elected speaker with the promise of independence from the Executive. Under his command, Camara dos Deputados has held 121 voting sessions in the first five months of 2015, a record number for the beginning of the legislative year since 1995.

This is not necessarily good news for the country. Today, Congress has more weight and more strength; it has also become more conservative and more self-centered. Two weeks ago, Mr. Cunha and his supporters pushed forward political reform measures after outmaneuvering other members of the house and disregarding three months worth of work from a congressional commission. Among the proposals approved in the first round were the private financing of political campaigns and the end of reelection in the Executive. The constitutional amendments still have to undergo a second round of voting in the lower house before moving on to the Senate for approval.

Starting this week, Brazil Talk will closely follow the economic and political situation in Brazil with a series of infographics that will inform our readers about the struggle for power in Brasilia as the government attempts to recover the economy. The first infographic – Austerity Ahead – explains the fiscal measures sponsored by finance minister Joaquim Levy to hold on to Brazil’s investment-grade credit rating and hit a primary surplus target of 1.2% of GDP by the end of this year. Mr. Levy has also slashed almost 70 billion reais from planned discretionary spending for 2015 and urged lawmakers to back tax increases. But Congress approved softer versions of the austerity bills, upsetting Mr. Levy’s efforts to increase government revenue.

Austerity Ahead

The Protests in Brazil: Dialogue as a Necessary Alternative

by Leonardo Petronilha

photo by Marcelo Bonatto

March 15, 2015 was marked as a Sunday of protests all across Brazil against Dilma Rousseff’s—from the Partido dos Trabalhadores (Workers’ Party)—government. One of the most vaunted demands was for impeachment proceedings to be opened against the President of the Republic.

First, it’s important to call attention to the fact that we live in a “Democratic State of Law” in accord with the preamble of the Constitution of the Federal Republic of Brazil, enacted on October 5, 1988. “Democracy,” in quotation marks, because our social and political culture is characterized—for example—by slavery, patrimonialism, and innumerable historical examples of authoritarianism, such as: repression, manipulation, and extermination of indigenous populations by our country’s explorers; blacks brought here as commodities and treated like animals; the Bahia and Minas Gerais conspiracies; the Sabinada revolt; the Balaida revolt; the Praieira revolt; Guerra dos Farrapos (The Ragamuffin War); the Canudos War; Revolta da Vacina (The Vaccine Revolt); Chibata (the Revolt of the Lash); and military dictatorship, amongst others. There are important traces of this history present in our social and political culture today. This is why it is important that we defend democracy, without quotation marks, and not “democracy,” in quotation marks, that still tortures, persecutes, promotes inequality, silences, controls, selects, represses, etc. To defend democracy is to try and remove the quotation marks.

Continue reading “The Protests in Brazil: Dialogue as a Necessary Alternative”

Petrobras: a tail of dirty politics, heavy corruption and an absent Board of Directors

by Tina Evaristo

by seloart
by seloart

The disclosure last year of what was apparently just a bad business done by Petrobras – the Brazilian semi-public oil company – evolved and became one of the biggest corruption scandal to hit the country after the reinstatement of democracy in 1988. The Brazilian Supreme Court has authorized the investigation of more than 40 politicians, including the speakers of the Chamber and the Senate and a former President. They are all suspects of integrating a large kickback scheme. Parliament is also promising to carry out their own investigation too, politically unbiased and dispassionate according to them. The hearings have already started.

The subject requires a lot of explaining indeed. Apart from Petrobras’ own executives, the corruption ring also included big companies from Brazil, Europe and Asia. The scheme, based on the payment of bribes in exchange for contracts, is supposed to have managed over $ 2,5 billion. Where was the Board of Directors? And the Fiscal Board? What about the Risk Management Committee? There is also the Advisory Committee. Everyone failed to spot the wrongdoings that took place over, at least, one decade.

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Police violence part of Brazil’s security problem

by Heidi Lipsanen

photo by Heidi Lipsanen

On the morning of April 22nd 2014 the body of 26-year-old Douglas Pereira, the talented dancer of a popular television show, was found on the yard of a kindergarten in Rio de Janeiro’s Pavão-Pavãozinho slum. Locals and his family refused to believe the initial police statement according to which the injuries were compatible with a death caused by fall. Instead they took to the streets. Images of burning car tires and testimonies of gunfire between the police and the community spread like wildfire in international media. Another man lost his life during the disarray. The kick-off of the FIFA Word Cup was less than seven weeks away and the eyes of the world were fixed on Brazil.

The following day the uncomfortable truth behind Douglas’ death was announced. His slender body had been penetrated by a lethal bullet, which was later matched to a police firearm.

Nearly a year has passed since Douglas was murdered. Despite delays in the investigations his mother Maria de Fátima hopes the officer who triggered the killer weapon will be brought to justice. There is, however, a hint of despair in her voice on the other end of the phone line.

“The police was created to arrest, not to kill“, Maria de Fátima says and compares the Brazilian police to a combat force. “But the system is very corrupt and I just wonder how they will ever manage to pull these bad officers off the streets”, she adds and wishes that God will deliver justice in case the Brazilian judicial system fails to do so.

Continue reading “Police violence part of Brazil’s security problem”