Brazilian Elections 2018: A short introduction to recent events

President Michel Temer with Justice Minister Alexandre de Moraes. Photo: Beto Barata /PRPresident Michel Temer with Justice Minister Alexandre de Moraes. Photo: Beto Barata /PR

This October Brazilians will go to the polls to elect the country’s future President, Vice President, National Congress, state Governors, and state Legislative Assemblies. With a population of over 200 million, the largest economy in Latin America, an intricate federal system, and the contemporary repercussions of colonialism and dictatorship, Brazilian politics is a labyrinth at the best of times. Adding to this complexity, the country has recently experienced a number of social, economic and institutional upheavals, explored below, which have left many Brazilians in shock, and international commentators scratching their heads.

June 2013 and the Rejection of Entrenched Power

An account of Brazil’s recent political and social history must acknowledge the importance of the events of June 2013. Following a 7% rise in public transportation costs in the city of São Paulo – Brazil’s financial and cultural capital – Movimento Passe Livre (Free Fare Movement, a group working for free public transport) called for public protests to challenge this decision. A violent police response to the initial protests drew more to the streets, quickly becoming the country’s largest demonstrations in over 20 years. Although mainstream media initially ignored or misrepresented the protestors, a live broadcast from Rede Globo, the country’s largest media conglomerate,captured their own journalist being brutalised by the police. Catalysing a more supportive media portrayal, cities and townsacross Brazilbecame sites of mass protest and public actions. “Não é só vinte centavos” (“It’s not only about 20 cent”, referencing the 7% rise in transport costs) became a popular chant as the demands of the protestors diversified, all seeking a fairer and more liveable Brazil. Brazil has been celebrated internationally for being the first country in the world to recognise a citizen’s ‘Right to the City’(through the 2001 federal City Statute’) which aimed to affirm the social purpose of space and property and social control through gives local residents a role in setting the urban planning priorities and policies of their area.  Yet, despite high hopes,critics have recognised that this legislative intervention has mostlyled to the co-optation of local planning decisions by propertycorporations and alreadypowerful sections of civil society. The important geographer and public intellectual, David Harvey, has drawn attention to this strange collision of neoliberalism and democratisation in Brazil, key to the country’s development since the 1990s. A high profile example of this, recently featured in the Guardian, is São Paulo’s Ocupa Mauá (Occupation Mauá). This squatted community of over 250 families in the city centre is fighting eviction after local interest groups proposed plans for a new retail, office and high-end building development. Despite legislative innovation, Brazilian cities remain unequal and unliveable for those with limited access to resources and political power.

What has distinguished the Free Fare Movement and subsequent mass protests from previous instances of popular, political expression in Brazil, has been the mobilisation of the middle class. Between 2003-2011, Brazil’s middle class increased from 66 million to over 115 million. Entrants to this socioeconomic bracket have enjoyed consumption possibilities beyond the satisfaction of basic needs, access to credit and formal employment. This growth has cemented lifestyles of consumption within Brazilian households and social imaginaries. Yet, this new found prosperity remains for many precarious, dependent on high rates of indebtedness and vulnerable to economic fluctuations. The precarious position of the middle class (not to mention those below) has only been exacerbated following the 2015-2018 recession (see below). Although many in Brazil enjoy and quite literally buy into these high consumption lifestyles, the 2013 protests have shed light on the cracks in Brazilian society.

Prior to 2013 the cronyist logic of Brazilian government had gone largely unchallenged. Cabinet seats and lucrative appointments in state-owned companies were handed out to influential parties in Congress in return for support of the President’s legislative agenda. The protests of June 2013 were an emphatic rejection of this system of ‘coalitional presidentialism’, tarnishing the legitimacy of Brazilian political institutions. The impetus to challenge the current distribution of political power has remained in place ever since.

Recession and the Debunking of a Miracle

A member of the BRIC block and the largest economy in Latin America, many were shocked by Brazil’s entry into recession in 2014. To understand the current economic climate, it is important to note how Brazil became a ‘miracle economy’ in the first place. During the 1980s and 1990s, Brazilians suffered hyperinflation, hitting an annual high of 2,477% in 1993. To combat this, the government of Itamar Franco introduced a new currency, the Brazilian Real (replacing the Cruzeiro), in 1994. This new currency, which was roughly pegged to the US Dollar, allowed Brazil to engage in international trade. Commodity exports (e.g. iron ore, soybeans, raw sugar) soon boomed. Foreign and domestic investment increased, boosting employment and economic indicators. Beginning in the mid-2000s, Brazil’s famous Bolsa Familia (Family Allowance) which provides cash transfers to poor families, was also implemented. Coupled with a general push to reduce interest rates, Brazil’s economy experienced increased flows of cash and new opportunities for spending. Then, just as oil prices were peaking in the mid-to-late 2000s, Brazil discovered huge additional offshore oil reserves. As growth spiralled and most Brazilians saw themselves tangibly becoming better off, wider attempts to make structural changes to the economy took a back seat. This increased optimism allowed many large Brazilian public and private companies, such as Petrobras (the state oil company), to access easy credit on international markets.

With the onset of the global economic crisis (roughly beginning in 2008) commodity prices tumbled, hitting Brazilian industries hard. Thanks to the success of the previous years, the Brazilian Real was valued relatively highly, making Brazilian exports even more expensive for key trade partners such as China and Argentina. At the start of Dilma Rousseff’s first term in office (2011), a number of important policy changes were made to encourage growth. The Brazilian Real was devalued, the Central Bank reduced base interest rates even further, and tax exemptions were applied to key industries, such as energy. In other words, the government adopted a number of short term policies to maintain exports and keep cash flowing.

Yet, cracks in Brazil’s ‘miracle economy’ image turned attention to important structural issues which could not be addressed through more easy cash. These issues include an overdependence on commodity extraction and exportation, inefficient bureaucracy, poor infrastructure and patchy education levels. In 2013, a change in the U.S Federal Reserve’s international lending policy (known as the “Taper Tantrum”) turned sentiment against lending to countries like Brazil, with high external and fiscal imbalances. The result was increased interest rates on Brazil’s public borrowing, raising gross public debt to historic highs of 63% of GDP in 2015. Subsequently, Brazil was downgraded by international lending agencies, curbing the international cash flow on which the country had become dependent.

As the recession began to bite, and the federal government continued to try to spend its way out, and an inflation shock rose consumer prices to a 13-year high. For many middle-aged and older Brazilians, this brought back fears of the 1980s and 1990s, something which severely marked perceptions of Dilma Rousseff’s ability to manage the economy. As these negative forces continued to intensify, key economic players in the Brazilian economy became embroiled in corruption scandals (see below), protracting uncertainty and distrust in the economy. Michel Temer, who has replaced Dilma Rousseff in 2016 (see below) has opted for a much harsher deficit reduction programme, slashing public spending and tightly limiting future spending. These have been unpopular reforms and some would argue, given the questionable success of deficit reduction programmes in other recession economies, motivated by political impulses rather than economic logic. “The crisis is being seen as an opportunity for a new economic agenda”, commented Laura Carvalho, a professor at the University of São Paulo and one of the top economists in Brazil.

Part of this new agenda is a wave of proposed privatizations across Brazilian industries, even including Brazil’s national lottery. Temer’s team argue that privatization is needed to combat the prolonged structural issues of the Brazilian economy. How these industries are being valued and their plans for sale are causing huge debates within financial, academic and bureaucratic spheres. Many economists, from all perspectives, worry that the economic changes proposed by Temer are too fast and too furious, especially for an economy the size of Brazil’s –  the ninth-largest in the world. Thankfully, the sale of national patrimony takes time, and little will be achieved before the 2018 elections. However, debates ignited over the last few years, such as the privatisation of Electrobras (the state electricity company) – something that would have been unthinkable during Lula and Dilma’s era – has influenced the direction of political discourse heading into Brazil’s national election.

Operation Car Wash and the Threads of Extra-legality

In March 2014, federal prosecutors launched an investigation into the dealings of Alberto Youssef, a black market money-launderer who operated out of a nondescript office located on top of a car wash in Brasilia. Operation Car Wash quickly spiralled into the largest corruption probe in Brazilian history as Youssef revealed details of a scheme in which major Brazilian construction companies formed a cartel to monopolize public contracts with state-owned oil company Petrobras. The contracts were guaranteed by bribing Petrobras directors, who in turn would distribute the illicit funds to the politicians who had appointed them to their positions. The part of the bribes received by the politicians were used to fund political campaigns.

The corruption scheme led to the circulation of over US$5 billion in bribes, implicating all of Brazil’s major political parties. The operation marked the first time in Brazilian history in which elite impunity was put in check. Operation Car Wash benefitted from measures put in place by the Partido dos Trabalhadores (Workers’ Party, PT) governments (2003 – 2016) to ensure judicial independence, including the selection of the attorney general by federal prosecutors rather than the president. In the wake of the June 2013 protests, President Rousseff also passed a law authorizing plea bargains, which has become the decisive judicial tool to get defendants to reveal the details of the corruption scheme.

Prosecutors eventually turned their eyes towards the politicians who were the ultimate beneficiaries in the scheme. Four former presidents and current President Michel Temer have been implicated in Car Wash plea bargains. 108 members of Congress are facing charges stemming from the operations, but their parliamentary immunity has left their cases in the hands of the notoriously lethargic Supreme Court.

While Car Wash has been widely praised for its exposure of the rampant corruption pervading the Brazilian political system, its aggressive approach to pursuing suspects and its harnessing of public opinion has been widely criticized. In order to prevent the federal government from putting an end to the investigation, Judge Moro and the Car Wash prosecutors have deftly used the media to bolster public support for the operation. Scandalous details of plea bargains have been leaked to the media to maintain the public’s attention. Along with widespread public dissatisfaction witnessed in June 2013, Operation Car Wash is the most significant threat to the future distribution of power in Brazil’s capital, Brasilia. The politicians implicated have suffered blows to their credibility and popularity. However, their position as elected office holders has also kept many immune from criminal proceedings. This election season will no doubt see more politicians implicated in corruption scandals, and many desperately doing all they can to hold onto the privileges that come with elected office.

Impeachment and its Consequences

Dilma Rousseff came into office in 2011 with high approval ratings and a Congress that was willing to comply with her legislative agenda. However, growing public unrest and the revelations coming out of the Car Wash investigations began to implicate her congressional allies, cabinet members and her own vice-president Michel Temer.

Despite her growing political fragility, Rousseff won re-election in 2014 in an extremely close contest against center-right candidate Aecio Neves. Neves challenged the election results in court and accused Rousseff of using government revenue to fund her campaign. The charges were ultimately dismissed but investigations into Rousseff’s budgetary policies revealed that her administration had committed fiscal fraud in order to finance social welfare programs such as Bolsa Familia. The government required state-owned banks to finance government programs without reimbursing the banks. Previous administrations had engaged in similar budgetary schemes but the president’s inability to rein in her fledgling congressional coalition led to impeachment proceedings being approved by her former ally Eduardo Cunha, who was then the leader of the lower house of Congress.

Cunha and Vice-President Temer led the Partido do Movimento Democratic Brasileiro (PMDB, Brazilian Democratic Movement) the most powerful party in Congress. Sensing an opportunity to control both the legislature and the executive, the PMDB left the governmental coalition and became the standard bearer for the impeachment process. Crucially, the PMDB’s high command, including Cunha and Temer, were all facing criminal charges stemming from the Car Wash investigations. Getting rid of a government that was willing to let corruption investigations operate independently became an unprecedented opportunity for Brasilia’s kleptocracy to save itself. Unable to harness congressional support to stop the impeachment proceedings, Rousseff accused the PMDB of orchestrating a parliamentary coup. The coup accusations became stronger after Romero Juca, one of the PMDB leaders in the Senate, was caught on tape claiming that impeachment proceedings were going ahead in order to “stem the flow” of the corruption investigations. Juca also spoke of establishing a “national pact” involving the judiciary and the military to ensure that the impeachment would go through.

Rousseff was officially removed from office on August 31, 2016, after the Senate voted for impeachment. With Michel Temer occupying the presidency, coalitional presidentialism resumed and Temer and his congressional allies have unsuccessfully attempted to reign in the judiciary’s investigative prerogatives. While pursuing an aggressive neoliberal agenda, Temer remains embroiled in some of the most high-profile corruption cases in Brazil. He was charged with bribery and obstruction of justice in May 2017 as part of Operation Car Wash investigations and proceeded to issue approximately BRL$1.9 billion (£500 million) in land grants and agricultural credits to his allies in Congress to prevent the charges from reaching the Supreme Court.

Knowing that the loss of his presidential immunity will likely leave him behind bars, Temer has launched a farcical presidential run. With 1% of voters intending to vote for him and a previous court ruling for electoral fraud hanging over him, Temer’s candidacy is yet another absurd element to the surreal world of Brazilian politics. After a polarising impeachment process, the relentless revelations from corruption investigations, increased unemployment, persistent inequality and devastating crime rates, the legitimacy of political institutions is at an all-time low. As a consequence, the upcoming elections are increasingly turning into a contest between ‘outsiders’ averse to the conventional distribution of power, and those like Temer who seek to maintain the nefarious benefits of coalitional presidentialism.

Lula and the Electoral Path Forward

The contest between outsiders and insiders surrounding the 2018 elections remain centered around former president Lula, the most popular politician in Brazil. Lula was elected president in 2002 promoting his party’s ethical approach to politics, and left office in 2010 with the highest approval ratings in history. A former union leader with no formal education, Lula led the PT’s efforts towards moderation, which consisted of removing explicit socialist aspirations from the party’s political program and entering into alliances with conservative forces. Lula has become a key protagonist in Brazilian politics by presenting himself as a humble man of the people, capable of working with the elite. His presidency was marked by internationally recognised poverty alleviation and hunger eradication programs, but also by the PT’s complete assimilation into Brasilia’s kleptocracy.

As the most iconic politician in the country, Lula inevitably became the main target of the Car Wash investigations. Prosecutors accused the former president of being gifted a beachside apartment as a bribe from construction company OAS in exchange for facilitating Petrobras contracts for the company while in office. In January 2018, Lula was sentenced to 12 years in prison on corruption and money laundering charges. Lula’s arrest on April 6 has been the defining moment of Operation Car Wash and of the electoral season. The former president’s sentencing, defeated appeal and rejected habeas corpus request in the Supreme Court, all passed through the typically lethargic court system in record time. Lula’s supporters claim that the speed of the court decisions was an orchestrated effort to prevent the former president from running again in the 2018 elections. Despite his arrest, Lula remains the leading presidential candidate in nationwide polls.

Arresting the leading presidential candidate in this year’s elections reflects the half-truths and incongruencies that have defined Brazilian politics since 2013. In attempting to prove that the law counts for everyone, and not just for society’s poorest, the Car Wash prosecutors have themselves had to push the limits of legality. In asserting the rule of law over those who have historically circumvented it, the judiciary has come into battle with political forces and shed any semblance of impartiality. While it is undeniable that Lula’s decision to join the ordered illegality of Brazilian governance, rather than transforming it, has to be scrutinized, it is also impossible to ignore that rampant class hatred and explicit political imperatives influenced his judicial defeats. As the first head of state to come from the country’s marginalized class, Lula has come to embody a gradual societal egalitarianism that has shattered five centuries of white, patriarchal elite consensus in Brazil.  As a consequence, he elicits passionate, often polarizing discourses regarding class privilege, structural inequality and the inner workings of Brazilian political power. It is therefore impossible to disentangle the court decisions against Lula from the far-reaching political discourse that he is immersed in.

The numerous crises that Brazil has faced since 2013 has rapidly eroded the already faltering legitimacy of the country’s political institutions. The sense of disgust at public governance that erupted in June 2013 remains, but the consensus for significant political reform has evaporated. 2018 marks the 30th anniversary of the enactment of the constitution that solidified Brazil’s democratic transition from military rule. Rather than a celebratory occasion, the events of this year will continue to remind us of the enduring fragility of Brazilian democracy.