Last year’s Brazilian election was billed as one of the closest run in living memory, and with no shortage of headline fodder to feed the international press, the occasion delivered on its promise. At three percent, the wafer thin majority was barely enough to kickstart a second term in the chair for Dilma Rousseff. However, after months spent wading through a campaign trail of petty low blows and bitter recriminations, the former fugitive has dipped her toe in for another four-year stint in charge of the world’s seventh-largest economy. “I want to be a much better president than I have been to date,” said the newly re-elected president before a bustling crowd in Brasília. And with that, Rousseff set the wheels in motion to reassure citizens that she was in no way associated with the injustices that she herself played a key part in chasing out of society. “It is my hope, or even better, my certainty, that the clash of ideas can create room for consensus, and my first words are going to be a call for peace and unity.”
A turbulent first term
The promises were well received by the watching crowd, yet the speech was delivered against a less-than-ideal backdrop. News of a recession still lingered large on the horizon and the fallout from the World Cup protests lined the streets, meaning that not a single step of Rousseff’s campaign trail was free from criticism. For every promise made, there was a painful reminder of her first presidential term and, as the accusations of corruption grew progressively louder, Rousseff suffered setback after setback.
I want to be a much better president than I have been to date
In her first four years in charge, key macroeconomic indicators at no point impressed analysts, and with commodity prices on course to take a tumble in the coming months, many are of the opinion that the worst is yet to come. On the other hand, Rousseff’s social welfare policies have succeeded in reaching millions of formerly impoverished individuals, and while attempts to boost growth have been to little avail, Rousseff has succeeded in reducing extreme poverty and closing the inequality gap.
Arguably the most significant of Rousseff’s policy decisions was when she raised social security payments for less well-off families (‘Bolsa Família’) by 10 percent in May of last year. This commitment, coupled with a string of tax cuts, has so far found its way to more than 36 million families at a time where over 21 percent of the population is living in poverty. True, inhibitive – and at times misguided – economic policy decisions have wiped billions from the Sao Paulo Stock Exchange, and basic goods are today more expensive than they were under Rousseff’s predecessor, but following on from the example set by Workers’ Party (PT) governments of old, which lifted 40 million people out of extreme poverty through 2001 to 2012, Rousseff is credited with eradicating the problem in its entirety.
Still, the focus on social development was criticised by some, who were of the opinion that the country’s inability to keep to a 6.5 percent inflation target or drive up GDP was of far greater concern (see Fig 1). With the world’s fifth most populous country knee-deep in a recession and the national budget deficit running at an all-time high, the president’s decision to introduce costly social programmes in place of austerity measures was unusual. Add to that the small matter of falling commodity prices, uncompetitive labour costs and an overvalued currency (see Fig 2), and it’s clear why so many struggling businesses and free-market economists have hit out at Rousseff’s time in charge.
Crunching the numbers
Still, others maintain that progressive social programmes are supported by perfectly adequate macroeconomic numbers, and that this focus on poverty reduction has facilitated a more stable and inclusive environment. “During the last decade, Brazil’s strong macroeconomic frameworks have contributed to preserve macroeconomic stability, support robust growth and underpin sustained poverty reduction,” according to the IMF’s latest country report. “The key pillars of Brazil’s macroeconomic frameworks have been the fiscal responsibility law, the inflation targeting regime and the flexible exchange rate. In addition, a strong prudential framework has underpinned a sound financial sector that withstood well the global financial crisis of 2008–9. The prolonged macroeconomic stability has facilitated the adoption of far-reaching social programmes that have produced a remarkable social transformation – in particular, a substantial reduction in poverty and the increase in living standards of large segments of the population.”
Pushing through much-needed social reforms ahead of costly economic initiatives is exactly why there was such a clear geographic divide between those voting for and against Rousseff in October. Election figures show that the poorer northern states favoured Rousseff’s PT party, whereas the more developed southern states took to the Brazilian Social Democracy Party (PSDB), in a battle that pit north against south and rich against poor. This was an election that, reduced to its base parts, saw the voting public weigh up the benefits of successful social policy against a lacklustre economic showing, arriving at Rousseff as the best candidate to lead a divided Brazil.
No matter the agreed-upon reasons for the win, history books will read only that this was a fourth consecutive electoral victory for the Workers’ Party, and the beginning of a landmark second term for Brazil’s first female president. And while there is no shortage of people who claim Rousseff’s interventionist ways are dampening investor sentiment and inhibiting growth, the win marks yet another page in an already-impressive portfolio of achievements.
Best characterised by an unerring focus on human rights abuses and a steely disposition, Rousseff’s commitment to social reform and to cajoling out corruption dates back to her years spent as a guerrilla activist. However, with the country divided on Rousseff’s policies, and some questioning just how clean her hands are of a recent Petrobas scandal, the president’s credentials have been called into question like never before.
Born to a Bulgarian émigré in the late 1940s, Rousseff was educated in a French-speaking Catholic school and expressed a desire to train as a ballerina – though abandoned the career choice early on. In her formative years, Rousseff rejected a life of relative privilege and turned her hand to political activism, dedicating a good 20 years to opposing an oppressive and unlawfully appointed military regime.
It was in the late 1960s that Rousseff became a key figure in one far-left guerrilla group of Marxist-Leninist partisan orientation, during which time she was convicted for having played a key part in the group’s best-known transgression. The organisation orchestrated a robbery that saw it steal approximately $2.5m and earned Rousseff a place on the country’s most wanted list.
This two-decade long dictatorship marks a defining, though seldom talked-about chapter of Rousseff’s time in politics, during which time she was subjected to torture and forced to serve a three-year sentence in prison. Having experienced first hand the brutality of the country’s military rule, Rousseff, in 2012, established the National Truth Commission, whose task it was to shed light on the crimes committed between 1964-1985, when an estimated 400 Brazilians were either killed or reported missing.
“Under the military dictatorship, repression and the elimination of political opposition became the policy of the state, conceived and implemented based on decisions by the president of the republic and military ministers,” according to a 2,000-page report published in December 2014, following an almost three-year investigation into the crimes. The seven-member commission therefore rejected “the explanation offered up until today that the serious violations of human rights constituted a few isolated acts or excesses resulting from the zeal of a few soldiers”.
Though painful, Rousseff’s past experiences have carried over into her time in office, and the president’s willingness to make known instances of corruption and civil rights abuses is closely in keeping with her activist roots. “Brazil deserves the truth. The new generations deserve the truth. And most of all, those who deserve the truth are those who lost family members, friends, companions and continue to suffer as if they died again each and every day,” said Rousseff at a ceremony to mark the release of the report. “We, who believe in the truth, hope that this report contributes to make it so that ghosts from a sad and painful past are no longer able to find shelter in silence.”
This ambition to wheedle out corruption and a focus on social welfare ahead of immediate economic growth, therefore, is perhaps the most characteristic aspect of Rousseff’s government, and one that stretches beyond any one single investigation.
Having emerged from a two-decade long dictatorship, and having spent a lot of the time since acclimatising to a much-changed economic and social climate, corruption has emerged as a key concern for Brazilian businesses and citizens alike, whose transition to democracy has not come without consequence.
In fact, many are of the opinion that the ruling authorities are incapable of keeping a lid on corruption, not to mention reviving a flagging economy, yet Rousseff has sought to reassure people that the issues are being looked at. As soon as the votes were counted in October, the newly re-elected president pledged to narrow inflation, rein in government spending and restore any former economic promise. Chief among the president’s concerns is corruption, and clamping down on this issue constitutes a key part of cleaning up Brazil’s muddy reputation on the world stage.
In only her first year in charge, Rousseff made clear that those found guilty of corruption were laying their necks on the line, and the former activist pulled no punches in ridding of any corrupt government officials. Not content to sit idly on her laurels, Rousseff spearheaded a political upheaval in which several senior government officials were ejected from their positions.
Labour Minister Carlos Lupi, for example, was less than apologetic in November 2011 when allegations of corruption were laid at his doorstep. The official was quoted as saying “to get me out, you’d have to shoot me”, adding “it would have to be a big bullet because I’m a big guy”. However, less than a month on and the minister would tender his resignation, stating that he had been subjected to vicious and unwarranted attacks from sources in the media and in government. One local magazine, Veja, alleged that the minister had demanded kickbacks from charities, whereas the national paper Folha de Sao Paulo looked at the small – though equally illegal – matter of receiving a second government salary; enough to force him from office after all.
Most worrying, however, was that the official marked the sixth government minister to resign under Rousseff’s first year in charge, with the defence, transport tourism and agriculture ministers all having departed from the summer onwards. Lupi’s resignation was hailed as another achievement in a long line of victories for a president whose goal it was – and still is – to tackle corruption in the innermost sanctums of government. “I am not an adolescent, nor a romantic,” said Rousseff shortly after Lupi’s resignation. “I analyse objectively.”
This pledge to unite a divided society and expose corrupt officials seems to have struck a chord with formerly disenchanted supporters, and Rousseff’s approval rating at the end of 2014 stood at 52 percent, up from only 37 percent prior to the election. “The end of poverty is just the beginning,” read one presidential slogan in 2013, though there is still work to do – and undo – if Rousseff is to make good on that statement.
Rousseff’s anti-corruption drive has succeeded in drumming up support, and was particularly effective towards the beginning of her first term in charge. However, the president’s firm stance on the matter has also left her dangerously exposed to any failures on this front. Tasked with the business of dousing political infighting and dismantling a system riddled with corruption, Rousseff has largely upheld her promise to uproot it – but recent allegations concerning state-owned Petrobras have dealt her credibility a near-fatal blow.
As the country’s largest company and a landmark Latin American name, any damage inflicted on the oil colossus brings with it its fair share of consequences for citizens and the wider economy. It was with regret, therefore, that Brazilian authorities were forced to commit 300 police and 50 tax officials to an operation that spanned five states and the capital city last November. In it, the police unearthed facts that would later result in the biggest corruption scandal in the country’s history, following a tip from former company executive Paulo Roberto Costa that Petrobras’ refinery division was diverting money to political parties.
Brazilian police would soon after arrest 23 people, 19 of whom were company presidents or executives: evidence enough that a huge discovery was in the works. Days later, 35 people were charged, and it was found that the value of the kickbacks and bribes peddled to political parties came close to BRL 4bn ($1.54bn). “These people stole the pride of Brazilians,” said the prosecutor general Rodrigo Janot at a news conference in Curitiba. “We’re far from being at the end.”
Months later and the number of executives and former public officials standing trial has reached 40, and the hundreds of millions of dollars lost has landed the oil giant in a sticky situation. The fact that Rousseff chaired the Petrobras board between 2003 and 2010 – the time in which the bulk of the crimes were committed – has also given weight to the words of those who claim the president’s anti-corruption probe is inadequate and that her credibility is questionable. Worse for Rousseff is that the vast majority of known offenders belong to the Workers’ Party, therein taking some of the shine away from a seemingly heartfelt election pledge to tackle corruption.
A new problem
For these reasons, the lead-up to Rousseff’s second term in charge was mired in corruption allegations, as opposition parties joined in pointing an accusing finger at the Workers’ Party for their failure to keep an eye on their dealings. At no other time has the president been asked to contest her involvement in such a scandal, and polls taken amid the scandal showed that Rousseff’s support was fading fast. “There is one easy way to put an end to corruption: throw the Workers’ Party out of office,” said Aécio Neves, presidential candidate for the PSDB, in response to one voter’s question on how Brazil could better tackle corruption.
With the incident weighing heavily on Rousseff’s credibility, any comments made on the subject of corruption were met with an all-too-familiar grimace among large swathes of the population as the Workers’ Party attempts to repair a rocky reputation. The president has since taken pains to reassure those concerned that the scandal need not hamper the economy, and that the punishment should stop short of tarring all those under the Workers’ Party banner with one brush. “We must know how to punish the crime, not harm the country or its economy,” she said in a speech towards the end of 2014. “We must close our doors – all our doors – on corruption, without shutting them on growth or progress and employment.”
The statement here sheds some light on what is already Rousseff’s biggest challenge, as she seeks to calm fears that her party is funded by illegal means or that she herself was aware of the Petrobras scandal. And where once Rousseff spent her waking hours fighting an oppressive regime, she now finds herself in the situation of having to reassure citizens that she is not heading a corrupt government herself.
A longstanding culture of corruption serves only to reaffirm what so many have assumed about the Brazilian Government: that little has changed. However, assuming that Rousseff is staying true to her roots, as her statements would appear to suggest, there’s no reason to believe that the president’s ambition is not to put the issue of government corruption to bed.