2016-01-12 By Kenneth Maxwell
It is summer time in Brazil and until “Carnival” is over in early February the on-going political crisis, at last in Brasilia, is temporarily on hold.
Although the New Year rises in transportation fees in the big cities is already causing opposition on the streets.
But what is unprecedented in Brazil is that so many politicians, bankers and businessmen, are being held accountable.
And more significantly are being jailed, and in some cases, found guilty and sentenced.
The aggressive role of federal prosecutors and federal judges in Brazil is new.
But the investigation of crimes, particularly fiscal crimes, with the involvement of money laundering, or the hiding off-shore of illicit gains, is now almost always international in scope, and the international banking sector has been forced to become much more transparent since the global financial crisis.
It is not only Brazil that is seeing the consequences of this shift. But it makes previously hidden Brazilian accounts in Switzerland, or the Cayman Islands, or even in the British cannel island of Jersey, much more likely to be opened up to judicial scrutiny, either by official judicial injunctions and criminal investigations (or by unauthorized leaks.)
There are globally fewer places to confidently hide stolen funds today than in the past. And this has been a major factor in the current Brazilian crisis.
Some have attributed the current Brazilian political and corruption crisis to the fact that Brazil has been an unequal country for so long, and that that this long pattern of historical social inequality, helps to explain why corruption in Brazil is so pervasive. But the truth is that Workers Party government (PT) did not invent corruption in Brazil.
Corruption in Brazil has always been bipartisan, often international in scope, and always the private and corrupt businessmen and politicians have obfuscated the public interest.
And this is not the result of Brazil’s social inequality. Many countries are unequal. Brazil is far from unique in this. Nor is Brazil the most corrupt country in the world. Russia, and China, and South Africa, to name only a few of the BRICS counties that Brazil likes (or liked until very recently) to compare itself with, are all certainly also highly competitive in the global corruption stakes. So to is Angola if one wants to look only at the Portuguese speaking (or Lusophone) world.
And all these countries have a much sorrier record in confronting these generic problems than does Brazil. In this aspect at least Brazil has much stronger institutional means, as well as much greater, and more democratic, and more transparent public pressure, to begin to deal more effectively with a what is after a deeply and universal human challenge.
But the current political crisis in Brazil does potentially put the major social advances of the last 20 years are at risk, as well as the future of the so called “new” middle class.
Unfortunately, because of the bitterness of the current political crisis, neither of the sides involved In the current very bitter contest for power in Brasilia, will recognize the collective achievement of these social gains. And in fact those who have gained most, and have most to lose, have yet to speak.
The past year was not a good one economically for Brazil and 2016 looks even less promising. But it should be remembered that these are by and large not problems of Brazil’s making. Such problems include the following:
- The collapse of the international price of petroleum;
- The economic slow down in China;
- The action of the US Federal Reserve Bank in raising interest rates.
Brazil has no control over any of these events. But they all affect Brazil’s economic prospects.
The street protests in Brazil since 2013, even though they have certainly at times been vast and nation-wide in scope, have still been largely composed of by those with a degree of education, and income, and social comfort, at least in comparison with the vast number of Brazilians, certainly if one looks at the composition of the crowds on the Avenida Paulista in São Paulo on the Avenida Altantico in Rio de Janeiro for instance.
The real question is if, and when, the vast majority of Brazilians become involved. That is those millions of Brazilians who live on the margins, and particularly those who have gained from the social policies, and the economic stability, and the taming of inflation of the past twenty years, and who now risk returning to the poverty and deprivation from which they have only very recently escaped.
The problem in Latin America has been much less a contest between “left” and “right” than it is populist policies, certainly in Argentina and Venezuela. Brazil has to a degree escaped the worst excesses of both these neighbors. Brazil has developed much stronger and more resilient political institutions.
And it is very important to always remember that Brazil has always been a vast continental size nation, with a highly diverse and fragmented political system, with many important regional power holders, important powers vested in state and municipal governments, which has always required conciliation and compromise to function on a national level.
But the larger international problem has been the failure of Brazil to find an effective international role.
Brazil rejected a deal with the U.S. on a free trade area for the Americas, but has found its regional alternative in Mersosul highly problematic. The USA is meanwhile perusing a free trade deal with Europe (which excludes Brazil.) The BRICS have proved be a chimera (and China has ceased to provide an insatiable market for Brazil’s exports of raw materials). And Brazil’s would-be partners on the east coast of South America, as well as Mexico, have been more attracted to the Pacific free trade area (which also excludes Brazil.)
Brazil has never received much serious attention in the USA and the attention now is dominated by corruption, and to a lesser degree in the sports pages of the newspapers, because of the on-going scandal at FIFA (with a dominant role played by Soccer federations in Latin America and in Brazil in the kickback scandals), as well as because of the upcoming Olympic Games in Rio de Janeiro in 2016.
But one can anticipate more of this year as the FBI and Justice Department’s investigation gathers pace. As the Petrobras case (brought by investors) progresses in the US federal courts. And the allegations of drug use in international athletics (especially the Russians but also many others) will surely impact potentially on athletes participating in the Olympic Games in Rio de Janeiro.
Brazil will certainly receive more attention in 2016.
Unfortunately, it may not be the type of attention that Brazil seeks or deserves.