Brazil’s political turmoil

Any sense of euphoria experienced by President Dilma Rousseff and her Workers Party following her re-election as President of Brazil last year must now have vanished as large scale demonstrations broke out in protest against not simply sluggish economic growth, but what appear to be credible allegations of substantial corruption, associated with the state-owned oil company Petrobras, seemingly   beneficial to the Workers Party, prior to the elections. And the more recent arrest of the Party’s treasurer, apparently viewed as the organizer of, or intermediary in, the Petrobras scandal, has hardly helped the government’s situation.

The morale of the President herself seems to have been affected as the protests increased, with her political mentor, former President Lula, feeling it necessary to appeal to her to be more visible and responsive to the variety of accusations that the opposition has levelled against her and the government.

Brazilians are well aware that the period of relative prosperity inspired by continuing economic growth, and which they associated with Lula and the Worker’s Party, has lost its strength and persistence. This has compounded their concerns about recent revelations that the party itself and elements related to it flourished financially; these revelations coming at a time when the country’s economy has taken a downturn.

Projections for 2015, announced by Finance Minister Joaquim Levy, suggest that it will be “almost flat”, with the economy which grew at a rate of 0.15% in 2014 doing so at 0.5% this year. This situation has prompted a strategy of higher taxation on a number of products including fuel, and cuts to pensions and unemployment benefits, as he seeks to staunch the increasing budget deficits which the country has experienced.

These events have prompted discussion at home and externally that Brazil could well decline in status as one of the so-called BRICS –the relatively large developing economies which have had reasonable rates of growth in recent times; and which are slated, over time, to advance closer in economic strength, and therefore economic status, to the traditional dominant industrial economies.

From this perspective, Brazil was placed in the category of Russia, China, India and more recently South Africa, indicating an economic status higher than other developing countries. The implication has been that they could have a substantial and continuing diplomatic influence in the discussions that take place between the industrialized states and the wider range of developing states. And an indication of the BRICS attribution of importance to this has been,, for example, their recent decision to establish an international development bank that can parallel institutions like the World Bank, which they are prone to consider as insufficiently understanding of, and therefore sympathetic to the concerns of the large, economically variegated countries referred to as developing.

In the context, however, of the present difficulties, President Rousseff has had to focus on domestic matters, and appears to place much confidence, towards a recovery of economic growth during her term, in her post-election appointment of Finance Minister, Levy. She no, doubt, has felt that he stands a chance of being able to calm the markets and sustain international confidence, on the basis of his reputation as a former Vice-President of the Inter-American Development Bank, high official of the Western Hemisphere Department of the IMF, Secretary of the Brazilian Treasury, and Secretary for Finance of the state of Rio de Janeiro and graduate of the University of Chicago, known for its technocratic advocacy of the so-called free market approach to development.

The President’s objectives at this time would appear to be twofold. First, not only to satisfy the population’s reliance on her party for continuation of Lula’s programmes of sustained economic growth; then secondly, to put the country’s economy on a basis that can underpin the government’s commitment to maintaining a level of international credibility that would permit it to pursue the objectives of the grouping of BRICS which include a capacity to be able to influence discussions on the future pattern of the international economy, such that they encompass, credibly, the objectives of the developing countries.

In that connection Brazil would see itself in international diplomacy as, first, the country representing the other countries of Latin America in the Western Hemisphere, and therefore having a capacity to influence major country economic diplomacy; and secondly, as carrying the weight of the developing Western Hemisphere countries into BRICS diplomacy in international economic and development diplomacy; BRICS representation being a step to a substantial participation in the economic diplomacy of the developing countries as a whole.

That Brazil has made some progress in that regard is reflected in the recent repetition of an invitation to Rousseff to visit Washington. It will be recalled that his first invitation was eventually rejected by her, in consequence of the United States revelations of electronic snooping on other countries. For her on this occasion, however, a US invitation will have been accepted as a prop for diminishing perceptions of her weakness at home, both in terms of the economy, and in the context of the necessity for her to participate in a run-off after the presidential elections in October last year.

In that election run-off, the difference between herself and her opponent was a mere 3.2%, and it is unlikely that in the context of the weakening of the economy and the corruption allegations, and their related extensive popular demonstrations against her government, that her position will have improved.

There has been little indication, since the Summit of the Americas meeting, that much was concluded between President Obama and his Latin American colleagues on the issue of development diplomacy. This, no doubt, in part reflects the apparently low-level part that Brazil played in those recent discussions.

In that context, since the BRICS decision to create an international bank, China has moved ahead autonomously on this matter. Whether her independent initiatives will overshadow the BRICS initiative is left to be seen, even as it looks likely.