Table of Contents
Political Landscape of Brazil
Economic Development from the Real Plan of 1994 to 2013
Economic History of Boom to Bust
The Real Plan of 1994
Commodities Boom of 2000’s and Bolsa Familia
End of Commodities Boom and Economic Actions of 2010’s
Protests of mid-2013
Lingering Effects of Bolsa Familia on the 2013 Protests
Height of the 2013 Protests
Effect of Mensalão on the Protests
Increased Transparency and Communication
A Break in Protests
Organized Crime Law of 2013
Increased Transparency from the Government
Brazil was once synonymous with economic growth and potential, all factors pointing at global powerhouse potential. It is a country abundant with natural resources, with the 8th largest economy, largest country in the region, 6th most populous in the world, and part of the BRICS bloc. The recent years have set Brazil back, from entering into a recession dubbed the worse of its history (Brasilia 2016) to civil society protesting in the millions to impeaching its sitting president to most notably of all— entering and still in progress of a corruption scandal, classified as “one of the largest corruption scandals in modern history” (Mello 2016).
Operação Lava Jato, or Operation Car Wash, began in 2014. It has revealed a widespread system of corporate kickbacks, bribes, and money laundering— all focused mainly on Petrobras, Brazil’s state-run oil company and Obedrecht, a Brazilian construction giant (Padgett 2017). Four years on and investigators have yet to see the bottom of the investigation. It has implicated virtually all high-profile mainstream politicians both of the controlling party and opposition parties, a third of current President Temer’s cabinet, popular former President Luiz Inacio Lula de Silva, as well as leading to the resignation of now-former President Dilma Rousseff (“Brazil judge targets” 2017).
Corruption is not a new concept in Brazil. It has seen a number of corruption scandals throughout its history, including an impeachment of its first democratically elected president since its military rule in 1992. It is far from reaching to be the most corrupt nation in the world, ranking 96 out of 180 nations and scoring 37 out of 100 (0 is highly corrupt and 100 is very clean) on the Transparency International index in 2017 (Biller 2018). But it is on a decline—falling 17 positions since 2016 on the Transparency International index; only Bahrain and Liberia slid more on the index (Biller 2018).
In this paper, I will argue that there has been a ‘corruption culture’ that has been accepted as the ‘norm’ within the fabric of Brazilian society. I will argue that the mentality of “Rouba mas faz” (“he or she steals, but get things done”) and the political structure have sustained this ‘culture’. I will also argue that there has been a recent switch on tolerating corruption in the past five years. And that the recession, increases in investigations, general visibility and bad governance have threatened the sustainability of the ‘corruption culture’. My primary case will be Operation Car Wash, with the Mensalão scandal and former President Collor’s impeachment as secondary cases.
Political Landscape of Brazil
There are two factors that have sustained the ‘corruption culture’ within Brazil until lately: the mentality of the people itself – a sense of “Rouba mas faz”—and the political structure of Brazil itself, that has lacked accountability as well as has produced such a number of candidates from a multitude of parties that it has become difficult for the voting public to know exactly who they are voting for.
‘ Rouba mas faz’ Mentality
There are two studies that have explored this term “Rouba mas faz”. Pereira found that voters are more likely to vote for corrupt politicians when public goods are provided, rather than private goods in exchange for their vote (Pereira 2015). These public goods – mostly in the form of infrastructure, such as the building of new schools or hospitals – reflect positively on the reputation of politicians. Voters directly know that a portion of public spending had been spent on them, undermining any charges of corruption that had or will be presented to the voting public (Pereira 2015).
This can be seen through the case of former president Luiz Inácio Lula da Silva, commonly referred to as Lula, and his numerous scandals throughout his administration. The most notable was the Mensalão scandal, a bribery scheme in 2005 which members of the Worker’s Party (Lula’s party) was paying members of congress for their vote to support the president’s agenda (Spalding 2017). His social spending on Bolsa Familia, a program which brought millions out of poverty, gave a clear indication to the voting public that spending was being spent on them directly. Despite the corruption scandal, he was reelected in 2006 and Dilma Rouseff—who was handpicked by Lula and of the Worker’s Party— in 2010, and had high approval ratings even up until his conviction during Lava Jato. He was convicted in the Lava Jato scandal in late July 2017. He is still running for president in 2018, since he can still legally run while his appeal is still in progress, and as of October 2017 is a frontrunner in the election (Apler 2017).
A study by Winters and Weitz-Shapiro focus more on the concept of voter information to explain the election and reelection of corrupt politicians. They have two hypothesis: one being informational—the voters are not aware that the politician is corrupt—and the other being of tradeoff – that voters are aware of the corruption but support the individual due to their performance in other areas (Winters 2013). They find that without credible, very specific and accessible information that ties corruption to a specific politician, they are more likely to vote for them. Having too many politicians who are corrupt makes it harder for the voting public to recall and identify specific information about corrupt politicians— which is often the case in Brazil.
Balan makes a similar argument previous to the two studies, expanding the explanation of “Rouba mas Faz” as well as making a point of Brazilian voting habits. When it comes to “Rouba mas faz”, he attributes it to a collective perception of cynicism. He argues that since the generation perception has been that all politicians are corrupt, the voting public therefore favors those who at least “do something” for the public good, no matter what it is or at what scale.
For the voting public to do all of what the previous studies have mentioned – from seeing if the politician has or has not contributed a public good or any good at all; to if there is credible and very specific information about said politician concerning ties to corruption; to even keeping track of who is who in the vast pool of corrupt political actors – it can be daunting. While not impossible to keep track of, for the common citizen who has, as Balan points out in his argument, has succumbed to the collective perception of cynicism, the background research is likely not to occur. Voters are more likely—as another facet of Balan’s argument –– to vote for politicians instead for politicians that share their ideology, identity, religion or kinship, even if they have been accused or found proven of corruption (Balan 2014).
Public perception in its totality is a tricky thing to pin-down—not all general perceptions pertain to each and every member of the voting public. There might be those who vote against the corrupt or perceived corrupt politicians, but as I will explain in my next point, the political structure of Brazil had not yet allowed for this movement to grow into any sort of fruition, and in some facets has not yet fully allowed the voting public to do so.
Kauffman describes governance as the traditions and institutions that determine how authority is exercised—including how governments are held accountable and selected (Kauffman 2015), two aspects in which I argue Brazil has lacked up until Lava Jato. There is a distinct lack of accountability when it comes to corruption scandals up until 2014.
A number of cases of corruption end up in recommendations rather than definitive sentences. Others were reversed after the final decision was made – as was the case of former President Fernando Collor, who after becoming the first democratically elected president after the military dictatorship ended up having to resign after corruption charges. His criminal charges were annulled two years later by the Supreme Court, but his political charges still stood. He was disqualified from holding political office for eight years- which common sense would dictate that would be the end of that. Yet he ran in 2006 for senate and won; then reelected in 2010 and 2014. As of early February 2018, he is also running for president in the upcoming October 2018 elections. In 2012, the Brazilian newspaper, Folha de São Paulo, calculates that around 6% of the nearly 850 defendants ended up with a conviction, and only 1% received final convictions after exhausting the appeals process (Michener 2012).
When it comes to the selection that the voting public has to choose from – there is a large variety of candidates at an election or any point of Brazil’s history. As of 2016, there are 35 political parties within the Brazilian Congress. There are a total of 27 electoral districts in the entirety of Brazil, many with large populations – the district of Sao Paulo has 44 million people for example. While it can be argued that the more political parties, the more representation of a variety of views within the government--these are often parties with weak structures. No party is able to hold a single absolute majority, because the number of parties elected each round does not mathematically allow for an absolute majority. For example, the lower house— the Chamber of Deputies – has a total of 513 seats. As of 2017, 70 seats are held by the Worker’s Party, 61 seats by the Brazilian Democratic Movement Party, 51 seats by the Progressive Party, and 45 seats by the Brazilian Social Democratic Party (Leme 2017). There is a somewhat similar but drastically less situation in the Senate. As of 2017, the Brazilian Democratic Movement Party holds 23 seats, the Brazilian Social Democratic Party holds 11 seats, the Worker’s Party holds 8, and the Progressive Party holds 7 (Leme 2017). There is obviously a drastically more of a majority in the Senate compared to the Chamber of Deputies, but it is not by many seats. Often coalitions have to be built by the three major parties – the Worker’s Party, the Brazilian Social Democratic Party and the Brazilian Democratic Movement Party— with smaller parties for legislation to be passed.
This often leading candidates faced with numerous fellow candidates come election time. Consequently, political campaigns have become expensive as of late. While not at the rate of other countries, mayoral campaigns for example can run anywhere from $200,000 USD in small cities to $2 million USD in large cities (Pereira 2015). This hefty price can lead to barriers of entry for ‘cleaner’ politicians.
It can also lead to politicians to look towards less than conventional venues of funding—namely companies. Donations from companies are often done as ‘investments’ in regards to the company – expecting something in return, mostly government contracts (Lloyd 2016). This had fueled the corruption culture, further intensifying the relationship between corporations and government officials. This also had a drastic effect on the 2014 campaign cycle – companies donated 3.05 billion Brazilian reals ($790 million), versus 553 million reals from individual donors (Kiernan 2015).
This was the last year of such an effect, because the Brazilian Supreme Court ruled the next year that only individuals and the government could donate to political campaigns. This change from the Supreme Court was sparked by this seemingly sudden change in public mentality and demands, who pressed their government for change.
Economic Development from the Real Plan of 1994 to 2013
It was seemingly sudden, both in the perspective of the outer world and within the country as well, namely within the government. Protests were sparked in mid-2013, with numbers unseen in over 20 years – not since the protests to impeach President Collor. Before going into the protests and the measures that were triggered because of it, it is worthwhile to look through the economic policies that, I argue, led to the public unrest in 2013. A succession of economic policies that were created, and often not reformed in the years afterward at all, led the country in a deep recession where civil society had no choice but to make their displeasure known.
Economic History of Boom to Bust
Brazil’s economic history has followed very much a boom to bust saga. It is especially seen through the mid-20th century up until now. The 1980’s were seen as the “lost decade” in Brazil, because they had the highest inflation in the world, a high level of foreign debt— all which led to them to have an economy that grew very little. They tried a succession of economic stabilization plans – one including Plano Collor, which confiscated saving accounts because the idea was that if there was no income, consumption would be so low that the inflation would have to go down (Mello 2012). The plan that stuck, and the last economic stabilization plan to be implemented in Brazil, was Plano Real, Real Plan of 1994.
The Real Plan of 1994
The plan requires five conditions to be met by the government: clear public deficit, stop automatic indexing of the economy, index the economy rather to the new exchange rate, open the economy by reducing import tariffs and sharply increase international reserves (Mello 2012). It also introduced the Real – a new form of Brazilian currency that would not be fully pegged to the US dollar but would follow the variation of it.
The issue with the Real Plan is that to date, there have been no reforms on the Real Plan of 1994 since its implementation. For a program that fights inflation, one would think that reforms to modernize aspects of the measures would be integrated with time. Yet, no predecessor since President Henrique Cadroso, who implemented the program, has introduced reforms to sustain it; they continue the process as is, soaking in the prosperity (Dwyer 2014). The Real Program was and still is a regime of tough anti-inflation measures, in which the government had to make annual adjustment to prices on a range of products and services to ensure that costs and wages would stay in sync.
- Quote paper
- Debora Aberastury (Author), 2018, Corruption and the federative republic of Brazil. What factors have sustained the corruption culture and what has changed?, Munich, GRIN Verlag, https://www.grin.com/document/913182