On March 6, 2015 Brazil’s Supreme Court has given the green light to federal prosecutors to investigate 49 people, including 34 sitting politicians in connection with the Petrobras scandal. The list includes 22 congressmen and 12 senators. As mentioned earlier (below), the House and Senate speakers Eduardo Cunha and Renan Calheiros, both PMDB members, are among them; the PMDB party is a coalition partner of President Rousseff. 33 of the 34 lawmakers are members of the ruling coalition composed by Rousseff’s PT (21), the PMDB (6) and the Workers Party (5). Among the other people to be investigated are the former president Fernando Collor de Mello, Rousseff’s former energy minister Edison Lobao, former finance minister (under President Lula) Antonio Palocci, Rousseff’s chief of staff during her first term, Gleisi Hoffmann, as well as the party treasurer of Rousseff’s PT, João Vaccari. The investigated politician who is not a member of the current coalition parties is Senator Antonio Anastasia of the oppositional PSDB party.
Despite everything Brazil’s President Dilma Rousseff (*1947) is trying to tell you, she is of course deeply involved in the $1.5 billion Petrobras scandal. She has worked as State Secretary of Energy from 1993 until 1994 as well as from 1998 until 2002. She has been Minister of Mines and Energy from 2003 until 2005. In 2002, during presidential candidate Lula’s campaign, she was part of Lula’s energy policy team. In addition, from 2003 until 2010, Dilma Rousseff served as chairman of the semi-public oil company Petroleo Brasileiro SA aka Petrobras, which was South America’s largest company by market capitalization until the current scandal wiped out large parts of its market value.
As Petrobras chairman (or chairwoman), vice-minister and minister of Energy, the former Marxist guerilla Dilma Rousseff did not care too much about working conditions at Petrobras, about the company’s human rights violations and even less so about the environmental record of the partly state-owned oil producer and refiner.
At the very best, Dilma Rousseff has been incompetent, if she should not have been aware of what has been going on at Petrobras for years. She has probably turned a blind eye to the mismanagement and the corruption at Petrobras. It is possible that she has been personally involved in the scandal. In the past, she has been credited with being a pragmatic vice-minster and minister of Energy as well as Petrobras chairman. In retrospect, it seems that she has been too “pragmatic”.
Construction companies that won contracts with Petrobras are accused of having diverted slush funds for political parties and having bribed company officials. Most involved is of course the center-left coalition, including the PT party of Dilma Rousseff as well as allied parties such as the center-left PMDB.
According to Brazilian press reports, the speaker of the Brazilian parliament’s lower house, Eduardo Cunha, as well as the senate’s speaker, Renan Calheiros, both PMDB members, are on the list of 54 people under investigation by Brazil’s chief prosecutor, Rodrigo Janot. The two speakers are accused of running the Petrobras corruption scheme together with mainly other politicians and Petrobras executives. Kickbacks of 3% of the contracts won by construction companies ended up in the mentioned slush funds for political parties as well as in the pockets of bribed politicians, company executives and others. The PT party treasurer, João Vaccari Neto, had already been questioned by prosecutors in early February 2015. At that time, 86 people had been put under investigation. And this may only be the tip of the iceberg.
Former President Lula and current President Rousseff have largely been credited with helping Brazil’s economy grow and reducing the number of the country’s poor over the past decade. Thanks to welfare programs such as Bolsa Familia, some 40 million people have been lifted from poverty. Brazil’s poverty rate was reduced by 55% and the extreme poverty rate by 65%. The informal sector, the shadow economy, shrank from 22% to 13%.
The economic success was partly achieved by systematically rising Brazil’s minimum salary by 84% since 2003. Although not without positive effects in the beginning, this policy of a rising the minimum wage has its limits. The country has ended up in economic stagnation, locked in the so-called middle income trap. The rise of salaries has not kept up with the rise of productivity. The industrial sector shrank by some 15% in 2014. The emerging country can no longer “emerge further”. More investments in education and infrastructure are needed. The corruption within the political system as well as the corporate corruption within Petrobras remain obstacles towards further growth.
Fiscal responsibility has been lost some time ago. It has been replaced by creative accounting both within the government and within Petrobras, which is state-owned by two-thirds. The government used Petrobras to control inflation. In 2014 alone, oil and gas has been subsidized with €19.7 billion.
In 2014, Brazil’s growth rate reached roughly 2.5%, down from 7.5% in 2010. This is not enough for an emerging economy. Nevertheless, in the period of the 2014-electoral campaigns, the unemployment rate was down to an all-time low of 4.9%. At the same time, some 40% of the roughly 200 million Brazilians still live in household that earn less than $700 per month. The savings rate is too low.
The left under the presidents Lula (2003-10) and Rousseff (2011-18) has governed Brazil far too long already. Unfortunately, in the 2014 presidential election, Dilma Rousseff won a second mandate. With 51.5% against 48.4% in the runoff-election, she narrowly defeated her valid opponent, Aécio Neves, who has successfully run his home state of Minas Gerais as governor from 2003 until 2010.
Brazil cannot afford to be governed by Dilma Rousseff and her coalition until 2018. The sooner the investigation into the Petrobras scandal comes up with tangible results involving President Dilma Rousseff herself directly, the quicker early elections and a fresh start could take place. Anyway, given her previous positions, she should take political responsibility for the Petrobras scandal and step down, which she will of course refuse to do. Only a court decision, her own coalition partners and/or massive protests by the general public could force her out of office.
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Palácio do Planalto / Official photograph of President Dilma Rousseff, taken by the official photographer Roberto Stuckert Filho, at Alvorada Palace on January 9th, 2011. Via Wikimedia.
Article added on March 6, 2015 at 10:45 CET. Last update and corrections on March 7, 2015 at 10:11 CET.
