from Latin America's Moment and Latin America Studies Program

Brazil’s Agonizing August

Brazil, 2016 Olympics, Rio de Janeiro, Zika, August, Dilma Rousseff, impeachment, Michel Temer, reforms, pension reform, labor reform, elections, democracy, developmentalist economic policies, coalitional political system

July 26, 2016

Brazil, 2016 Olympics, Rio de Janeiro, Zika, August, Dilma Rousseff, impeachment, Michel Temer, reforms, pension reform, labor reform, elections, democracy, developmentalist economic policies, coalitional political system
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The coming month will be a stressful one for Brazilians.

The Olympic opening ceremony on August 5 may have two rival presidents in attendance, killer mosquitoes, pesky media, and now, the potential for terrorism. Most Brazilians had long hoped the games would be a chaotic but happy mess, like the 2014 World Cup, and few anticipated an embarrassment. But sentiment has shifted with the arrest of a dozen alleged homegrown extremists. Terrorism can be added to the long litany of potential problems that have led Rio de Janeiro Mayor Eduardo Paes to note that “contingencies are always possible,” and that the Olympics have been a “lost opportunity” for Brazil.

With the Australians refusing to move into their “uninhabitable” Olympic quarters, male U.S. golfers avoiding Rio de Janeiro on Zika concerns, and athletes complaining about astounding pollution, the games are already a net public relations loss. The only winners so far seem to be the state of Rio de Janeiro, which received a last minute, R$2.9 billion emergency fund from the federal government that is enabling it to pay down overdue civil servant salaries, and the federal military personnel in the Força Nacional, whose living allowances were more than doubled when they threatened to walk away from running security for the Games.

In Brasília, meanwhile, the political games will also be getting underway. August will start a day early, with demonstrations—both in favor and against the impeachment of Dilma Rousseff—planned nationwide for Sunday, July 31. Rousseff’s defense in the Special Committee on Impeachment should wrap up by the end of this week, and the Committee will likely vote during the first week of August on whether or not to proceed to trial. There is little doubt that the Committee will move to a trial, although the legitimacy of impeachment has been vociferously challenged, including by one federal prosecutor, Ivan Marx, who undermined the fiscal basis for impeachment by arguing that there were no grounds for criminal prosecution.

The Senate trial, however, won’t get underway until the last week of August, which will keep Brasília on tenterhooks all month. Prosecutor Marx’s claims about the absence of criminal responsibility, and the brouhaha over Glenn Greenwald’s harsh criticism of the Folha de S. Paulo newspaper for its misleading reports on polling about the possibility of holding new elections, have seriously dented the legitimacy of pro-impeachment forces. Uncertainty will be exacerbated by politicians’ longstanding tradition of selling their support dearly, which means that Senators may play up their ambivalence about impeachment until the last minute in the hopes of convincing the interim Michel Temer administration to be generous with budget allocations, key appointments, and state debt negotiations. Street demonstrations are likely again during the third week of August, with all of the uncertainty about potential violence and strange behaviors that popular demonstrations elicit. A vote against Rousseff still seems much more likely than not, but August will play cruelly with the faint of heart.

August also sets the stage for the last two years of the presidential term. Minor policy changes have been slowly wending their way through Congress in the first two months of interim President Temer’s administration, including legislation establishing Central Bank autonomy and facilitating labor outsourcing. But the major reforms that Temer has suggested, and that markets have been clamoring for—including pension and labor reform—won’t move forward until impeachment is finalized (assuming, of course, that Rousseff loses in the Senate). Even the end of the impeachment drive won’t bring major legislative movement, though, as legislators’ attention will have to turn almost immediately to the nationwide municipal elections. Free TV advertising by politicians begins August 26, and then there will be five weeks of chaotic campaigning before the first round of elections on October 2. The second round of elections, in major cities, won’t be until October 30, meaning that for all intents and purposes, the legislative calendar and major reform initiatives will be on hold until November.

But does this mean that Brazil is in danger of becoming the world’s largest failed state, as one blogger recently noted in the Financial Times?

Pshaw. Brazil is facing a remarkable set of challenges, undoubtedly. But it has also weathered the storms of recent years far better than could be expected from many of its emerging market peers. August will be tumultuous, and the remainder of the presidential term will be difficult, no matter which politicians survive the next month. But Brazilians have been through dark times before in the past thirty years since redemocratization, and Brazilian democracy has always emerged, resilient and improved, on the other side. The much more important long-term question is how this experience will affect Brazil’s developmentalist economic policies and its coalitional political system, which have both been shaken to their core, but remain deeply embedded. That is a subject for a future post. In the meantime, August will give us plenty to think about.

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