Rousseff’s Impeachment: What’s Next for Brazil?

Brazilian President Dilma Rousseff’s impeachment, if it moves forward, will not bring political stability but raise a new set of challenges, says CFR’s Matthew Taylor.

April 28, 2016

Interview
To help readers better understand the nuances of foreign policy, CFR staff writers and Consulting Editor Bernard Gwertzman conduct in-depth interviews with a wide range of international experts, as well as newsmakers.

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Heads of State and Government

Brazilian President Dilma Rousseff has likened efforts to remove her from office to a coup d’etat. Her impeachment trial, which could begin early next month, comes amid an economic recession (Brazil’s economy shrank 3.8 percent last year), a corruption scandal that has ensnared many of Rousseff’s political allies and foes, and single-digit approval ratings. While claims of a coup have been challenged, the political circumstances are extraordinary, says CFR Adjunct Senior Fellow Matthew Taylor. A majority of lawmakers in Brazil’s Congress, which voted for her impeachment, have themselves been charged with corruption, Taylor says. He adds that her possible replacement by Vice President Michel Temer would bring new challenges in creating a governing coalition, since he is nearly as unpopular as Rousseff.

Iran elections posters Brazil’s presidential Planalto Palace is pictured lit in the colors of Brazil’s flag ahead of the 2016 Rio Olympics. (Photo: Ueslei Marcelino/Reuters)

Rousseff and her Workers’ Party (PT) are describing efforts to impeach her for allegedly using state money illegally to cover up deficits as a slow-moving coup. Why?

The argument that the Workers’ Party has been making is that impeaching someone for fiscal wrongdoing is unprecedented in Brazil. And they’re correct about that; there have been many politicians who have abused the Fiscal Responsibility Law [a 2000 law that governs spending and budgets], but no one has ever paid a price quite this large. Rousseff says her administration used the funds for social programs, and also notes that many prior governments also engaged in similar maneuvers.

Critics of Rousseff point to the fact that the scale of the fiscal abuses by her government is unprecedented. The central bank itself released data showing that the size of the fiscal credits issued were thirty-five times greater than anything ever seen at the federal level.

There are two sides to this: There is a very strong narrative on the left and in defense of Rousseff that seeks to call this golpismo [putschism], and on the center and on the right, there are people who are pushing back against this, arguing that it follows the constitutional rules for removal of a president who has engaged in wrongdoing.

The impeachment process comes amid investigations into a corruption scandal, known as Lava Jato (“Carwash,” for where malfeasance was first uncovered), at state oil company Petrobras. How is this related?

The impeachment charges are only fiscal. The petition for impeachment, which was filed in August and approved April 17, has some language about corruption, but the actual charges are all related to fiscal mismanagement and the so-called pedaladas—fiscal maneuvers—which are seen as dishonest attempts to hide federal government spending that was never authorized by Congress.

Separately, the Lava Jato investigation has looked into corruption at Petrobras, among other corrupt acts. Given Dilma’s role as former chairwoman of the board of Petrobras (2003–2010) and as minister of mines and energy [the ministry that oversees Petrobras] under Lula [former President Luiz Inácio Lula da Silva], this investigation touches directly on Rousseff’s managerial record.

"The legal ground on which the president’s removal is being sought is solely fiscal. This is where you get to the hypocrisy of Congress in this impeachment decision: A full three-fifths of Congress has been charged with corruption."

It’s important to reiterate that corruption is not one of the accusations against the president, even though many of the congresspeople that were voting on [April 17] talked about corruption. So you have a couple of parallel processes going on here: You have the impeachment drive, and it’s been wrapped up in the logic of Lava Jato, but in fact the legal ground on which the president’s removal is being sought is solely fiscal. This is where you get to the hypocrisy of Congress in this impeachment decision: a full three-fifths of Congress has been charged with crimes. So even as they were incorrectly tying impeachment to corruption, they themselves are charged with corrupt or criminal acts.

Vice President Michel Temer would take power if the Senate puts Rousseff on trial next month. He is unpopular and is also being investigated for corruption. How stable would his government be?

It’s very likely he will become the interim president by mid-May. During the impeachment process, once a simple majority of the Senate votes in favor of accepting the charges that came from the Chamber of Deputies, the president is removed from office for 180 days. So he will be the interim president, and then if two-thirds of the Senate votes to remove Dilma, she will be removed from office permanently and Temer would serve to the end of her presidential term in 2018.

If Temer comes into office, he [would] come in first as an interim and then as the permanent president. Based on current trends, it looks as if both of those things are going to happen. But an interim presidency [would] be very complex politically because not only will Temer be driving [Rousseff’s] removal process forward, but he’ll be expected to put together a governing coalition at the same time.

The two things go together, but they don’t necessarily lead to the same conclusion. It may be very difficult for him to put together a removal coalition at the same time that he’s trying to negotiate a longer-term coalition that can undertake reforms. His popularity levels are close to those of Dilma, at only 16 percent [Rousseff has 10 percent approval]. Only 2 percent of Brazilians would actually vote for him in a presidential election.

Some polls that were taken among demonstrators who were out on the streets in favor of impeachment [found that] 54 percent of them were in favor of Temer’s impeachment, too. People who were supporting Dilma’s impeachment were also supporting Temer’s. Associated with this, of course, is that he has been tied to some illegal schemes related to Lava Jato, and for all intents and purposes, if he becomes president his backup legally is Eduardo Cunha, the disgraced and scandal-ridden president of the Chamber of Deputies. [Editor’s note: Temer, Cunha, and Senate President Renan Calheiros are part of the centrist PMDB party.]

Would Temer’s policies differ significantly from those of Rousseff?

In trying to build both of these coalitions—the removal coalition and the governing coalition—Temer has been emphasizing that he will not change social policy. In fact, [among] rumored cabinet positions that have been leaked is [economist] Ricardo [Paes de] Barros, who is considered by many the intellectual founder of Bolsa Familia, the social welfare program aimed at providing financial assistance to poor Brazilian families. The signal that Barros could become the architect of an expanded Bolsa Familia program is a way of deflating the criticism that the new government may somehow restrain the successful social policies implemented by the Workers’ Party.

The second major change would be in economic policy. All of the names [that are under discussion] are names that are pro-market, pro-reform, and would be identified by Brazilians as “neoliberals.”

Even if all the parties that currently seem to be on board with Temer back him, they still only have 66 percent of Congress, or of the Chamber of Deputies. In a system in which most major economic reforms—tax reform, labor reform and social security reform, as well as political reform—are going to require constitutional amendments, that’s not a very good margin of victory. In addition to a series of committee votes, constitutional amendments require two 60 percent votes in the plenary of the Chamber of Deputies, and another two 60 percent votes in the Senate. This doesn’t leave much margin for error, especially if Temer’s popularity declines, or there are further revelations from the Lava Jato investigation that strain the governing coalition.

How will this instability will affect the country’s ability to deal with the Zika virus and prepare for the upcoming Summer Olympics in Rio de Janeiro?

I’m cautiously optimistic with regard to those two things. The Olympics have turned into a largely municipal affair; the federal role is no longer as relevant. [Brasilia has] made a financial contribution, and the military will participate in security, but other than that, the day-to-day operations of the Olympics is no longer really in the hands of the federal government, and construction and other preparations seem to be on schedule.

The one caveat to that cautious optimism is attendance, and that’s where the issue of Zika plays a part. The last figures I saw showed that ticket sales are about 50 percent of what they need to be, and much of that may be related to foreigners’ fears of traveling to Brazil. I don’t think [officials will have] any trouble filling the seats because there will be Brazilians that want to go, but Zika is still definitely a significant concern. The Olympics will be taking place during the dry season in Rio; therefore, Zika may be less of a problem than it would have otherwise been. Zika is a worry and a tragedy, but it’s just one more of a series of tragedies that have hit Brazil. I don’t think it has a lasting implication either in regard to the Olympics or in regard to Brazil’s future.

How strong are U.S.-Brazil ties right now, and will Brazil’s instability affect this relationship?

The relationship is fairly strong considering where it was during Dilma’s first term, when we had the Snowden revelations and that very important break in relations. [Editor’s note: In 2013 former NSA contractor Edward Snowden reported that the United States had spied on Rousseff.] We’ve seen a very conscientious effort on both sides to engage in incremental negotiations and try to find ways to work together, often at a fairly micro level, whether it’s security cooperation or the letter of intent on trade facilitation that was signed last year.

"Zika is a worry and a tragedy, but it’s just one more of a series of tragedies that have hit Brazil."

The United States is rightly trying to stay out of the very complicated domestic politics of Brazil’s impeachment process, but I also think that the United States realizes that whatever government emerges is not going to be a particularly useful partner in the two plus years that will remain of the presidential term, whether it’s Temer or Rousseff.

What does Brazil’s crisis mean for its political institutions?

What we see here is an imbalance amongst institutions in Brazil. There are many examples where institutions have not worked as well as they could have, from state prosecutors overreaching, the vice president conspiring against the president, the fact that so many congress members involved in the impeachment vote are corrupt, the Supreme Court intervening in many ways that are unpredictable, and of course the government and its use of appointive powers. Institutions have been working imperfectly in part because of the polarization of the actors within them.

On the other hand, if this crisis has a silver lining, it would be that prosecutorial services are working better than they have in the past, judges are showing more eagerness, and the public has been strongly supportive of efforts to tackle corruption. In the long term, I’m fairly hopeful that this will lead to a change in the way coalition-making has worked under Brazilian presidentialism and to the strengthening of the rule of law in Brazil. But, in the short term, it is of course generating a great deal of instability. We’re likely to see continued instability through the end of this year and perhaps into next year.

This interview has been edited and condensed.

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