The Americas in the 21st Century

38.5: The Americas in the 21st Century

38.5.1: Brazil’s Economic Success and Corruption Woes

Brazil, a member of the BRICS group, had one of the world’s fastest growing major economies until 2010, with its economic reforms giving the country new international recognition and influence.

Learning Objective

Connect the allegations of widespread corruption to Brazil’s economic growth in the 2000s

Key Points

  • In 1985, Brazil entered its contemporary era, ushering in a period of re-democratization after decades of dictatorships and military rule.
  • The adoption of Brazil’s current Constitution in 1988 completed the process of re-establishment of the democratic institutions. Since then, six presidential terms have elapsed, without rupture to the constitutional order.
  • In 2002, Luiz Inácio Lula da Silva of the PT (Workers’ Party) won the presidency with more than 60% of the national vote.
  • His presidency was characterized by major economic growth, increased international prestige, and numerous corruption scandals.
  • Despite these scandals, Lula’s popularity rose to a record of 80%, the highest for a Brazilian president since the end of the military regime.
  • One major mark of Lula’s second term were his efforts to expand Brazil’s political influence worldwide, including Brazil’s membership in G20, a global discussion forum of major powers.
  • On October 31, 2010, Dilma Rousseff, also from the Worker’s Party, was the first woman elected President of Brazil, with her term beginning on January 1, 2011.
  • Sparked by indignation and frustrations accumulated over decades (against corruption, police brutality, inefficiencies of political establishment, and public service), numerous peaceful protests erupted in Brazil from the middle of first term of Rousseff.
  • Amidst political and economic crises, evidence that politicians from all main political parties were involved in several bribery and tax evasion schemes, and large street protests for and against her, Rousseff was impeached by the Brazilian Congress in 2016.
  • She was succeeded by Vice President Michel Temer.

Key Terms

Luiz Inácio Lula da Silva
A Brazilian politician who served as President of Brazil from January 1, 2003 to January 1, 2011. He is a founding member of the Workers’ Party (PT – Partido dos Trabalhadores). He is often regarded as one of the most popular politicians in the history of Brazil and, at the time of his mandate, one of the most popular in the world. Social programs like Bolsa Família and Fome Zero are hallmarks of his time in office. He played a prominent role in recent international relations developments, including the nuclear program of Iran and global warming, and was described as “a man with audacious ambitions to alter the balance of power among nations.”
Dilma Rousseff
A Brazilian economist and politician who was the 36th President of Brazil from 2011 until her impeachment and removal from office on August 31, 2016. She is the first woman to have held the Brazilian presidency and previously served as Chief of Staff to President Luiz Inácio Lula da Silva from 2005 to 2010.
G20
An international forum for the governments and central bank governors from 20 major economies. It was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability. It seeks to address issues that go beyond the responsibilities of any one organization. The participating heads of government or heads of state have periodically conferred at summits since their initial meeting in 2008, and the group also hosts separate meetings of finance ministers and central bank governors.

Background: Re-Democratization of Brazil

Leading up to the 21st century, Brazil saw a return to democratic rule after a period of dictatorship during the Vargas Era (1930–1934 and 1937–1945) and a period of military rule (1964–1985) under Brazilian military government. In January 1985 the process of negotiated transition towards democracy reached its climax with the election of Tancredo Neves of the PMDB party (the party that had always opposed the military regime) as the first civilian president since 1964. He died before being sworn in, and the elected vice president, José Sarney, was sworn in as president in his place.

In 1986 the Sarney government fulfilled Tancredo’s promise of passing in Congress a Constitutional Amendment to the Constitution inherited from the military period, summoning elections for a National Constituent Assembly to draft and adopt a new Constitution for the country. The Constituent Assembly began deliberations in February 1987 and concluded its work on October 5, 1988.

The adoption of Brazil’s current Constitution in 1988 completed the process of re-establishment of the democratic institutions. The new Constitution replaced the authoritarian legislation that still remained in place and that had been inherited from the days of the military regime.

In 1989 the first elections for president by direct popular ballot since the military coup of 1964 were held under the new Constitution, and Fernando Collor was elected. Collor was inaugurated on March 15, 1990. With the inauguration of the first president elected under the 1988 Constitution, the last step in the long process of democratization took place, and the phase of transition was finally over.

Since then, six presidential terms have elapsed, without rupture to the constitutional order: the first term corresponded to the Collor and Franco administrations (Collor was impeached on charges of corruption in 1992 and resigned the presidency. He was succeeded by Franco, his vice president.); the second and third terms corresponded to Fernando Henrique Cardoso’s administration; the fourth and fifth presidential terms corresponded to Luiz Inácio Lula da Silva’s administration; and the sixth term corresponded to Dilma Rousseff’s first administration. In 2015, Mrs. Rousseff started another term in office, due to end in 2018, but was impeached for violations of budgetary and fiscal responsibility norms in 2016.  She was succeeded by Vice President Michel Temer.

 

Lula Administration

In 2002, Luiz Inácio Lula da Silva of the PT (Workers’ Party) won the presidency with more than 60% of the national vote. In the first months of his mandate, inflation rose perilously, reflecting the markets’ uncertainty about the government’s monetary policy. However, the markets’ confidence in the government was promptly regained as Lula chose to maintain his predecessor’s policies, particularly the continuation of Central Bank’s task of keeping inflation down. After that, the country underwent considerable economic growth and employment expansion. On the other hand, Lula’s mainstream economic policies disappointed his most radical leftist allies, which led to a breakdown of the PT (Workers’ Party) that resulted in the creation of the PSOL (Socialism and Liberty Party).

Several corruption scandals occurred during Lula’s presidency. In 2005, Roberto Jefferson, chairman of the Brazilian Labour Party (PTB), was implicated in a bribery case. As a Parliamentary Commission of Inquiry was set up, Jefferson testified that the members of parliament were being paid monthly stipends to vote for government-backed legislation. Later, in August of the same year, after further investigation, campaign manager Duda Mendonça admitted that he had used illegal undeclared money to finance the PT electoral victory of 2002. The money in both cases was found to have originated from private sources as well as from the advertising budget of state-owned enterprises headed by political appointees, both laundered through Duda’s Mendonça advertising agency. The collection of these incidents was dubbed the Mensalão scandal. On August 24, 2007, the Brazilian Supreme Court (Supremo Tribunal Federal) accepted the indictments of 40 individuals relating to the Mensalão scandal, most of whom were former or current federal deputies, and all of whom were still allies of the Brazilian president.

The loss of support resulting from these scandals was outweighed by the president’s popularity among the voters of the lower classes, whose income per capita rose as a consequence of both higher employment, expansion of domestic credit to consumers, and government social welfare programs. The stable and solid economic situation of the country, which Brazil had not experienced in the last 20 years, with fast growth in production both for internal consumers and exportation as well as a soft but noticeable decrease in social inequality, may also partially explain the high popularity of Lula’s administration even after several scandals of corruption involving important politicians connected to Lula and to PT. Hence Lula’s re-election in 2006: After almost winning in the first round, Lula won the run-off against Geraldo Alckmin of the PSDB (Brazilian Social Democracy Party) by a 20 million vote margin.

Following Lula’s second victory, his approval ratings started to rise again (fueled by the continuity of the economic and social achievements obtained during the first term) to a record of 80%, the highest for a Brazilian president since the end of the military regime. The focus of Lula’s second term was to further stimulate the economy by investments in infrastructure and measures to keep expanding the domestic credit to producers, industry, commerce, and consumers alike.

Another mark of Lula’s second term was his efforts to expand Brazil’s political influence worldwide, specially after G20 (from which Brazil and other emerging economies participate) replaced the G8 as the main world forum of discussions. Lula is an active defender of the Reform of the United Nations Security Council, as Brazil is one of the four nations (the others being Germany, India, and Japan) officially coveting a permanent seat in the council. Lula also helped orchestrate Brazil’s membership in BRICS, the acronym for an association of five major emerging national economies: Brazil, Russia, India, China, and South Africa.

Lula is also notorious for seeing himself as a friendly, peacemaker conciliator Head of State, managing to befriend leaders of rival countries from the likes of Presidents George W. Bush and Barack Obama from the United States to Venezuelan leader Hugo Chávez, Cuban former president Fidel Castro, the President of Bolivia Evo Morales, and lastly, Iranian President Mahmoud Ahmadinejad, fueling protests inside and outside the country due to Ahmadinejad’s polemical anti-Semitic statements. Lula took part in a deal with the governments of Turkey and Iran regarding Iran’s nuclear program despite the United States’ desire to strengthen the sanctions against the country, fearing the possibility of Iran developing nuclear weapons.

Close-up photo of President Luíz Inácio Lula da Silva in front of a Brazilian flag.

President Luíz Inácio Lula da Silva (2003–2010). President Lula is often regarded as one of the most popular politicians in the history of Brazil and, at the time of his mandate, one of the most popular in the world. Social programs like Bolsa Família and Fome Zero are hallmarks of his time in office.

Rousseff Administration

On October 31, 2010, Dilma Rousseff, also from the Worker’s Party, was the first woman elected President of Brazil, with her term beginning on January 1, 2011. In her winning speech, Rousseff, who was also a key member in Lula’s administration, made clear that her mission during her term would be to keep enforcing her predecessor’s policies to mitigate poverty and ensure Brazil’s current economic growth.

On June 2011, Rouseff announced a program called “Brasil Sem Miséria” (Brazil Without Poverty). With the ambitious task of drastically reducing absolute poverty in Brazil until the end of her term, which currently afflicts 16 million people in the country or a little less than a tenth of the population. The program involves broadening the reach of the Bolsa Família social welfare program while creating new job opportunities and establishing professional certification programs. In 2012, another program called “Brasil Carinhoso” (Tenderful Brazil) was launched with the objective to provide extra care to all children in the country who live below the poverty threshold.

Although there was criticism from the local and international press regarding the lower-than-expected economic results achieved during her first term ahead of the government and the measures taken to solve it, Rouseff’s approval rates reached levels higher than any other president since the end of the military regime, until a wave of protests struck the country in mid 2013 reflecting dissatisfaction from the people with the current transport, healthcare, and education policies, among other issues that affected the popularity not only of the president, but several other governors and mayors from key areas in the country as well.

In 2014, Rousseff won a second term by a narrow margin, but was unable to to prevent her popularity from falling. In June 2015, her approval dropped to less than 10% after another wave of protests, this time organized by opposition who wanted her ousted from power, amid revelations that numerous politicians, including those from her party, were being investigated for accepting bribes from the state-owned energy company Petrobras from 2003 to 2010, during which time she was on the company’s board of directors. In 2015, a process of impeachment was opened against Rousseff that culminated with her temporarily removal from power in May 12, 2016 with Vice President Michel Temer assuming power temporarily until the final trial was concluded in August 31, 2016, when Rousseff was officially impeached and Temer was sworn in as president for the remainder of the term. During the impeachment process, Brazil hosted the 2016 Summer Olympics.

Photo of President Dilma Rousseff (2011-2016).

President Dilma Rousseff (2011-2016). Dilma Rousseff is a Brazilian economist and politician who was the 36th President of Brazil from 2011 until her impeachment and removal from office on August 31, 2016. She is the first woman to have held the Brazilian presidency.

Attributions