Economic Failings Lead to Impeachment of Another Economist in Brazil

By Mario Osava Reprint | | Print | |En español

“I never thought I’d have to fight against a coup d’etat in Brazil again,” said Dilma Rousseff after she was suspended as president on Thursday May 12, before embracing former president Luiz Inácio Lula da Silva outside the government palace. Credit: Ricardo Stuckert/Lula Institute

RIO DE JANEIRO, May 12 2016 (IPS) - Ironically, the only two economists who have served as president of Brazil are also the only ones impeached for economic failures.

Dilma Rousseff, in office since January 2011, was suspended by a vote of 55 to 22 in the Senate on the morning of Thursday, May 12 after a marathon 21-hour session.

The impeachment trial may take up to180 days, during which time Vice President Michel Temer will assume the presidency.

If at least 54 of the 81 senators – a two-thirds majority – vote to remove Rousseff at the end of the trial, Temer will serve as president until Jan. 1, 2019.

Analysts agree that it is highly unlikely that Rousseff, of the left-wing Workers’ Party (PT), will return to power, after the overwhelming defeats she has suffered – first in the Chamber of Deputies, where 71.5 percent of the lawmakers gave the green light to the impeachment proceedings, and now in the Senate.

The most likely scenario is a repeat of the case of Fernando Collor de Mello, elected president in 1989 and impeached in 1992, after a four-month trial.

But there are many differences between the two cases.

Rousseff is not accused of corruption, but of using creative accounting to hide large budget deficits. And she still has the firm support of a significant minority made up of left-wing parties and social movements capable of mobilising huge public protests.

By contrast, Collor de Mello was completely isolated, supported only by a tiny party created to formalise his candidacy. His impeachment was the result of a virtual consensus.

But there are also similarities. Both economists lost their political base due to reckless management of the economy.

When he took office, Collor de Mello immediately froze people’s bank accounts, to curb hyperinflation, releasing only small amounts for essential household expenses.

In 1990, GDP fell 4.3 percent, while unemployment soared and companies went under. The popularity of Brazil’s youngest president, who was 40 when he took office, took a nosedive. And when a corruption scandal broke out two years later, the conditions for impeachment were in place.

In the case of Rousseff, the decline of the economy took longer. Starting at the end of her first term (2011-2014), the recession turned into full-blown depression, with a 3.8 percent drop in GDP in 2015 and a continued downturn in 2016.

Consumption subsidies, tax cuts to give certain sectors a boost, and artificial caps on fuel and electricity prices are among the anti-inflationary or pro-growth measures that led to disaster, especially in the fiscal area.

Michel Temer signs the official Senate notification of Dilma Rousseff’s suspension, which made him interim president, on Thursday May 12. Credit: Marcos Corrêa/VPR

Another thing Collor de Mello and Rousseff have in common is that they misled voters in their campaigns.

Collor de Mello was elected in 1989 after accusing his opponent, trade union leader Luiz Inácio Lula da Silva of the PT (who was finally elected president in 2003) of preparing to freeze bank accounts – the very measure that Collor de Mello himself adopted on his first day in office.

Rousseff accused her opponents, during her 2014 reelection campaign, of seeking a fiscal adjustment that she herself tried to push through in her second term. And she hid the scope of the government’s deficit problem and announced an expansion of social programmes that was not economically feasible, due to a lack of funds.

These errors helped spawn the movement for her impeachment, the mayor of São Paulo, Fernando Haddad of the PT, acknowledged in a May 6 interview.

The economic crisis was then compounded by the corruption scandal involving the state-run oil company Petrobras. More than 200 members of the business community and politicians have been implicated, including former president Lula and other PT leaders, which has smeared the image of the government, even though Rousseff herself is in the clear.

This backdrop strengthened allegations that Rousseff violated fiscal responsibility laws by signing decrees increasing public spending without authorisation and by obtaining loans to the federal government from state-owned banks, which is illegal.

These two measures would amount to “crimes of responsibility”, which according to the constitution provide grounds for impeachment. And they allegedly aggravated the fiscal deficit, the key factor in the economic crisis.

Attorney General José Eduardo Cardozo, who represented Rousseff, and ruling coalition legislators rejected the accusations, arguing that the government decrees merely redistributed funds to other areas and that the government’s delayed payments to the state banks did not constitute illegal loans.

A group of weary senators applaud at the end of the marathon session that decided to immediately suspend President Dilma Rousseff during an impeachment trial for her removal. Credit: Marcos Oliveira/Agência Senado

Dozens of mayors and state governors, as well as former presidents, have used the same accounting maneuvers without being punished in any way, said Senator Otto Alencar of the Social Democratic Party, a majority of whose members voted against Rousseff.

Whatever the case, the trial is political; the president will be removed if two-thirds of the senators decide that there are grounds for such a move, independently of strictly legal arguments.

In the all-night session, the 78 senators (only three were absent) heard 73 speakers who had up to 15 minutes each to speak before the vote.

The result, which was already a given, was a crucial indicator for the opposition: They managed to achieve the two-thirds majority needed to find the president guilty.

However, it is possible that some senators who gave the go-ahead to the impeachment trial will change their position.

At least three senators qualified their votes, clarifying that they were only approving the trial itself because they wanted more in-depth investigations and discussions on presidential responsibility, and that they had not yet decided to vote for Rousseff’s removal.

They included former footballer Romario Faria, a senator for Rio de Janeiro, and Cristovam Buarque, a former governor of Brasilia. They belong to two different socialist parties.

PT senators said there would be a fight, as well as mobilisations to block the “unfair” impeachment. And Rousseff reiterated that she would “fight to the last” against what she called “a coup.”

The vice-president’s rise to president means a heavy concentration of power in the hands of the centrist Brazilian Democratic Movement Party (PMDB), which has the largest number of mayors, many state governors, the post of president of the Senate, and now the presidency (interim, for now).

A group of six senators from different parties called for an alternative to the “traumatic” impeachment process: early elections to allow the people to choose their leaders.

Many senators, such as Tasso Jereissati of the opposition Brazilian Social Democracy Party (PSDB) and Collor de Mello called for political reform, arguing that “coalition presidentialism” has proven to be the source of crisis and instability.

Rousseff’s impeachment also provides an opportunity to debate reforms in the political system.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes