Dilma’s new broom

Financial Times, 08/30/2011

Dilma Rousseff has had an uncomfortably busy three months. Following a slew of corruption allegations, Brazil’s president has lost her minister for transport, the number two at the agriculture ministry and her chief of staff. Ms Rousseff’s unyielding stance on corruption is a welcome departure from the relaxed attitude that has typified Brazilian politics for too long – and a further sign that she is stamping her own authority on the government she inherited from Luiz Inácio Lula da Silva.

The cost of corruption is inherently hard to quantify, but it is significant. The São Paolo-based Federation of Industries puts it at between R$50bn and R$84bn per year. That is about 2 per cent of gross domestic product. With big infrastructure projects under way ahead of the 2014 World Cup and the 2016 Olympics, there is scope for much more. It is no coincidence that the transport and tourism ministries have been at the heart of recent scandals. If Brazil is to fulfil its economic potential, corruption must be countered vigorously.

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