As Brazil’s Rousseff reels from crisis, opportunity for reform emerges

Carlos Eduardo Lins da Silva (Brazil Institute’s Global Fellow) – Geopolitical Information Service, 10/2/2015

Brazil's President Dilma Rousseff greets former President Luiz Inácio Lula da Silva, her political mentor and ally, during a campaign rally for the Workers’ Party (source: dpa)

Brazil’s President Dilma Rousseff greets former President Luiz Inácio Lula da Silva, her political mentor and ally, during a campaign rally for the Workers’ Party (source: dpa)

Brazil is facing its worst crisis in 70 years. Its economy is mired deep in a recession that will last at least until 2017. The political scene is in disarray, with a president who was re-elected just a year ago now chastened by approval ratings in the single digits. No opposition leader or party is considered a viable replacement for the Workers’ Party, which has held power since 2003.

Fear pervades the business community – not only due to the country’s macroeconomic woes but also because of an anti-graft investigation by federal police that resembles Italy’s ‘clean hands’ investigation of the 1990s. The operation is dramatically reshaping the traditionally venal relationship between large companies and the state in sectors such as construction, energy and transport.

The silver lining is that the democratic institutions Brazil has built since the end of its military regime 30 years ago continue to prove strong and effective. The Public Prosecutor’s Office, the Federal Police Department, Congress, the courts, civil society and the press are all functioning well, while enjoying freedom and independence. The military, under civilian command, is fulfilling its constitutional duties – and it is unimaginable that it would ever intervene in the political process, as was the norm throughout most of the last century.

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Brazil’s ex-president Lula to be questioned about Petrobras corruption

Tom Hennigan – The Irish Times, 10/5/2015

A Brazilian government shake-up designed to head off efforts to impeach president Dilma Rousseff has been overshadowed by a supreme court ruling that former president Luiz Inácio Lula da Silva – known as Lula – can be questioned about his knowledge of corruption in Petrobras.

Federal police want to interview Lula to see if he personally or his government benefited from the illicit multibillion-dollar scheme inside the state-controlled oil giant. Their request was backed by the country’s chief federal prosecutor, Rodrigo Janot, who made clear Lula is only a witness in the case and not under investigation.

Dozens of politicians face charges for their role in the scandal, including Lula’s former right-hand man, José Dirceu, while last month the ruling Workers Party’s treasurer was jailed for 15 years for his participation in the scheme.

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Real takes a reality check as Brazil strains to support its currency

Katie Martin – Financial Times, 10/4/2015

Brazil’s currency, the real, is tormenting many fund managers.  Few thought it would see out the year unscathed. The country’s high interest rates were never likely to be enough entirely to shield the currency from trading weakness at a time when the economy was shrinking and the US is on the cusp of raising interest rates.

But the real has contrived to stand out particularly among a field of emerging markets currencies almost all of which have suffered bruising declines.

The pace and scale of the fall in the Brazilian currency, once a popular pick as one of emerging markets’ juiciest bets, have stumped even the most seasoned observer and left some investors peeking at their screens through their fingers. “Mayhem” is how Rabobank described it; the source of “one of the wildest days we’ve ever seen in Latin American markets”.

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Pensioner shot dead after following phone app through Brazil favela

Donna Bowater – The Telegraph, 10/5/2015

A 70-year-old businesswoman has been shot dead after using a mobile phone app which made her take a wrong turn into a favela in Rio de Janeiro, according to reports.

Regina Murmura and her husband Francisco, 69, had been trying to get to a beach in Niteroi, Rio, when they accidentally entered the gang-controlled Caramujo favela on Saturday.

Police told local media the couple had been using navigation app Waze to reach the seafront street of Avenida Quintino Bocaiúva in the south of Niteroi.

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Brazil’s Rousseff cuts eight ministries in cabinet shuffle

Paulo Trevisani – The Wall Street Journal, 10/2/2015

Brazil’s President Dilma Rousseff shook up her cabinet Friday in a bid to save her job and break a political logjam that is paralyzing Latin America’s largest economy.

The changes give more clout to Brazil’s largest political party, the PMDB. Its leaders are seen as key to blocking a possible impeachment process against Ms. Rousseff and helping her pass much-needed fiscal reforms.

The revamp comes as the deeply unpopular president and her ruling Workers’ Party or PT struggle to cling to power less than a year after Ms. Rousseff won a second four-year term in the October 2014 elections.

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Brazil’s Justice Min. says audit no grounds for impeachment

Sabrina Valle and Anna Edgerton – Bloomberg Business, 10/4/2015

The expected decision by Brazil’s audit court to reject the government’s 2014 accounting practices isn’t grounds for impeaching President Dilma Rousseff, Justice Minister Jose Eduardo Cardozo said.

The government will file a complaint Monday against Augusto Nardes, the auditor responsible for the case in the court known as the TCU, and ask for his suspension, Cardozo told reporters in Brasilia. Rousseff’s opponents are using the case to promote reasons for impeachment while the accounts analysis should be technical only, he said.

The alleged violation of government accounting practices is one of the main arguments being used in calls to impeach Rousseff. Her popularity has plummeted with the onset of a recession, rising inflation and devaluation of the currency as the government is embroiled in a bribery and kickback scheme surrounding Petrobras, the state-owned oil company.

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In Brazil, balloon of former president da Silva provokes ire

John Lyons – The Wall Street Journal, 10/5/2015

A new figure looms over Brazil’s already volatile politics, stirring controversy wherever it goes: A 50-foot-tall balloon depicting Brazil’s former President Luiz Inácio Lula da Silva in a striped jailhouse uniform, complete with ankle ball-and-chain.

The balloon, recognizable as Brazil’s best-known politician because of its big belly and gray beard, first appeared at a mass demonstration in mid-August. Overnight, it became a national mascot for protesters seeking to oust leftist President Dilma Rousseff, a da Silva protégé.

The inflatable likeness is a regular at marches, on newspaper front pages and in late-night comedy skits.

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Brazilian farmers wake up to their own specialist coffee

Daniel Gallas – BBC News, 10/02/2015

We drive up the hills in his pickup truck to see farmers harvest the coffee beans in the vast valley around us. Coffee has been the economic backbone of this region – on the border between the Brazilian states of Minas Gerais and Espirito Santo – for more than a century.

But after years of a commodity-fuelled boom, economies like Brazil are having a hard time adjusting to slower global demand and lower prices.

Over the decades, the Lacerda family has known fortune and poverty, with their wealth always oscillating around coffee. Droughts, government policies, global consumption, currency problems – these were blessings and curses that determined the fate of the Lacerdas.

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