Understanding the political crisis in Brazil

Lisa Desjardins, Paulo Sotero, Uri Friedman, Monica de Bolle and Brian Winter – NPR, 05/03/16

Last month in Brazil, the lower house of the country’s National Congress voted to impeach the president, Dilma Rousseff. There are the legal grounds for the move — alleged cooking of the government books. And then there are the political motives, which as many observers have pointed out, are what’s really driving the impeachment. Those have to do with a massive corruption scandal at Petrobras, the state owned oil company. Add to that a severe recession, and many Brazilians are not happy with how their country is being run. Guest host Lisa Desjardins gets an update on the political crisis in Brazil from our panel of guests.

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The real reason Dilma Rousseff’s enemies want her impeached

David Miranda – The Guardian, 04/21/2016

The story of Brazil’s political crisis, and the rapidly changing global perception of it, begins with its national media. The country’s dominant broadcast and print outlets are owned by a tiny handful of Brazil’s richest families, and are steadfastly conservative. For decades, those media outlets have been used to agitate for the Brazilian rich, ensuring that severe wealth inequality (and the political inequality that results) remains firmly in place.

Indeed, most of today’s largest media outlets – that appear respectable to outsiders – supported the 1964 military coup that ushered in two decades of rightwing dictatorship and further enriched the nation’s oligarchs. This key historical event still casts a shadow over the country’s identity and politics. Those corporations – led by the multiple media arms of the Globo organisation –heralded that coup as a noble blow against a corrupt, democratically elected liberal government. Sound familiar?

For more than a year, those same media outlets have peddled a self-serving narrative: an angry citizenry, driven by fury over government corruption, rising against and demanding the overthrow of Brazil’s first female president, Dilma Rousseff, and her Workers’ party (PT). The world saw endless images of huge crowds of protesters in the streets, always an inspiring sight.

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OECD Sees Brazil 2016 Recession Deepening to 4% Drop

David Biller – Bloomberg, 02/18/2016

The OECD more than doubled its forecast for Brazil’s 2016 recession, projecting it will be even worse than last year. That makes it more bearish than the International Monetary Fund and most analysts surveyed by Bloomberg.

Brazil’s economy will contract 4 percent this year after a 3.8 percent recession in 2015, the Organization for Economic Cooperation and Development said Thursday in a report. The 2016 forecast was revised down from a prior 1.2 percent decline, and is worse than estimates of all but two of 35 analysts surveyed by Bloomberg. Their median forecast is for a 2.8 percent drop this year after a 3.7 percent decline last year.

Latin America’s largest economy is sinking as demand withers. Consumers who for most of the past decade have been Brazil’s growth engine have had their confidence shot by rising joblessness and double-digit inflation. At the same time, investment has been rattled by the nation’s largest-ever corruption scandal, and the government is struggling to implement a fiscal adjustment to shore up its finances.

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Brazil heads for worst recession since 1901

David Biller – The Salk Lake Tribune, 1/5/2016

Brazil’s economy will contract more than previously forecast and is heading for the deepest recession since at least 1901 as economic activity and confidence sink amid a political crisis, a survey of analysts showed.

Latin America’s largest economy will shrink 2.95 percent this year, according to the weekly central bank poll of about 100 economists, versus a prior estimate of a 2.81 percent contraction.

Analysts lowered their 2016 growth forecast for 13 straight weeks and estimate the economy contracted 3.71 percent last year.

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Brazilian police raid home of speaker Cunha and other senior politicians

Jonathan Watts – The Guardian, 12/15/2015

Brazil’s impeachment duel has tilted back in favour of President Dilma Rousseff after her most strident opponent suffered twin blows from the police and a congressional ethics committee.

Two weeks after the lower house speaker, Eduardo Cunha, launched proceedings to remove the head of state from office, his home was raided by detectives as part of the Lava Jato (Car Wash) investigation into alleged corruption at Petrobras and other major companies.

Hours later the lower house ethics committee announced it would investigate claims that the once-untouchable politician lied about Swiss bank accounts. If proven this could result in his removal from office.

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Fitch Downgrades Brazil to junk, with negative outlook

Jeffrey T. Lewis – The Wall Street Journal, 12/16/2015

Fitch Ratings cut Brazil’s sovereign credit rating for the second time this year, citing the country’s ballooning budget deficit, political turmoil and a deeper-than-expected recession, and leaving the country’s debt with junk status and dealing a fresh blow to Brazilian President Dilma Rousseff as she struggles to revive the economy and avoid impeachment.

The downgrade left Brazil’s rating at BB+, one notch into junk territory, with a negative outlook.

Fitch is the second of the big-three ratings companies, after Standard & Poor’s, to downgrade Brazil’s debt to junk, which could trigger a selloff of Brazilian assets and weaken the currency. It will also make it more expensive for the Brazilian government to borrow, at a time when Finance Minister Joaquim Levy is trying to cut the government budget deficit.

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Farming flourishes amid Brazil’s fiscal mess

AG Web, 12/9/2015

Financial and political turmoil that put Brazil on the brink of a depression also is contributing to one of the best years ever for domestic farmers.

A consequence of economic stress in Latin America’s biggest country is a weak currency that has turbo-charged export revenue for everything from soybeans to beef to coffee. Even as global surpluses spark a commodity slump, the drop in the Brazilian real against the dollar is so steep that farmers still come out ahead. Agriculture revenue will rise to a sixth straight annual record this year and grow again in 2016, the government predicts.

“That’s the only part of the economy which is still evolving positively,” said Fabio Silveira, an economist at GO Associados, a consulting firm in Sao Paulo.

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Brazil court suspend impeachment process against President Dilma Rousseff

Rogeria Jelmayer – Wall Street Journal, 12/9/2015

SÃO PAULO—Brazil’s Supreme Court Wednesday suspended the impeachment process against President Dilma Rousseff until at least next week, a delay analysts say carries risks for Ms. Rousseff.

The president has been accused by a fiscal watchdog of manipulating the numbers of her government’s budget to disguise poor fiscal performance.

She has denied any wrongdoing.

Ms. Rousseff and her supporters are trying to get through the impeachment process as quickly as possible because they feel she has enough support in Congress at the moment to either derail the process before it reaches trial in the Senate, or to win there. The president could lose some of that support if the process is drawn out because information damaging to her case could come out, analysts say.

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Brazil’s Vice President sends letter criticizing President Dilma Rousseff

Paulo Trevisani & Rogerio Jelmayer – The Wall Street Journal, 12/8/2015

BRASÍLIA—Brazil’s already turbulent political situation took an extraordinary turn Tuesday with the publication of a letter sent by Vice President Michel Temer to embattled President Dilma Rousseff in which Mr. Temer accuses the president of having no confidence in him or his party.

The vice president’s authorship of the letter, which was published in several local newspapers Tuesday, was confirmed by Mr. Temer’s spokesman. The president’s press office had no immediate comment on the letter.

Ms. Rousseff is facing an impeachment process that the president of the lower house of Brazil’s Congress, Eduardo Cunha, approved last week. Ms. Rousseff is accused of illegally manipulating the numbers in the national budget; she has said her administration did nothing wrong.

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