Can The Sinking Brazilian Economy Be Saved?

President Rousseff has abandoned big spending projects in favor of currency devaluation to fuel exports. Will it save her presidency? And more importantly, this BRICS nation's floundering economy?

A cargo ship in Brazil
A cargo ship in Brazil
Eleonora Gosman


SÃO PAULO — The only positive note for Brazil in the deplorable start to 2015 has been state prosecutor Rodrigo Jano's decision to leave President Dilma Rousseff out of the Petrobras corruption scandal. But economic data may not be so kind to her.

The price of the dollar most recently broke the barrier of three reais, the Brazilian currency, which means a 22.6% devaluation compared to March 2014 and an 11-year low. Likewise, there have been no optimistic reports on industries such as car manufacturing, which is a major employer.

Production has fallen 28.9% year-on-year; unsurprising, given that at least 1,800 people lost their jobs last February. Congress is expected to vote for a cost-cutting program, so the current political crisis definitely doesn't favor economic recovery.

Economists such as Luis Carlos Bresser Pereira, a minister under President Fernando Henrique Cardoso, believe that big spending cuts are necessary. According to Bresser, "Dilma is not orthodox" in economics, but "she is doing what she has to do." He says she has had to curb overgenerous subsidies, abuses of the system and "mistaken" tax breaks. "There is nothing more in tune with development policies than setting the finances straight," he says. "Instead of providing tax incentives, she is adjusting the exchange rate."

Rousseff, "not orthodox" in economics — Photo: Porto Alegre - RS

The prominent economist maintains that circumstances have led Rousseff to change her economic model. She therefore dropped the policy of boosting growth with public works projects, which previously generated jobs and internal demand, and opted instead for an export-based project. In the case of industry, Bresser says, this should create conditions for reviving production and jobs.

Other experts — while not questioning the concept or considering whether it's orthodox or unorthodox, development-oriented or neoliberal — believe the measures Rousseff has taken in her second presidential term are not enough to push the economy out of recession. Pedro Varkanian of Mackenzie University says the economic situation is "highly challenging" for combining the worst factors: stagnation and rising inflation.

This economist believes Brazil is about to enter into stagflation, a situation Argentina has suffered on more than one occasion, most recently during the period after 2001. Varkanian says the dollar's increased value "leads to an increase in the price of imported consumer goods," and has a generalized inflationary effect. Add to this the government's price hikes for transport and electricity, and these will inevitably have an effect on working-class incomes and spending, Varkanian says.

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Dutch Cities Have Been Secretly Probing Mosques Since 2013

Revelations of a nationally funded clandestine operation within 10 municipalities in the Netherlands to keep tabs on mosques and Muslim organizations after a rise in radicalization eight years ago.

The Nasser mosque in Veenendaal, one of the mosques reportedly surveilled

Meike Eijsberg

At least ten Dutch towns and cities have secretly used a private agency to probe mosques and other local religious organizations, Amsterdam-based daily het NRC reports in an exclusive investigation.

The clandestine operation — funded by NCTV, the National Security Services, the Netherlands' leading counter-terrorism agency — was prompted by the social unrest and uncertainty following multiple terror attacks in 2013, and a rise in Islamic radicalization.

The NCTV, which advises and financially supports municipalities in countering radicalization, put the municipalities in touch with Nuance by Training and Advice (Nuance door Trainingen en Advies, NTA), a private research agency based in Deventer, Netherlands. Among the institutions targeted by the investigations, which came at a cost of circa 500,000 euros, were the Al Mouahidin mosque in the central Dutch town of Ede, and the Nasser mosque east of the city of Utrecht, according to NRC.

Photo of people standing on prayer mats inside a Dutch mosque

Praying inside a Dutch mosque.


Broken trust in Islamic community

Unlike public officials, the private agency can enter the mosques to clandestinely research the situation. In this case, the agents observed activity, talk to visitors, administrators, and religious leaders, and investigated what they do and say on social media.

All findings then wound up in a secret report which includes personal details about what the administrators and teachers studied, who their relatives are, with whom they argued, and how often they had contact with authorities in foreign countries, like Morocco.

Leaders of the Muslim organizations that were secretly probed say they feel betrayed.

It is unclear whether the practice is legal, which is why several members of the Dutch Parliament are now demanding clarification from the outgoing Minister of Justice and Security, Ferd Grapperhaus, who is said to be involved.

"The ease with which the government violates (fundamental) rights when it comes to Islam or Muslims is shocking," Stephan van Baarle, member of the leftist party DENK, told De Volkskrant, another Dutch newspaper.

Leaders of the Muslim organizations that were secretly probed say they feel betrayed. Hassan Saidi, director of one of the mosques investigated, said that the relationship with the local municipality had been good. "This puts a huge dent in the trust I'd had in the municipality," he told the Dutch public broadcaster NOS.

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