Geopolitics

When Corruption Meets Austerity: Dilma Rousseff's Nightmare Scenario

Brazilians are furious as their personal prosperity slips away amid reports of runaway corrruption. All the while, President Rousseff looks forced to impose new austerity measures. Which way out?

March 15 protest in Rio de Janeiro
March 15 protest in Rio de Janeiro

-Editorial-

The streets of Brazil are rumbling.

The seemingly daily reports that power brokers have been using Petrobras as a cash till to settle political favors for years — under the eyes of the Workers Party of the recently reelected President Dilma Rousseff and her predecessor, the once popular Luis Inacio Lula da Silva. The payments are thought to have begun when Rousseff headed the Petrobras board of directors between 2003 and 2005.

The spreading dissatisfaction burst out into a nationwide protest against Rousseff that drew at least 1.5 million people Sunday across scores of cities.

Demonstrators demanded Rousseff be removed from her presidential duties amid the Petrobras scandal. Days ago a Supreme Court judge approved the investigation of 34 parliamentarians (32 of them allied with the president and including the heads of both legislative chambers) for suspected involvement in the energy company scandal.

The misuse of state oil funds could end up shaking Brazil's political and institutional stability to the core. It is the biggest alleged case of bribery in the country's history, and the timing couldn't be worse. The economic policies of the first Rousseff presidency have led the country toward a mix of recession and inflation that will be difficult to revert without structural reforms and a strict austerity plan.

The Brazilian GDP is expected to shrink 1% this year while inflation already exceeds 7%, as the real currency has lost 15% of its value this year. Meanwhile, in something far from the control of the political leaders, a massive drought is threatening to force more water and electricity rationing in the country's main economic region, the São Paulo state.

Losing friends

When she began her second term late last year, Rousseff seemed to understand that Brazil's government needed a heavy dose of reality. But the various reforms and austerity plans she has announced need parliamentary approval and her main political ally, the PMDB (Democratic Movement Party of Brazil), has already started to criticize her in public and hint that it may not vote for her legislative proposals. The PMDB's votes in parliament are crucial for the passage of such measures as tax hikes on salaries and stricter preconditions for unemployment and pension benefits.

PMDB legislators have said they may not back austerity plans that "affect the rights of workers." Some have threatened to call the treasurer of Rousseff's Partido dos Trabalhadores (PT, Workers' Party) to testify at a parallel inquiry parliament has set up on Petrobras, as Congress wants to know if any Petrobras money financed Dilma Rousseff's campaign. In that case the PMDB would be passing straight to the opposition and effectively tying the hands of the government to pursue its legislative agenda.

All of this would likely in turn lead to a credit downgrade for Brazil, making foreign credit more expensive and discouraging investment.

Dilma Rousseff has already shown her ability to forge alliances when nobody thought it possible. If she does it again and wins approval for the austerity measures the country needs for future growth, she will still have to face the wrath of the public. The millions of Brazilians who emerged from poverty under Lula, are increasingly hard pressed to pay their mortgages or otherwise maintain the level of consumption.

They realize that today they could simply slip back into the poverty they left behind a decade ago, and were among those shouting loudest in Sunday's massive protests.

The first thing Rousseff must do at this stage is to exhibit the best of her political and communication skills to simply tell Brazilians the truth, and to convince them to tighten their belts. But she may also need a new political alliance to start implementing her austerity plan sooner rather than later.

If she cannot do both, she may not complete her second term, but we certainly hope she will, given Brazil's present institutional fragility. She is not the perfect solution for Brazil, but as they say: better the devil you know.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!

Protests against gasoline price hikes in Lebanon

Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 Wai!*

Welcome to Thursday, where leaked documents show how some countries are lobbying to change a key report on climate change, Moscow announces new full lockdown and the world's first robot artist is arrested over spying allegations. Meanwhile, German daily Die Welt looks at the rapprochement between two leaders currently at odds with Europe: UK's BoJo and Turkey's Erdogan.

[*Bodo - India, Nepal and Bengal]


🌎  7 THINGS TO KNOW RIGHT NOW

• Documents reveal countries lobbying against climate action: Leaked documents have revealed that some of the world's biggest fossil fuel and meat producing countries, including Australia, Japan and Saudi Arabia, are trying to water down a UN scientific report on climate change and pushing back on its recommendations for action, less than one month before the COP26 climate summit.

• COVID update: The city of Moscow plans to reintroduce lockdown measures next week, closing nearly all shops, bars and restaurants, after Russian President Vladimir Putin announced a nationwide seven-day workplace shutdown from Oct. 30 to combat the country's record surge in coronavirus cases and deaths. Meanwhile, India has crossed the 1 billion vaccinations milestone.

• India and Nepal floods death toll passes 180: Devastating floods in Nepal and the two Indian states of Uttarakhand and Kerala have killed at least 180 people, following record-breaking rainfall.

• Barbados elects first ever president: Governor general Dame Sandra Mason has been elected as Barbados' first president as the Caribbean island prepares to become a republic after voting to remove Queen Elizabeth II as head of state.

• Trump to launch social media platform: After being banned from several social media platforms including Facebook and Twitter, former U.S. President Donald Trump announced he would launch his own app called TRUTH Social in a bid "to fight back against Big Tech." The app is scheduled for release early next year.

• Human remains found in hunt for Gabby Petito's fiance: Suspected human remains and items belonging to Brian Laundrie were found in a Florida park, more than one month after his disappearance. Laundrie was a person of interest in the murder of his fiancee Gabby Petito, who was found dead by strangulation last month.

• Artist robot detained in Egypt over spying fear: Ai-Da, the world's ultra-realistic robot artist, was detained for 10 days by authorities in Egypt where it was due to present its latest art works, over fears the robot was part of an espionage plot. Ai-Da was eventually cleared through customs, hours before the exhibition was due to start.

🗞️  FRONT PAGE

"Nine crimes and a tragedy," titles Brazilian daily Extra, after a report from Brazil's Senate concluded that President Jair Bolsonaro and his government had failed to act quickly to stop the deadly coronavirus pandemic, accusing them of crimes against humanity.


📰  STORY OF THE DAY

Erdogan and Boris Johnson: A new global power duo?

As Turkey fears the EU closing ranks over defense, Turkish President Erdogan is looking to Boris Johnson as a post-Brexit ally, especially as Angela Merkel steps aside. This could undermine the deal where Ankara limits refugee entry into Europe, and other dossiers too, write Carolina Drüten and Gregor Schwung in German daily Die Welt.

🇹🇷🇬🇧 According to the Elysée Palace, the French presidency "can't understand" why Turkey would overreact, since the defense pact that France recently signed in Paris with Greece is not aimed at Ankara. Although Paris denies this, it is difficult to see the agreement as anything other than a message, perhaps even a provocation, targeted at Turkey. The country has long felt left out in the cold, at odds with the European Union over a number of issues. Yet now President Recep Tayyip Erdogan is setting his sights on another country, which also wants to become more independent from Europe: the UK.

⚠️ Outgoing German Chancellor Angela Merkel always argued for closer collaboration with Turkey. She never supported French President Emmanuel Macron's ideas about greater strategic autonomy for countries within the EU. But now that she's leaving office, Macron is keen to make the most of the power vacuum Merkel will leave behind. The prospect of France's growing influence is "not especially good news for Turkey," says Ian Lesser, vice president of the think tank German Marshall Fund.

🤝 At the UN summit in September, Erdogan had a meeting with British Prime Minister Boris Johnson at the recently opened Turkish House in New York. Kalin says it was a "very good meeting" and that the two countries are "closely allied strategic partners." He says they plan to work together more closely on trade, but with a particular focus on defense. The groundwork for collaboration was already in place. Britain consistently supported Turkey's ambition to join the EU, and gave an ultimate proof of friendship after the failed coup in 2016.


➡️ Read more on Worldcrunch.com

📣 VERBATIM

"He has fought tirelessly against the corruption of Vladimir Putin's regime. This cost him his liberty and nearly his life."

— David Sassoli, president of the European Parliament, wrote on Twitter, following the announcement that imprisoned Russian opposition leader Alexei Navalny was awarded the 2021 Sakharov Prize for Freedom of Thought, the European Union's highest tribute to human rights defenders. Navalny, who survived a poisoning that he blames on the Kremlin, is praised for his "immense personal bravery" in fighting Putin's regime. The European Parliament called for his immediate release from jail, as Russian authorities opened a new criminal case against the activist that could see him stay in jail for another decade.

💬  LEXICON

魷魚的勝利

Chinese video platform Youku is under fire after announcing it is launching a new variety show called in Mandarin Squid's Victory (Yóuyú de shènglì) on social media, through a poster that also bears striking similarities with the visual identity of Netflix's current South Korean hit series Squid Game. Youku apologized by saying it was just a "draft" poster.

✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

Anyone want to guess Trump's first post on his upcoming social media platform...? Let us know how the news look in your corner of the world — drop us a note at info@worldcrunch.com!

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ