Moving Forward: Brazil After Rousseff

Brazil closed one significant chapter in its political history when President Dilma Rousseff was formally removed from office by a Senate vote of 61 in favour and 20 opposed. More than 13 years of leadership by Brazil’s Workers Party (PT) was brought to an early end. The vote was both anticlimactic and a foregone conclusion. The most important factor that sealed Rousseff’s fate were the formal charges levelled against her for manipulating the budget.

Many observers see Rousseff’s leadership shortfalls as another key factor, not formally linked to the impeachment process, and as the real reason for her impeachment. Rousseff’s weak response to: a worsening fiscal situation; a major corruption scandal that is still unfolding, and complex inter-party dynamics involving Rousseff’s own Workers Party (PT) and the other key parties—the PMDB, PSDB, and PSB in part led to her downfall. In the end, some political analysts argued that even her own PT compatriots wanted her to leave office in order to improve the party’s chances of returning to power in the 2018 elections.

The most frequently heard reaction in Sao Paolo and Brasilia in the immediate aftermath to the impeachment drama had been one of relief to have the process completed. Interim-President Michel Temer, who temporarily replaced President Rousseff after she was suspended in May, was sworn in formally just hours after the impeachment vote and departed immediately for the G20 Summit in Hangzhou, China. Temer himself remains under investigation for possible campaign financing violations allegedly committed by the Rousseff/Temer electoral ticket.

What is clear is that most of Brazil’s population is exhausted from the political drama and from the resulting policy paralysis that has only worsened the economic slump that Brazil has suffered over the past two years. Most people want the new president to get to work to stabilize the economy and to get the country growing again. However, some degree of social and political instability is likely to continue, as the violence in Sao Paolo last night demonstrates.

In his first days as interim president in May, Temer put together a cabinet with a strong economic and foreign affairs team. That the team was composed completely of white men shocked many Brazilians more used to the diverse cabinets of Dilma Rousseff and Lula da Silva, her PT predecessor. Temer now has a chance to make some cabinet adjustments and strengthen some of the portfolios where critical reforms are urgently needed. To have any chance of turning the country’s fate around, Temer needs to undertake unpopular and difficult reforms. He faces many of the same challenges that Argentine President Mauricio Macri is now grappling with as he tries to reverse decades of dysfunction and decline in Argentina.

The top priority reforms

Of the top priority reforms, reform of the country’s labor laws is critical to make the country competitive again, not only in its own neighbourhood but also in the globalised world. Reform is long overdue of Brazil’s costly pension system, which allows for early retirement at full salary—a luxury that an emerging economy like Brazil’s simply cannot afford. The country’s complex tax system increases the already high costs of doing business in Brazil. Finally, a top-to-bottom reform of the political party and electoral system should be a key priority, to address a situation in which 32 political parties, and 35 new parties awaiting formal approval, results in a system of political alliances that seriously weaken the president’s ability to lead and encourages dysfunction and corruption. President Temer understands the importance of these reforms, but the question is how far a president with a 32-month time horizon and a challenging environment can push the political system.

President Temer’s party, the PMDB, in alliance with the PSDB functioned well to ensure the ouster of Rousseff. However, this alliance is not likely to endure for long, before preparations for the 2018 presidential elections turn PSDB leaders into direct competitors of Temer. While there has been some talk in recent weeks of a broad-based agreement by the leading parties to support a package of reforms similar to the Pact for Mexico reforms pushed through in recent years by Mexican President Peña Nieto, few see in today’s Brazil the kind of political leaders needed for such an historic initiative. Brazilian politics are clearly some of the most complex in South America. The events of the last 24 hours only prove yet again that this is still very much the case.
By Dr Michael Matera and Dr Elcior Santana. Michael Matera is a senior fellow and director of the Americas Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Elcior Santana is a senior associate (non-resident) in the CSIS Americas Program.

This article was originally published by the Center for Strategic and International Studies on 1 September. It is republished with permission.