Brazil: Lula Joins Rousseff’s Titanic

Brazil needs a new government to return confidence among foreign investors.

LATINVEX EDITORIAL

Brazil’s immediate past president Luíz Inácio Lula da Silva has been named chief of staff of current president Dilma Rousseff.

There are several serious problems with this.

First, in the current situation, with Rousseff widely seen as a weak leader, Lula becoming the chief of staff will mean that he will be the de facto president.

“He would be the de facto president,” Sérgio Praça, a political scientist at FGV in Rio de Janeiro, told the Financial Times.

“Disguised as a minister, Lula assumes his third mandate,” said news weekly Veja in a headline on its web site after the news broke.

Lula was not elected to become a de facto president and the move is almost reminiscent of Russian strongman Vladimir Putin’s move to become prime minister when he wasn’t allowed to run for re-election.  Putin was president from 2000 to 2008 then became prime minister for four years (but ruling as the de facto president) and then came back as president in 2012. (Lula has stated he plans to run for the presidency in 2018).

Even more serious: the move clearly buys Lula more time out of jail, showing that he is afraid of facing Brazil’s normal judiciary.  Now it will be up to the Supreme Court to accept or reject any formal charges against Lula. Judge Sérgio Moro, who is leading the probe into the massive corruption scandal at state oil producer Petrobras, was planning an arrest warrant for Lula before he was named to Rousseff’s cabinet.

[On March 17, a federal judge in Brazil issued an injunction to suspend the appointment, arguing that could lead to Lula's interference in police and judicial activities, Bloomberg reports].

Either way, the Lula appointment won’t save Rousseff nor Lula as the likelihood of impeachment against Rousseff has grown significantly (many experts say there is a 60 percent chance that she will be impeached).

An estimated three million people are thought to have taken part in more than 100 protests across Brazil on Sunday in what the country's top newspapers hailed as the largest political demonstrations there ever, AP reported.

The news of Lula’s appointment led to a new wave of protests, putting further pressure on lawmakers to impeach Rousseff.

Lula, whose government from 2003 to 2011 received praise among many investors for his pragmatic economic policies (in contrast to Rousseff’s statist policies), brought economic prosperity to Brazil, while significantly reducing poverty.

However, he also brought a new level of corruption to a country already used to bribery. José Dirceu, Lula’s chief of staff, was convicted of leading a massive corruption scheme in the legislature, the so-called Mensalão scandal. The ruling Workers Party (PT) paid legislators a monthly allowance to vote in favor of government bills.   

The scandal claimed several key PT figures, including both the party’s president and treasurer.

Roberto Jefferson, the legislator who revealed the scheme, said Lula was aware of it, but he could not provide any evidence to back that up. However, it is difficult to believe Lula was ignorant of such a massive scheme within the party, allegedly led by his own chief of staff.

Then there’s the Petrobras scandal, which has tarnished both Lula and Rousseff. Not only has it cost Brazil billions of dollars, it has led to thousands of people losing their jobs. Many of the same people the PT supposedly was trying to help.

Brazilian police say there is evidence that the Petrobras bribes enriched former Brazilian President Luiz Inacio Lula da Silva and financed electoral campaigns and the treasury of his political group, Reuters reported.

Senator Delcídio do Amaral, the head of the ruling Workers Party in the Senate told prosecutors that both Rousseff and Lula had been aware of corruption at state-run energy company Petrobras; that Rousseff tried to intervene to get prosecutors to release defendants they had jailed in the scandal and that Aloísio Mercadante, a Workers' Party veteran who has served as Rousseff's chief-of-staff and is now education minister, last year offered to pay Amaral to keep quiet in the investigation, Reuters reports. Prosecutor-General Rodrigo Janot has decided to request an investigation of Rousseff, Veja reports.

Meanwhile, Andrade Gutierrez (Brazil's second-largest engineering company) paid suppliers for Rousseff's 2010 electoral campaign off the books.

And last month, João Santana, the campaign strategist behind Rousseff’s electoral victories in 2010 and 2014, was arrested after receiving payments from construction giant Odebrecht using money stolen from Petrobras. (Odebrecht CEO Marcelo Odebrecht was just sentenced to 19 years for bribery, money laundering and organized crime related to the Petrobras scheme).

Brazil is now seeing its worst economic crisis in 25 years, largely because of Rousseff’s failed policies and the Petrobras scandal.

"The complete lack of confidence in the government is hindering investments and consumption," Paulo Skaf, president of the Sao Paulo Industry Federation (FIESP) - the most powerful Brazilian business group, told O Globo newspaper.

At this point, Brazil’s only solution is the resignation of Rousseff and either a caretaker government led by Vice President Michel Temer until January 2019 (after the scheduled elections are held October 2018) or to hold new elections.

Even a caretaker government led by Temer will have more power – moral as well as legislative -- than Rousseff, who appears to have lost all control in recent months.

Lula’s appointment only delays his inevitable imprisonment while Rousseff’s Titanic continues sinking.

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