DECEMBER, 2015

On strawberries and grapes*

He who imagines that all fruits ripen at the same time as the
strawberries knows nothing about grapes Paracelsus.

Everything is possible in Brazil. Despite her actions and amazing tendency to blunder,
even Dilma Rousseff can hang on to power after leaving the Brazilian economy in
tatters after just a few years. Of course, it would be fair to say she didnt manage
this mighty achievement all on her own. She was backed by over a decade of brazen
corruption within her own political party, the PT, founded by Lula who, until recently,
was himself an icon of social transformation in international social circles and a
superstar at global events holding gold-plated conferences paid for by the Brazilian
construction companies that now stand accused of corruption. With inflation in
double-digit territory, unemployment rising to around 12% by the start of 2016 and
a government deficit in the region of US$ 35 billion, Dilmas administration will come
crumbling down in the first half of next year. At least, its a pretty good bet.
Impeachment proceedings have been initiated by Eduardo Cunha, the speaker of Brazils
lower house, a politician also accused of corruption who has been using his power to delay
a decision from the Ethics Committee on whether he should be suspended from office.
He stands accused of lying to Parliament when he said he held no foreign bank accounts,
however with support from the Swiss, the Brazilian courts have documentary proof he
misled Parliament. When presented with the facts, he justified his position by saying he
held trusts, not accounts which, he reasons, means he didnt lie. This impeachment
process is based on what Brazils Constitution classifies as crimes of responsibility.
Dilma spent billions without congressional permission. According to the charges, she
used accounting tricks to paint a rosier picture of the economy that involved not paying
government bills and running up debts with state banks, which is a crime, under the
Constitution. The opposition claims Dilma did this during the run-up to last years elections
in an attempt to mask the economic crisis that would rear its head after her reelection.

This
impeachment
process is based
on what Brazils
Constitution
classifies as
crimes of
responsibility

This is the price

we pay for a
democracy that
is still in its youth.
But one thing
is certain. Our
institution are
working well and
the number of
politicians and
businessmen
under arrest is
evidence of that

The impeachment process was temporarily halted because the Communist Party of
Brazil filed a motion with the Supreme Court, challenging the decision by the speaker
of the lower house to accept the impeachment petition. This week, the Supreme
Court will explain the way ahead. Many see this as Supreme Court interference in
parliamentary business. The Supreme Court consulted Renan Calheiros, head of the
Senate, to discuss the best approach and he believes it is his job, in the Senate, to lead
impeachment proceedings. Anyway, the head of the Senate is also under investigation
for corruption. His name is on the Federal Police suspect list.
This is a very Brazilian setting: carnival scenes backed by a samba beat. Dilma Rousseff and
the PT defense is that impeachment proceedings are Cunhas political-motivated revenge.
However, neither the president nor the party behind her can answer questions about her
crimes of responsibility. When they do, the administration argues others have made the
same missteps in the past. Some government supporters justify the presidents fiscal
creativity as an attempt to help the poor (drawing some sort of Robin Hood parallel).
Society seems to have been numbed by daily announcements of more and more Federal
Police operations resulting in the arrest of businessmen, politicians and attorneys. Federal
prisons are almost bursting at the seams. We dont have enough room for so many of
the corrupt. A few days ago, during a federal police operation, the owners of a company
managing state hospitals in Rio de Janeiro threw bags of money out of their apartment
window to avoid being caught red-handed. The whole episode was broadcast on TV, but
incredulous Brazilians didnt know if they were watching the news or a soap opera.
Against this backdrop, it is hard to tell how the story will unfold over the coming months.
But even though Brazil is a country where everything is possible, there is practically zero
chance of this administration remaining in power. Its just a question of time, and not much
time, at that. This is the price we pay for a democracy that is still in its youth. But one thing
is certain. Our institution are working well and the number of politicians and businessmen
under arrest is evidence of that. Former president Lula is being hauled into court to explain
his actions and his son is also under investigation.
What is there yet to come? We will likely see a transitional government made up of
the current vice-presidents party (PMDB), which is untangling itself from the current
administration, and Dilmas opposition parties (led by the PSDB). This change will be
reason enough for Brazilians to celebrate as though they had won the World Cup. Brazilians
are highly emotive and this victory will bring great optimism, at least for the 97% of people
who now reject the current administration. This optimism will not reverse the fact that
Brazil has lost its investment grade credit rating. But it is a good way to start over.
Brazilians political awareness is maturing not like strawberries but like grapes step by
step and amid great suffering.

Paulo Andreoli

Chairman MSLGROUP Latin America

President MSLGROUP ANDREOLI

(*). This article reflects the authors personal opinion.