Rousseff needs to level with Brazil

On Aug. 16, hundreds of thousands of protesters across Brazil took to the streets demanding President Dilma Rousseff’s ouster over an economy in recession and a corruption scandal at the state-run oil firm Petrobras. Police estimated at least 879,000 people joined the nationwide demonstrations. Rousseff, who was re-elected to a second term by a whisker 10 months ago, has seen her approval rating dip over the past few months. There is now little confidence in her ability to govern effectively and get Brazil's economy back into the black.

Rousseff faces a skeptical electorate but impeachment is unlikely. Most Brazilian analysts agree that there are no grounds for impeachment without evidence of responsibility for crimes committed during her tenure. Similarly, while Rousseff's unsuccessful and interventionist fiscal policy during her first term set the current recession in motion, economic mismanagement is not an impeachable offense.

However, if forced through on a technicality rather than clear evidence of willful wrongdoing, Rousseff’s impeachment would be calamitous for political stability and therefore the economy, taking Brazil to dark places not visited since the military dictatorship that ended three decades ago.

Rousseff has the worst approval rating ever recorded by the Brazilian polling institute Datafolha. Only about eight percent of the 3,363 people surveyed across Brazil in early August thought highly of her, while a record 71 percent disapproved of her government. In the same poll, about 66 percent of Brazilians believed Rousseff should be impeached now.

I spoke with a cross-section of protesters at the demonstrations in São Paulo on Sunday. There was no consensus on Rousseff’s future. Some protesters said impeachment could rid the country of an incompetent leader, while others believed it was pointless because another “equally mediocre” leader would take over. Others came to simply voice their dissatisfaction with corruption and the government’s handling of the economy.

But the protesters’ grievances were largely justified. The economy, already in recession, is expected to shrink this year and next, while inflation and unemployment both swell. On Aug. 11, Moody’s credit rating agency downgraded Brazilian debt perilously close to junk territory and warned that the current political chaos was unsustainable. Brazilians are tired of Rousseff blaming outside influences such as the global financial crisis for the slump rather than shouldering some of the responsibility herself.

The sprawling corruption scandal at Petrobras has brought the country's biggest company to its knees and pummeled the economy. Dozens of politicians from Rousseff's ruling coalition are now under investigation. Rousseff chaired the Petrobras board of directors from 2003 to 2010, when much of the vast kickback scheme allegedly whirred into action. Her opponents argue that even if Rousseff did not benefit financially, it is highly unlikely she was unaware of the scheme, through which prosecutors say billions of dollars were skimmed off inflated contracts between Petrobras and construction companies and funneled to political parties, enriching everyone involved. She has denied any knowledge and has been cleared by investigators. 

But this hasn’t stopped the impeachment advocates from mobilizing the public. There are alternative impeachment attempts afoot. Eduardo Cunha, speaker of Brazil's Lower House, is now leading the impeachment bandwagon after declaring war on the government over accusations, based on testimony from Júlio Camargo, a lobbyist turned state witness for the Petrobras graft investigation, that the congressional leader had taken bribes. Cunha denies the allegations and maintains Camargo was pressured into naming him, but prosecutors on Aug. 20 filed charges against him.

Cunha has fought to hamper a number of bills aimed at improving the government’s ability to balance its books. A bill boosting payroll taxes and reducing pension and unemployment benefits was watered down by Congress, and on Aug. 18 the lower house voted to boost contributions to workers’ severance funds to increase the final bill on the government. Impeachment advocates believe that Cunha's Brazilian Democratic Movement Party — a large, ideologically disparate kingmaker in Brazilian politics that is part of Rousseff's ruling coalition — is the only thing that stands in the way. Cunha has vowed to remove the party from Rousseff's coalition to deprive the president of a majority in Congress, but the party has not decided on this. In fact, two key members of the movement, vice president Michel Temer and the president of the Senate, Renan Calheiros, have spoken out against impeachment.

Calls for impeachment are, nevertheless, persisting: Opposition leader Aécio Neves, of the Brazilian Social Democracy Party, who was Rousseff’s main rival in the 2014 elections, upped the ante by joining Sunday’s protests. However, more and more politicians, business leaders and commentators are now urging moderation, which suggests the likelihood of Rousseff's ouster has, for now, receded.

Senate President Renan Calheiros has held out a crucial olive branch, agreeing to work with the government on its fiscal adjustment plans. Powerful media and industry groups, uneasy about effects of potential chaos on the economy, are also urging cooperation instead of impeachment.

In short, Rousseff is likely to serve the remainder of her second term, however paltry it turns out. Many here believe that her stay would reduce political instability. And her new economic policy of curbing public expenses and boosting tax revenues has been widely praised, including by domestic and international markets.

Rousseff should capitalize on this and continue to shore up support for her new economic strategy and prioritize Brazil’s stability. She should emphasize her role in ensuring independent anticorruption investigations, which put an end to the idea that politicians and the business elite are above the law.

Rousseff could also improve her craft. She’s a technocrat, not a seasoned politician. Going off-script, her words often fail to connect with the population and can come across as arrogant. Her predecessor, former president Luiz Inácio Lula da Silva, a self-made politician whose strength of character and perseverance took him to the top, could guide her. Rousseff needs Lula’s flair for speaking or outward humility to win allies and assuage fears about her inability to govern.

She needs to speak directly and connect with the population — leveling with Brazilians as much as is politically possible on what went wrong with the economy during her first term. Rousseff must also distance herself from those tainted by corruption, sidelining anyone in her government under investigation, while asserting her authority to build confidence in her leadership.

Ultimately, clawing back support in her Workers’ Party traditional base and achieving wider approval will depend largely on whether creeping inflation and unemployment can be halted, and the economy returns to growth. The situation remains fluid, and unexpected twists and turns could still steer her presidency onto the rocks. Any evidence directly connecting either of them to the corruption scandal could see both Rousseff’s presidency, and Lula’s possible 2018 comeback, unravel overnight.