What will remain of Brazil after the Car Wash investigations?

[Para ler a versão em português deste texto, clique aqui]

(Photo: Sergio Moro, Car Wash’s judge, receiving an Award from Globo, Brazilian largest media corporation)

Dear Readers, the Cafezinho blog is launching today a monthly political bulletin in English. In this first edition we conduct a political analysis of what is happening in Brazil. We believe that the world is extremely ill informed about the subtleties of Brazilian politics. This is because information comes mainly from our own media. Not only is the media involved, but it is one of the parties that is most responsible for the deplorable state of affairs we find ourselves in. Furthermore, our reality is very complex and full of contradictions. If not even Brazilians are able to understand what is going on, what chance has an outsider?

But we will try.

This is the first edition of our monthly Political Bulletin on Brazil.

What will remain of Brazil after the Car Wash investigations?

By Miguel do Rosario, Editor of Cafezinho

Explaining Brazilian politics to a foreign audience is as difficult as translating Guimarães Rosa. With his unusual lyricism, his colloquialism and invented words, this Brazilian Master is notoriously difficult to translate.

It is not just difficult to explain Brazilian politics to a foreign audience, it is difficult to explain it to Brazilians themselves. This is because, everyday, factual truths have to be unpicked from the many lies (or post-truths) spread by the media, and people in general – locals and foreigners alike – tend to limit themselves to generalities. Unfortunately, with truth the devil is in the detail, it’s in between the lines.

The Worker’ Party (PT), ousted from power through the impeachment, issued a statement signed by Carlos Zarattini, the Party leader in congress, which clearly reveals the irrationality and chaos of the Brazilian political system. It accuses the Temer Government of “sponsoring a number of manoeuvres to literally block the Car Wash Investigations, thus preserving the PMDB (Temer’s party) and the PSDB (Former President Fernando Henrique Cardoso’s Party and formal opposition to the Workers’ Party)”.
However, the Car Wash investigations that the PT leader is so fiercely keen on defending are the very same that accuse former President Lula of being the “Commander-in-Chief” of corruption schemes.

The Workers’ Party, through its main leaders, politicians and members of parliament, including its Honorary President and founder, former President Lula, have accused investigators of being dishonest and playing party-politics. They believe the Car Wash’s main objective is to make sure Lula is not electable in 2018.

How can we, therefore, explain that the party accusing Temer’s government of wanting to “bring these investigations to a close” is also the same that has most to lose from these investigations?

Recent opinion polls reveal that although Car Wash involves many parties, most people associate it solely with the PT. Indeed, it was precisely these investigations which produced an atmosphere of political and economic terror, paralysing and destroying whole sectors of the economy, that led to the impeachment.

The explanation is hard but simple: The Workers’ Party (PT) is acting like a headless chicken. It runs from side to side, confused, agitated, not knowing where to go and what to do.

What those outside Brazil need to understand is that the main problem is not corruption. The period when the Workers’ Party was in power saw the least amount of corruption in our history. The Federal Government implemented an unprecedented number transparency mechanisms. It created bodies for controlling expenditure and combatting embezzlement.

Above all, institutions such as the Federal Police and the Public Prosecutor’s Office, responsible for investigating corruption, had never been more independent and received more funds and political support. It was the Workers’ Party that created the anti-corruption legal framework that is now being used against it.

Car Wash estimates of embezzled funds have been wildly exaggerated to produce high impact factoids for the media. A new narrative needed to be invented: that Car Wash dismantled the “biggest corruption case in history”.

Unfortunately, that’s not true. How can it be the biggest case in history if there is nothing to compare it with? This could only be so if there had been previous similar investigations. But there were not.

It a recent lecture at the University of Columbia sponsored by the Lemann Foundation, Sergio Moro, the judge in charge of the investigations, admitted that Car Wash led to instability, but that in the future it would do Brazil good, as the country would become more competitive.

President Temer was not present at the World Economic Forum at Davos this year. Instead, Brazil was represented by its Prosecutor General, Rodrigo Janot. He was warmly welcomed by the President of Paraguay, who also came to power through a coup d’état. In an interview Janot claimed that Car Wash was “pro-market”.

The disastrous effects of the destruction of Brazil’s main civil construction companies was clear, but political madness seems to have made everyone blind. Today those responsible for Car Wash seek to justify their irresponsibility with ideological arguments: Car Wash is pro-market, it will make Brazil more competitive.

Furthermore, one of the most bizarre outcomes of the investigations, besides destroying the economy, has been to bring the shadiest characters of Brazilian politics to power, many of whom are also being investigated by Car Wash.

This explains why some Workers’ Party leaders have been acting so irrationally. Some sectors within the party argue – with unbelievable naivety – that the investigations could now start to catch up with the PSDB and involve the most important members of Temer’s government.

However, taking advantage of the timely death of the Supreme Court judge in charge of the Car Wash investigations in Congress (Teori Zavascki died in a plane crash a few days before approving the start of plea bargaining involving Brazil’s largest civil construction company, Oderbrecht), Temer decided to appoint his own Minister of Justice, Alexandre de Moraes, to replace him.

His appointment will need the approval of the Senate. Something that is unlikely to cause Temer any headaches, considering the Senate is full Car Wash suspects.

It is important to note that Moraes’, who is also being investigated by Car Wash, has the full support of Rede Globo, Brazil’s largest media conglomerate, as can be observed by Merval Pereira’s position on this matter, a journalist widely known for expressing the views of his employers.

Rede Globo knows that there is no need to “end the Car Wash investigations”, all that is needed if for Car Wash to remain exclusively focused on the Workers’ Party and… arrest Lula.

The reporting of national politics has given way to crime journalism. Constant criminalisation means that people confuse those “accused” and “under investigation” with “being guilty”. They are not. For someone to be found guilty, there needs to be evidence.

The Car Wash “accusations” are a chapter apart in Brazilian political history. In 2014, the collaboration between the Car Wash investigators and the mainstream media could be thought of as criminal: scraps of accusations have been selectively and continuously disclosed, even before their validation. These events follow a strictly political agenda whose original purpose was to strengthen the pro-impeachment narrative and bring people out into the streets.

The Car Wash investigations are also marred by illegal acts. First, there are the pre-trial preventive detentions that have been transformed almost into torture instruments. Defendants can only hope to wait for their trials at home if they accept plea bargain terms.

Some of the most important civil construction executives, responsible for the country’s main infrastructure works, have been in detention for over a year because they have so far refused to accept the terms imposed by Car Wash.

Odebrecht, once Latin America’s largest engineering company, has been literally destroyed. Apparently, Marcelo Odebrecht, the company’s CEO, has refused to denounce Lula.

So, he has been feeling the full weight of the investigations. Not satisfied with simply destroying Odebrecht’s Brazil business, Car Wash investigators have furnished the United States’ Department of Justice with sensitive company information (just as they did with Petrobrás). The result is that Odebrecht is now being expelled from all the countries with which it once did business.

Odebrecht’s reaction to all this attack has been a mega-denunciation demolishing the investigation’s main argument: that Lula was at the centre of the corruption scheme’s decision-making. Odebrecht accuses the main leaders of the current government (PMDB), including Michel Temer, as well as heavy-weight members of the PSDB (former President Fernando Henrique Cardoso’s party) of receiving kickbacks.

Fate has seemingly provided an answer to Oderbrecht’s threatening accusations: the death of Supreme Judge, Teori Zavascki, in charge of the investigations at the Supreme Court and the appointment of Alexandre de Moraes. Once the current Minister of Justice becomes a member of the Supreme Court, he will oversee the reviewing of Car Wash.

The detention of Eike Batista, a bankrupt magnate, and Sergio Cabral, former Governor of the State of Rio de Janeiro, generated a media circus. They are now awaiting confirmation of their plea bargain. It seems likely they will corroborate the Prosecutors’ main thesis that Lula is corruptor in chief.

But there is a problem. Investigations have so far found no evidence against Lula. The former president’s life has always been simple. He has lived in the same flat, in the same industrial town, for over thirty years.

There are no proofs that Lula is the owner of a flat in the coastal resort of Guarujá, despite Car Wash attempts at finding evidence and the hysterical reaction of the media.

Lula explained that he considered buying the apartment, but decided not to do so. It is a simple apartment in a middle-class building, in an unprestigious area of a town that is now considered unfashionable by the São Paulo elite.

The media exposed the fact that that this apartment was a ‘triplex’. It did not, however, mention that it was the smallest of the triplexes in the block, measuring less than one hundred metres squared.

Former President Lula is also accused of owning a ranch in Atibaia, in the state of São Paulo, where he used to spend much of his time. But there is no evidence that the ranch is his. It belongs to an old friend.

The Car Wash Operation accuses the former president of receiving a flat (which is not his) and a ranch (which is also not his) as kickback, part of the Petrobrás corruption scheme. If this is the case, Lula is the most frugal corrupt person in the world, given he has asked so little for a scheme that involves billions.

While the media focuses on Car Wash and both left and right wing parties seek to accuse each other of wanting to “end the investigations”, the political regime installed by Temer has moved strongly to the right.

It froze expenditure in health and education for over twenty years. It dismantled or drastically reduced all policies in the areas of development, technology, social housing, as well as social programmes. All projects involving national industrial strategy have been cancelled. In foreign affairs, the government has moved away from other Brics members. It practically cut relations with poorer countries, in particular in Africa.

During the Lula years, Brazil massively increased trade relations, hugely benefitting Brazilian exporters, more specifically, producers of manufactured goods. The national public banks, responsible for Brazil’s resilience to the 2008 financial crisis, have seen considerable cuts and some have been dismantled. The Brazilian public broadcaster has been ruined and lost its independence. It now merely repeats news that interests the government.

The Brazil that emerges from the Car Wash Operations and the impeachment is definitively not more ‘competitive’ or ‘pro-market’, as both Sergio Moro and Rodrigo Janot claim.

The economy is in tatters, there are no prospects, institutions have become chaotic and often act against their own interests. The Judiciary is no longer shy when it comes to annulling election results. Municipal council members, deputies and senators are detained without knowing what they are charged with.

Last week, Luiz Fernando Pezão, the current Governor of the State of Rio de Janeiro, saw his mandate annulled. The State of Rio has had no political leadership for a while, as Pezão has temporarily stepped down for cancer treatment. The state is now entirely at the mercy of the Federal Government which wants to force the privatisation of the state water company, Cedae.

Moreira Franco, another Car Wash suspect, was made Minister under the same circumstances as Lula. Lula was prevented by the Courts from assuming the position of Minister. It was alleged that, by becoming Minister he would escape from the clutches of Sergio Moro. Federal Ministers can only be judged by the Supreme Court. It seems the same rules that applied to Lula may not apply to Moreira Franco.

Regardless of Temer’s or Moreira Franco’s personal traits, it seems the Judiciary is out of control. It now decides who can and cannot become a Minister and whether elections are valid or not. This is, of course, all taking place before the Courts reach any decisions. And decisions take time, the judges and prosecutors complain.

At the end of the day, Sergio Moro may be right. Brazil will become more competitive in the future. But this will only happen when a system of democratic checks and balances is applied to judges, prosecutors and police chiefs.

Brazil needs leadership. But this leadership needs to be endorsed by democracy, through free, fair and competitive elections. A country run by whistle-blowers, prosecutors and vigilante judges will not make the economy grow. Brazil is condemned to fail.

Rio is one of the main victims of Car Wash. It had a prosperous shipping business and a thriving oil and gas industry. Ports were refurbished and new chemical and steel industries were established near shipping terminals. In Itaboraí, works to build the largest refinery in Latin America, Comperj, were underway. This all came abruptly to an end. Plans were abandoned. Tax revenues collapsed and the State of Rio is literally broke.

Petrobrás, currently under Pedro Parente’s administration, initiated a brutal denationalisation campaign which discriminates Brazilian companies. For instance, no national companies were allowed to participate in the tendering process at Comperj, when these were finally allowed to resume.

Yes, it might be all too difficult for a non-Brazilian to understand.

[This is the first edition of Cafezinho – Monthly Political Bulletin, edited by Miguel do Rosário]