Car Wash Generation in Brazil!

After Lula-era excess, the Car Wash generation upends Brazilian politics

Misha Glenny* (Financial Times:  March 18, 2016 )

AS Brazil has succumbed in the past two years to a political, economic and constitutional crisis, its people have grown worryingly polarised — further undermining what was heralded as a great emerging economy success story.

Many are incensed by the revelations of mass corruption at the state oil company Petrobras . Equally, they are ap­palled by the president’s handling of the economy.  Her ratings have plunged almost as fast as the currency; support for her impeachment has risen, along with unemployment and inflation.

Demonstrations against the president’s Workers’ party (PT) are spreading and turning violent. But neither the president nor Mr Lula da Silva — still the party’s mastermind and great symbol — nor her supporters are likely to go down without a fight. The political rhetoric on both sides disguises considerable vested interests. So, while the economy begs for stability, the country appears set for even greater turmoil.

The possible impeachment of the president is moving to the centre of the political stage. The greatest threat to Ms Rousseff lies in the revelations of corruption at Petrobras. Although she has not been directly implicated, much of her party’s senior leadership has — a fact that is driving the street protests.

Added to that, the end of the commodity boom reveals that part of the economic transformation of the 2000s was an illusion. Mr Lula da Silva used the boom to build up his reputation, domestically and globally, as a friend of both the markets and of the poor. But last year, Brazil’s economy shrank 3.8 per cent. The era of largesse is over and structural weaknesses in the economy are all too obvious: excessive dependence on commodities, unproductive jobs in the state sector, overgenerous pension provisions, a weakening tax base and low levels of investment.

As if it were not hard enough to shake off apocalyptic visions, the mosquito-borne virus Zika has added a biblical touch to this demonic mess. Were it not for Syria, migration, the UK’s EU referendum and Donald Trump, Brazil would dominate global headlines. It may yet do so as the city of Rio de Janeiro, with its distressed infrastructure, prepares to host the Olympics in August. The International Olympic Committee has identified significant problems with Rio’s readiness. The pro­spect of national embarrassment looms.

Meanwhile, the primary challenge to Ms Rousseff and Mr Lula da Silva is from the judiciary.  Driving the “Car Wash” investigation into Petrobras and the Mensalão scandal that preceded it, are the supreme federal tribunal, the public prosecutor’s office and the federal police. Historically these branches of the criminal justice system were regarded as pliant facilitators of the venal habits of governments and economic elites.  But in the past decade they have shown a greater willingness to take on corrupt politicians and their business partners in a series of criminal investigations. 

Operation Car Wash has been probing payments allegedly made by big construction companies and other corporations to Petrobras in order to secure lucrative contracts. The money was then channelled to parties, including the PT, and individual politicians.  PT members claim the judiciary is acting as a cat’s paw for the super-rich elite and its political allies, who want to take revenge on the party for its support for the working class and poor.

That does not quite square with the facts.  The head of the opposition, who denies wrongdoing, is currently being investigated on suspicion of having taking money. Marcelo Odebrecht, the boss of the country’s largest construction company, was last week jailed for 19 years.  Until now the fabulously rich captains of industry believed themselves immune from judicial threat. For Brazilians, Odebrecht’s imprisonment is even more startling than the investigation into Mr Lula da Silva.  If the elite is using Car Wash to protect itself they are not doing a very good job.

In a country renowned for institutionalised corruption, the rules have changed:  anyone is vulnerable to Brazil’s new breed of Untouchables — police, judges and prosecutors.  Central among these is Sérgio Moro, who is in charge of many of the Car Wash cases.

The 43-year-old Harvard-educated judge is representative of a generation who in the 1990s drifted away from politics, which they saw as mired in graft.  Some sought an outlet for their idealism in the law. The result can now be seen in these investigations, where many of the officials involved are now in their thirties and forties. The officials have proved less susceptible to bribery and intimidation than those pursuing political careers at the top level.

Things are going to grow considerably worse in Brazil before they get better. It is going to be a tumultuous few months in the run-up to the Olympics. But ultimately Brazilians must embrace the changes that Mr Moro and his colleagues are pursuing if the country is ever to break the back of the cosy relationship between big money and rapacious political parties.

•  The writer is author of ‘Nemesis: One Man and the Battle for Rio’