The rivalry between the Brazilian mogul Joesley Batista from meat giant JBS and President Michel Temer is a new layer to country’s deepening political-economic crisis. Batista exposed recordings of bribery conversations involving the chief of state and his current ally Senator Aécio Neves. The recordings also implicate individuals allegedly linked to  former presidents Dilma Rousseff and Luís Inácio Lula da Silva.

The roots of the political crisis trace back to the large demonstrations that started in 2013, and before the global economic crisis of 2008. It’s also related to the Lava-Jato (Car Wash) operation of 2014, investigated by the federal police and assigned to courts in Curitiba, in southern Brazil.

In retaliation,  Temer is trying to sue Batista for defamation and moral damages. In a recent letter he called his former friend the “most successful notorious criminal”. The president knows he’s in hot water, as the first acting president formally charged with a crime of  corruption.

With a population of 200 million people, mostly Catholic, Brazil’s  33 years old democracy has lurched from one crisis to next since the upheaval, spearheaded by Temer, that drove former president Dilma Rousseff from office. The powerhouse of South America is known to the outside world for its rich culture and natural resources, flamboyant carnival parties, world-class soccer players and soap operas. These days the most closely followed narrative today is not on the TV screen with its kitsch scenarios, but in reality. The real-life corruption drama and the deep cuts in employment and retirement systems proposed by Temer’s cabinet have riveted the nation.


The Economic Backdrop

Brazilian economist Luiz Alberto Machado, a professor at the  Armando Alvares Penteado Foundation, believes that the housing bubble crisis beginning in the United States in 2008 led Brazil to adopt measures to stimulate its economy including enhancing access to credit  and selective reduction of taxes “that were good in the short term, specifically in raising the GDP in 2010”.

But in Machado’s opinion,   these measures should have been implemented for a limited period and instead since they were extended indefinitely for  political ends. He says this affected relative prices and sent mixed signals to economic agents.

Guilherme Boulos, a leader of left-wing  the Movimento dos Trabalhadores sem Teto (MTST, Homeless Workers Movement) notes that the U.S. crisis reduced international demand and slowed the upward trend of commodities, on which the Brazilian economy over-relied.. “This generated a strong pressure from the big entrepreneurs and their political allies who introduced policies of reviewing taxes and attacking labor rights. They wanted in any possible way to uphold and even amplify profits during the crisis even if it destroyed the country and ended up imploding its democracy”.

He adds that they  also launched an offensive against social resistance. For Boulos, Dilma Roussef’s impeachment was a coup d’êtat orchestrated by an “out-of-touch and backward elite” that had no qualms in pacing its immediate interests above those of the nation’s. “Now they have no idea how to end this situation we’re in,”  he added.


Brazil’s Original  Sin

Sociologist Aldo Fornazieri from the Sociology and Politics School Foundation of Sao Paulo) traces Brazil’s tradition of corruption  back to the country’s foundating and original political culture. He cites two  classics: Based in the books “Os Donos do Poder” (1958, The Owners of Power) by Raymundo Faoro and “Raízes do Brasil” (1936, Roots of Brazil) by Sérgio Buarque de Hollanda, and points to  “the adventurous way we were colonized, the Iberian heritage, the long history of  slavery, never really resolving independence from Portugal and the proclamation of the Republic, the inefficiency of the laws and the historical leniency to corruption and its agents, as well as the always reinvigorated tradition of patrimonialism”.

In May 2017 the World Competitive Report, put out for investors  by the International Institute for Management Development, ranks Brazil in 61th place among 63 countries–only ahead of Mongolia and Venezuela. Nonetheless, Machado states that “Brazil is still being considered as a very positive bet in the long run” due to its productive agricultural sector with large tracts of land  and favorable climate, wide range of energy sources, a big consumer market,  modern and efficient financial sector and diverse industry. “That’s why despite all the instability we are going through, foreign investment never ceased to come– although it could be larger”.

A cause of the crisis, according to the economist, is the ruling elite in decision-making positions in the public and private sectors. Recent news reveals that there is widespread collusion between both spheres of power.

Boulos doesn’t excuse Rousseff and Lula’s Worker’s Party, which ruled for 13 years, but he views the reforms proposed by Temer in labor and retirement plans as a regression that will take away any social net the Brazilian working class had left.

“It is a national dismantling strategy. If this group is not stripped of power, we’ll pay the price for decades”.

Fornazieri doesn’t deny the urgent need for reform, but also sees the Temer reforms as a step backwards. “The reforms as proposed are unacceptable,” he conclude. Not only do many Brazilians agree with this assessment, but the unpopularity of the reforms have contributed to unresolved questions regarding  the validity of Temer’s government based on how he came to power.


Lava Jato Scandal Continues

The on-going g Lava-Jato investigation has dealt a major blow to the elite the academics blame for the economic crisis. Investigators  have been exposing, interrogating and arresting businessmen and politicians. The operation has swept up nearly a third of Temer’s cabinet, senators and other leading politicians  It has thrust judge Sergio Moro into the limelight, where opinions on the magistrate who became world-famous almost from overnight are sharply divided.

“The Lava Jato  (operation) accelerated the fall of the New Republic, deepened the representational crisis and opened the path to anti-politics”, Boulos sums up. Machado disagrees, and affirms his support for advancing the operation to shed light on  shady figures. He claims it contributes “to make Brazil a better country”.

“There were many legal mistakes and heavy  bias among the judges and prosecutors in Lava Jato”, observes Fornazieri. He also believes the investigation will have historic ramifications,  as it confirms what was widely suspected: “Brazilian politics are fueled by corruption, and not a small-time game, but a large-scale operation that annihilates the country’s future, sowing inequality and injustice for centuries, constituting a short-cut accumulating  capital in Brazil and a near death sentence for citizen rights”.

The sociologist accepts that the Justice System is trying to  reduce such sleazy acts between the private and public sectors, but he has two major questions: Will it lead to a new political class with better ethics and moral values?  Will it reduce corruption in the country?

There are some indications that foreign investors view the crisis as a passing moment and that South America’s leading economy will recover its position in the global economy. “The problem is that we’ve been careless and wasted good opportunities and this has caused undesirable measures and backsliding.  In the case of backsliding, what bothers me most is that the most affected by them are the underprivileged who are obliged to live the harsh reality of losing what they fought so tenaciously to achieve”, ends Luiz Machado.