It had been a hot summer, in more ways than one. China had made the biggest headlines; its vital economic signs, as could be inferred from its periodic statistical releases, were worse than most pundits had expected; in private, many wondered whether 2015 GDP growth could be flat or even negative rather than settling around the +6.9% or so trumpeted in public..
The dizzying gyrations of the Shanghai stock market, the increasingly erratic government interventions, and finally industrial catastrophes like the explosion at the Tianjin port frayed nerves around the world.
A still slow growing U.S., a convalescent Europe and a teetering China were wrecking havoc for many commodity dependent countries. Low oil prices had hit Colombia hard, but Brazil had fared worse.
The country of the future and likely to remain so, as skeptics had dubbed it, Brazil had hugely benefitted from the commodity boom which started in 2003. Indeed, it had been able to finance a generous social program and ambitious oil and gas related investments without difficulties and without needing to correct glaring structural economic weaknesses.
The discovery of huge offshore oil and gas reserves had triggered a renationalization of sort at Petrobras, had encouraged the federal government to intervene more than ever into various sectors of the economy, and as was to be discovered later, had given birth to institutionalized corruption on a scale never seen before.
The Great Recession of 2008, the profound change in investor sentiment and the uncovering of the Petrobras corruption scandal gave birth to the biggest crisis that Brazil had experienced in three decades. Petrobras, weighed down by huge debts contracted to carry out the government’s pre-sal ambitions, came close to debt restructuring; the international financial markets effectively closed to Brazilian borrowers; the abrupt economic slowdown cut federal tax revenues while public spending was only slightly reined in, leaving the country with a flat to negative budget primary balance.
But most of all, the petrolao scandal tore apart the political system, leaving Brazil with either a weak presidential or parliamentary regime, depending whom you talked to.
During her reelection campaign, President Rousseff and the Workers Party (PT), had scoffed at the necessity of budgetary cuts; likewise, by delaying cash outlays and having Congress amend the budgetary Law, the government had avoided more immediate trouble.
Now, President Rousseff had to backtrack on her promises, which proved difficult as her own party strenuously opposed spending cuts and the population was ill prepared to accept them anyway.
Against this ominous background of incipient economic, institutional and financial crisis, the government blindingly stuck to its authoritarian ways in nominating a new president of the House. This backfired badly, and its political ally, the PMDB, managed to elect one of its own, Eduardo Cunha, to the job. With PMDB member Renan Calheiros already holding the presidency of the Senate, the government had dealt itself an incapacitating blow.
The PMDB quickly made it known that it no longer was a junior partner of the PT, and Eduardo Cunha made it known that the Legislative Branch had responsibilities and powers equal to the Executive’s. Bewildered, frustrated, the PT dragged its feet when called upon to vote for painful measures, leaving President Rousseff in a weakened position to negotiate the support of the PMDB. The politics of Brazil became very complicated, with a weakened Executive, a powerful Legislative with no mandate to govern, and a divided, ineffective, opposition.
Yet matters were getting much worse. Continuing revelations by the investigating magistrates, leaks and plea bargaining by a slew of suspects further destabilized the various branches of government. The presidents of both the House and the Senate were formally investigated for corruption, along with a number of senators, congressmen and former governors from the parties that had formed the governing coalition, namely the PT, PP and PMDB.
Fighting for his political life, Eduardo Cunha opened his own House inquiry into suspected malversations at the National Bank of Economic and Social Development (BNDES), as a means of pressuring the government into letting him off the hook. The Executive and the Legislative were now at loggers head, despite being led by the same political coalition.
As September came, further revelations of mishandling of funds surfaced: billions lent by BNDES to Cuba, Venezuela and others in support of the same engineering and construction companies that were already suspected of corruption, and with similar results: overbilling and (credit) losses in the billions. Worse, former President Lula, the highest profile politician in Brazil and the PT leader, was formally indicted of influence peddling.
His response was immediate and virulent: on September 17, in Sao Bernardo do Campo, flanked by thousands of PT and United Workers’ Central (CUT) members waving red flags and giant portraits of him, former President Lula denounced the hidden agenda of the opposition, ridiculed PSDB leader Aecio Neves’ “pathetic attempt to clear his way to the next presidential elections”, and threatened that any attempt to put him under preventive custody would be “opposed by the Brazilian people”.
Standing to his right, Wagner Freitas, president of the CUT, remained impassive. Yet all of the members of the press in attendance remembered his fiery declarations, a month before, when talks of impeaching President Rousseff were growing:
-“ what is coming to Brazil today is intolerance…. We are the defenders of a national project to bring better conditions to all, and this means, right now, getting down in the street, and digging in, weapon in hand, in case they want to overthrow President Rousseff. Any attempt against democracy, the lady [Dilma Rousseff] or President Lula, we will be the army that will confront those bourgeois in the street.”
Like the mythical straw that broke the camel’s back, the indictment of President Lula, after the long string of revelations at Petrobras, Eletrobras and most recently at the Federal Railway System, struck a raw nerve in the population.
Brazilians were already suffering from high inflation, negative growth and accelerating layoffs most visibly in the automotive, oil and gas and related sectors. Yet while they were facing hard times, midlevel managers and politicians admitted to having stolen tens of millions of dollars.
There were no institutions to believe in anymore. Even the Judicial Branch, which had gamely exposed the misdeeds, was resented for ruining the national mood, and the common man still doubted very much that the miscreants would spend significant time in jail anyway.
A huge wave of popular anger and despair spread throughout the country. Just like in March, calls for a nation-wide day of protest rose spontaneously. On September 20th, a huge protest march was to assemble in Brasilia to “throw the bums out”, and a massive sit-in was to start in front of the Planalto until the President resigned. Another demonstration would gather in front of President Lula’s residence any many more would spring up around the country.
Meanwhile, both the PT and the CUT decided to organize counter-demonstrations against what they viewed as politically orchestrated efforts to unseat the President. Some on the fringes of these organizations were eager to “retake the streets” and viewed the Venezuelan, motorcycle mounted, milicias bolivarianas, as a worthy model; after all, these had succeeded in dispersing and discouraging popular demonstrations. There had been casualties among the population but no militia has been prosecuted.
The PSDB was ambivalent about the marches. Neves and his associates viewed them as genuinely popular, and a wave to surf on politically, especially since their party didn't have the kind of structure and manpower the PT had. But they also realized that this limited manpower wouldn't allow them to control mass demonstrations should they get out of control. If that happened, the PSDB would be held responsible.
In the end, Neves publicly supported the forthcoming demonstrations and marches but advised PSDB members to attend individually and not in representation of the party.
September 20th was hot, especially in Brasilia when temperatures rose to 98F at midday. According to police estimates, over 8 million people descended in the streets nationwide. Some 50,000 police personnel were deployed to contain any violence. Unfortunately, by the end of the day, confrontations between opposing movements had degenerated into deadly violence. Accounts vary as to who started, but in the end, the excesses of a few thousands triggered massive and often uncontrolled popular reactions. Police attempts at mob control often became desperate efforts to save their own lives, and live ammunition was used.
In all, there were 120 deaths and some 2,000 casualties that day. Brasilia declared a national state of emergency and a 9pm curfew. September 21st came, and with it, a new future.
