Archive | August, 2011

Brazil’s Long-Awaited Freedom of Information Bill Once Again Under Threat

23 Aug

As President in 1990, before impeachment in 1992

Brazil’s long-awaited freedom of information law is once again under threat. Senator and disgraced ex-President Fernando Collor, who was impeached in 1992 by the very Senate he now serves, has proposed radical revisions to the freedom of information bill 41/2010. These changes constitute a clear affront to President Dilma Rousseff, who has supported passage of the measure, to the Chamber of Deputies, which approved the bill in 2010, and to the three Senate committees that have already endorsed the measure in 2011. As Chair of the Committee on Foreign Relations and National Defense, Collor holds a powerful position in the Senate. But the amendments proposed are so retrograde that Collor should hardly be taken seriously.

A freedom of information law is viewed to be one of the principal pillars of transparency and social accountability needed to better combat endemic corruption in Brazil.

Will the Senate Cooperate with Rousseff?

Given Senator Collor’s intent, the freedom of information bill will almost certainly forfeit normal legislative

Collor more recently

procedure. President Dilma Rousseff will have to work with Senate leader José Sarney to either a) issue an “urgency petition” in order to force the bill out of committee, for an open floor vote, or b) pursue a floor vote that will ultimately approve the bill as it stood before Collor’s amendments. If the Senator’s amendments are approved, the bill will likely go back to the Chamber of Deputies to expire. What stands in the way of a successful urgency petition is Senate leader José Sarney, who has already indicated his opposition to the bill. Without the Senate leader’s cooperation, moving forward with the urgency petition may be impossible.

In light of recent revelations of corruption by government watchdogs, which have predominantly fallen on parties within Rousseff’s coalition (including Sarney’s PMDB), a strategy to delay or even amend the freedom of information law may be just the revenge that congressional allies have been looking for. A defeat in the Senate would be an embarrassing step backwards for the Brazilian government, especially after its recent pledge to co-chair the Open Government Partnership, an international initiative whose very intent is openness and transparency.

The amendments proposed by Collor are numerous, but here are just a few highlights:

  • Collor seeks to make all “ultra secret information” permanently secret (“sigilo eterno”) (Art. 24). This stands in contrast to better practice, whereby classification decisions are reviewed after the initial reserve period expires in order to determine whether the justification for secrecy still holds.
  • Collor aims to re-define information so that primary documents are exempted, and only “finished” document can be obtained by the public (Art. 4, 1; Art. 7).
  • Collor wishes to eliminate the right to obtain information on the “activities” of public bodies, as well as their policies, organization, services (Art. 7, V); use of resources, procurement and administrative contracts (Art. 7, VI).
  • Collor believes the government should not be “obliged” to publish information on the internet, but that the “possibility” of publishing information should instead exist (Art. 8, 2; Art. 10 (2).

And the grand finale, the death sentence for any freedom of information law:

  • Collor insists that public information requests must be justified (Art.10, 3).

You can take action to help Brazil approve a freedom of information law by signing Brasil Aberto’s petition in Portuguese at http://www.peticaopublica.com.br/?pi=P2011N11816 . You can use a google page translator, just copy the above URL into a google translate tool: http://translate.google.com/?hl=en#pt|en|

Why Don’t Brazilians React?

22 Aug

Juan Arias

The Fateful Question of El País Correspondent Juan Arias

Search for the question “por que os brasileiros não reagem?” (Why don’t Brazilians react?) or the phrase, “do Brazilians really not know how to react to hypocrisy and their leaders’ lack of ethics?” (“Será que os brasileiros não sabem reagir à hipocrisia e à falta de ética de muitos dos que os governam?”) and you will find pages upon pages of Brazilian bloggers and media outlets responding to an editorial by Juan Arias, a Brazilian correspondent of El País, and re-published in the Jornal Globo in mid-July.

Corruption scandals have brought down three ministers since President Dilma Rousseff took power, and many forget that Erenice Guerra—who was Rousseff’s first lieutenant while the now-President was Chief of Staff (later to become her replacement when Rousseff joined the 2010 presidential race)— was also sent packing in late 2010 after revelations of nepotism, influence-peddling and corruption.

Unmoved by A Global Movement toward Positive Political Upheaval

Why Brazilians have not reacted strongly against so many high-level corruption dismissals is a question worth asking. Grassroots protests towards corruption and poor governance continue to erupt all around the world. Globally, we are living a moment of positive political upheaval, but Brazil seems unmoved by clear evidence that their democracy is rife with graft.

Here are three significant good governance uprisings in well-established democracies that have occurred within the last three months or so:

1. Spain’s 15-M Movement or “Real Democracy Now movement!” (Democracia Real Ya!) responds to the mis-governance and corruption that has driven Spain to the brink of insolvency, resulting in unemployment rates in excess of 20 percent. Youth unemployment, at more than 40 percent, undoubtedly stands as one of the main drivers of protests. Rallies peaked in mid May, 2011, when more than 130,000 people across Spain protested poor governance, and 50,000 in Madrid alone. One of the key demands is passage of a freedom of information law, a measure promised since 2004 and only introduced to parliament a month ago. Protesters continue to engage in cat-and-mouse tactics with police and politically motivated vandalism has been rampant over the last months.

2. India’s Kisan Baburao Hazare went on a hunger strike in April 2011 in order to protest governmental feet-dragging on an anti-corruption bill. The LokPal bill would create an ombudsmen to investigate corruption in government without the need for the parliament’s to approve of each investigation. When a joint committee failed to meet expectations, Hazare threatened to go on another indefinite hunger strike. Thrown in jail before he could make good on the threat, urban India erupted in protests last week—in one day more than 1100 protesters ended-up in Mumbai’s jails. Authorities had little choice but to release Hazare, who has now given the government a deadline of August 30th to pass the anti-corruption bill. These efforts follow in the legacy of India’s 2005 Right-to-know success, in which citizen efforts led to the passage of one of the world’s most advanced and efficacious freedom of information laws.

3. Chile’s protests for education reform: Beginning in May and evoking concrete political responses, protesters seeking to reform Chile’s complex three-tiered private-public system have conducted massive protests. One of the latest “flash protests” on August 3rd resulted in the arrest of more than 800 students and teachers. President Sebastián Piñera’s public approval ratings have plummeted as a result of these protests against Chile’s allegedly “neoliberal” education system.

Pitched Debates

So why have Brazilians not responded to corruption scandals – proof of unethical governance –  in the same way as protesters in Spain or India? Yes, Brazilians are doing fine economically, but India and Chile are not doing so badly either. And while Brazil has a relatively new democracy, so does Chile. So what might account for a high corruption threshold in Brazil?

Arias’ question inspired pitched debates among the media, activists, and bloggers. A disturbing number of people condemned the audacity of a foreign reporter (“Arias, why don’t you shut up?”) for criticizing Brazil, especially in the light of Spain’s current troubles. Others used Arias’ article as a hook to talk about the muteness of Brazilians on other pressing issues yet to be satisfactorily addressed in Brazil, such as inequality and injustice. Some commentators on Transparencia Hacker, a listserve to which I subscribe, have fatalistically lamented the country’s incorrigible political culture; and still others offered interesting explanations for the malaise of political passivity in Brazil.

“It’s the PT’s fault”

I am most interested in responses that address this last line of reasoning. Why don’t Brazilians take to the streets? Veja’s Reinaldo Azevedo advanced the hypothesis that a lack of political activism in Brazil is a direct result of nearly a decade of PT (Partido Trabalhista) government.

Azevedo views the PT to have co-opted the public domain. He says the PT has exercised a certain “monopoly” over the public space. It has achieved this dominance because it has propagated the idea that “the plaza is of the people, just as the people are of the PT.”In other words, how can the public protest if the party in power is one-and-the-same as the public?

Azevedo also blames the PT for having co-opted those public actors most likely to lead protests. He alleges that the PT has bought-off most of the traditional corporatist sectors, such as the National Student Union (UNE). In this view, the ones most likely to lead protests are public-sector unions and PT-linked movements such as the Landless Movement for Agrarian Reform (Movimento Sem Terra). This corporatist perspective of protest seems to be excessively 1970s.

Finally, Azevedo blames the media, who he views to have ceded too much space to the left; so much, indeed, that the country no longer allots any space for a right-leaning discourse. In short, Azevedo views the PT to have exercised so much control over the public, traditional activists, and the media that Brazilians have become passive observers.

These are provocative explanations for Brazil’s political apathy, but I think there are a couple of other hypotheses that deserve further exploration:

1. Brasilia.

They protested in New Delhi outside of parliament; they protested outside the Palacio de las Cortes in Madrid; they protested in government plazas in Santiago. But can you really expect anyone to protest in Brasilia?  The city is more than a thousand kilometers away from Brazil’s largest cities, São Paulo and Rio de Janeiro. Moreover, practically everyone who lives in Brasilia works directly or indirectly for the government. Who’s to protest? When the capital was Rio de Janeiro, prior to the 1960s, this country was much more politicized. Indeed, hyper-politicization and stalemate in Congress contributed to the military coup of 1964. In short, the location of the capital renders politics distant from the everyday lives of Brazilians, literally and figuratively.

2. Brazil has come a long way in a short time.

Since hyper-inflation in the 1980s and early 1990s to stable macro-economics, stable presidents, and the deliverance of tens of millions from poverty to the working class, Brazil has made huge strides. Sure, corruption is bad, but things get done (“rouba, mas faz”).

3. There’s no one to blame.

In india, Chile, and Spain there are two dominant political parties or coalitions. In Brazil, party arrangements are much more fluid. Sure, it’s government versus opposition, but the governing PT has less than 20 percent of seats in Congress, forcing it to form coalitions with close to a dozen parties (of 23 total). Opposition parties may join the government coalition, and government coalition members may drop out to become opposition. Two of the three Ministers who resigned from their posts were from allied, coalition parties. Should Rousseff be held responsible for parties that expect to enrich themselves at the public expense in return for their support in Congress? Who should take the blame when there are so many parties? Perhaps if there were four parties protests could be better directed…but 23?

4. Education.

The average time spent in formal education is just above seven years in Brazil. Politics is complex; and a reasonable education—formal or informal—is usually required to understand and expect basic standards of political behavior. In Chile, the average years spent in school is over nine and most importantly, the best educated of Chile’s citizens live at the doorstep of power, in the protest-ready capital, Santiago.

5. What’s to complain about?

The system works for the middle classes upwards, so why should these more educated sectors protest? The economy is doing well, and a strong Real means more trips to go shopping in Miami. The public sector is so large and their salaries and benefits so luxurious that they rival those of most northern countries. As I write about here, scholars Wendy Hunter and Natasha Sugiyama observed that about a quarter of Brazil’s education budget goes to universities, which enroll less than two percent of the total student population (mostly from wealthier families, to be sure). Public sector corruption does result in higher taxes, but with a little ingenuity many in the elite can find ways around these annoyances. That’s Brazil’s got an enormous burden of value-added taxes, which tend to fall hardest on the poor. So if you’re well educated, what’s there to complain about?

6. Cultures of consensus.

“Tudo bom?” (“Everything good?”)

“Everything’s well” (“tudo bem.”).

For better or for worse, Brazil is a country where it is culturally expected that people will conform to agreement, happiness, and accord. This idea is elegantly captured by Brazil’s quizzical everyday greetings: “tudo bom?” (everything good?), “tudo joia?” (everything like a jewel?), “Beleza?” (beauty?).  It is a place where there is a strong social aversion to discord. To question is not native to the culture. Criticism and constructive criticism are often viewed as one and the same. In short, it is the kind of place where most people would prefer to steer clear of the negative. I write about these issues in different ways, here and here. Beleza? Joia?

7. Globo

The TV network has over 70 percent of the national market and is the third largest network in the world. They own interests in newspapers, magazines, broadband, you name it. With this type of influence, you’d want to make sure that things stay even-keeled too.

I love Brazil. My children will be Brazilian. That’s why I believe it’s essential we debate questions like Juan Arias’, to face-up to the corruption that keeps Brazil perpetually the country of the future.

New Brazilian Record: 4 Ministers Fall in 8 Months of Corruption Faxina

18 Aug

When President Dilma Rousseff took office in January, she counted on the largest congressional majority Brazil had ever witnessed—a super-majority that gave her more than three-fifth of votes Congress— enough to change the constitution. Rousseff lost that super-majority when the PR and its block of 52 deputies broke with the government on Tuesday, reported Jornal Globo. The break follows the Ministry of Transportation and Infrastructure (DNIT) scandal, in which the government wrested control of the ministry from the PR after clear evidence of embezzlement and kickback schemes surfaced.

4 Resignations in 3 Months

Yesterday’s resignation by the Minister of Agriculture, Wagner Rossi (PMDB), marked the fourth ministerial resignation in 8 months—a new record for Brazilian democracy. Rossi’s departure follows in the footsteps of Antonio Palocci (Chief of Staff, PT), Alfredo Nascimento (Minister of Transportation, PR), and Nelson Jobim (Defense [resignation unrelated to corruption]). The Ministry of Tourism has also been purged, with the Federal Police having made over a dozen arrests in the face of ongoing investigations.

Even before this latest resignation, the faxina (cleaning) of corruption jeopardized congressional support, particularly because most revelations fell on the heads of parties within the PT’s coalition. The latest resignation puts into question the support of the President’s key congressional ally, the PMDB, without whose support Rousseff would probably not be able to approve legislation in Congress.

The PMDB’s leader, Vice-President Michel Temer, says the resignation of Agriculture Minister Rossi responds to family issues. Yet a whistleblower within the Ministry of Agriculture has insisted that the building’s video system captured visits by lobbyists implicated in alleged payoffs. These videos have been seized by the Comptroller General (CGU) for further analysis. Whatever the reason for Rossi’s departure, the resignation may help clear the PMDB name and obviously heightens the party’s leverage over the Rousseff government.

Surprising Follow-Through

The most surprising element of all these scandals is Rousseff’s follow-through. In the past, scandals broke, leaders admitted no wrongdoing, insisted on getting back to the business of governing, and chastised the news media for its impudence. The 2006 Mensalao, a monthly vote-buying scheme that nearly brought down Lula’s first government, played out in this fashion. No one has yet gone to jail for the Mensalao, undoubtedly the most encompassing corruption scandal Brazil has experienced since re-democratization in 1988.

Yet with Rousseff it appears to be different. No criminal convictions have yet been made, but the President is insisting on investigative follow-through. This follow-through keeps the media spotlight trained on alleged perpetrators, an excellent means of “shaming” politicians and their parties, and one of the key reasons that we have seen resignations as opposed to mere passing storm clouds. It has also shown the spirited work of Brazil’s policing mechanisms, such as the Tribunal de Contas, the Comptroller General, the Federal Police, and the Corregedoria de Justiça.

Loss of Congressional Support or Greater Momentum for Anti-Corruption?

Although the press has done excellent job in breaking scandals, greater citizen oversight is needed—a long-awaited freedom of information still awaits approval in the Senate. It remains to be seen whether Rousseff’s strategy will cost her the support of Congress, possibly jeopardizing the approval of further accountability-enhancing tools, such as the freedom of information law and a Truth Commission. An alternative hypothesis is that Rousseff’s actions may ignite even greater momentum for the cause of anti-corruption.

Whatever the result, Rousseff’s faxina appears to be a paradigm shift in the country’s political culture: from an acquiescence of corruption and impunity in exchange for governability, to growing intolerance.

Response to a Stratfor Global Intelligence Article on Brazil

15 Aug

A friend recently wrote me about this report on Brazil by one of the leading economic intelligence publishers, Strafor. The article is worth a read, and it’s a freebe. This is part of my response:

“This article is quite a sweeping take on the country, with an interesting geo-economic vision: Brazil is a logistical nightmare, with no natural transport routes, and little coastal space for contiguous development… The observations about infrastructure and the oligarchic system are correct for the most part. I talk about the problem of a protected market quite often in my blog: http://observingbrazil.com/?p=461

I don’t know if the authors have everything correct, however. There was little discussion about Foreign Direct Investment (FDI), which could ultimately be Brazil’s great escape from its present conundrum. A high Real, a huge internal market, and relatively stable vitals means that Brazil is increasingly becoming a place to invest.

Brazil’s manufacturing export industry may whither under a strong Real, but its strong internal market coupled with a strong Real is already attracting manufacturing multinationals, such as Foxconn (the maker of Apple’s Ipad), which will promote a sort of foreign industrialization of Brazil. These foreign investments are already offsetting–in the short term– the negative current account deficit that Brazil would have suffered because of lost export markets (due to the high Real).

This multinational industrialization, may contribute little to Brazilian home-spun industry, however, and it will reinforce the closed-market, high tariff walls that Brazil currently embraces. FDI is interested in Brazil because it is a closed market where firms can gain distorted market advantages over imports, but this advantage is contingent on stable policy. If changes are suddenly put in place to subsidize other domestic competitors, the multinational may lose its advantage.

 The author also omits one of the primary incentives for high tariff walls, a factor that makes them very difficult to remove: tariffs are, in effect, taxes, and these provide government with huge revenues. Although high tariffs mean that Brazilian firms have the advantage over imports in Brazil, these tariffs are so high that they still allow Brazilian firms to be heavily taxed. Many of Brazil’s taxes are indirect, such as labor requirements. By law, employers must pay their formal-sector workers a thirteenth month’s salary, a paid lunch, transport, a basket of basic goods each month, a heavy social security pay-in, and equally heavy compensation pay for dismissal. Direct and indirect taxes on Brazilian industry make it less competitive internationally.

 As I write about here: http://observingbrazil.com/?p=496  almost all value-added taxes are untransparent in Brazil, and unless people start to be realize just how much they’re paying– about 36% of GDP in taxes (more than Canada)–there will be no tax revolt.

All of this goes to say that Brazilian politicians have perverse incentives to keep Brazil uncompetitive, an over-taxed, protected market. And because it is protected from the world market, all areas of society suffer: education, infrastructure, entrepreneurship…etc because there is no need to pull everything up by the bootstraps to really compete on a level playing field with other parts of the world…as it stands Brazil is not a good bet in the long term– the multinationals investing directly in operations in Brazil are the best bets, especially the ones in under-capitalized markets, such as heavy construction machinery (Caterpillar is now investing here). The levels of growth we’re now seeing also occurred in the 1960s and 1970s, but they’re ultimately commodity-based and may not help build-up the industrial base of the country– the large government and heavy tax burden tend to cannibalize gains from growth…

The one positive point about Brazil’s protected market is that it has so far served to protect the country from most of the more gutting effects of recession and volatility occurring abroad. A stronger Real and more FDI have been the most immediate results of this upheaval.

The trick now is to deal with inflation–Brazil’s historical grim reaper–without raising interest rates again. Higher interest rates (they’re already near the highest in the world) make consumer debts more difficult to pay, and increase the cost of capital for domestic industry, once again putting the squeeze on uncompetive industry. They also increase inequality, as those with money in the bank profit generously, and those with debts, grow poorer.” Crime tends to be one of the most obvious results.

I would welcome responses and retorts to this post, because more serious, accessible analysis of Brazil’s long-term economic prospects is sorely lacking.

Dilma Cleaning House or Slapping Wrists?

3 Aug

Over the past three months, corruption scandals and ministerial resignations have been changing the face of Brasilia. Yesterday, Defense Minister Nelson Jobim resigned after expressing dissatisfaction with President Dilma Rousseff’s handling of the military. Jobim’s departure marks the third Minister to resign in the first seven months of the Rousseff administration. At the pace of nearly one minister per two-month period, Rousseff indeed appears to be cleaning house. All of these early exits have been ‘Lulistas’ — Ministers who played prominent roles in the administration of Rousseff’s benefactor.

While it is positive to see that Rousseff is fashioning the government in her own design and forcing the exit of Ministers implicated in allegations of grand corruption, the government’s unwillingness to apply real sanctions to malfeasance continues to draw attention to Brazil’s defiance of its own laws and its long legacy of impunity.

The corruption scandals of 2011 illustrate that the abuse of the public’s trust continues to be an important problem in Brazilian politics.

First it was the President’s number two, Antonio Palocci, forced to resign after he could not explain why his net worth quadrupled in four years based solely on ‘consulting contracts’ to party and government hacks.

Then it was the PR’s Alfredo Nascimento, the Minister of Transportation, who resigned after revelations that his son had received contracts worth more than $20 million dollars. Nascimento’s resignation accompanied the dismissal of 27 other officials from the same Ministry.

Most recently, the Minister of Agriculture, Romero Jucá (PMDB), was summoned to answer questions in Congress after his brother revealed deposits of more than $8 million Reales to ghost accounts.

The heroes emerging from these three scandals are Veja Magazine, which broke the Transportation and Agricultural scandals, and the Folha de São Paulo for being the first on top of Palocci’s irregular enrichment.

Valiant Veja

Veja’s reporting on corruption has stood out as particularly valiant. It was this magazine that broke allegations of corruption during the administration of President Fernando Collor, ultimately leading to Collor’s resignation. The article that led to these fateful events was based on an interview with the President’s brother, Pedro, in 1992. The parallel between the Collor scandal and the latest allegations surrounding the Minister of Agriculture is striking –both accusations of corruption originated from brothers. Veja’s talent for pitting members of Brazil’s nepotistic political families against one another should give us pause.

Veja has also provided a public service in its coverage of ministerial expense accounts. Using the government’s Transparency Portal and inside sources in various ministries, Veja has exposed just how lavishly top officials spend the public’s money. Of all the ministries, it was the Minister of Culture, Ana de Hollanda, who used public finances most licentiously – jetting around the country on weekends at the public’s expense.

Veja’s reporting led to an investigation by the Comptroller General and now Hollanda must repay some R$45,000 (US$30K) of public money spent illicitly during the first semester of 2011. Brazil’s representative to the Open Government Partnership, Foreign Relations Minister Antonio Patriota, has also incurred astronomical travel expenses—R$30,649 per day (about US$20K), according to the same article in Veja.

Dilma Facilitating Revelations?

Veja’s success in culling information about expenses from within the Federal Executive Branch is not entirely surprising; it is widely understood that the Rousseff administration has sought to clean up corruption in government, especially the portfolios of ministries held by dubious coalition allies, such as the PR (Transportation). Rousseff appears to be putting her stamp on her administration, making it ‘hers.’ She has done so by refusing to cover-up corruption or exposés; indeed she may even be encouraging them.

The congressional opposition, led by the PSDB party, has signaled that it will call five ministers to parliament, an effort to obtain answers about allegations of corruption. The government has the power to stonewall these demands, but as a recent Jornal Globo article indicates, the Rousseff administration has virtuously chosen not to do so.

Slapping Wrists

But the Rousseff administration also appears to be reluctant let anti-corruption measures pose political problems for the government’s legislative ambitions. Three officials dismissed from the Ministry of Transportation have already been exonerated, according to this report by the Folha de São Paulo. These include José Henrique Coelho Sadok de Sá, whose wife, working for the Araújo construction company, signed business deals with the Ministry of Transportation. By endorsing impunity from prosecution– in clear defiance of criminal evidence — the Rousseff government signals that it will take a soft-handed approach to corruption.

Notwithstanding the administration’s willingness to opposition grillings in parliament, it has lobbied hard against more severe measures, such as the famous Congressional Inquiry (CPI). Yesterday evening, opposition Senators had mustered enough signatures (27) to trigger a CPI. Under extreme pressure from the government, however, two Senators have retracted their commitments, according to the Folha de São Paulo. Once again, the government has privileged impunity at the cost of maintaining the support of its congressional allies.

No Media Circus

In the final calculus, the Rousseff administration appears willing to open itself up to some degree of scrutiny, and will even dismiss officials once the press has definitively placed corruption in the public spotlight. However, it is not willing to incriminate allies under the law, nor has it shown much taste for parading corruption into the limelight. The Jornal Globo quotes the President in an article published yesterday:

The government will not embrace any cases of corruption, but the government also will not pose for the media in the combat against corruption. We will combat it effectively.

Given Brazil’s commitments to the Open Government Partnership and its pending transparency deficit –a freedom of information law and a truth commission, among other measures –it behooves government to do better. As it stands, citizens lack the means to adequately monitor government (a freedom of information law). They have little choice but to put their faith in checks carried out by government itself and the scandalous, albeit valiant, revelations of Veja Magazine.