If Brazil’s recent past is prologue, the alleged misuse of public funds won’t be the main reason for President Dilma Rousseff’s possible impeachment. However troubling the pedaladas fiscais (fiscal tricks) scandal may seem, it’s merely a sideshow obscuring the ultimate culprit responsible for Rousseff’s political woes – the Brazilian economy.
Bill Clinton’s presidential campaign mantra – it’s “the economy, stupid” – especially resonates for a new democracy like Brazil. Still building trustworthy institutions, new democracies tend to be much more fragile when faced with economic downtowns. When recessions hit, sitting governments in these countries often lose more political capital and face more crises of confidence.
This correlation between business cycles and political crises describes what is happening now and what has happened before in Brazil. Since Brazil completed its transition from military rule to democracy in 1990, four of its presidents have faced widespread calls for impeachment during a sour economy: Fernando Collor de Melo, Fernando Henrique Cardoso, Luís Inácio Lula da Silva, and now Dilma Rousseff. Unlike European parliamentary systems, Brazilian law does not provide for a vote of no confidence.
Collor de Melo, presiding over an unstable economy, was forced mid-term to turn over the reins of government mid- to President Itamar Franco. Both Cardoso and Lula also faced fared tough economic times but fared better, able to negotiate their way out of opposition attempts to unseat their governments. Interestingly, it was Rousseff’s own party, the Partido dos Trabalhadores, that made 50 impeachment calls for Cardoso to resign. Lula’s term brought accusations that he had betrayed his predecessor’s macroeconomic policies; a subsequent period of economic expansion restored his popularity.
During Rousseff’s first years in office, the economy was middling but without crisis. That changed in late 2014 when recession hit and has continued to spiral the economy downward. Headlines about the public-funds scandal and calls for Rousseff’s impeachment increasingly resound against this economic backdrop. Whether the opposition can garner the necessary two-thirds of both the Brazilian congress and senate remains to be seen. In the meantime, there are no signs that a business turnaround could moderate Rousseff’s problems. Experts project 2016 will be similar to the last year’s dismal level of -3.5% growth, which made the Brazilian economy the worst large performer in the world.
Without the option of a no-confidence vote, impeachment may well be the only way to set a new Brazilian government on a new path hopefully toward economic recovery and growth. Ultimately, the current stakes extend much further than simply alleged fiscal tricks and accusations that the Rousseff government disregarded country’s balanced budget law. In Brazil, economic growth is also vital to the growth of its new democracy.