The Petrobras Investigations and the Future of Brazil’s Democracy: Thailand and Italy as Cautionary Tales

In March of 2014, when Alberto Youssef, the initial whistleblower for the now infamous Petrobras scandal disclosed his knowledge of the scheme to his lawyers, he prefaced his revelations with a grim prediction: “Guys, if I speak, the republic is going to fall.” While that prediction may have seemed melodramatic at the time, the recent turmoil in Brazil surrounding the Petrobras scandal and the impeachment proceedings against President Dilma Rousseff have led some to begin to question whether Mr. Youssef’s prediction might in fact ring true.

The Petrobras scandal may be the single biggest corruption scheme in any democracy, ever. By some estimates, up to US$5.3 Billion changed hands through inflated construction contracts and kickbacks to Petrobras executives and politicians. Even for a country accustomed to political corruption scandals, this case is unique in its breadth and scope. Dozens of Brazil’s economic and political elite have been implicated, including the CEO of the country’s largest construction firm (sentenced to 19 years in jail), and the former treasurer of Rousseff’s Workers’ Party (sentenced to 15 years in jail), plummeting Brazil into a true political and economic crisis. The investigations transcend party lines: Eduardo Cunha, the speaker of the House leading the charge for President Rousseff’s impeachment (for using accounting tricks to mask the nation’s deficit), has himself been charged in connection with the Petrobras Scandal. Indeed, this scandal appears to be a political reckoning, an indictment of the entire elite class in Brazil.

By most accounts, Brazil is a thriving democracy—elections are free and fair, and there is a multi-party system marked by vigorous competition between rival parties. Civil liberties are generally well respected. Protests against the government have been massive, but by most accounts peaceful and undisturbed by state authorities. But some have gone so far as to speculate that the unprecedented scale of this scandal may lead to a collapse of Brazil’s democratic system. At least one historical example suggests that this might not be so far-fetched: In Thailand, the political deadlock in 2014 following the ouster of President Yingluck Shinawatra on allegations of corruption and abuse of power ended with a military coup, and democracy has yet to return. Yet perhaps another, somewhat less dramatic but nonetheless troubling precedent is even more apt: In Italy in the 1990s, the Mani Pulite (Clean Hands) campaign revealed endemic corruption and led to the collapse of the four governing political parties. In this case, while democratic elections continued, the political void left in the wake of Clean Hands was filled by new, corrupt actors like Silvio Berlusconi, and political graft remains rampant. Though Brazil seems unlikely to suffer a fate similar to Thailand, it is highly plausible that the aftermath of the Petrobras scandal might resemble the Italian experience.

Let’s consider some of the possible parallels between Brazil and Thailand, on the one hand, and Brazil and Italy, on the other.

To start on what is perhaps a more pessimistic note, there are some striking similarities between the situation in Thailand in 2013 and the current state of affairs in Brazil:

  • First, protests in both countries were exacerbated by economic woes. In 2013, the Thai economy had stagnated, and had one of the most unequal income distributions in the world. Brazil is going through its worst recession in three decades, and unemployment is at a seven-year high. While the protests have ostensibly been about corruption, the economic woes of the country (and the President’s manipulation of finances to mask deficits) are also playing a significant role in the unrest. A recent Wall Street Journal article suggested that corruption is not the real problem in Brazil, but is merely a symptom of a bloated state-controlled economy that has inhibited growth. Thus, unless the economy can be revived in some meaningful sense, a sea change in Brazil’s state apparatus and system of governance may be inevitable, with corruption acting as a main catalyst.
  • Second, the political divides in Brazil also resemble that of Thailand. Prime Minister Shinawatra and her predecessor and brother, Thaksin Shinawatra, were viewed as corrupt by the urban elites in Bangkok, but had won elections with support from the rural poor, by diverting more public funds to these historically underserved areas. Similarly, in Brazil, President Rousseff’s predecessor, Lula, was able to survive the Mensalão cash-for-votes corruption scandal by garnering the political support of the rural poor through the launch of the Bolsa Familia social program, which diverted huge amounts of funding to lower-income Brazilians. Current opposition to Dilma’s government is especially strong among wealthier, urban Brazilians, mirroring the political cleavages in Thailand, and suggesting the possibility of an enduring political standoff with little hope of peaceful resolution.

Yet there are also some crucial differences, which make the Thai outcome–a military coup–considerably less likely in Brazil. In Thailand, the military had already staged a coup in 2006 and was a formidable political presence; this threat does not seem as credible in the Brazilian context. Moreover, the opposition in Thailand was focused on the creation of an unelected “people’s council” to displace the democratically elected government. In Brazil, by contrast, the opposition are working through democratic processes to prosecute those found guilty of wrongdoing in courts of law, and working to potentially impeach President Rousseff through constitutionally mandated procedures, suggesting the viability of the Brazilian democracy.

So an anti-democratic coup in Brazil seems relatively unlikely, though the Thai example does provide a cautionary example of what can happen if the citizens, or powerful elites, lose faith in the ability of Brazil’s democratic institutions to manage the crisis. But the Italian example illustrates how, even when democratic institutions survive a massive corruption scandal and massive purge of the political class, things can still go wrong. Two observations, and possible comparisons, are especially salient here:

  • First, although the Clean Hands investigations In Italy initially received widespread support from a citizenry disgusted with the corruption of political elites and their cronies, the Clean Hands campaign eventually lost the confidence of a considerable segment of the public as investigators began to come across as vigilantes and being politically motivated. In Brazil, these concerns may arise as well. Indeed, some have accused the Brazilian prosecutors and judges involved in the Petrobras investigations of being overzealous, a concern echoed by a previous post on this blog. An overemphasis on convictions of high profile politicians and business executives may lead to a sacrifice of due process rights, a concern broadly discussed here as well. Whether or not these accusations are well-founded, prosecutors must be mindful of how their efforts are viewed by the public, and avoid falling into a similar trap. This is not only important for maintaining confidence in the investigations, but also for maintaining public support for Brazil’s democracy and democratic institutions. Though the public may lose confidence in their elected officials, support of the democracy at large can be maintained if the other institutions remain committed to the principles of the rule of law.
  • Second, in Italy the Clean Hands campaign led to the collapse of at least four political parties–but the political void was not filled by cleaner politicians. Rather, corruption scandals continued to be part of the Italian political landscape, and perversely, the investigations may have had a “saturation effect” and actually increased public tolerance for corruption. Those following developments in Brazil might well worry about something similar happening there. After all, Vice President Michael Temer, who would replace President Rousseff if she were impeached, has also been ensnared in the Petrobras scandal. Eduardo Cunha, the man who is orchestrating President Rousseff’s impeachment, also faces charges that he accepted $40 million in bribes. Some worry that the call for President Rousseff’s impeachment may serve as a cover for the return of the old elite into Brazil’s politics, and a resumption of the corrupt ways of the past without any real change. While the non-elected branches of Brazil’s government appear to be functioning effectively in rooting out corruption, the long-term viability of Brazil’s democracy hinges on whether clean politicians can fill the void left in the wake of this scandal.

In sum, Brazilians investigators should learn from the mistakes of their Italian counterparts so as to not waste the opportunity of improving the quality of Brazil’s young democracy. While a drastic coup similar to the Thai experience in 2014 seems unlikely, the real test of Brazil’s democracy will be in the years to come in the wake of the Petrobras scandal.

3 thoughts on “The Petrobras Investigations and the Future of Brazil’s Democracy: Thailand and Italy as Cautionary Tales

  1. Pingback: The Petrobras Investigations and the Future of Brazil’s Democracy | Anti Corruption Digest

  2. Pingback: Matthews' Blog

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