Doing Right By Latin America's Behemoth

Council On Hemispheric Affairs

Monitoring Political, Economic and Diplomatic Issues Affecting the Western Hemisphere

Brazil is now experiencing its latest political scandal in a non-stop history of woeful instances of corruption, which has chilled its spread of democracy. This scandal underscores current impediments preventing the achievement of public rectitude in the Americas—corruption, lack of transparency, scant accountability and the weak application of the rule of law. However, this latest salvo of scandals signals that corruption has reached unprecedented proportions in Latin America’s largest nation. The shame now lashing the Brazilian system reflects current political misfirings such as a lack of adequate anti-corruption safeguards as well as the application of few significant political reforms. On that note, why isn’t Washington paying closer attention to the ongoing scandal in Brazil, considering that it captures the essence of a fundamental impediment to democratic consolidation in the region?

The recent “Fourth Global Forum on Fighting Corruption” held in Brasilia, on June 7-10 provided an opportunity to explore practical ways to fight corruption at all levels. Unfortunately, the meeting occurred at a tumultuous time for Brazilians. President Bush stated, “The United States supports countries that embrace transparency, promote the rule of law and implement responsible economic policies, and through those steps contribute to the global fight against corruption.” On that note, the White House should fulfill its commitments through assisting countries facing Brazil’s plight by accelerating the implementation of the Millennium Challenge Account, which it established to provide core development assistance to developing countries such as Brazil.

Political Corruption in Brazil
Despite Washington’s counter corruption protestations, region-wide venality continues to flourish. Since the colonial period, political corruption in Brazil has flourished along two specific trajectories: the manipulation of political decisions to favor private economic gains, and through the illegal appropriation or the "detour" of public funds by politicians. Interestingly enough, one of the rationales for the Brazilian military’s seizure of power in 1964 was to "end political corruption." Ironically, the levels of political corruption increased significantly during the 21 years of the military rule. The military eventually was forced to return to the barracks due to a wrecked economy, increased levels of corruption and the erosion of the armed forces institutional prestige. A decade later, Fernando Collor de Mello resigned his presidency amidst a rash of corruption charges.

The Scandal at Work
The 1992 crisis that forced Mello’s resignation and the current one, have a common thread – MP Roberto Jefferson. Today’s scandal was first unveiled in May with the broadcast of a videotape showing a midlevel political appointee in the postal service soliciting a bribe in the name of the parliamentary leader of the Brazilian Labour Party (PTB) Roberto Jefferson. His political party is an ally of President Luiz Ignacio “Lula” da Silva’s PT (Partido dos Trabalhadores -Workers’ Party). In an attempt to deflect attention from his involvement, Jefferson disclosed a new scandal in a television interview on June 6, 2005. He insisted that the PT had solicited and disbursed illegal campaign contributions as well as bribed allied Liberal Party (PL) and Progressive Party (PP) legislators. The purpose behind the “monthly allowances” of 30,000 reales ($12,500) from 2003 to early 2005 was to ensure support for the PT-sponsored legislative agendas.

If these allegations are confirmed, (as is the case on an almost daily basis) Lula's PT government would have built a de facto legislative majority entirely on corrupt foundations, through systematically purchasing the votes of the PL, PP and PTB parties. This arrangement would throw into question the legitimacy of some of the major reforms adopted in Brazil in the past two years, such as the now tainted modification of Brazil’s social security system.

The scandal intensified on August 11, when Duda Mendonça, who headed the PT's election campaigns since 2001, confessed that he had received 15.5 million reales ($6.5 million dollars) in illegal, undeclared campaign financing. Mendonça said the money had come from the man at the heart of the corruption scandal, Marcos Valerio Fernandez de Souza. A businessman owning several PR-firms, Fernandez de Souza had big contracts with the government, and had “loaned” millions of reales to the Workers' Party during the election campaign. However, Mendonça adamantly insisted that the funds had not been used to finance Lula’s presidential campaign.

What Makes This Scandal Different?
The PT party has always claimed to be an ethical party, in contrast to a number of other national parties considered to be well practiced in venal behavior. During his campaign in 2002, Lula, the founding father of the PT, pledged break with Brazil's traditional dirty politics by promising to clean them up by banishing corruption. Lula even called for reforming campaign finance rules, emerging as a symbol of hope and honesty. He carried high the promise of ‘rule by clean hands’ that helped win for him the electorates’ adoring trust. However, recent events have very much tarnished the PT and proved again that governability in Brazil remains in permanent crisis.
Since the beginning of democratic politics in 1985, Brazil’s major political institutions have brewed a state of permanent crisis regarding the nation’s governability. Simply put, its political machinery is predictably inefficient, unreliable and dishonest. A good part of its political problems stem from basic design inadequacies. The country’s multiparty system is highly fragmented and lacks effective integration. The legislature is filled with weak, non-cohesive, and undisciplined political factions, while the electoral system is based on an open list of proportional representation with open lists without an exclusion clause. The parties present regional lists of candidates, but voters may vote directly for individual candidates. This system makes it difficult for national party leaderships to discipline individual elected representatives, and it also fosters Brazil’s traditional focus on personalities rather than institutions. The reason here is that political campaigns are planned and financed less by political parties than by the candidates themselves, leading Dr. Barry Ames to observe that, “Brazil’s electoral system motivates deputies to seek pork.” He further notes, “the ungovernable nature of Brazilian society is the result of a weak relationship between Brazil’s national political institutions and the probability that the government will adopt new programs and policies.”

Legislation and Implementation
Weak internal control mechanisms essentially have cultivated an abuse of power. Overall, Brazil lacks effective regulatory and legislative oversight. Demonstrably, Brazil’s political elite historically has designed a political institution that better serves its members’ interests than those of the nation. Brazilian political institutions appear to generate incentives to primarily encourage unlawful practices such as delivering pork-barrel programs to political lawmakers and backers. In turn, bribery and pork projects are used as “short cuts” in order to achieve personal and political gains. In Brazil, there truly is no deterrence from venality because the political elite is rarely charged or punished for it. This indicates that there is a serious failing when it comes to respecting the rule of law. As a result, political credibility and respect for policy-making, as well as compliance with already existing laws that act as a shield against unlawful behavior, become invalid. In the end, an inefficient state is born from the ashes of immorality and injustice.

Conclusion
The democratic consolidation in Brazil cannot be achieved without attacking corruption head on. Fighting corruption requires an array of different initiatives, tools, and institutions. Corrupt practices undermine government institutions, impede economic and social development and cast shadows of lawlessness that only further erode the public trust. Since the abuse of power serves the interests of the powerful and the rich, to the detriment of the poor, widespread corruption, in turn, worsens the level of inequality. Like the rest of Latin America, the most pressing problems Brazil faces today concern social and economic issues such as: improving economic development, reducing poverty, improving public health, and providing basic education. Clearly, as long as Brazilian political institutions remain weak, corruption will be endemic, with few incentives motivating this deplorable situation from being redressed. If Brazil was democratically consolidated, the guard dogs of transparency would see to it that it be accompanied by the accountability of public officials through voiding the impunity that characteristically accompanies. The fight against corruption is unattainable unless there is rule of law, prosecution, and equal access to a fair judicial state that can be counted on to render impartial decisions. Until functioning judicial systems and a state of transparency are established, the current corrupt practices will stick, a trait not only featured in Brazil, but also throughout most of Latin America.

Methods of Fighting Corruption (A Breviary of Initiatives)
• Fighting corruption by strengthening all forms of accountability -- political, financial and legal-- must be stepped up in order to aid the fight through various oversight mechanisms;
• Modernize the state and update the judicial system as means to fight corruption;
• Redesigning political institutions so that the rules of the game do not openly conspire against building or maintaining an institutionalized party system;
• Introduce political reforms and regulations to limit the capabilities of lawmakers to carry out unlawful practices.

The Intended Role of the U.S.
If the Bush Administration is committed to more than just rhetoric when it comes to implementing international anti-corruption measures, then it swiftly should take action and assist President Lula in the mess he has clearly authored. After all, the US leader has noted that his administration provides millions of dollars each year to help governments around the world to fight corruption. The Bush Administration should inform Lula that it is committed in helping him through providing relatively small amounts or sharply focused development assistance. Lula has been hurt by the scandal; more than that, it has grievously weakened him. The Bush administration could be making a serious mistake by deciding to now press on with an offensive to advance its FTAA, now that Brazil lacks neither the vision nor the political heft to oppose Washington’s open market trade model.

Hopefully, Brazil’s cluster of scandals will help highlight the current flaws and seemingly perpetual anti-democratic practices that are being wrongfully rewarded through the various international financial institutions’ and private banks’ funding packages and development assistance projects that have less to do with bandaging Brazil’s wounds than keeping it within the perimeters of Washington’s trade plans for the region.

The U.S. has an opportunity to take advantage of this scandal and Brazil’s shackled president. It could also choose to turn the malaise surrounding Lula into a positive outcome, not by taking an advantage of Brazil being, at least temporarily, on the ropes, but by sharing effective oversight mechanisms that the U.S. government now uses, especially procedural rules and implementation techniques, which effectively, are sadly not in place in the Latin America giant.

For More Information:
Ames, Barry. The Deadlock of Democracy in Brazil. Ann Arbor: The University of Michigan Press. 2002

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COHA Opinion 05.21