“Money is the Mother’s Milk of Politics”

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Fabio Rodrigues Pozzebom / Agência Brasil / Flickr / CC BY 2.0

In the June edition, Conjuntura Económica invited three Brazil experts to present their views on the country’s political crisis. Below is a conversation with one of them, Peter Hakim, president emeritus of the Inter-American Dialogue.

How would you describe the events of Lava-Jato in Brazil?

From Ancient Greece onward, democratic politics have been infused with corrupt practices everywhere. That was the reason that Plato proposed that Athens be ruled by philosophers, who he assumed were less driven by wealth accumulation than practitioners of most other professions. Politicians prefer to talk about values and principles, but politics, in practice, is a transactional exercises—and there are few places where corruption is absent. “Money is the mother’s milk of politics” is a widely heard phrase in Washington, coined by a once powerful Californian politician.

Corruption in Brazil is rampant, no question, but many countries are worse offenders. Since it began its surveys of perceived corruption, Transparency International (TI) has, year after year, ranked Brazil as the fourth or fifth least corrupt country in Latin America—behind Uruguay, Chile, and Costa Rica, but far more transparent and honest that any of the other major economies, Mexico, Argentina, Venezuela, and Colombia.

Although not backed up by data, my sense is that corruption has long been an element of Brazilian politics, and has probably been fueled more by flawed institutions, established habits, and limited risk of exposure than by any national cultural disposition. Corruption, like other bad habits, is more of an adaption to circumstance than genetic or cultural disorder.  In recent years, as the cost of politics and campaigns has ballooned in Brazil, and the state has played a larger and larger role in the economy, the extent of corruption has expanded to keep pace. Today, the money involved is enormous, and it reaches into nearly every corner of political activity.

The so-called Lava Jato investigations and prosecutions are the highly professional work of an exceptionally skilled, determined, and honest judiciary. It is still not clear to me why the Brazilian judicial authorities have proven to be so much more proficient, bold, and demanding than their counterparts in most other countries of the region. But if they can sustain their high standard of work, they may be able set the basis for cleaner, less corrupted politics in Brazil.  They may provide the needed deterrent, the necessary checks on power, that will lead to greater transparency and less corruption. It could, however, also turn out that, in the coming period, a stronger president and a powerful legislature may end up with the authority and leverage to restrict the role of the judiciary—and perhaps reduce its integrity and professionalism. It has happened elsewhere.

Interestingly, the TI rankings of corruption for most countries have barely changed over the years. Countries that were at the bottom, the most corrupt, have stayed at the bottom. And those at the top remain at the top. In short, it is uncertain whether Brazil judiciary, despite its successes so far will be able to bring corruption under control and allow for a thoroughgoing reform of the country’s governing institutions.  

In the short run, moreover, the Lava Jato investigations are producing some collateral damage. They are clearly disrupting the efforts of President Temer and his supporters in Congress to secure legislative approval of the economic reforms that are vital for lifting the Brazilian economy from its current slump and putting on a path of stable, sustainable growth. Without a steady economic revival in the coming period, it is difficult to foresee how Brazil can emerge from its current governance crisis. Brazil should be proud of its judiciary and encouraging it to stick with its anti-corruption agenda. At the same time, however, the judiciary’s very effectiveness at fighting corruption may be forestalling the resolution of other problems confronting the countries, and interfering with both its economic and political revival. It is an unsolvable dilemma.

Is the polarization we have observed in Brazilian society in the recent past comparable to the larger international community?

Both journalists and academic analysts are in a constant search for patterns and paradigms in the events they write about. Understandably, they want to discover trends that give context to their reporting and help them explain the complexities of current affairs. In the process, they often end up exaggerating similarities between events in different countries and downplay the differences and uniqueness of what is happening in each. There may well be a trend toward polarization in the US and many countries of Europe—although recent elections in France and Germany suggest an emerging counter-trend toward more centrist, less divisive outcomes. But, polarization seems to be diminishing in Latin America as Venezuela’s influence collapses and populist leaders are in something of a retreat. Perhaps, Brazil has become more divided and divisive in recent years—but it is far from the schisms and ruptures that we see in many nations. The great majority of Brazilians wanted President Dilma removed from office; the same  number or more now want President Temer out. This is not polarization. It is a demand for better government. Brazil’s fundamentally conservative press is divided over Temer’s remaining in office. That is not polarization. It is a difference of opinion. Brazilian voters are suffering. They are, justifiably, frustrated, angry, and fed up with their political leadership. They are not yet deeply or irretrievably polarized, at least not yet, and certainly not compared to voters in the United States and so many other nations.

What will be the legacy of this investigation on the Brazilian political system?

Brazilians tend to view the future with a considerable degree of optimism. Not all, but most Brazilian in conversation agree that the short term is unpredictable, filled with potential perils, and that Brazil is likely to suffer a period of great hardship. But the great majority express confidence that Brazil’s longer-term prospects remain bright, that the dark clouds will eventually break. They are convinced that the country will resolve its governance problems, reenergize its economy, and confront its deep social problems.  Whether this happy outcome is the most probable path is by no mean certain, however.. Sure, Brazil has succeeded in emerging from many crises over the years, and could well again—but the challenges today may be greater than ever.

Brazil seems like a hospital patient whose many chronic diseases are occurring at the same time, making it difficult to treat any single one of them. Brazilian political and economic institutions are fighting massive and pervasive corruption in both the public and private sectors, in the midst of its worst economic performance in decades, while governed by a desperately weak and unpopular political leadership. The governing crisis in Brasilia, a reflection of the country’s erratic and fragmented political system, presents huge obstacles to implementing economic reforms essential to restore even moderate growth. At same time, a huge fraction of Brazil’s political and corporate managers, who should be focused on resolving the nation’s multi-dimensional crises, are under investigation and faced with trial and arrest on varied charges of corruption. The good work of the judiciary, while deserving great praise, may be making a solution to the political crisis even more difficult. The legacy of  all this is mostly unpredictable.

Maybe the Brazilians are learning some  things that will allow the country to emerge from crisis stronger. Maybe they have learned that corruption cannot be the source of financing for politics, that minor corruption turns into major corruption and should not be tolerated and abetted. Maybe they are ready to better manage good economic times so they are prepared for the bad. The actions of the judiciary may be teaching hard lessons of transparency. Julius Caesar justified his divorce by claiming that his wife not only had to be honest—but to be above suspicion. But these are not easy lessons.

What is the main impact this investigation will have on the image of Brazil in the international community?

Brazil has already paid a high price in international stature and influence for its corruption scandals, economic mismanagement, and governance failures. It was not long ago that Brazil had every reason to celebrate it rising global profile. In succession, Brazil produced two of Latin America’s most eminent leaders ever, Fernando Henrique Cardoso and Luiz Inancio Lula da Silva. They established Brazil as the regional pole of power in South America, and led the regional giant to an increasingly robust role in international affairs. In part, this reflected Brazil’s new assertion of its global presence and ambition, but the nation’s rising international role emerged mostly from its growing economic strength and promise (including the immense oil discoveries), a thriving democracy at home, and expanding attention to its most vulnerable citizens. Today after two years of deep recession and a still tottering economy, it is no longer a reliable or highly sought-after commercial partner.  And its chronic deficiencies in economic policy and management—its protectionism, low and stagnant productivity, sky-high taxes, antiquated labor legislation, deteriorated infrastructure, and subsidized  economic sectors—have all become more visible. Moreover, relations with many governments (including Washington) have been damaged in varying degrees by Brazil’s sprawling, seemingly endless corruption scandals, involving political leaders of all stripes and many of the nation’s largest corporations—and now spread to a dozen other countries. And, in many places, there remain lingering questions still about the legitimacy and fairness of President Rousseff’s impeachment. Sure, Brazil can and should regain its standing in international affairs—but that will require restoring trust, at home and abroad, in its political institutions and rebuilding confidence and in its economy and business environment