Americas

Brazil

  • Brazil
    Brazil’s Internet Is Under Attack, Again
    The Brazilian government has launched a consultation on the future of CGI.br, the body that sets internet policy in the country. Some fear that the Temer administration is trying to gut it.
    Blog Post by Guest Blogger for Net Politics August 14, 2017 Net Politics
  • Brazil
    Brazil’s Clouded Political Horizons
    Brazil is in a confusing place, with unprecedented voter dissatisfaction but no clear path out of crisis. Markets cheered last week when Congress voted 51 percent to 45 percent not to permit President Temer’s trial on corruption charges. But it was a pyrrhic victory, coming only because of a large number of expensive concessions to deputies, which raised the price of all future votes. The economic reforms that Temer promised as a way to justify his presidency seem as far away as ever, and the government is virtually guaranteed to miss its already unambitious fiscal goals for the year. Meanwhile, outgoing prosecutor general Rodrigo Janot has been hinting that he could file further charges against Temer before departing office in late September, suggesting that there is no end in sight for the political drama that has been consuming Brasília. Even as Temer faces these headwinds, however, the situation is no better for the Workers’ Party (PT) standard-bearer, former President Lula. Sympathetic noises coming out of the appeals court suggest that trial court judge Sérgio Moro’s conviction of Lula will in all likelihood be upheld when Lula’s appeal goes to judgement next year. Under the terms of the Clean Slate Law, conviction by the appeals court means that Lula will be ineligible to run for the presidency; even if by some miracle he were to survive, another five corruption investigations are pending against him. In Brazil this month, nobody has been able to give me a convincing explanation of what all this means for the 2018 election. Many Brazilians seem to be holding out hope for an outsider who will be able to change politics as usual. But given the ban imposed by the Supreme Court on corporate campaign contributions in the 2018 campaign, political parties—with their access to massive public funding, on the order of more than $1 billion—may be more important than ever, limiting the likelihood that a true outsider can emerge (a partial exception is João Doria, the São Paulo mayor, a relative newcomer on the political scene who has a slim but seemingly growing chance of capturing the Brazilian Social Democratic Party’s (PSDB) presidential nomination, and later, its public campaign funds). Even an outsider, though, would have a hard time meeting Brazilians’ demands. Polls show that Brazilians believe that the dire economic situation and corruption are the two leading problems facing the country. Yet a quick look at two recent votes in Congress show that representatives will have great difficulty simultaneously delivering on both the anticorruption reforms and the economic reforms that Brazilians are demanding.  As the table below illustrates, in recent votes on the two issues, deputies in favor of labor reform tended to support Temer against the rule of law, while deputies who had voted against labor reform tended to be more anti-Temer. Although the PT voted as a bloc against Temer, the congressional divide on Temer’s trial was not only a Temer vs. PT dynamic: indeed, given that 40 percent of legislators are under judicial investigation, many deputies who voted against Temer were hoping to burnish their imperfect anti-corruption credentials, while even parties within the Temer coalition, such as the PSDB, split down the middle. In sum, although Brazilians seem eager to see change, there is no cohesive coalition in Congress in favor of both rule of law reforms and economic reforms. Nor are there signs that a strong consensus has emerged among the public that would lead to the election of such a Congress next year. Brazilians are too tired to go into the streets to demand change, as they did between 2013 and 2016. But they may also be passive and uncertain because there is little agreement on which reforms would be most effective, and there are few leaders who have been able to offer credible solutions on the best path forward out of Brazil’s combined economic and rule of law malaise.
    Blog Post by Matthew M. Taylor August 8, 2017 Latin America’s Moment
  • Corruption
    What Latin America Can Learn From Past Anticorruption Success
    As Latin America reflects on its current wave of anticorruption successes—including the arrest of former Guatemalan president, Odebrecht prosecutions in Peru, and the ongoing Lava Jato cleanup in Brazil—it may be both sobering and heartening to consider the history of past anticorruption successes around the world. First, the sobering lesson. Even when things go well, other countries’ experiences suggest that an overall shift in the degree of corruption can take decades. Perhaps the best known example is the United States, where a series of disconnected local and national accountability efforts during the Progressive Era took place—including regulation of the trusts, elimination of patronage hiring in the civil service, and restrictions on corporate campaign contributions.[i] But although many of the reforms took place in the late nineteenth century, they only coalesced into a significant shift in the overall level of corruption in the U.S. between the 1920s and the New Deal. Summarizing a complex history, Glaeser and Goldin use press coverage of corruption to demonstrate an arc-like pattern: corruption rose steadily from 1815 to 1850, but began falling after 1870, reaching a stable lower-corruption equilibrium by the 1930s, where it remained until the 1970s (when the authors ceased data collection). Similarly, Bo Rothstein’s work on Sweden suggests that the process of significantly lessening the degree of corruption in that country was decades-long.[ii] While the slow pace of these changes may be discouraging for Latin American publics frustrated by the damage and unfairness inflicted by persistent political graft and crony capitalism, it may be somewhat heartening to think that even small victories in the short term can trigger enormous development gains, by changing norms, removing dirty players from the political game, and most importantly, by consolidating public support for the continuation of the reform process. As Brazil’s outgoing prosecutor general Rodrigo Janot noted in Washington this week, there is no putting the genie back in the bottle: no matter where Brazil’s Lava Jato investigation goes, the public has shown that it will no longer tolerate the old cronyism between oligopolies and politicians. Furthermore, the pace at which anticorruption gains accumulate may be faster in the twenty-first century than it could be in the nineteenth and twentieth. Countries as diverse as Georgia and Rwanda have made remarkable gains on most measures of corruption in the space of the past two decades. They have done so by drawing on a large set of international best practices, simultaneously improving transparency, oversight, institutional effectiveness and the likelihood of sanction. Latin American democracies that are already implementing such anticorruption strategies may also be able to benefit from vibrant political competition, which lessens oligarchic politics and increases the practical autonomy of courts and prosecutors, and a vibrant press, which has proven essential to uncovering wrongdoing and mobilizing civil society. Finally, the international anticorruption framework is much stronger than ever before—the record-breaking Odebrecht settlement with Swiss, Brazilian, and U.S. officials being only the latest example—which enhances global support for reformers while increasing the likely international penalties against potential bribe-takers. So although the path to improvement will be a long one, it may be possible for Latin American reformers to move more quickly than was possible in the not-so-distant past. That alone is grounds for optimism, although a healthy dose of realism is also needed in the face of widespread pushback from the guardians of the status quo.   [i] Glaeser, Edward L., and Claudia D. Goldin. Corruption and Reform: Lessons from America's Economic History. Chicago: University of Chicago Press, 2006. Hofstadter, Richard. The Age of Reform: From Bryan to F.D.R. 1966 ed. New York: Alfred A. Knopf, 1955, p.3. [ii] Rothstein, Bo. "Anti-Corruption: The Indirect 'Big Bang' Approach." Review of International Political Economy 18, no. 2 (2011): 228-50
    Blog Post by Matthew M. Taylor July 25, 2017 Development Channel
  • South America
    South America's Turn to Deadlock
    Scholars of Latin America spent much of the first decade of this century discussing the causes and consequences of the region's turn to the left, under Venezuela's Chávez, Argentina's Kirchners, Brazil's Workers' Party, and other variants of leftist parties. It was therefore perhaps not surprising that as the left began to lose power in the second decade of this century, journalists and academics began to talk of the region's tilt to the right. But looking across South America's political landscape, it becomes apparent that the region hasn't really turned toward right-leaning politics as much as it has chosen deadlock. In country after country, the president is governing with either minority support in Congress, or will be perilously close to doing so after upcoming elections. In Peru, Pedro Pablo Kuczynski (PPK) narrowly won the presidency over Keiko Fujimori, but her Fuerza Popular party gained 56% of Congress. This majority, combined with the divided Left, has empowered the Fuerza Popular to block PPK at every turn, including by removing PPK's ministers or forcing them to resign. Argentina's President Maurício Macri was able to move forward on a variety of reforms in his first year, but now faces a rockier outlook. Four months away from midterm elections that will be crucial to the fate of his market reforms, the ever-surprising former president, Cristina Kirchner last week announced that she was founding her own Unidad Ciudadana party, and declared herself a candidate for an open Buenos Aires Senate seat that she will contest against a close Macri ally. As one local pundit summarized the situation, Macri needs to defeat Kirchner to finally become president and convince investors fearful of a return to populism; Kirchner needs to destroy the Macri presidency if she is to have a political future. The midterm elections are widely thought to be a bellwether for the 2019 presidential election, but although some Macri gains are anticipated, it is not clear such gains would lead to a change in the balance of power in Congress that would enable Macri to move as quickly and surely on reform as he might wish. Brazil's stand-in president, Michel Temer, has lost all capacity to govern the fragmented Congress, whose members are running scared of losing their heads either from the sword of justice or the scimitar of popular disgust.  After some initial success on fiscal reform, social security reform is back on the back burner, labor reform has been narrowly blocked in committee, and tax reform, political reform, and other significant changes are a distant mirage. In Chile, Michelle Bachelet's approval ratings have been improving of late, and she hopes to move forward on same-sex marriage and infrastructure investment plans in her remaining months in office. She may yet do so, but her successor will likely have a harder time of it. Polling in the presidential election continues to tip between Chile Vamos' Sebastián Piñera and the Nueva Mayoria's presumptive nominee, Alejandro Guillier, who have each polled in the 20 to 25 percent range in recent months. The 155-seat lower house, and 23 of 50 Senate seats, are also pending in the November elections. Concomitant elections for the executive branch and much of the legislature may ensure the presidential winner has some legislative coattails. But the extreme fragmentation of this year's primaries, the breakup of the old anti-authoritarian coalition, declining voter turnout, and simmering protests raise questions about the political system's ability to manufacture a convincing legislative majority. This may matter less in Chile than in some parts of Latin America, given the broad Chilean consensus around economic policies, but it does suggest that governance under the next president will not be an easy matter. In Colombia, former presidents Álvaro Uribe and Andrés Pastrana are doing everything they can to make certain that the election campaign is polarized around the peace deal, thus continuing the back-and-forth between those critical of the deal and supporters of President Juan Manuel Santos' effort. The initial candidate of Uribe's Centro Democrático party, Oscar Ivan Zuluaga, has had to withdraw due to allegations in the Odebrecht case, but that does not seem to have weakened the "no" side's resolve. The more that fissures around the peace deal dominate the 2018 election cycle, the less likely that other issues will become a matter of debate. In a political landscape in which former vice president Germán Vargas Lleras leads, but no other candidate is yet a clear second-place contender, emphasizing the shortcomings of the peace deal makes strategic sense. But the longer-term upshot may be a deepening of the polarization that emerged around the October plebiscite on the peace deal. The path toward deadlock is by no means certain. But in a context of sluggish regional growth, a massive regional corruption scandal, declining trust in democratic institutions, and the fracturing of traditional political parties, the possibility of gridlock does raise red flags. Influential social scientists have long warned of the perils of presidentialism, with its tendency toward zero-sum politics and regime breakdown. Over the past twenty years, Latin America has largely managed to avoid these perils through coalition-making and consensus-building. But the region's susceptibility to stalemate suggests these may yet become tense times for the region's democracies.
    Blog Post by Matthew M. Taylor June 27, 2017 Latin America’s Moment
  • Brazil
    Brazil’s Most Underreported Reform Battle
    With all of the turbulence in Brazil, observers can be forgiven for ignoring a potentially paradigm-shattering initiative that picked up speed last month: reducing politicians’ court privileges. Somewhere between 37,000 and 54,000 politicians nationwide enjoy special legal standing, known colloquially as the foro privilegiado. Sitting federal ministers and elected federal officials—more than 800 individuals in total—can only be tried in the Supreme Federal Tribunal (STF), a sclerotic court with little capacity, interest, or time to spare for criminal cases. When the STF seems to be nipping at their heels, furthermore, indicted politicians often simply resign, so as to see their cases start over in lower courts, buying them another decade or two of appeals. The result of this system has been practical immunity from prosecution: because of this extraordinary privilege and the slow pace of the courts, fewer than one in one hundred cases against politicians in the STF lead to conviction, meaning that there is little deterrent to the widespread looting of the public treasury and other crimes.  The uproar over the incendiary wiretaps of Joesley Batista overshadowed an important movement to limit these privileges and introduce a modicum of accountability for powerful public figures. While hearing a case against a former congressman at the end of May, STF justice Luís Roberto Barroso asked the full court to consider limiting special standing, restricting it to crimes committed during politicians’ terms that are related to their public jobs. He noted that more than 200 cases against politicians had run out the statute of limitations in the STF, and that another 500 cases were pending against roughly one-third of Congress. He was supported by the chief federal prosecutor, Rodrigo Janot, who noted that such limits would protect politicians from politically-motivated litigation, without permitting criminal abuses. Both argued that the limits on standing should be implemented immediately, and Barroso cited a study by the Fundação Getulio Vargas that suggests that such a change would eliminate 90 percent of the cases against politicians currently in the high court. Politicians are terrified of the STF’s initiative, not least because Judge Sérgio Moro (of Lava Jato fame) has shown that trial courts may be far less deferential toward big wigs than Supreme Court justices who share the same rarified Brasília air. The speed with which the high court moved forward on this discussion drove Congress to race forward on its own reform of special standing, which passed the Senate as a constitutional amendment at the end of May, and now heads to the Chamber of Deputies. If approved, the congressional reform would be a moderate improvement on the status quo, limiting the number of politicians with privileged standing, but it would also make it harder to jail those convicted of crimes, by requiring congressional approval before they could be sent to prison. In the past, congressional approval for any investigation of its members has been rare, except in the most egregious of cases. It is a sign of the times that the STF has paused deliberation of the case, after President Michel Temer’s nominee to the court, Alexandre de Morães, asked for extra time to evaluate Barroso’s proposal. Meanwhile, Justice Gilmar Mendes, never one to mince words, tore into Barroso for his “institutional populism,”and called the FGV study an “academic fraud.”  The STF vote count stands at four in favor of eliminating special standing and seven votes pending. Of those seven, Morães, Mendes, and two others seem inclined to vote against change. That leaves three relatively moderate and pragmatic justices as swing votes, suggesting that reform could narrowly pass. This calculation may help to explain Justice Morães’ logic in asking for additional time to study the proposal: under the informal rules of the STF, Justice Morães is permitted to take his time evaluating the case, which could stifle Barroso and other reformers for months, if not years. Congress, meanwhile, seems unlikely to continue pushing a reform of its own if the STF is not breathing down its neck. As this case demonstrates, the STF is now at the center of the hurricane in Brasília. Temperatures are likely to rise in the STF in coming weeks, as battle lines are drawn in the trials of high-level Lava Jato defendants, as well as — potentially— President Michel Temer. 
    Blog Post by Matthew M. Taylor June 2, 2017 Latin America’s Moment
  • Americas
    From Venezuela to Argentina: The Situation in South America
    This afternoon, I had the privilege of speaking alongside Cynthia Arnson, Kellie Meiman Hock, and Michael Shifter on current events in South America. Our talk covered countries from Colombia to Argentina, and subjects from climate change to corruption. You can watch the conversation here.
    Blog Post by Matthew M. Taylor May 31, 2017 Latin America’s Moment
  • Brazil
    Temer's Gambit
    Until May 17, it seemed as though President Michel Temer could survive in the presidency until the 2018 elections, despite various pending allegations against him. These calculations have been turned on their head by news reports that meatpacking baron Joesley Batista taped Temer encouraging Batista to pay hush money to the jailed former president of the lower house, Eduardo Cunha. If news reports of the Federal Police’s investigation are to be believed, authorities have accumulated indirect but damning evidence against Temer.  The new scandal panicked Brazilian markets this week, as investors realized that the reforms they expected of Temer are now likely to fall victim to fresh political turmoil. The public is inflamed, and new protests have already begun to percolate on the streets of major cities.  So it was shocking that when Temer gave a press conference on May 18, he categorically rejected any possibility of resignation, stating “I will not resign, I repeat, I will not resign.”  It may be, of course, that Temer is innocent of the charges against him, as he claims. But the pressure against him is enormous, and cynics could be excused for seeing his press conference as a calculated gambit to clamp down on public speculation about the quickest path to his removal: resignation.  With resignation apparently off the table, Brazil is now left with four bad options that suggest the resolution to this crisis will be measured at best in weeks, but more likely, in months. I list them below from fastest to slowest: 1.    Public pressure builds, and Temer resigns out of some combination of frustration, shame, and incapacitating political paralysis. This could happen as quickly as tomorrow, but it is more likely to take weeks or months, since Temer is a scrappy political fighter who has never given up easily. 2.    The investigation moves forward, with formal charges filed by prosecutors against Temer. In that case, the Supreme Federal Tribunal (STF) could rule that Temer should be removed from office for obstruction of justice. But the STF has been timid about getting involved in political affairs and always moves slowly. At best, this is a weeks-long scenario; more likely it would be a long slog.  3.    The electoral court finally hears a pending case, filed against the Rousseff-Temer ticket for alleged campaign finance violations in the 2014 elections. The court had appeared to be kicking the can down the road to avoid confronting the sitting president, but in the face of public pressure it might decide it is worth moving forward at last. The only problem is that the Batista investigation has nothing to do with the 2014 election case, which might give rise to criticism of the electoral court’s casuistic approach to law. Even if the electoral court did move, furthermore, progress will likely take weeks, and possibly months, and there is no guarantee that Temer will lose the case.  4.    Impeachment is a fourth option, but this would take at least six months or longer, especially in light of the fact that many members of Congress know that their survival is closely linked to Temer’s.  The passage of time also factors into Temer’s gambit to rule out resignation. Brazil is only 16 months away from elections, and every day the country moves closer to the elections diminishes the incentives opponents have to remove Temer from office by exceptional means. Opponents may also think twice as they look at the backup slate of politicians who would replace him—at least temporarily—which includes scandal-tainted figures such as Chamber president Rodrigo Maia and Senate president Eunício de Oliveira. Finally, there is no clear guarantee that the indirect elections that would likely follow Temer’s removal would lead to a better successor, especially because the Congress that would select that successor is deeply rotten.  Temer is not widely associated with probity, but few people question his political savvy. Vehemently rejecting resignation was a brilliant—if selfish—move, and may yet allow the Temer presidency to limp along to its natural end.   
    Blog Post by Matthew M. Taylor May 19, 2017 Latin America’s Moment
  • Brazil
    Will 2018 Bring a Mandate for Change in Brazil?
    It has been a tough month in Brasilia. The release of the list of 98 senior politicians implicated in the Lava Jato investigation confirmed that corruption runs broad and deep across the political landscape: 17 parties and 63 sitting legislators are mentioned, and President Michel Temer’s cabinet and the congressional leadership are chock-a-block with alleged wrongdoers. Temer himself has emerged in the revelations, and his only saving grace is that his poll numbers cannot fall much further: separate April polls by Vox Populi and Datafolha showed his popularity in single digits. Strikes against Temer’s reforms took place in over 100 cities nationwide last week. The president is facing a challenge in the Supreme Court, where the left-leaning PSOL has questioned the temporary immunity that he enjoys as head of state, as well as in the electoral court, where the 2014 Rousseff-Temer ticket’s campaign finances will be scrutinized later this month. The public overwhelmingly would like to see him replaced. But Temer seems unlikely to be going anywhere. The court cases against him will likely be kicked down the road by judges who see little to gain from adding uncertainty to an already fraught political landscape. Congress—which would be needed to engineer any political effort to replace Temer—remains largely supportive, in part because few other senior leaders have been left standing, and few politicians are eager to replace Temer as national punching bag.  The pressure to remove Temer diminishes with every day that Brazil steps closer to the 2018 elections; there is no need to remove him, after all, if soon enough voters will have their chance to vote in a successor. Temer’s survival, though, is probably a mixed blessing for would-be Brazilian reformers. His failings are exposed everyday by an active opposition, and association of reforms with Temer will likely tar the legitimacy of future reformers, even after Temer has left office. The Workers’ Party (PT), in particular, has been diligent in banging home two messages: first, that the Lava Jato investigations are politically motivated; and second, that the Temer reform project of fiscal austerity, pension reform, and labor code adjustment is part of a neoliberal “coup agenda.” The claim that Lava Jato is politically biased may help the PT to regain public support, but it also strengthens those who seek to foil anticorruption investigations: Congress has built on this sentiment to move forward a bill against so-called “abuse of authority” by prosecutors. While the bill includes some welcome controls, it is hard to avoid the conclusion that it is one more in a seemingly endless series of concerted efforts intended to prevent other Lava Jato investigations from emerging in the future. The PT, meanwhile, is determined to politicize the inquiry into former President Lula when he is deposed in Curitiba in the coming days: the party is planning a “caravan” to Curitiba and protests outside presiding Judge Moro’s chambers. The PT’s charge of differential treatment will find empirical confirmation in a sad reality of the Brazilian court system: the relative speed of trial courts like Moro’s, especially when contrasted with the glacial pace of the Supreme Court. This means that Lula’s case will likely be resolved years before the cases of sitting federal politicians from rival parties such as the Brazilian Democratic Movement Party (PMDB) and Brazilian Social Democratic Party (PSDB), whose incumbency provides them privileged standing in the glacially slow high court. A conviction in trial court, if upheld on appeal, would reinforce the discourse of partisan justice by barring Lula from competing in the 2018 election, in which he currently leads the polls. On economic reform, the PT’s approach is opportunistic but savvy. It is opportunistic, not least because both Lula and Rousseff in past years recognized the need for change, and even undertook some reforms that moved in the same direction as Temer. But it is savvy, in part because polls show that huge majorities of the population are against cutting pension benefits, permitting labor outsourcing, and freezing public expenditures. Railing against reforms and associating them with the low-legitimacy Temer presidency will buy the PT support. It helps the party return to its historical discourse of social equality and workers’ rights, galvanize supporters, and redirect public attention away from the very serious crimes committed on its watch. There are many unpredictable moving parts but, as it stands now, the first round of the 2018 election seems likely to feature a PT candidate who is the frontrunner in the polls, but is ineligible to run for office due to a corruption conviction. He or she will face a long list of other potential second-finishers: a tepidly reformist representative of the PSDB, such as São Paulo governor Geraldo Alckmin, the left-leaning Marina Silva, conservative firebrand Jair Bolsonaro, eternal candidate Ciro Gomes, or São Paulo mayor and PSDB upstart João Doria. Under these conditions, will the new president have a mandate for change? Significant progress on necessary constitutional reforms by the new president will require a strong electoral showing, support from Congress, and public backing. But a strong electoral showing may be hard to achieve in the fractured field of candidates, and even the artificial majority generated in the second round may well be fleeting—a pinch-my-nose vote between an unpalatable candidate and an only marginally more acceptable alternative. Congress is not going to be an enthusiastic backer of reforms, distracted as it will be by ongoing legal troubles, preserving its incumbent privileges, and positioning itself in a volatile environment in which voters overwhelmingly reject the established political parties. The public does not seem convinced of the need for reform, and the eager denunciation of reform by the PT and many other politicians will only make this burden heavier. Two scenarios could alter this sobering outlook. The first is that the PT wins, with either Lula or an as-yet-unidentified substitute, and governs pragmatically, in a scenario reminiscent of Lula’s first term in office when he strong-armed the party into adopting pension reform and prudent macroeconomic policies. The trouble with this scenario is that the PT is no longer an effective party of government, having been deeply wounded by the loss of so many leaders to the Lava Jato scandal, and it would have enormous difficulty reconciling with potential legislative allies, such as its erstwhile partners in Temer’s PMDB. The second scenario would involve a candidate who ran, and won, on an unabashedly pro-reform platform. At present, only two of the likely candidates might be able to galvanize reformist sentiment: João Doria as an economic reformer, and Marina Silva as a political reformer. The trouble with this scenario is that neither has yet consolidated their candidacy or perfected a message, and it is hard to envision a scenario in which either has substantial legislative coattails. Many factors could yet alter this outlook, but eighteen months out, the prospects of a reformist new president with a clear mandate for change remains a distant fantasy.
    Blog Post by Matthew M. Taylor May 12, 2017 Latin America’s Moment
  • Brazil
    Rumblings of a Constitutional Assembly in Brazil
    Brazil remains in ferment. The massive Lava Jato investigation turned three years old last month, and this week marked the one-year anniversary of the Chamber of Deputies’ vote to impeach Dilma Rousseff. Last week brought the release of long-anticipated “end of the world” testimony by 77 plea-bargaining Odebrecht executives, which implicated nearly one hundred senior politicians, including a third of the Senate, more than three dozen deputies, thirty percent of the cabinet ministers, and a handful of governors. All six living presidents, including incumbent Michel Temer, now face allegations of improprieties from Lava Jato. Temer’s signature reforms, meanwhile, have hit a rough patch. A draft pension reform amendment was watered down before presentation in committee in an effort to bring reluctant deputies on board. In time-honored fashion, the President is on an appointment spree, doling out mid-level government posts to allies to ensure that he surpasses the 308 votes needed to push the amendment through the lower house. Odds are that some diluted version of pension reform will pass, but only because of old-fashioned horse-trading, rather than deep commitment. Protests are ramping up, with angry members of police unions breaking windows at Congress earlier this week. And the timetable is short, with a committee vote now postponed until May, even as the race heats up in the 2018 campaign for the most wide-open presidential contest in living memory. In the midst of the polarization and uncertainty, luminaries across the political spectrum have floated a bold new idea: a constitutional assembly to break the logjam. At least three problems could be addressed by rewriting the 1988 Constitution: the rule of law problem, best exemplified by the fact that none of the sitting federal politicians implicated in the Odebrecht testimony are likely to receive a definitive sentence from the slow-moving high court before the end of the next presidential term in 2022; political fragmentation and weak links between voters and politicians, best exemplified by the fact that few voters can name their deputies, much less do anything to hold them accountable at election time, even though a large plurality of Congress is under investigation for corruption and other criminal acts; the fiscal problem, exemplified best by the unsustainable path of the pension system, which the World Bank has argued requires urgent and much-needed reform, given rapid ageing, high benefit streams, inequality-augmenting privileges, and the system’s enormous burden on the budget. In Washington this week, former president Rousseff called for a constitutional assembly to carry out political reform. Caio Magri, president of the progressive business group Instituto Ethos, echoed this idea from São Paulo, while calling on Temer to step down and hold early elections. Separately, the right-wing Estadão newspaper published a manifesto from three eminent lawyers—Modesto Carvalhosa, Flávio Bierrenbach, and José Carlos Dias—for a plebiscite to decide on whether to hold a constitutional assembly with an even broader remit: political reform, an end to special standing for politicians, and a review of the expensive fiscal guarantees in the current Constitution. Interesting though these proposals may be, they face an uphill climb. A major new pact for constitutional reform seems unlikely before the end of Temer’s presidency: Temer shows no signs of relinquishing office and already has a full agenda of his own; congressional incumbents have little reason to reform the system they have prospered under; the public fears that any political pact would serve only to sweep the massive scandal under the rug; it is unclear who would have the legitimacy to set the agenda or convoke the assembly; and even if an assembly were called, there is little consensus about how to address the huge challenges the country faces. Meanwhile, critics of constitutional reform note that the underlying problem in Brazil has not been the constitution itself, but failure to heed the law as it was written: the off-the-books campaign finance, money laundering and corruption at the heart of the past few years’ turmoil are already illegal, after all. That said, the shift in discourse is significant, inasmuch as it drives the public conversation toward the much needed task of developing concrete solutions to the intertwined political, economic, and judicial crises. In many ways, it also presages what is likely to be the central theme of the 2018 campaign and the next presidency: the airing of strong opinions about what went wrong, what is broken, and how best to go about reforming Brazilian democracy. This may provide a welcome respite from the acrimonious zero-sum polarization between the leading political parties, as well as an opportunity for a fledgling reformist movement to emerge from the wreckage of the three decade old political system.
    Blog Post by Matthew M. Taylor April 19, 2017 Latin America’s Moment
  • United States
    The World Next Week Podcast
    Yesterday I joined Jim Lindsay on CFR’s podcast, The World Next Week, which gives a preview of world events in the week ahead. We discussed the political crisis unfolding in Venezuela, Turkey’s constitutional referendum, Brazil’s deepening corruption probes, and Donald Trump’s abrupt policy shifts. You can listen to the podcast here.
    Blog Post by Shannon K. O'Neil April 14, 2017 Latin America’s Moment
  • Brazil
    What U.S. Policymakers Can Learn From Brazil’s Anticorruption Gains
    Introduction Corruption costs Brazil an estimated 3 to 5 percent of gross domestic product (GDP) annually. Yet, Brazil today is lauded internationally for its efforts to combat graft. An important shift has taken place since the country’s return to democracy in 1985. Brazil has seen a steady increase in bureaucratic audits, civil servants removed from office and fined, and politicians barred from elections for wrongdoing. Over the past five years, trials in two major scandals—the mensalão scheme of payments by the government to legislative allies and the Lava Jato [PDF] scheme of kickbacks from state-owned companies to corrupt executives and politicians—have altered the public’s perceptions about the costs of corruption, as well as the possibility of holding powerful actors to account. These improvements give reason for cautious optimism. Brazil’s progress—though tenuous—largely reflects homegrown efforts. Still, the nation’s path holds important lessons for how U.S. policymakers might assist other countries in their fight against corruption. By enhancing international cooperation capacity, providing targeted technical training, and encouraging the adoption of international norms, the United States can advance the efforts of local reformers in other middle-income democracies. Background Brazil’s successes against corruption have progressed together with its young democracy. Its new democratic 1988 constitution [PDF] guaranteed equality before the law and enhanced the public’s right to information. While often flouted in practice, these constitutional provisions gave citizens a claim against state abuses and tools to demand better public services. The constitution also provided a useful foundation for anticorruption reforms by allowing citizen-led petitions onto the legislative agenda, leading to prohibitions against vote-buying and against convicted politicians standing for office. Democracy gave voters electoral leverage over politicians, forcing them to address graft concerns. The need for fiscal transparency, especially during the fight against hyperinflation, led to better public oversight [PDF] of government budgets through enhanced public access and stronger rules curbing government spending. Second, responding to the human rights abuses and policy failures of the authoritarian period, both civil servants and politicians sought to improve the effectiveness of the public sector and build its institutional capacity. Courts, prosecutors, police, and oversight agencies grew in autonomy, size, and strength, enabling them to undertake real efforts against graft. Brazil began slowly shifting away from patronage, adopting rigorous merit-based examinations and reducing the number of appointees. More budgetary resources permitted anticorruption agencies to move investigations forward. Accountability agencies gained tools for building successful investigations, including new anti–money  laundering [PDF], plea bargaining, and racketeering laws, along with improved fiscal oversight and banking regulations. Bureaucrats also began working with allies in other countries, leading to the adoption of bilateral and multilateral frameworks that enhance anticorruption efforts. Brazil joined the Organization of Economic Cooperation and Development (OECD) Anti-Bribery Convention in 2000 and updated anticorruption legislation to correct shortcomings in enforcement of that convention, including by passing a major corporate anticorruption bill in 2013. Third, civil society groups have kept anticorruption efforts in the spotlight, highlighting problems, proposing solutions, and driving reforms. A free press has pressured elected officials through broad media coverage of malfeasance and has educated citizens about the costs of corruption and potential solutions. Most recently, in March 2016, two million citizens joined a petition for congress to consider a ten-point proposal drafted by prosecutors to strengthen anticorruption laws. The combination of media attention and public mobilization has sustained the anticorruption agenda, supporting and promoting legislative change, and defending anti-graft campaigners against pushback. Challenges Significant challenges remain. Despite democracy’s generally positive effect on anticorruption efforts, Brazil’s electoral system encourages corruption. Open-list proportional representation voting and weak party labels fragment the party system and increase the costs of electoral campaigns, which are among the most expensive in the world. The expense and high degree of intraparty competition also creates incentives for politicians to rely on illicit finance for a competitive edge. To govern effectively, the president has to build a coalition from more than two dozen legislative parties, often relying on perks such as appointments to plum spots in the public bureaucracy, state-owned enterprises, and semiautonomous public agencies. Bargaining chips like these have been used both to build political support, and—as the Lava Jato investigation has shown—to illegally fill campaign coffers and offshore bank accounts. The courts, even though they are independent and well funded [PDF], move too slowly to effectively punish corrupt actors. Strong rights protections, delay-ridden processes, and endless appeals all conspire against efficient resolution of even the most egregious cases. The Supreme Federal Tribunal, which adjudicates cases against many federal officials, is poorly equipped to serve as a criminal court, in part because it is congested with more than one hundred thousand cases a year. The first conviction of a sitting federal politician occurred in 2010, twenty-five years after the return to democracy; he remained free on appeal until 2013. Opponents of anticorruption efforts remain powerful. Politicians who benefit from the status quo have tried to slow or undermine reforms, proposing bills to permit politicians’ families to repatriate undeclared foreign assets, give amnesty to defendants at firms that reach leniency deals with the government, and restrict prosecutorial independence. Most recently, the lower house amended to insignificance the ten-point anticorruption petition proposed by prosecutors. Meanwhile, perceived excesses, such as leaked wiretaps and the extensive use of pretrial detention, undermine the goals of anticorruption agencies. Recommendations Despite these ongoing challenges, Brazil’s anticorruption gains provide guidance for steps the United States can take to effectively support anticorruption efforts in a wide range of middle-income democracies around the world, including South Korea, India, and South Africa. Expand U.S. cooperation with other countries’ law enforcement and prosecutors. The U.S. Department of Justice (DOJ) has cooperated with Brazilian authorities to share information on potential targets and investigations, and advance shared enforcement actions against Brazilian firms such as Embraer, Odebrecht, and Braskem. The DOJ’s efforts brought legitimacy and greater effectiveness to Brazilian prosecutorial efforts. Yet the DOJ’s Office of International Affairs (OIA)—often the starting point for such cooperation—has been unable to address mounting inbound requests from foreign partners, leading to significant delays in information sharing. Although OIA resources were recently increased, OIA still needs to make a concerted effort to improve the response time for international requests. Create a new professional exchange program for anticorruption authorities. The DOJ should create a program similar to the U.S. State Department’s International Visitor Leadership Program (IVLP) to provide foreign anticorruption authorities with a network of U.S. counterparts and access to targeted legal expertise about international best practices, innovative uses of similar statutes, and successful reform efforts. The Brazilian judge at the center of the Lava Jato investigation, Sergio Moro, participated in the State Department IVLP program a decade ago and has noted the useful ties it provided to U.S. authorities. With congressional funding, the DOJ should expand existing exchange programs to provide deeper training beyond today’s frequently ad hoc and boilerplate introductions, which are seldom tailored to the specific training needs of foreign authorities. Even at their most basic, such programs help anticorruption campaigners fight the isolation that often besets them at home. Advocate for the adoption of stronger anticorruption prosecutorial tools and efficient judicial procedures in partner countries. In Brazil, the adoption of plea bargaining, the strengthening of antiracketeering statutes, and the enhancement of anti–money laundering laws over the past decade were vital to building cases against private and public sector officials alike. A fledgling law on corporate leniency agreements, modeled on U.S. non-prosecution and deferred prosecution agreements, has been used to significant effect in the Lava Jato investigation. The DOJ and U.S. Agency for International Development should encourage the adoption of similar tools and procedures, tailored to local institutions, while sharing lessons learned from international efforts to increase the effectiveness of anticorruption prosecutions. Direct U.S. programming and funding to support middle-income countries’ efforts to build and train a professional civil service. In Brazil, merit-based hiring, higher salaries, and better budgets have increased the quality of police, prosecutors, tax collectors, and other agencies’ work in the fight against corruption. Homegrown efforts to increase professionalization should be complemented with training on international best practices on anticorruption, which could be developed by the State Department’s Bureau of International Narcotics and Law Enforcement Affairs, in consultation with the DOJ’s International Criminal Investigative Training Assistance Program and the Office of Overseas Prosecutorial Development Assistance and Training. Encourage middle-income democracies to join multilateral anticorruption bodies. Committing to the standards of international anticorruption bodies—including the OECD Anti-Bribery Convention—helps lock in periodic reviews of anticorruption enforcement, provides access to best practices, and drives reform. Multilateral frameworks such as the Financial Action Task Force and the Anti-Bribery Convention have the benefit of demonstrating that anticorruption is a multilateral effort, rather than an imposition by a single country. By taking these steps, the United States can enhance middle-income countries’ ability to stem corrupt practices that threaten economic development, institutional stability, and the integrity of global business transactions. Absent such efforts, the path toward effective anticorruption efforts in middle-income nations such as Brazil may be unnecessarily difficult and subject to reversal. 
    Report by Matthew M. Taylor March 24, 2017 Civil Society, Markets, and Democracy Program
  • China
    Brazil’s Brewing Trade Debate
    Brazil is in the midst of a grand debate on its future in the global economy. The debate has been happening behind the scenes, obfuscated by the fireworks of the Lava Jato corruption scandal, overshadowed by the flashier discussions of political reform and the Temer administration’s fiscal reforms, and hidden from view by explosive scandals, such as the recent meat-packing disaster that threatens one of Brazil’s key export markets. But as a recent paper by David Trubek, Fabio Morosini, and Michelle Sanchez-Badin highlights, policy elites in Brazil have been rethinking the country’s place in the global economy. The debate takes place against a dramatic domestic recession and political crisis, but also against a highly uncertain international backdrop, which has fueled questions about development strategy, export markets, and Brazil’s foreign policy preferences. Trubek and his co-authors argue that three schools of thought have emerged, with different feelings about the role of the state in the economy and the priorities for market expansion and global alignment: The most deeply embedded of these schools of thought is the so-called “developmentalist” school, which has endured since the 1930s, and historically has had support from both left and right sides of the political spectrum. Developmentalists support a strong role for the state in the economy, and downplay the need for closer ties with developed economies, for fear of being shoehorned into neoliberal economic policies or constrained by restrictive trade agreements that might limit national options. Developmentalism has been knocked down but not beaten by the combined drama of the Lava Jato investigation that originated at state-owned behemoth Petrobras and the impeachment of President Dilma Rousseff. Developmentalism’s continued influence pushes Brazil away from alignment with the United States and toward South-South relations, including with both Latin America and the BRICS. A second school is the pro-opening group of free traders and open economy advocates that Trubek et al. label the “aberturistas.” They advocate a radical rollback of heterodox economic policies and state intervention, and seek free trade and greater integration into global value chains, from which Brazil is largely absent. They are eager to turn toward the United States and the European Union, and more importantly, to shift the dominant economic paradigm toward greater global integration. But historically, they have been few and far between; their influence in some academic institutions has not been matched by real power, save for a few rare appointments in the Treasury and Central Bank. Somewhere in the middle lies the “nationalist developmentalist” group ascendant in the Temer administration. Trubek and his coauthors describe this group as “chastened” developmentalists, seeking to preserve policy space and promote developmental policies, while “reining in” some of the most interventionist policies adopted by the Lula and Rousseff administrations. Foreign Minister José Serra was an exponent of this perspective, seeking accommodation with the United States and increased access to Northern markets without unduly constraining policy flexibility. His departure from the Temer administration last month is a loss to the nationalist developmentalist cause, but that group continues to have strong support within the government, not least because Temer is a pragmatist who is not hellbent on reforming the status quo beyond the changes immediately required by markets and ratings agencies. The authors are quick to note that Brazil may have concretely fewer options than the largely academic debate between the three schools suggests. The United States has withdrawn from the Trans-Pacific Partnership (TPP) and become far less interested in even discussing a bilateral agreement. Mercosur negotiations with Europe continue at their usual glacial pace. China is a treacherous trading partner, given that its exports compete directly with Brazil’s weakened manufacturing sector. As a consequence, “the idea that trade policy can easily be used to leverage major changes” in the developmental model seems “far-fetched.” More importantly, the authors note that alignment with many of the global trading agreements would require major changes to Brazilian industrial policies, to its state-owned enterprises, and to the regulation of foreign direct investment. None of these—with the partial exception of regulation—seem to be in the works. Nonetheless, the debate over trade may soon be pushed into the political arena. In the wake of the United States’ withdrawal from TPP, trade negotiations in the hemisphere are shifting in a more Latin America-centric, Asia-focused direction. In mid-March, ministers from Latin America and Asia met in Viña del Mar to discuss paths forward. It is telling that while neither China nor Brazil was a party to the original TPP, the Viña del Mar meeting included China, but not Brazil. The train toward Asia-Pacific integration is already picking up steam, with the Pacific Alliance countries – Chile, Colombia, Mexico, and Peru – energetically shoveling coal. As Trubek and his coauthors note, the Temer administration does not have a stable or strong mandate to undertake trade reform, nor does the administration seem inclined to move beyond its “nationalist developmentalist” posture. But this need not mean total immobility: Mercosur partner Argentina is increasingly demonstrating interest in inter-bloc negotiations, bilateral agreements remain a possibility, and the sensation of missing the trade train just as it stops in Latin America enroute to Asia could yet change the calculus of key economic players as Brazil heads into its momentous 2018 presidential campaign.
    Blog Post by Matthew M. Taylor March 22, 2017 Latin America’s Moment