BRAZIL-You can read the law

The list of behaviors that can lead to impeachmennt in Brazil

The crimes that Dilma Rousseff says that have to be presented against her for impeachment to be legally legitimate and not a "putsch" can be found by "googling" on "lei 1079/50impeachment"

Articles 5 through 12 of that law list all of the behaviors that can be considered impeachable offenses under the law.

If you are interested and following the discussions and events surrounding the question of Dilma's impeachment you might it interesting to review this legislation.

BRAZIL-More Jabberworky

You can spread this on your roses to make 'em grow!

Dilma just now appeared on TV to once again describe impeachment as a coup d'etat. She insisted in her usual "angry primary school teacher" voice to intimidate students that the only justifiable reason for impeachment is a crime of responsibililty (Crime de Responsabilidade in Portuguese).

I think she needs to consult arrticles 85 & 86 of the Constitution she has sworn to defend for clarification of the justifiable reasons for impeachment and the 1950s law that governs the process. There she will find a rather extensive list of possible causes/reasons for the impeachment of a president of which crimes of responsibility is one.

Dilma added that the fact that 80% of the population does not like its government has nothing to do with the issue of impeachment!! As the PT would say, "That's domocracy!"

Yawn!!!

BRAZIL-Brazilian Titanic taking on more water

The ship is sitting just below the water line

It’s been a while since I referred to the Brazilian Titanic sitting dead in the water. It continues to ship water as the economy worsens at an accelerating rate. Total confusion reigns on deck and on the bridge as the crew engages in a bar fight over who is in charge. No oneis at the wheel that remains firmly lashed in place. The ship has suffered serious structural damage that will require major repair work and if water reaches the “engine room” the ship will have to be towed.

Yesterday, the PT’s largest partner in the coalition decided to “jump ship”. A “mutiny” is underway and the PT’s grasp on the wheel has been challenged. “Captain” Dilma may be removed from command and her “navigator” Lula could be tossed in the brig.

That’s probably enough metaphor for now.

In the real world of Brazilian politics, the PT is now in a life-threatening situation. Dilma’s impeachment charges have been written up and will be submitted to the Lower Chamber for approval before being submitted to the Senate.  She and Lula are desperately scrambling around to find substitutes for the plethora of PMDB appointments in the administration (estimated at close to 600 second and third tier management appointments) in order to control the voting of the remaining parties to the coalition.

If possible, the administration would like to defeat the motion to impeach in the Lower Chamber where a 2/3 vote is required to move the motion to the Senate. Most analysts suggest that the PT will not be able to marshal the 1/3-plus-one vote count to stifle the motion so it will most likely ascend to the Senate.

Whether or not the President of the Senate, Renan Calheiros, also of the PMDB but reportedly sympathetic to Dilma, would seek to nullify the motion in the Senate is an unknown. Calheiros has differed with Vice-President Temer (also PMDB and the mentor of the “mutiny”) on the position the party should take but because Temer is also titular president of the party, he might find it expedient to support the motion rather than seek to support Dilma.

The headline of the lead editorial in yesterday’s Estado de São Paulo is “Public Spirit and Courage” is a bit misleading. There is nothing “public spirited” or “courageous” in the PMDB’s decision to break with the PT. If the destiny of Brazil as a nation were the issue, the PMDB would not have acquiesced so readily to the PT over the past 13 and most especially over the past 5 years. 

The PMDB endured numerous humiliations at the hands of the PT in exchange for patronage and some cabinet posts for its membership. However, the government is no longer in a position to use that lever to maintain its authority and ascendency over the PMDB. It is no longer usefulto maintain the relationship and, in fact, could prove detrimental in this year’s municipal elections. 

The PMDB is most noted for its “grass roots” support in Brazil's municipalities and its association with the PT could actually cost it votes in this year’s elections. 

At issue in this case is a decisive battle between the “traditional” and the “neo” kleptocrats. The latter want to avoid losing theur grasp on power, the former want to encroach on that power and seize it entirely.

This is little more than the clash of the two mutually exclusive models I have discussed numerous times before. It’s a battle for control and there is nothing “public spirited” or noble about it. Only one model can survive. As I noted in previous blog posts, no matter who wins, the winner will be a kleptocrat. 

The PT’s heavy-handed methods essentially gave the advantage to the PMDB that has always been a bit more subtle about the way it confiscated the rents of the Brazilian economy. It also was also of somewhat more acceptable parentage.

Some background

When the military took over in 1964 it abolished Brazil’s political parties and imposed a two-party system composed of the National Renovation Alliance (ARENA) and the Brazilian Democratic Movement (MDB). The MDB was essentially a token opposition party to maintain the façade of democracy under the military dictatorship. ARENA called the shots.

As public enthusiasm for the military gradually eroded as a result of ideological splits within the military, the MDB gained public support. When the military announced that it would eventually step down and return power to the civilians, the MDB and ARENA were dissolved and in 1979, the PMDB was formed from the MDB and with some of those who had been associated with ARENA. The conservatives in ARENA went off to lick their wounds and form smaller conservative political parties like the PL and the DEMS.

The formation of the PMDB was followed in 1980 by the foundation of the PT, the Workers’ Party that emerged from the obscurity imposed on the left during the military regimes. The PT arose from the Labor Movement under Lula and was composed of an eclectic collection of leftists of every major stripe from liberation theologians, labor unions, radical left-wing student organizations, communists, socialists, and even former guerrilla groups such as MR-8, et al. who had all been thrown into the same mixing bowl by the military.  

The PMDB was a motley collection of liberals, some left-leaning academics, pragmatic and numerous opportunistic politicians, and some outright political oligarchs. Included among its members was Fernando Henrique Cardoso, a prominent intellectual, who had served as a Senator from the State of São Paulo on the MDB ticket in 1982. In 1986, serving as a Senator again for the PMDB, he joined with a group of like-minded members of the legislature who were concerned for the “rightward” drift of the PMDB as well as its political “opportunism”, to form the PSDB – a social democratic party of idealists, intellectuals, and reform-minded politicians.

The three parties, PMDB, PT, and PSDB became the three major parties in Brazil each representing a particular swath of the Brazilian electorate.

The PMDB pretty much represented the Brazilian “silent majority” of middle class and lower middle class voters who mistrusted both politics and politicians, considering both as a necessary evil. Like most such voters everywhere, they wanted most to be left alone to deal with their own affairs and were not politically engaged – it was every kleptocrat’s dream. The PMDB was the party of the “polyester suit” crowd.

The PT had initially cast itself as the representative of the disenfranchised poor and the working class. Founded in 1980 by Lula with his comrades and colleagues from the union movement, its membership was politically active and militant. It was the party of the T-shirt and sandals crowd.

The PSDB split off from the tepid PMDB in 1986 to become a party of politically active mainstream liberals, intellectuals and academics with a few token conservatives thrown in. Its ideology was akin to that of many European Social Democratic parties and advocated economic liberalism albeit with a little (but not too much) kleptocracy thrown in. It drew its membership from the educated middle, upper middle and upper classes. It was the party of the tropical wool-blend suit – off the rack or tailor-made (for the highest echelons).

The three parties constituted a tripod each leg of which attracted the support of smaller, fringe parties that sought to get its members elected or appointed to public sector sinecures in exchange for support in the legislature.

Only the PT, with its contingent of radical left wingnuts, had a project to seize power and hold on to it in perpetuity.

Back to the present

Once in power with the election of Lula in 2002 the PT applied the tactics discussed in my previous blog post on the 27^thof March entitled “An impeachment trial is now likely”, to exploit the weaknesses of the political system and engage in populist rhetoric and employ populist policies to secure its hold on power. 

Every tactic that I listed in that post was employed to move Brazil in the direction of the “New Economic Framework” that looked and looks remarkably like a “dictatorship of the proletariat”, Latin American style, as practiced in the 50s and 60s by both the political right and the political left “populist caudillos”.

The PT’s plans were initially thwarted by the PSDB’s imposition of the Real Plan that effectively ended Brazil’s long-term chronic inflation that had held kelptocratic government in place ever since colonial times. Simply as a result of the end of inflation, some 40-million Brazilians in the lower economic echelons of society were moved up to the status of a “new middle class”.

No party seriously sought the support of this “new middle class”. Its values were not consistent with, and it would find it difficult to live with, kleptocracy and the systematic confiscation of the fruits of its labor.

Yesterday’s action by the PMDB can thus be considered what might be a decisive battle that ends the War of the Kleptocrats in its favor. However, as I have previously quoted baseball player Yogi Berra: “It ain’t over until its over!”

If we prefer to refer to more modern examples, we can use a video game metaphor: the current situation will be the equivalent of “War of the Kleptocrats” v.2. One winner will emerge. Dilma will be impeached or she will not. If she is imeached, the PT will have no choice but to “go to ground” or simply slip into political oblivion as I have suggested in other posts. If she is not, the economy will suffer further as she continues to pursue the "project".

The cost of the current battle

Dilma’s strategy is now to seek legislative support first in the Lower Chamber and later, if necessary, in the Senate, and finally in the Supreme Court. The odds are against her, but they are not sufficiently heavily weighted in that direction to presume that all is lost for the PT. As I observed in a previous blog, she could still “walk”.

If that happens she returns to office and can be expected to spend to support her “new” patrons in the Congress. She will have to encourage new projects and new spending that will burden an already-burdened budget that will lead to further stagnation of the economy.

If the PMDB emerges victorious (i.e. Temer assumes the presidency) it will be stymied perhaps by those who have joined Dilma and lost and by budget constraints to initiate any effective short-term recovery efforts. Moreover, the PMDB is not necessarily popular amongst voters who know it as just another group of kleptocrats, sympathetic to democracy but not necessarily to transparency. (Interestingly, a PT supporter was quoted in yesterday’s press warning Temer that he was “next in line” because the voters would recognize him as [paraphrasing now] just a better-dressed member of the PT!)

Public dissatisfaction with corruption is the underlying issue. It needs to be understood that eliminating corruption is not possible in any society. Ultimately what is required is that appropriate checks and balances are in place and corruption when discovered is sanctioned. The current wave of plea bargains is not due to a sudden flash of repentance on the part of those caught; it’s the discomfort, humiliation and public approbation that result from having to sit in a prison cell for crimes committed. (None of those guys are “boy scouts”! Their "repentance" is little more than avoiding more pain than necessary.)

We can assess the approximate cost of kleptocracy from the PT’s reaction to the risk of an impeachment trial. ALL consideration of the economy has ceased in order to defend the PT’s plan to hold power in perpetuity even if it means ruling over the rubble.

Industries are shutting down operations (some 4.4 thousand in São Paulo in 2015) and unemployment is growing faster than expected.

However, no matter which way that effort goes – i.e. whether Dilma is impeached or not – there is not enough money available to jump-start the economy. Investors are like wild rabbits caught in the headlights of an on-coming 18-wheel truck. Some 1.1 million industrial jobs have been lost just in the first quarter. Some 9.6 million Brazilian workers are now unemployed, and many are still waiting for their indemnity payments - to include their FGTS contributions, which the government is now using to finance 90% of the Minha Casa – Minha Vidalow-cost subsidized housing program and the credit expansion project announced in January (which thankfully for the FGTS fund, has met with only very minor demand). By mid-year, expectations are that some 13 million will be unemployed. In metropolitan São Paulo the rate is already at 14% vs. the 9.5% rate for Brazil as a whole (or hole!)

The government has submitted a request to the Congress to allow for a larger-than-planned budget deficit for this year (R$96 billion) and we are only finishing the first quarter. The official GDP growth forecast has been revised to a 3.05% decline for the year while the market continues to expect a decline of not less than 4% and perhaps closer to 5%.

Inflation might fall short of the double-digit level of 2015 but that is due largely to the decline of private consumption, so that is not necessarily good news. (Official expectations are for a 7.7% rate by year-end.)

Meanwhile, the Lava-Jato investigation turned up signs of a “department” within Odebrecht (Brazil’s largest construction firm) solelydedicated to handling the payments to members of the Congress (the legality of many of the payments is considered questionable but not yet proven). With the names of 297members of the legislature and 24 political parties and because the members of the legislature enjoy a right to a Supreme Court investigation and trial, the spreadsheets showing the code names, amounts, party affiliations, and projects, etc. that have been submitted to the Supreme Court appear to be a rather sharp increase in that body’s work load! (One can’t help but wonder if that was not a bit of “serves-you-right” medicine prescribed by Sergio Moro to the Supreme Court for the decision to recall the case against Lula back to Brasilia for additional consultation! Facing the possible impeachment trial of a president and having to investigate almost 300 politicians at the same time sounds a bit complicated!)

Finally, the exchange rate seems to be behaving in a rather strange manner. As things worsen in the economy, the stock market shows slight improvement while the dollar shows slight devaluation. In an economy where the currency is continuously losing value (albeit at a decreasing rate) and the fiscal situation shows signs of serious deterioration, one would expect the dollar to be re-valuing against the local currency. One has to wonder if the Central Bank is not selling off dollars to increase local quantity supplied to keep the forex rate from rising. This will create other problems later when it comes time to finance the deficit, especially now that Brazil is now part of the “junk” category of the credit agencies and is likely to experience further reductions of its ratings.

The political cost

On another subject I raised a few days ago: the question of whether Brazil should have a parliamentary system of government instead of a presidential one has hit the press. This is one of the favorite topics of possible presidential candidate José Serra.

The press constantly refers to rendering the titular head of state to the figurehead role attributed to the Queen of England. However, the Queen of England is far from being just a symbol. She is actively involved in matters of state, consults with her prime minister on a regular basis and he pays attention to her observations. She does not just run around kissing babies and cutting ribbons. She takes her role as monarch seriously and I have that from solid sources. Brazil’s past attempts at a “hybrid” parliamentary system have proved disastrous.

My argument is that every system needs the checks and balances appropriate to its form, without which in a parliamentary system you could wind up with a vote of “no confidence” every 6 months such that you might need a revolving door on the prime minister’s office.

It’s also a rather useless debate in the current context of things but one which presidential candidates (most especially Serra) enjoy raising in presidential elections. (Another popular but useless debate that attracts the gadflies is whether Brazil should re-establish a monarchy under the direction of the remnants of the royal family that ran Brazil for 489 years! Yawn!, but good for some comic relief!)

So, here we sit awaiting now the results of the latest battle in the War of the Kleptocrats. The “traditionals” have rallied and the “neos” are on the run.

Have a drink and relax! Paraphrasing Yogi, the game’s not over until it’s over! You've got a lot of scenario material to work with.

I’ll keep you informed as we go!

Jim

BRAZIL-A slice of life!

A personal example

I generally do not provide details of my private and misspent youth in my blog except to refer to it on occasion. However, my previous blog post can be easily contextualized by the following “blast from the past”:

When living in North Carolina and at the tender age of about 17, I took a job on a truck delivering carpet for installation by my colleague, a large and physically strong black guy who could toss the carpet rolls into the truck by himself!

I learned while working with my colleague, Hazel was his name, that he was dating a girl in my school. We developed a bond.

On one occasion, Hazel told me he was going to meet with his girl friend (my schoolmate) and I should take the truck to a bar on the West side of town where he would meet me after lunch. The bar was almost empty – just one guy shooting some pool in a burgundy-colored silk shirt. Given the hour of the day, the shirt, and his skill at the table, I concluded that he was not necessarily “gainfully employed” and probably made his living as a pool shark.

He also did not appear to be overly friendly or amused by my white face in an otherwise all black bar in an all black neighborhood. He gave me a hostile look and said, “You a soul brother?”

I tried to disarm his hostility with the comment, “Would I be anything else in this bar at this time of day?”

That didn’t help! He looked at me with a little more hostility and said, “I think you don’t like me because I’m black!” (There’s that initial premise!)

Knowing that conflict was imminent, I (rather stupidly) replied, “No, that’s not it at all. I think I would not like you if you were green, blue, purple or any other color!”

He was now totally pissed off and started moving toward me and at his gesture, I grabbed a pool cue for possible defense. When I grabbed the cue, he reached in his pocket and pulled out a razor. Now, I am neither foolishly brave nor stupid, but I knew enough to know that I was either going to die or sport a very ugly scar after that day.

Fortunately, another patron entered the bar and yelled, “WHAT THE FUCK IS THIS???!! My antagonist replied, “I’m gonna cut this honky, Hazel!”

Hazel knew the guy! And the guy was afraid of Hazel! He said, in a calm voice, “You ain’t gonna cut no friend of mine. He was waitin’ for me.”

The guy apologized to Hazel (not to me!). Hazel simply said, “Let’s get outta here!” and we quietly left. He said nothing further after I thanked him and we went off to deliver our carpet.

My point is that some situations are simply inevitable when mutually exclusive options are concerned. The truth is no more useful than an explanation, an outright lie, or an attempted negotiation in such a situation. My antagonist’s initial premise took over and there was nothing more to say. (My motive for my wise-ass answer was just to not let the challenge go unanswered – dumb, but I am from New Jersey!) Hazel’s arrival “impeached” any further action that day. 

I never tested my hypothesis further by returning to that bar!!

Sorry  for waxing personal!

BRAZIL-An impeachment trial is now likely

Is it really due solely to incompetence?

Try to imagine that you are a member of a left-wing political movement that seeks to establish a leftist authoritarian regime in Brazil. Your assignment is to make it possible.

What do you have to do?

If you follow the precepts of Lenin, Che Guevara, Régis Debray, or even ideologically neutral Saul Alinsky (Alinsky, by his own admission simply likes the game and how it is played) you must first tear down the existing power structure. 

Here are the basic rules of engagement:

• Your basic premise is that the system is wrong. There is nothing to debate. Whatever is proposed in defense of the system is, by  premise, wrong!
• Your objective is not to seek accommodation but rather to replacethe existing order with your own.
• If there is a strong private sector it has to be brought to its kneesso it is not able to thwart your plans to control its activities, its profits or its power.
• If there is a legislature, it must be compromised by whatever means works; corruption, stacking the legislature with your own people, blackmail, etc. You cannot allow your initiatives to be subject to debate or any other form of questioning. As stated in item 1, whatever the interests of those in power, they are wrong (by definition). That is your initial premise. The US Black Panthers in the 80s used this approach effectively: “You’re saying that because you’re white!” All debate ends at that point, unless you get sucked in to explaining that you are not white, which is clearly impossible if you are white!
• You must have a “Messiah” of the movement. This should be someone who can effectively talk to and claim to represent those you want to follow you. The “Messiah” must be able to rally the masses. He can foment fear, anger, hatred, frustration, or whatever it takes to ensure that the actions and reactions of the elite are perceived as hypocritical, self-serving, and patronizing. He should present himself always as “a man of the people”.
• You must constantly use the system against itself. Every system is designed to meet the needs and plans of its founders. When the USA was founded on the principal that all men are created equal, negroes were counted in the 1973 Constitutional Convention each as 3/5 of a person! So, some were 40% moreequal than others (by law). (Ironically, that decision was designed to avoid giving the slave-holding Southern States a disproportionately largerepresentation in the House of Representatives, and therefore considered a “do gooder” compromise! It was a two-edged sword that came back to haunt the US; First it did not thwart Southern dominance in the legislature, the South controlled it anyway until 1861. Second, when slavery was repealed in 1865 a “backlash” of frustration and anger on the part of former slaves and legislation to disenfranchise blacks in the South caused other problems for over one hundred years).
• Any and all actions by the Judiciary to thwart the actions of the movement must be challenged and the Judiciary weakened by whatever means possible – again corruption, the bureaucracy, the legislature, decrees, edicts, legally contesting the Judiciary.
• You must control the machinery of government. You have to fill the bureaucracy with members of your own “team” and your supporters. It doesn’t necessarily matter in the beginning at what level your loyalists operate or even if they are competent to perform their jobs. They are your "useful idiots". Even cleaning personnel and servants can gain access to information which you can use to gain actionable intelligence to anticipate the actions of the “opposition”. Many an ambassador has been betrayed by a butler; an executive by a secretary; a politician by a housekeeper or a gardener, etc. (And remember Edward Snowden?) The higher up your loyalists are in the hierarchy, the more effective your actions. You build on this network.
• Remember always that your objective is to seize power. “Doing the right thing” in your lexicon means doing whatever it takes to achieve that objective.
• Be a victim as necessary. Be prepared to find “devils” “Judases” and “gremlins” everywhere to justify your actions. When things go wrong, pull out the appropriate “devil”, “Judas” or “gremlin” (e.g. a snitch, an external crisis, opponents or unfair laws in the system, etc.)

Analysis:

The foregoing is a summary of some of basic rules for bringing down any system. If the opposing systems are mutually exclusive, no accommodation is possible. Only one can prevail.

For example, if the operational term in  the expressions “left-wing authoritarianism” and “right-wing authoritarianism” is “authoritarianism” (e.g as we saw in the case of So. Korea) there is room for negotiation. However, if the operational words are “left-wing” or “right-wing” they are mutually exclusive and negotiations are useless. Right and left are mutually exclusive in the brain (each side has a particular function although even there they do negotiate via synapses), most certainly in traffic (where driving in the wrong lane can prove disastrous) and most assuredly in politics (whenever “us” vs. “them” rhetoric prevails).

Every ordered system contains the seeds of its own destruction if only because of the Law of Entropy that says all order tends to disorder. (See my post entitled “Why do we manage anything?) Some systems go beyond the Law of Entropy and its founders cynically build in what serves their immediate objectives with little or no consideration for the risk involved.

That’s where YOU come in! As a “manager”, “executive”, "CEO”, “Executive VP” etc. you have to be attentive not just to the entropic dynamic but also to whatever might go wrong in the short run. For example, cutting wages of production workers might be a good short-term expediency to improve results. However, if the improvement leads to buying the directors a fleet of new BMWs, you might find that the wage reductions could lead to a worsening of results somewhat later rather than a sustainable improvement.

The short-term expediencies of the administration in Brazil have begun to converge in an acceleration of entropy combined with self-destructive decisions that has brought the system to almost total paralysis.

My hypothesis that there has always been a “method to the madness”, which I have mentioned numerous times in this blog, seems to be justified by the administration's applications of the rules of engagement mentioned above.

Can you think of any one of those rules of engagement that the PT has not employed to “creatively destroy” the current system in preparation for the imposition of the “New Economic Framework” envisioned by Dilma and her apparatchiks?

I continue to argue that the administration knew exactly what it was doing and was not incompetent when it came to tearing down the system. It was only incompetent in the execution of certain tactics. It lost a few battles but has not yet lost the war.

And it won’t all be over with impeachment – no matter how that effort works out!

There is going to be conflict - it could be of short or long duration - but it will occur.

Be prepared! (Being from New Jersey helps!!)

BRAZIL-What a mess!

Whaddya mean “quit”?! I haven’t even begun to work my mojo!!

The PMDB is scheduled to decide on whether it remains an ally in the PT coalition or formally breaks with the party.

There are 7 PMDB ministers in the Presidential Cabinet in rather important positions: Mines & Energy; Health; Agriculture; Science & Technology; Tourism; Civil Aviation; and Ports. In addition, there are most certainly a few hundred second and third tier public sector management positions occupied by PMDB appointees.

Dilma, in fact, was reported to already be discussing with other parties to appoint their personnel to those slots in exchange for their support re the question of impeachment. (How crazy is that? She could be facing impeachment in a month or so! The new appointees will have to be quick to benefit from their appointments!!)

The seven cabinet officers will also be expected to step down and some have already indicated that they are not terribly (and understandedly) keen to lose their posts.

I have to admit that it is a surprise that Brazil is even standing under its current circumstances. 

If you have some projects pending in the lower management echelons of the federal bureaucracy, you might prepare for even longer delays for approvals, etc. Gotta get the old rascals out and some new rascals in!

BRAZIL-Oh yeah, well he's not so perfect, you know?

The ego factor

An attorney friend of mine mentioned that Judge Sergio Moro’s fame has begun to produce some envy among his judicial colleagues. 

My friend’s observation was borne out by a press report today that in a 2010 case involving fraud, Moro was reported to have gone a bit overboard in his prosecution of some malefactors and some of his decisions were overturned in appeal to higher courts.

Since this has yet to happen in the Lava Jato investigation, you can’t help but wonder why this is being discussed. Might it have something to do with the fact that Moro was ranked 13^th in a list of the world’s most influential people?

Moro would do well to operate “in the background” for a while. 

Something happens when Brazilians achieve international acclaim, whether they be actors, physicians, or whatever. Playwright Nelson Rodrigues might be inclined to say it comes with what he once called Brazil’s “mongrel dog complex”.

BRAZIL-Now that's really pushing it!

Lula declares war!

Comparing himself to Vietnamese General Vo Nguyen Giap, Commander of the People’s Army of Vietnam and nicknamed the “Red Napoleon”, Lula was quoted in today’s press that he has declared war on the Lava-Jato investigators.

The comments were made in a conversation with Senator Lindbergh Faria (PT-RJ) who expressed his support and said that Lula could count him “in”.

On the heels of my blog post yesterday, Lula’s declaration makes me look prophetic! (Except for the “Giap” part) His reference to Giap suggests that he is at least thinking of guerrilla operations as an alternative.

Because Lula waxes “tough” in an on-again-off-again manner, it is not possible to know when he is serious and when he is playing to the grandstand. Nevertheless, I would not dismiss his declaration out of hand. Some of the more pugnacious hardliners in the PT might just think victory is possible if they choose to attack the system with violence.

It certainly won’t be good for business.

And the bombastic comparison to Giap, considered a brilliant military strategist, was a real stretch!!

In any case, I recommend you have a serious conversation with your security team. As I suggested in a previous post, if Dilma is impeached neither she nor Lula have anywhere to go!

BRAZIL-Possibly coming soon to a theater near you!

Presumably you are fully prepared

We can expect to see a lot of “stuff” hitting the fan over the next 30 to 45 days. I think we have covered most of the outcomes over the past few months so I hope you have built your scenarios.

Consider the following possible outcomes:

Dilma will not face impeachment charges. 

• She will marshal the votes in the Lower Chamber to defeat the motion to impeach; (End of story)

Dilma will not marshal the votes in the Lower Chamber and the motion will move to the Senate.

• She will marshal support in the Senate to file the motion and will not suffer an impeachment trial;
• She will not get sufficient support in the Senate to kill the motion and an impeachment trial will follow;
• Vice-President Michel Temer will assume the presidency during the impeachment trial;
• Temer’s party has indicated that it will break its alliance with the PT and that is likely to lead to defections of other “fringe” parties anxious to be on the side that’s winning;
• Senate President Renan Calheiros (PMDB) will have to decide whether he wants to oppose Temer and be the leader of a PMDB splinter group or will side with the party if it decides to end the relationship with the PT.

Dilma will be impeached

• Michel Temer will assume the presidency for the rest of Dilma’s term (some 32 months currently)
• The PT will go “bananas” and take to the streets, perhaps with violence (the MTST has already suggested that it set Brazil on fire!)

Dilma “walks” from her impeachment trial and reassumes the Presidency

• The PT will launch a campaign against Lava-Jato;
• The PT will conduct a witch hunt of its enemies;
• The populist policies will continue to the detriment of the deficit;
• Lula will finally get his cabinet post;
• Dilma might commute the jail sentences of those imprisoned by Lava-Jato.

Analysis:

If Dilma is impeached you can rest assured that political and social chaos will follow. The PT hardliners (CUT, MST, MTST) can be expected to take to the streets and employ violence if necessary. Lava Jato investigations will continue and Lula and Dilma will be fanning the flames of a "popular revolution" . Remember that the PT's project is to remain in power in perpetuity - i.e. to make Brazil a one-party system.

It is unlikely that the PT's support groups cited in the previous paragraph will have the will or the firepower to initiate and carry out a "popular revolution". Most of the participants in their demonstrations were paid to be involved. (Getting R$50 and a sandwich is one thing, getting shot or clubbed is quite another). If the PT cannot foment a "popular revolution" I do not rule out the possiblity of a core group of supporters to carry out urban guerrilla actions, sabotage factory production lines, promote strikes, bus burnings, and other such acts of "mass disruption". (This is familiar territory for Dilma from her earlier years.)

You might want to grab a history book or check on the Internet for the methods used by Lenin to undermine the Provisional Government in Russia and promote the October Revolution that ushered in the Bolsheviks. I also suggest you review some of the tatics of the IRA against the UK such as bombs in public parks (e.g. in abandoned baby carriages, trash containers, etc.) and in shopping centers or other public places. This cannot be ruled out.

Watch events very carefully and expect the worst. If if does not happen, hooray! But if it does, you will be prepared.

BRAZIL-Time to go WHERE?

The Economist has it wrong!

Telling Dilma Rousseff to renounce the presidency is tantamount to telling the Pope to renounce Catholicism! He simply cannot do it, and neither can she. Dilma operates from a set of deeply held convictions that cannot be shaken even by the protests of 5 million Brazilians.

I remember a conversation I had with one of Brazil's managing generals during the military regimes. We had visited a small town in the poverty-striken Northeast where he received a long line of people seeking help on one matter or another, ranging from requesting the hospitalization of a relative, to supporting the enlistment of a son into the military, a social security pension, etc. I foolishly remarked that it would be interesting if all those people had the means to achieve their objectives without intercession. He flashed a hard look at me and said "These people don't know what they want!" Persisting in my foolishness, I argued that I was the grandson of an Irish-American coal miner who had a third grade education, was orphaned at the age of 8 or 9 and went to work in the anthracite coal mines of Eastern Pennsylvania.  I added that while he was an ignorant man, he was far from stupid and pursued his life on his own terms. He knew what he wanted.

His brother became a dedicated Communist and Labor Union Organizer, fought against Franco in the Spanish Civil War, and on his deathbed said that if he had his life to live over, he would do the same damned thing! He, too, knew what he wanted.

I don't often disagree with The Economist (except when it treats the US as if it were still a British colony) but the suggestion that Dilma renounce the presidency is simply a non-starter. To do so would be to abandon a set of core convictions and fundamental premises on which her logic and life are built.

Like my friend the general, Dilma seems to believe that "the people" need to be guided and told what they want. The difference between an authoritarian and a liberal is that while the liberal embraces the freedom to choose the authoritarian seems to believe that freedom is so precious that it has to be "rationed" or it will be "used up".

There is, of course, a place for authoritarianism. The military is the prime example. Soldiers are taught (even brainwashed) into thinking collectively (i.e. protecting the "group"). When one is being shot at, the "normal" reaction is to hightail it in the opposite direction. Running foward into a hail of bullets is totally counter-intuitive and one must be trained to do it. I still remember my training sergeant telling me in a loud voice, "Wygand, when the US Army wants you to have an opinion, it will issue one to you!"

However, Adam Smith told us a couple of centuries ago that Man is directed by self-interest. He is inclined to "truck, barter, and trade" to achieve his objectives. Even the most ignorant among us knows what he wants and needs to survive and, as possible, prosper.

All that is needed for that to happen is an agreed-upon set of values and acceptable behaviors and the freedom to choose one's options subject to those constraints and Man will do the rest. It doesn't always work as desired or planned, but what does?

Because Dilma Rousseff appears to not accept that fundamental premise, she cannot be expected to think she has failed. And if she doesn't think she has failed, she has no reason to renounce the presidency.

So, unless Dilma is struck by some blinding flash of lucidity or like Saul, struck down on the road to Damascus and immediately converted, exhortations to "do the right thing" and resign are useless. She appears to believe that she is doing the right thing - the complaints of 5 million citizens notwithstandong.

BRAZIL-The inconvenient question

What if she "walks"?

There are three ways Dilma Rousseff can be removed from office. One is through the annulment of the 2014 elections by the Superior Electoral Court (TSE). The second is through an impeachment trial. Neither offers a certain outsome. The fhird is that Dilma could simply renounce her office. Yesterrday she categorically dismissed  the third option in an aggressive press conference. The TSE could conclude that there is insufficient hard evidence to justify cancelling an election. The impeachment process requires three steps:

• Peparation and approval by the Lower Chamber of the charges to be submitted to the Senate;
• Acceptance by the Senate of the charges of the Lower Chamber
• An impeachment trial

If the Lower Chamber's document is "weak" as regards the existence of an impeachable offense, it could be rejected in plenary session.

According to the Supreme Court ruling regarding impeachment proceedings, the Senate could simply reject the Lower Court document and there will be no trial.

If there is an impeachment trial, Dilma could be acquitted of the charges and return to office.

Many a horse race has been won by some 16-to-1 long shot.that suddenly spurts ahead in the home stretch to cross the finish line ahead of the pack.

You should definitely consider the possibility in your scenarios.

Let's look at the actors:

• Eduardo Cunha (President of the Lower Chamber)::The Lower Chamber's report is put together by a Special Committee which has been hand-picked by Dilma's nemesis: Eduardo Cunha (President of the Chamber). The committee's report must be approved by a 2/3 majority in the Chamber before being submitted to the Senate. Cunha is facing charges in both a Congressional Inquiry of the Ethics Committe of the Chamber that could lead in the worst case (for him) to the loss of his mandate, and in the Lava-Jato investigaetion. Some time ago he was reported to have talked to Dilma about tying up impeachment  charges in procedural wranglings in exchange for efforts to get him off the hook. When it appeared unlikely that Dilma could deliver on his reported request, he assumed the opposite approach and began to assemble evidence for her impeachment. 
• Renan Calheiros (President of the Senate): The Senate can simply override the recommendations for impeachment as submitted by the Lower Chamber and reject the document. Calheiros has been an on-again-off-again spporter of Dilma and has threatened on occasion to split the PMDB (his party and the party of the vice presdient, Michel Temer who would assume office if Dilma is impeached). With 6 cabinet appointments the PMDB is divided on the issue of impeachment.
• The Supreme Court: The Court oversees the impeachment trial that is conducted by the Senate. Dilma has been reported to have said that she has 5 of the Supreme Court Justices "in her pocket" so the possibility of her acquittal exists. 

So, at each juncture, it would appear that there is the possibility that Dilma could find herself back in the presidential palace after what is likely to be a very nasty trial. Her personality profile and the PT's traditional "grace" following a victory suggest that an acquittal will be followed by a vicious witch hunt of the PT's "enemies".

One has only to look at the actions of the so-called Commission of Truth that conducted a witch hunt of the military for "crimes against humanity" of torture and murder in spite of an amnesty law that dates back to the 80s.

It should also be remembered that the guerrilla movement to which Dilma associated was not organized to restore democracy usurped by a right-wing authoritarian regime. It was to replace the right-wing authoritarian regime with a left-wing authoritarian regime.

Her past behaviors notwithstanding, her current behavior also begs the question of why when faced with one policy failure after another over 5 years she continues to espouse the same failed policies. Together with Lula she has masterfully controlled the legislature to the point of gridlock. If she can't get she wants she can at least ensure that no else (including 68% of the population and her lowest popularity rating on record) can get what they want. While she can't govern, no one else can either.

Her apparently "stage-managed" differences with Lula appear to be largely regarding superficial issues such as protecting herself against charges of corruption. She continues to come to Lula's rescue or do his bidding on a regular basis.

Her behavior suggests that either she is simply incapable of recognizing her policy failures or she recognizes them as part of the process of imposing the "New Economic Framework" that has never been discussed with the electorate but that is apparently predicated on the PT remaining in power in perpetuity. Note also, that she and Lula have continued to attempt to dismantle Lava-Jato in spite of its popularity among the voters and demands for its continuation and its successes against corruption.

Consequently, I consider it germane to include a scenario (however improbable it might seem) that is based on Dilma's return to office after escaping impeachment. I have not seen or heard this issue raised in the press or by the analysts and pundits who seem to think impeachment is a foregone conclusion.

It just might not be that simple!

BRAZIL-Coming into the home stretch

Negotiating the post-war peace

 The "traditional" kleptocrats have begun to negotiate the political spoils of the Kleptocrat War. Vice-President Michel Temer and José Serra, likely (and perennial) candidate to the presidency, have been negotiating the terms and conditions of their return to power.

According to today's press, Serra wants Temer to commit to not running for re-election in 2018 if Dilma is impeached and Temer assumes the presidency for the next two years. Serra also wants to ensure that if the PMDB (Temer) replaces Dilma for the next couple of years, it will not engage in a "witch hunt"(whatever that is supposed to mean! I presume it means that the PSDB (Serra) will not be denied a seat at the "rents banquet" of the traditional kleptocrats!)

The necessary preparations for requesting Dilma's impeachment have been completed and will soon be placed for a vote in the Lower Chamber and if passed, will be submitted to the Senate for approval.

It does not appear likely that the PT can marshal the votes to defeat the motion in the Lower Chamber and Senate President Renan Calheiros, who has been keeping a foot in each canoe, now seems likely to accept the motion. Michel Temer will then ascend to the Presidency pending Dilma's impeachment trial.

Lula continues unemployed following the second cancellation of his nomination to the Cabinet. If Dilma is impeached, Lula's appointment is toast.

The current race is a bit like the first race (Preakness Stakes) in the Triple Crown contest that ends with the Kentucky Derby. It looks likely that the traditional kleptocrats will cross the finish line first in the first race. Next will be another race (Belmont Stakes) between and among the "traditionals" and more of the quid pro quo bargaining that has characterized the Brazilian political system for decades.

Lava-Jato will continue to ferret out the "bad guys" so when the next race is run, the field might be a bit smaller than expected.

By the time of the final race (the Derby) there might have been a further weeding out of thieves so it's possible the race could be run with a relatively and unprecedented large share of "honest brokers".

As I have mentioned in previous blog posts, the winner of the first race will necessarily be a kleptocrat from one or the other side. The second race will be among those who emerged victorious in the first, and perhaps a few "long shots". If the Derby also contains a few "long shots", the winner could be a "non-kleptocrat"..

Juzt an aside: Be prepared for the traditional discussion in the 2018 elections of what form of government is best for Brazil. This is a regular debate at every presidential election that generally includes the possible restoration of the monarchy, approving a parliamentary system, or keeping the current presidential model. The regular proponent of the parliamentary system is José Serra who has already mentioned its "advantages" by allowing the replacement of an inept prime minister without the trauma of an impeachment trial of a president. It apparently never occurs to Serra that without the appropriate institutional arrangements and safeguards, Brazil might wind up conducting a "no confidence" vote every two weeks. You'd think that after 500 years, Brazil would have decided at least on its choice of form of government!

I must confess that it is also a bit boring to always see the same cast of characters in Brazilian politics.. It's  not unlike those ubiquitous high school class reunions at which all the people you knew years ago still look like they did when they were kids, but older, fatter and balder. (Yawn!)

I emphasize that you should not rule out the issue of street violence if the PT is squashed over the next couple of months. There are no signs that Dilma or Lula will retreat gently into that dark night of political oblivion.

BRAZIL-A shot across the bow of the ship of state.

"Suspected leaks will be punished immediately!"

This was the message from the new Minister of Justice. He indicated that any information leak regarding a Lava-Jato invetigation by the Federal Police will result in the immediate removal of the entire investigative team prior to an investigation of the leak. The Minister added that it is sufficient that he simply suspect a leak for him to take said action.

The new Minister is reportedly sympathetic to the PT and his statement so indicates. The Federal Police responded in kind with the statement that any such action will be met with legal, and if necessary extra-legal measures to enture the entity's right to independently investigate crime.

The spokesman for the Feds emphasized that any suspicion of leaking information will be rigorously investigated and the party or parties responsible held accountable but it does not accept summary dismissal of an entire team on the basis of a suspicion.

It's clear that the Minister's statement is designed to weaken Lava-Jato and put pressure on Judge Sergio Moro and if the Minister acts on his promise, you can expect trouble both on the streets and within the Justice Ministry.

It is not a coincidence that this statement comes precisely at a time when the case against former President Lula has been returned to Judge Sergio Moro and one of the issues is whether Lula should be subject to preventive detention pending further charges or dismissal of the case.

Lula remains outside the protective shield of the Supreme Court until such time as his appointment to Dilma's cabinet is confirmed. The appointment was cancelled by a court order currently under analysis by the Supreme Court and a decision is unlikely until aftter the Easter recess - i.e. on or about 29 March. In the meantime, the former President will have to simply sit on pins and needles.

If anything breaks in this matter, I will let you know!

BRAZIL-Jabberwocky at the "front"

She still doesn't understand the difference!

Dilma Rousseff continues to rant and rave about a telephone conversation she had with Lula the content of which made it to the TV.

She keeps saying that the authorities cannot tap the telephone of the President without a Supreme Court order and expresses her indignation loudly and aggressively.

What she has yet to understand is that it is not her telephone that is being tapped. She called Lula and his phone is being tapped - legally!

Now I know we are in the age of "smart phones" but they are not yet smart enough to know to stop listening when someone calls the phone being monitored.. The conversation is recorded because the telephone being monitored was the one called.. Full stop!

Seasoned politician Tancredo Neves was notorious for his comment that no politician should use a telephone for anything other than setting up a luncheon meeting and even then at the "wrong" place.

Meanwhile, Lula has again lost his job - this time after 3 hours following his nomination. His case has been returned to Federal Judge Sergio Moro whose courtroom Lula was trying to avoid. In short, the whole shabby affair of rushing to nominate him so he would not be arrested (on the basis of a poorly written opinion from the São Paulo Public Prosecutor) was simply much ado about nothing. He's right back where he started!

As for Dilma, she now has 9 remaining sessions of the Special Lower Chamber Committee on Impeachment to write up her defense. If impeachment proceedings are approved, Vice President Michel Temer will assume the Presidency (for 6 months) during her trial. Temer is miffed and smells blood in the water. Neither Dilma nor Lula could come off well if Temer takes over.

The next 30 to 45 days could prove "interesting".

BRAZIL-Bulletin from the "front"

Pressure building

The demonstratations have been steadily increasing in size as well as in incendiary rhetoric. Roughly 30 minutes ago, Lula showed up at a downtown demonstration. In the interim periods, Dilma makes the occasional TV apppearance and fans the flames of crowd anger and frustration.

The PT's demands are contradictory. The demonstrators are demanding the "rule of law" and "respect for democracy", neither of which seem to have been violated by the behavior of the Lava-Jato investigations thus far. Dilma demanded an end to the legal wiretaps solicited by the investigators alleging that they are illegal.

There is NO calll for calm or a reduction of tensions. Rather, the rhetoric appears to be deliberately designed in "whip up the crowd".

The PT has made the current situation a "life or death" issue for the party so I suggest you watch events very closely and make sure your crisis management and security teams are at the ready.

The US Consulate closed early today to allow local employees to go home before things get testy.

BRAZIL-Bulletin from the "front"

He got his job back

The court order that cancelled Lula's nomination to the cabinet was rescinded so he is now a cabinet officer. However, there are several other writs still out there in various venues. (It might be a good idea to put a revolving door on his office).

To address the plethora of writs and ensure that the jurisprudence is the same for all of them, the Supreme Court has been asked to look at them together to assess the merit of all or each.

However, there are still complications because at least for the time being, the investigation that the PT wanted to get out of Lava-Jato Judge Sergio Moro's courtroom was reportedly sent back to Moro. So the whole exercise to keep Lula from getting arrested was apparently in vain. Moro had never asked for Lula's arrest in the first place. (Yawn!)

The analysts suggest that the court does not want to antagonize either side of the issue by complicating things and will probably allow Dilma to have her "able assistant" and "mentor" help her govern Brazil until such time as her impeachment is considered.

To cap the confusion, Finance Minister Nelson Barbosa appeared on TV to exhort the politicians to pay some attention now to economic policy.

(Fat chance!)

Most analysts figure it will take another 30 to 60 days just to work out the political and legal problems. Now would be a good time for Nelson to work on that New Economic Framework that he developed for Brazil - do some debugging kind of stuff or break out one of those elaborate coloring books for grown-ups!

Meanwhile, protestors on both sides (anti-PT and pro-Dilma) continue to occupy the streets in a potentially explosive situation. The police had to remove the anti-PT protestors on Avenida Paulista with water cannons and tear gas.

Don't miss the next exciting chapter of this Brazilian Soap Opera!

BRAZIL-URGENT NOTE

NEWS FROM THE TALKING HEADS

The press has just now (10:30 hours local time) reported a conversation between PT president Rui Falcão and Jaques Wagner to the effect that the PT is in a turmoil and wants the court orders (now 20 in all in various jurisdictions)  that suspended Lula's appointment (see previous blog) rescinded ASAP.

He advised Wagner that the party has been mobilized and spoiling for a fight.

You might want to activate your security personnel and advise parent company and keep your TV turned on!

BRAZIL-The forty-minute cabinet minister

Wow, that was quick!

Yesterday, Dilma Rousseff officially appointed her new cabinet ministers, one of which was former President Lula.

The ceremony was marked by a pugnacious and defiant speech that, as usual, painted the PT as the victim of a coup. Dilma claimed that democracy was being held in check by a group of “malefactors” and conspirators and promised to “fight” to end the “misery”.

(You should make sure you heard the entire speech and plan your scenarios accordingly!)

Lula’s glory was short-lived. Forty minutes after his nomination a court order suspended his appointment and at least for the time being, he is still not a member of the cabinet. The PT has challenged the order and as yet there is no indication as to how long it could take for the challenge to be adjudicated.

Protestors on both sides of the issue are camped out throughout the country. The Special Committee to consider Dilma's impeachment was set up today to analyze the charges to be presented for her impeachment. She can actually start preparing her defense if she wants to.

Tension runs high and a few minor fights have broken out on the street but no major confrontations have yet occurred.

So far, all of the fighting has been in the form of legal wrangling. Over the next 30 days a lot could happen, so be prepared. I have laid out some extreme scenario material in previous posts and I recommend that you review them with your management team.

Analysis:

Without going into the “numbers”, party defections, changing positions of key actors, etc. I suspect that tensions will increase markedly.

It is a maxim of warfare that you should never engage an enemy whose back is to the sea. The soldiers will fight harder knowing that they have no way out of the dilemma.

During the 80s and 90s executives read books on military strategy – e.g. The Art of War by Sun Tzu, or A Book of Five Rings by Miyamoto Musashi. You might want to see if you still have copies of those books on your bookshelf!

There is little doubt that the PT is positioned with its back to the sea. The odds now favor Dilma’s impeachment and that will usher in the PMDB that will have little to gain from re-approximating with the PT. 

I do not expect the PT (read Lula) to “gently into the dark night” of political oblivion and Dilma’s rhetoric suggests that he (and she) won’t.

Sun Tzu writes that in times of peace one should prepare for war and in times of war one should prepare for peace. 

I argued some time ago in this blog that I thought (and think still) that Brazil needs A PT. But I also argued at the time that it did not need THISPT.

Going forward, a lot will depend on how the PT rank-and-file perceive the party’s options. It could choose to stand and fight beside Lula, or it could choose to adapt, regroup and play by the rules of institutional democracy. You need to consider both alternatives.

I confess that I am NOT an optimist when it comes to bar fights!