BRAZIL- Gearing up for "Gettysburg"

The final battle looms

The antagonists are lining up their respective orders of battle for the final official confrontation in the War of the Kleptocrats. I have alluded to the Battle of Gettysburg in the US Civil War because over a hundred years later the losing Confederacy was still characterized by cries of “The South Shall Rise Again” and the playing of the Confederate national anthem, “Dixie” at public events. 

I fully expect that the PT will exhibit a similar obstinacy with its expected loss in the impeachment process and its allusions to a Brazilian Civil War based on class differences and conspiracy. (Where is an Abraham Lincoln when he is needed?)

In any case, when it’s all over only one group of kleptocrats will be left standing!

Unable to halt the attrition of allied parties in the PT governing coalition, Dilma Rousseff has resorted to seeking support from the international community by referring to a “coup d’édat” in Brazil that holds implications for the survival of “democracy” in South America’s largest country. 

Never mind that her definition of “democracy” appears to include the concept of one-party rule in “perpetuity” that does not seem to fit well with democracy. She has resorted to the tactic employed by former US President Richard Nixon when facing impeachment by repeating, “I am not a crook!”

So far, with the exception of some “Bolivarian” allies, the response in the international press does not suggest that any of its major representatives have warmed up to the allegation of a "coup". 

The articles I’ve seen suggest that the issue is viewed as an internal one to Brazil and while there have been some questions as to the integrity of the accusers, it has also been acknowledged that due process seems to be the rule. 

Moreover, past articles in major publications have also suggested that Brazil’s problems seem to be self-made and thus do not require any sort of “alliances” abroad for dealing with them.

One verbal report I received from a source indicated that a representative of the PT held a closed door meeting with some “Wall Streeters” to request that they lobby with the US government to soft-pedal its “line” re the PT on the issues of corruption and impeachment. It’s not clear how that turned out and anyway, US attentions appear to be directed elsewhere (e.g. Europe, migration, dealing with terrorists, and the TPP with selected Asian countries) rather than on Brazil.

Lula is busy fanning the flames of the social movement groups that support the PT (Union Members of CUT, MTST, MST, University Student Groups, et al.) to protest the impeachment proceedings and the alleged “coup”.

Lula has also taken to attacking Vice-President Temer for being a “traitor” and conspiring with the most “repugnant” members of Brazil’s “conspiratorial elites”. Never mind that the party of “repugnant”, “conspiring”, “treasonous” politicians was instrumental to the PT’s initiatives for the past 13 years as members of its governing coalition. (The betrayed is always the last to know, I guess!)

Meanwhile, and as I write this post, the PT members of the Special Senate Commission on impeachment are arguing about who will report the results of their deliberations out of committee with recommendations to the Senate body for an eventual trial.

If the Commission recommends that the trial take place, Dilma will have to vacate the office of President for up to 180 days.

It will require 54 votes in a plenary session in the Senate to impeach and remove her from office and today’s published “scoreboard” suggests that there are already 50 in favor of impeachment.

Meanwhile, over in the PMDB camp, Vice-President Temer is preparing for the rigors of office in the Presidency if he should have to stand in for Dilma or even eventually substitute for Dilma until 2018 when her term of office expires.

He has indicated a number of measures he intends to pursue and some of the people he plans to nominate them to execute the measures.

• In the area of finance, he has approached former Central Bank president Henrique Meirelles to be his Finance Minister when and if he assumes office. Meirelles was reported to discuss the matter again once the Commission decides on whether Dilma will have to leave office temporarily or for good. He was also reported to have demanded that he have his own financial team in place.
• Temer reportedly has other candidates in mind if Meirelles should decide against the job but Meirelles appears to be ideal candidate. He was Lula’s Central Bank president for 8 years so Lula will find it difficult to now refer to him as “repugnant”. (Although few seem to think it beyond Lula to do so!)
• Temer has also promised to continue with the administration’s social programs but he appears to have it in mind to clean them up of crony appointments and benefits payments to those not truly in need and are “gaming” the system.
• He announced plans to audit the state-owned banks for the 13-year period the PT has been in power to identify any areas that need “cleaning up” and/or require remedial measures to avoid problems in the future.
• He is also trying to build a legislative base of support for whatever initiatives might be required to implement his plans to stabilize the fiscal accounts, generate investor confidence, and at the very least hold back the floodwaters that are rising in the economy and to break the political log jam that allows them to continue to rise.
• Finally, he is putting together an “x-ray” of the political and economic situations to let the voting public know what he is up against so as to not generate expectations he cannot possibly address.

Analysis:

I suspect that Temer will be a bit surprised at the depth of the hole the PT has dug in the economy. There have been a few references in the press first to the “creative accounting” issues and the use of the public banks to effect them. There have also been references to some of the “normal” commercial operations of the BNDES and Caixa Economica and the amount of bad debt on their books. Thorough audits are clearly in order and the results will probably be rather unpleasant.

The PT’s dominant strategy has been reduced to “delaying” things for as long as possible. 

• The first step is to delay the decision of the Special Senate Commission for as long as it appears that the commission is likely to approve recommending an impeachment trial in the Senate. The Commission has ten days to report its finding and a 41-member quorum is necessary to obtain a vote. I don’t rule out attempts by the PT to deny a quorum if that should be possible.
• The second step is that if an impeachment trial ensues, trying to drag it out beyond 180 days after which Dilma is automatically acquitted and returns to the presidency. In the meantime, the PT is reported to be considering the possibility of a “parallel” quasi-government (While 180 days might be a relatively short time for a trial, it’s a long time in politics to try to ensure a hold on and a return to power.)
• Street confrontations (mostly pushing and shoving for the time being) have begun between those supporting Dilma and those clamoring for her impeachment. If a trial ensues, such confrontations will become more frequent and possibly more violent. You should also not rule out the possibility that opposition to Dilma’s impeachment will enter your facilities in the form of strikes, sabotage of production, and even threats to employees. Keep your eyes peeled for such activities. One PT member (Lindbergh Faria-RJ) has announced that if Temer assumes office he will not last 3 months if the PT takes to the streets.
• Dilma has argued for a constitutional amendment to hold new elections in October (piggybacking on the municipal elections to be held in that month). Lula is reported to still have a 20% to 25% popularity rating that is tied with that of Marina Silva, former 2014 candidate, whose image the PT systematically “deconstructed” in the campaign. Lula’s rating is somewhat below what the PT has traditionally carried in previous elections (30%) but perhaps enough to make him think he can win. However, a constitutional amendment will require extensive debate and a lengthy approval process in the Legislature and that does not seem to be in the cards.
• In any case, Lula will continue to suggest that the impeachment is being conducted by a “legislative gang” of “the most repugnant group politics has to offer” (as he was quoted today) and Dilma will continue with her Joan of Arc act (which is beginning to take on all the insane characteristics of the original trial that led to Joan being burned at the stake.)

Be prepared for possible business interruptions and violent protests over the next several months. And don’t rule out the possibility of possible covert activities of frustrated members of the PT to disrupt business and instill fear in the workplace.