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World Brazil faces political, economic chaos with an ‘uncertain future’

With the lowest popularity rating of any Brazilian president in 30 years, Dilma Rousseff faces formidible challenges and enemies.

© Ueslei Marcelino / Reuters/REUTERS

Brazil's political and economic crisis deepened through a dramatic week in which the President's popularity and the value of the currency both hit extraordinary low points.

Congress is paralyzed, the ruling coalition has splintered, the economy is in free fall and a powerful clique of opposition politicians seems hellbent on toppling the President regardless of the costs.

The national newspaper Folha de Sao Paulo has begun to put a crimson headline reading "Brazil in Crisis" above related articles – splashing red over much of the paper.

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"We're in a very tense moment with an uncertain future," said Jose Alvaro Moises, a professor of political science at the University of Sao Paulo. "Few people in Brazil feel comfortable saying what might happen in the next months or even the next few days."

One strand of the crisis concerns the economy: There is a recession provoked by the end of a commodity boom, growing unemployment and inflation at its highest rate in a decade. The real hit 3.52 against the U.S. dollar this week, its lowest value in 12 years, and the country's investment grade is imperilled.

The government of President Dilma Rousseff had a plan to revive the economy through fiscal reform. But the austerity proposals have stalled in Congress, where her political enemies have seized an opportunity to try to bring her down. Eduardo Cunha, president of the lower house of Congress, whose party was nominally part of her coalition, has seized on her weakness: He blocked a series of austerity bills, put forward others to increase spending, and opened a series of inquires into government – before publicly disavowing Ms. Rousseff last month.

Two entire parties have left the coalition in the past two days. Brazil's business community, no fan of the President, came out in defence of the government, pleading for stability to try to staunch the economic damage. "It's time to put personal and political ambitions aside and aim to work for Brazil's interest," the federations of industry of Rio and Sao Paulo said in a joint statement on Thursday.

"There is clearly an irrational element to the whole thing," said Fabio Wanderley Reis, professor emeritus of political science at the Federal University of Minas Gerais. "There is no point trying to evaluate the rationality or the legitimacy of the allegations of the opposition, or of the government side, either." Ms. Rousseff has shown herself incapable of uniting the country or even her coalition, he added.

Only 8 per cent of Brazilians now believe that Ms. Rousseff is doing a "good" or "great" job, according to a poll released Thursday by the research institute Datafolha – the lowest figure recorded since the country returned to democracy in 1985. The poll also found that 66 per cent of people believe that Congress should undertake formal proceedings to remove her from office.

The backdrop for all of this is the giant corruption investigation that began at Petrobras, the parastatal energy company, and has spread to include almost every construction firm in the nation and more than 70 politicians from nearly every party. Prosecutors say suppliers paid at least $1.7-billion (U.S.) in bribes to obtain Petrobras contracts and that a percentage of those bribes was funnelled to politicians and political parties.

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Perversely, the corruption investigation can be seen as an indicator of the health of Brazil's democracy – prosecutors and police are investigating powerful figures without interference. But the revelations about the scale of the graft have enraged the public. (Ms. Rousseff was energy minister and thus chair of the Petrobras board during much of the period under investigation.)

And the politicians under investigation have been among her most bitter opponents: Mr. Cunha, for example, is alleged by a key informer to have taken a $5-million bribe.

So the net effect of the inquiry is to strangle, not bolster, the democratic process.

The President is doing her best to remind Brazilians that they elected her, just 10 months ago. "I know what it's like to live in a dictatorship," she said on Friday as she inaugurated a housing project in the Amazon region. "The votes I received are the source of my legitimacy and no one is going to take that away."

Prof. Reis said the opposition, which went into last October's election confident it would defeat Ms. Rousseff, has not recovered from coming within a sliver of taking power, and is obsessed with deposing her at all costs. "Their frustration created a willingness to go to extremes to obtain the result they expected."

Impeachment of the President is now openly discussed in every quarter. Most legal experts agree that there is no case for it: Ms. Rousseff has not been directly implicated in any of the corruption investigations at Petrobras, and could be impeached only for corrupt or criminal actions taken while she was President.

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However, it is Congress, under the leadership of Mr. Cunha, who will decide if the process goes forward. It will require a two-thirds vote from both chambers; at this point Ms. Rousseff still controls the Senate. If both she and her Vice-president were successfully impeached, the country would need to hold new elections (and in the interim, Mr. Cunha would be president).

The only other time Brazil impeached a president, the process took seven months, paralyzing the country.

Prof. Moises, who edits a political website called The Quality of Democracy, said impeachment is a growing likelihood and would, at least, offer a way out of the crisis, but also come with huge costs of its own. "I have to admit I don't see how we are going to get out of this," he said.

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