Brazil in Crisis: March 2016 Special Report

petrobras-scandal

Latin America Correspondent – Sam Farnan

Executive Summary

Brazil’s unfolding corruption scandal between large construction firms, the state-controlled oil corporation Petrobras, and renowned public servants highlights a troubling step backwards for a nation that was considered by many to be an up-and-coming global player.

Discussion

The now infamous Petrobras corruption scandal that has sparked riots by millions of Brazilians over the past two weeks continues to worsen with each passing day. For Dilma Rouseff, Brazil’s President, this crisis couldn’t have come at a more inopportune time. With more than two-thirds of Brazilians calling for her impeachment, it is worth examining how Brazil, the “B” of the touted BRIC nations has arrived at this point and the potential political consequences.

The scandal began in the early 2000s with various private construction firms in Brazil scamming and inflating Petrobras contracts. This took place with a few influential public servants in the Brazilian government and the state-controlled oil company, Petrobras. What ensued was more than a decade of bribery and corruption totaling more than $5 billion in embezzled funds. As prosecutors began to dig deeper following an initial round of arrests for money laundering in 2014, the depth of corruption within Brazil’s ruling elite was explosively uncovered. Considering the fact Brazil’s economy is in the most severe recession in a century, millions of financially stricken Brazilians have taken to the streets this March outraged, demanding that President Rousseff resign. Adding to their anger, Rousseff was also the head of Petrobras from 2003 to 2010, raising many eyebrows of her potential involvement in the scandal.

A broader factor to consider is that Rousseff and her predecessor, Luiz Inacio Lula da Silva were elected as candidates from the leftist Workers Party or “PT”. The PT was viewed as a more ethical and transparent alternative to Brazil’s former military dictatorship and sold itself on aiding the poorer echelons of Brazilian society. Last week the scandal intensified with former President Lula da Silva attempting to avoid prosecution and a series of contradicting court decisions regarding his appointment. The PT’s reputation is now tarnished in the eyes of millions of Brazilians, potentially damning the PT next election cycle. Most recently, Rousseff is now refusing to resign due to what she believes is a “coup attempt”. This serpentine-like web of corruption, its culprits, and the chants from Brazilian citizens will likely remain a center-stage in the country for some time with no real resolution being

Analytic Confidence

Analytic confidence for this product is moderate. Factors that influence this rating begin with the analyst using no formal structured analytic method and a constant stream of information regarding both the investigation of both the corruption scandal and Brazil’s political scene. The analyst worked alone and was on a short timeframe but source reliability is moderate.

Sources:

http://www.ft.com/cms/s/0/dcf30746-eeb6-11e5-a609-e9f2438ee05b.html#axzz43VBFbKdZ

http://www.vox.com/2016/3/18/11260924/petrobras-brazil

http://www.theguardian.com/world/2016/mar/17/release-tapped-phone-calls-lula-rousseff-deepens-brazil-chaos

http://www.cnn.com/2016/03/18/americas/brazil-lula-rousseff/

http://www.ibtimes.com/brazil-petrobras-scandal-president-rousseff-threatens-sue-senator-over-corruption-2339703

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