One of the most disgusting parts of the political process is the constant war of narratives: who gets to tell the story, how, omitting what, and so on. This is why I started writing these articles, to narrate the gist behind the political and economic crisis in Brazil. I hope to counterbalance nearly all journalistic pieces that make it out of the country are either made by left-leaning journalists from Brazil or misinformed American journalists that fail to see the deeper implications of the events they are covering.
This must be said because last week protests were held in Brazil in the wake of new plea bargains that surfaced against president Temer, and were reported similarly as previous protests against former president Dilma, with similar goals, or as if made by the same people. This is wrong.
To explain the situation event by event would require a book to rival Human Action. So let’s get into an overview then zoom into the situation at hand with president Temer.
The Workers Party
The political crisis in Brazil is rooted in an attempt by the Workers Party, a socialist party with a violent background, to maintain themselves on power eternally via bribery and corruption, thus controlling the Legislative and Judicial branches of government. Once such control was achieved the country would be guided much like Venezuela: slowly eroding the legal basis for freedom, concentrating power on the executive and encroaching ever further on people’s lives, until total government would be achieved.
To state it clearly: these socialists and their allies do not have any love for democracy. To them, it’s a convenient tool, a method to slowly gain complete control and destroy the opposition. Democracy in Brazil in fact is a code-word for socialization of something. As an example, the Workers Party proposed a law to “democratize” the media. What does “democratization” mean? State control.
They claim the media is in the hands of a few families, which it is as a consequence of government licenses and restrictions designed long ago by military governments and a fascist dictator to control the media. Their answer is not to abolish such controls and let reign the free-market, but rather to provide state funding to media groups, heavier federal regulation of the media, banning companies from owning different media vehicles, forcing television to show content made by workers unions, and so on.
Which countries inspired this law? Oh those bastions of freedom, development and democracy: Venezuela, Argentina and Ecuador. Unsurprisingly this type of law is exclusively defended by extreme-left parties such as the Communist Party of Brazil.
The gist of the law is: if something is against us, let’s pass a law to smash this group and render control to us, but that’s okay because...democracy. This twisting of speech is really Orwellian in many ways, but needs to be in the mind of anyone who wishes to understand Brazilian politics.
So just what did Operation Carwash uncover? A gigantic system put in place by the Workers Party, headed by former president Lula, to siphon money away from state companies in order to purchase political support. State banks were used to give loans to big companies in order to choose “National Champions,” companies that allegedly were already excellent in their field and the government decided should be even bigger because yay Brazil!
It’s submission of the economic sphere to the political sphere.Extensive legislation was also passed, and later on discovered was in fact sold, to help those companies destroy competition and acquire them with government loans. The bigger plan was to create private sector allies strengthened by the government who would eternally donate to those parties and stop any other economic power from threatening the status-quo. It’s submission of the economic sphere to the political sphere.
To bolster that, economic programs were deployed. The World Cup and the Olympics were brought, and construction companies won tens of billions of Reais in contracts to build useless stadiums and many public works, many of them unnecessary or hopelessly over-budgeted.
Petrobrás launched a gargantuan investment project to drill for oil in ultra-deep waters, all calculated with an inflated WTI barrel price of $100. Many components of that program were forced to be nationally produced, almost always elevating the price tags, but always on contracts with Brazilian companies in bed with government.
On top of it a “Growth Acceleration Program” was launched. Hundreds of billions of Reais all over Brazil for public works, again often over-budgeted beyond belief, years delayed and often useless. Again huge contracts to allied companies, all with a national development cover for justification.
The logic here is painfully simple: the more money government can give via subsidized state bank loans and public spending towards allied companies, the more money would kick back to political agents in order to purchase political support and rule forever.
The final touch was populist programs like subsidized housing, direct money relief, subsidized loans, subsidized college programs to get diplomas in propped up universities created via government decree, subsidized this, that and the other, essentially edging outright vote buying New-Deal style.
This was the economic program in Brazil from 2008 onwards, the classic Misesian boom and bust cycle took over and a huge crisis hit in 2014, from which we still haven’t recovered.
Hand in Cookie Jar
It all went wrong when one Petrobrás director was caught and took a plea bargain spilling the beans. Luckily the investigators were not in the pockets of socialist politicians and went through with the investigation, uncovering a massive corruption scheme inside Petrobrás, with politically appointed directors collecting money for politicians, going all the way up to former president Lula. When the construction company’s owners were arrested, they started talking too.
Behind the scenes, the Workers Party's main ally was performing a political backstab. Many political efforts were made to save them, from leniency laws to using allied media vehicles to accuse investigations of being US-backed efforts to undermine the socialist government and take over Brazilian oil production. Yes, this card was seriously pulled, but nothing really landed.
It would be also later on revealed that such allied media vehicles were on retainer and getting payments from those construction companies so they could finance their government-supporting operations. Popular revolt took over and was uncontrollable. Thank the internet, by the way.
Combine that with the natural revolt that comes from an economic depression and pressure to Impeach Dilma, president of the Workers Party and Lula’s foot in the presidential office, mounted up. The reason for impeachment? She was using state banks balance sheets to shore up government balance sheets, which is plain and simply illegal under law.
Behind the scenes, the Workers Party's main ally was performing a political backstab. Enter PMDB, the Brazilian Democratic Movement Party. Don’t get caught up in the name though, it’s nonsensical and nobody in Brazil takes it seriously.
They are the largest party in Brazil due to Big-Tent politics, and were brought in by Lula to support the government after he was elected in 2002. In 2010 and 2014 the vice president to Dilma was Michel Temer, president of PMDB and now president of Brazil. The price of this alliance? Operation Carwash later revealed that at the very least they were given access to Petrobrás to steal at will. Many other public companies were later revealed as being “offered” in such a manner.
As investigations mounted and popular pressure and revolt gathered, Dilma was simply unable to control the investigations, control the economy, pacify allies or anything at all really. Her only political weight was being supported by Lula, but she instead decided to rule on her own and failed to do so almost completely. The classic pawn that somehow ends up thinking he’s king kind of case. Since she could not stop the investigations, she got backstabbed and removed from office.
Then Came Temer
In enters Temer.
Something that must be clear as the day is that the main goal of Dilma’s late government was to stop the investigations. Pass laws, fire investigators, cut funding to the federal police, articulate obstruction movements, anything and everything possible to halt the works and throw everything on the bottom drawer. As she failed in this, she was replaced by Temer. His main goal? The same: Stop Operation Carwash.
Now, on the surface, the now-removed socialist government was opposed to Temer. Under wraps, they were cheering for him. Dilma was a complete political train wreck and couldn’t stop investigations. Temer is a political genius, well-articulated, patient and willing to compromise. If anyone could stop investigations, he was the guy, and it would save all socialist parties from going to jail as well, including former president Lula, now getting charged in many different scandals and facing probable arrest.
This is the political game right here. If Temer could save everyone, sacrificing Dilma as a pawn would be a very acceptable price. Temer should he opposed on the surface, but his goals and the Workers Party and their allies goals were ultimately the same. Lula never really opposed him.
Temer and his government tried mightily to deliver on the saving, but in many subtle ways. All big pushes failed but some more underhanded efforts succeeded. He also embarked on many light economic reforms that brought more investor confidence and helped the economy recover a bit. With more patience from the public as jobs were slowly coming back, Temer gained leeway to attack the investigations without incurring much political outrage. He thus put his real opposition in a trap: if you do oust me, recession comes back, is that what you want?
And then JBS flipped the table and threw Temer down the gutter.
Who’s JBS? Actually it’s a subsidiary to a larger group, J&F, who control the biggest animal-protein business in the world and many other businesses all the way to banking and flip-flops. Yes, flip-flops. I don’t know either. How? Remember the government economic project? J&F was a “national champion.”
Their subsidiaries received tens of billions of federal government loans to expand, buy off competition and lower prices, while the population steadily noticed a general decline in the quality of meat being sold. Tons of legislation was also passed deeply regulating the meat business, all seemingly designed to help J&Fs structure.
And Operation Carwash got to them. One of their businesses was Eldorado, working on paper and cellulose. I won’t get into the details of how the thread got there to focus on the big picture. The point is that operations started to hit J&F. Document seizures, questionings, and the whole package. It was but a matter of time for the dirty trail of money and paper to be brought to light, and JBS’s stock was already crashing. The empire would be brought down, so their owners ratted.
What’s interesting is that they did all the plea bargain negotiations, depositions and recordings in secret. Nobody knew they were in negotiations or the size of them. One day we just found out they had spoken, and oh they had spoken, and recorded the president as well. That’s Brazil for you, by the way. A slow day of news goes by, the stock market closes and you’re thinking about dinner, then suddenly it comes out the president was recorded by one of the biggest businessmen in the country talking about shady stuff which could get him impeached.
In the recording Joesley Batista, owner of J&F, goes on about how he’s bribing an arrested politician to keep quiet, that he has bought two judges and a federal prosecutor, you know, all republican stuff. What does the president do? Vast amounts of nothing. He just listens and talks as if that’s business as usual. Oh, so you’re subverting the judicial system to get away from an investigation? Okay, that’s fine, keep on son! Temer would later defend himself by stating that he thought Joesley was just lying and boasting.
Busted for Bribery Again
Adding to this the Brazilian Social-Democratic Party was heavily hit as recordings were made by Joesley with the party’s president, standing senator and former 2014 presidential elections adversary to Dilma, Aécio Neves. His party was also heavily hit by Operation Carwash, even though they were in the opposition against the Workers Party (or were they?), and Aécio was caught on tape talking about stopping investigations. Additionally, he was busted for asking for 2 million Reais as a bribe. For what? Why pay for his lawyer in other bribery accusations? All in all, Joesley claimed Aécio received over 80 million Reais in various ways, part of it in his 2014 campaign, to purchase support from other political parties. See a pattern?
The smoking gun was that the federal investigators actually made controlled operations to monitor bribe payments for Aécio and Temer, with marked money, trackers, cameras, photographs, everything. An operator for Temer, house representative Rocha Loures, was caught getting 500 thousand Reais, and Aécios cousin was monitored handling another 500 thousand payment.
Aécio was divested of his senator powers and nearly arrested. His sister and cousin are in jail. The representative that took the money for Temer might strike a plea bargain but is now divested of his powers as well and also nearly got arrested. Temer was heavily called on to resign and almost did so, by some accounts.
Why would he, anyway? Resigning would be equivalent to surrender, as he would lose all powers to stop the investigations. Yes, he is heavily implicated; everything is dirty, corrupt and ridiculous but so what? Why should he care for this the least bit?
Remember his main goal is to stop investigations and control power, so in what would a renunciation help him? Nothing. And so ever since this scandal popped up, Temer’s government has limped on, and while political allies initially distanced themselves, they slowly came back, as Temer is obviously the only one that can save everyone from jail. Aécio’s party hasn’t expelled them nor resigned their government appointments, nor did all other allied parties. Some individuals resigned but in isolation. It’s tacit support from now on.
Impeachment calls were made and formal requests filed, but they need to be accepted by the head of the lower house, who has already stated that all requests will be ignored. Unsurprisingly, he and his father also fell into the Operation Carwash net.
That isn’t all, folks. Temer is defending himself along with Dilma in the Supreme Electoral Court, under accusations their campaign received hundreds of millions of Reais in unaccounted and dirty money. They may be convicted, and if so their candidacy canceled and thus the office of president vacated. What then? Well, the constitution states there should be indirect elections. All parties would appoint a candidate and the representatives of the lower house vote to elect someone.
A gigantic power grab is now in motion. All parties, most implicated one way or another in Operation Carwash, are negotiating who is in better position to unite all in the effort to stop investigations. Names are being floated and shot down, theories and speculation are rife, and in the middle of all of this emerged a movement, backed by all socialist parties, of calling direct elections. Why? Well because via direct elections Lula could be elected president and not go to jail.
See it isn’t about democracy, or voting, or reforming the system. It is about getting Lula to the presidency and stopping the investigations. All else is smoke and mirrors. Nobody could stop investigations like Lula can, and being elected would also save him from being arrested in the now five different charges of corruption and money laundering he has, which would eventually lead him to jail.
This is unlikely to work as most people see this gambit for what it is, and also understand that elections now would be pointless as all candidates and parties would likely be involved in the major corruption scheme some way or another. What’s the point of electing another criminal? Since investigations are underway, the general perception is that it’s better for the clean-up to take place and presidential elections to take place normally as scheduled in 2018, and even then criminals would still be elected one way or another and the problem would continue.
The general sentiment of outright rejection of politics is growing, secessionist movements are gaining force. The general sentiment of outright rejection of politics is growing, secessionist movements are gaining force and of course, libertarians are having a field day with this. The pointlessness of politics and the state is being exposed bare and uncensored for the criminal organization that it inherently is, and the feeling of disgust is becoming more and more general by the day.
This is greatly aided by the incompetent efforts of the socialist parties to rile up the masses against the president. The public knows that precisely those socialists are the ones who got us into this mess to begin with. And they know those parties do not, in fact, stand for democracy, freedom, elections or the worker, but rather think Venezuela is the land of dreams and ponies, an example for mankind.
And here is where the socialists show their face and their hand.
Last week a mob of antifas, worker union thugs and such assortment of citizens, protested in Brasilia by setting fire to government buildings and throwing bombs at the police. Do notice their graffiti calls for “Death to the Bourgeois.” Nearly nobody in Brazil actually believes these people want democracy, and it’s pathetic that this narrative is being pushed by some news outlets. Communist sickle and hammers were sprayed everywhere, and it wouldn’t be surprising to find that a good chunk of those protestors were paid.
It’s also important to remember that a law may pass to end mandatory union contributions, which is expected to cut off some three billion Reais, roughly one billion dollars of yearly money to unions, who rarely if ever truly represent the workers but act more as socialist parties armed forces. Still think this is about direct elections or democracy?
Part of the unrest is also due to pension reforms being proposed, which might save the whole federal pension system, now on the brink of collapse. Again, it's not about democracy or direct elections, but mostly about civil servants keeping their gigantic pensions and benefits at the cost of the general taxpayer.
This Sunday protests were held against Temer, but most people recognized them for what they were: not protests against corruption or Temer’s government, but protests in favor of Lula and his return via direct elections, and the return of socialism to power.
In fact, in a very strange way, such protests actually help Temer, as the masses are unwilling to protest side by side with left-wing extremists or socialists of various stripes, even if it means protesting against Temer. People understand they might be used as political idiots to help a cause they don’t understand, and the fear of a returning Lula and what he would unleash in fact paralyzes protests against the current government.
The result of these dynamics can be easily shown by comparing the protests.
First, the protests on March 13th, 2016, against Dilma and for her impeachment, on Rio de Janeiro. An estimated half to one million people attended. Do notice the green and yellow colors, and no syndicalist flags?
And then the widest photo I could find of the Sunday protests against Temer, with an estimated 15 thousand to 50 thousand people roughly on the same spot as the protest against Dilma over a year before.
All flags and balloons are from socialist organizations or unions.
See a difference? See what the game is all about here? Reducing this to “protests in Brazil against Temer” or “calls for elections” really tells you next to nothing about what is going on.
Protests, Two Kinds
The bottom line here is to not lump all protests as having the same reason, or made by the same people. There are clearly two forces at the very least, one made up by the majority of the people, who flooded the streets in the millions, clad in yellow and green, against Lula and Dilma, another made of socialists who defend Lula and Dilma and come out in the thousands, bearing red and black flags.
The first is popular and spontaneous, made of working class people with no favored politician. The latter is widely rejected and widely believed to be paid, made of a mix of syndicalist thugs, college socialists and special interest groups defending their government handouts. The first defends the investigations and more economic freedom, the second defends the parties and politicians being investigated and more socialism.
And what does Temer’s government and his allies want? Survival. If he is to fall in one way or another, the house will elect someone else with willingness and ability to stop the investigations and save the political class. Economic reforms are taking place and Temer is holding them hostage, so to speak, but this is not a price many Brazilians are willing to pay. Almost everyone is against Temer, that is true, but for very different reasons, much like Libertarians and the Bernie Sanders troupe are against Trump, but lumping them together makes no sense at all and is a complete failure in conveying the situation to international observers.
Brazil is not for amateurs. It’s not “the people versus the system” but rather a mixed bag of groups with very different interests and ideologies with different positions about a corrupt status-quo in a desperate bid for survival, this own status-quo formed by alliances of convenience and being increasingly brought together by fear of being jailed. With so many parties it is in fact a gross reduction to speak of “the government”, as there are dissidents even inside Temer’s party attempting to sabotage him, and much more that would make for a very, very long article.
House of Cards has nothing on Brazil, really.
One might wonder about the future of Brazil, but it’s almost impossible to predict anything at all at this point, as just about anything could realistically happen.
There is one thing you can be sure of though: new lows will be found. Political forces are moving, and for them, democracy, law, institutions, the economy and ultimately the people are merely tools. No price is too high, no move is too dirty. The status quo in Brazil is facing nothing less than extinction; expect them to fight like a cornered tiger.
Brazil is not for amateurs.