Mar 17, 2015

Millions of Brazilians Demonstrated against President Rousseff

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Last Sunday, millions of Brazilian hit the streets in all the state capitals and numerous smaller cities across the country to express their dissatisfaction with President Rousseff and her economic policies and the corruption scandal surrounding Petrobras. The peaceful demonstrations lasted all day as Brazilians expressed their frustration with the president and her Workers Party. Dilma's supporters tried to preempt the protests by staging rallies in support of the government last Friday, but they were miniscule compared to Sunday's demonstrations.

There have been calls on the editorial pages in Brazilian newspapers for her resignation or impeachment (not an uncommon thing for Brazilian presidents), not because of the general economic malaise facing the country, but because of the expanding corruption scandal at Petrobras.

More than 20 company executives have been arrested and many of them are cooperating with the prosecutors laying out how dozens of politicians and several political parties received hundreds and hundreds of millions of dollars in kickback schemes from Brazil's state run oil giant. The complete extent of the corruption is yet to be fully revealed, but there are some estimates that have put the total of illegal payments over 4 billion dollars.

The current president (Dilma) and the past president (Lula) have not been specifically named in the investigation, but they both have been the head of the Workers Party which has been named by individuals within the company as the recipient of hundreds of millions of dollars over the years. Although Dilma continues to claim her innocence, during the time when many of illegal payments were made, she was the Chairwoman of the board at Petrobras and of course, she is the head of the Workers Party.

It stretches the bounds of credibility when the person in charge of the company finances does not know the company is paying out hundreds of millions of dollars (or maybe even billions) in illegal payments. Additionally, as the head of the Workers Party, she apparently did not inquire as to the source of hundreds of millions of dollars in campaign contributions! This has outraged Brazilians especially at a time of austerity, rising inflation, rising unemployment, and a stagnating economy that is probably headed for a recession. Dilma's outcome is uncertain, but her position is very precarious indeed.