For months, opponents of Brazil's president have been threatening her with impeachment. Widely believed to have played a role in the now-infamous Petrobras scandal, Dilma Rousseff has been the target of harsh criticism from opposition lawmakers, former allies and the public at large for allegedly violating public financial responsibility laws. But until recently, it was unclear whether there would be actual impeachment proceedings against the president. On Wednesday, a congressional committee that has been considering the issue finally decided that impeachment proceedings will indeed take place, beginning with an internal committee vote.
There are still several steps between Rousseff and her ouster from office. If the committee votes to move forward, the lower house of Brazil's National Congress would also have to vote for impeachment before the Senate makes the final decision. But the stakes are still high for both Rousseff and her party, especially with a presidential election approaching in 2018.
For the Workers' Party, avoiding political disaster ahead of the election is paramount. An impeachment would wreck its chances of retaining power. The president's plummeting poll numbers and the recession of the past several years have already cost the party significant voter support. That, in turn, has spurred a process of defections both from the Workers' Party and, most recently, from its largest ally in the lower house, the Democratic Movement Party of Brazil. The Democratic Movement Party's departure from the ruling coalition in March effectively set Rousseff on the course of having to defend her presidency against pro-impeachment lawmakers in the lower house.
Workers' Party leaders are trying to line up additional support in the legislature. The president's coalition is in tatters, but she may be able to persuade lower house members from smaller parties to reject impeachment. According to one report, the president holds a narrow advantage. Her opposition has only 270 of the 342 votes it needs to proceed with the impeachment process in the lower house. But that may change in next few days, and if it does, the president will face a series of hearings, followed by another vote within months. If that vote goes against her, her fate would be in the Senate's hands.
Traders hoping for a rise in the Brazilian stock market are rooting for Rousseff's removal, but many ordinary Brazilians, wary of violent street protests, want her to remain in office. Some view the crisis as a distraction from important conversations about economic and social policy that affect their daily lives. If nothing else, the fiasco is delaying needed structural adjustments to Brazil's economy and public finances by months and possibly years. Long-discussed measures such as national pension reform and cuts to Brazil's substantial public spending will not occur until the impeachment ordeal comes to a close.
But whatever the immediate effects of the political disarray, it is not the most important factor in Brazil's economic development. The demands of markets and political forces elsewhere in the world are shaping Brazil's direction in the long term. In the 2000s, rising Chinese demand for Brazilian commodities raised prices and drove Brazil's economic growth. With Chinese growth slowing, Brazil's longstanding structural weaknesses are once again showing. Poor transportation infrastructure and high tariffs are scaring off investors, a problem only compounded by the Petrobras scandal and related criminal investigations of Brazil's construction sector.
Brazil will not remain in economic limbo now that the global commodity boom has turned to bust. Alongside fellow members of the Common Market of the South, Brazil is negotiating a free trade agreement with the European Union, which could increase Brazilian manufacturing exports. And even a modest rise in oil prices would benefit the ailing Petrobras. But with global economic growth slower overall than in the previous decade, revitalizing Brazil's economy will take years.
Unfortunately for Rousseff, her impeachment and the 2018 presidential elections fall squarely in the middle of Brazil's latest journey through stagnation to recovery. The sluggish economy will make it even more difficult for the Workers' Party to recover from the damage done by the scandal. This year, Brazil's economy will remain in recession, and growth is expected to remain slow in 2017. In 2018 elections, voters may well look to challengers from the more conservative Brazilian Social Democratic Party or the Democratic Movement Party. Socialist Party of Brazil candidate Marina Silva could also be a strong contender. Meanwhile, the Workers' Party will be made vulnerable by its recent track record, one marked not only by political scandal but also by an economy wracked by inflation, declining foreign investment and job losses.
