As the war in Ukraine grinds on, a look at the economic battlefield and how the conflict might permanently reshape the global economy. Diane talks to Sebastian Mallaby, senior fellow for international economics at the Council on Foreign Relations.
Guest Host: Lisa Desjardins
Last month in Brazil, the lower house of the country’s National Congress voted to impeach the president, Dilma Rousseff. There are the legal grounds for the move — alleged cooking of the government books. And then there are the political motives, which as many observers have pointed out, are what’s really driving the impeachment. Those have to do with a massive corruption scandal at Petrobras, the state owned oil company. Add to that a severe recession, and many Brazilians are not happy with how their country is being run. Guest host Lisa Desjardins gets an update on the political crisis in Brazil from our panel of guests.
- Paulo Sotero Director of the Brazil Institute at Woodrow Wilson International Center for Scholars
- Uri Friedman Staff writer, The Atlantic, covering global affairs
- Monica de Bolle Nonresident senior fellow, Peterson Institute for International Economics; adjunct professor,School of Advanced International Studies, Johns Hopkins University; professor of macroeconomics, Pontifical Catholic University of Rio de Janeiro
- Brian Winter Editor-in-chief, Americas Quarterly and vice president of the Americas Society/Council of the Americas
MS. LISA DESJARDINSThanks for joining us. I'm Lisa DesJardins of the PBS NewsHour sitting in for Diane Rehm. Diane is recovering from a voice treatment. Over the weekend, Brazilian President Dilma Rousseff overused May Day gatherings across the country to try and rally support for her beleaguered Workers Party. To discuss Brazil's political crisis and what lies ahead for the country, I'm joined in studio by Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson Center, Uri Friedman of The Atlantic, Monica de Bolle of The Peterson Institute for International Economics and Brian Winter, editor and chief at Americas Quarterly and vice president of the Americas Society/Council of the Americas.
MS. LISA DESJARDINSThank you all for being here.
MS. MONICA DE BOLLEThank you.
MR. URI FRIEDMANPleasure.
DESJARDINSAnd, of course, you, too, are part of this conversation. We'd love it if you joined us. Call us at 1-800-433-8850 or send us an email to firstname.lastname@example.org. Find us on Facebook or send us a tweet. Brian Winter, let's start with you. I think many Americans know that there's something happening in Brazil, but it's very complicated. Since the lower house voted to impeach Brazil's President Rousseff and she's going through that impeachment process now, we've heard a debate over whether this is a coup or not. Can you bring us up to speed about what she is charged with and this debate over whether this is a coup.
MR. BRIAN WINTERWell, so Brazil dazzled everybody last decade. The economy grew a lot. It brought 40 million people out of poverty and then, people are generally aware that there's been this massive dramatic collapse in recent years. Despite all the promise of the 2000s, despite having received the World Cup and it's about to host the Olympics, the economy has really fallen apart and it is at the worst recession in at least 80 years and maybe ever.
MR. BRIAN WINTERAnd so that's been very dramatic and it's obviously put a lot of pressure on President Rousseff. Meanwhile, you have this huge bewildering corruption scandal. But in the case of the impeachment, President Rousseff is not actually being charged with any personal wrongdoing. What she is being impeached for is, essentially, what you could charitably call creating accounting with the budget. And...
DESJARDINSFiscal peddling is how they translated the words.
WINTERFiscal peddling, that's right. And so that's the case against her. Is it a coup?
DESJARDINSBut 11 -- it's not a small amount of money that she -- in their deficit, that she's accused of hiding.
WINTERIt's a tremendous amount of money and it, along with the end of the commodities boom and the, you know, the relative decline of China, all of these things have been factors in Brazil's collapse. Is it a coup? No, I don't think it's a coup. Is it potentially a flimsy case for which to make an impeachment, especially when you have all this corruption going on in the background? That's arguable.
WINTERAnd so, you know, all those different factors, yes, I think, for American listeners, I think it can be very hard to keep track of.
DESJARDINSPaulo Sotero of the Brazil Institute at Woodrow Wilson Center, you don't see this as a coup. You see this as democracy?
MR. PAULO SOTEROOh, I think it is democracy. It's following the rules of the law. It's following a process under the supervision of a Supreme Court of 11 members, 8 of which were nominated by Dilma Rousseff and her predecessor and mentor, Luiz Inacio Lula da Silva. I think what she is charged with is misrepresenting the state of budget accounts in Brazil. Imagine that President Obama had spent $181 billion not authorized by Congress. That's what she did.
DESJARDINSProportionally, you're saying that would be, effectively, the same amount. Right.
SOTEROIt's 1 percent of GDP, 1 percent of U.S. GDP, $181 billion.
DESJARDINSA huge amount of money.
SOTEROAnd she tried to hide that. Once that was revealed, her popularity, a reelected president, her popularity collapsed in about two and a half months, went from more than 50 percent to 7 percent and the economy, the Brazilian economy, which was already in bad shape, completely collapsed. So that is the reason she is being indicted. It is legal. There's no doubt about it. There is, though, and Brian, I think, is very important, and what Uri also wrote very well in The Atlantic, about corruption.
SOTEROThere is a problem of legitimacy in all of this, but not about (word?) and we are going to have to go through this process. I believe we are going to go through it, as painful as it is -- it's a very painful process, Lisa, because this is the second time in 25 years that we are impeaching a president. The average is not good so there is a systemic problem here. I think, though, that we can deal with that.
DESJARDINSUri Friedman, let's do go to you. That is just one layer on this onion, this impeachment proceeding right now. But I think what we just heard from Paulo Sotero was this idea that there are greater corruption scandals, of course, having to do with Brazil's oil. Can you talk about those corruption scandals and then, how that connects to who would be in charge if, in fact, Brazil needs a new president.
FRIEDMANSure. So one statistic that's getting cited a lot is that 60 percent of the deputies in the Congress are either facing or under investigation for serious charges.
FRIEDMANYes. Now, that's under investigation so not everyone has been indicted. There's currently a lot of plea bargaining going on in these scandals and so people are being named. It's unclear still whether these people are actually guilty, but it's still a pretty astounding number. And I think...
DESJARDINSAnd what do these generally surround? It seems like these are kind of connected to one idea.
FRIEDMANYes. Well, the charges vary. They can be anywhere from money laundering to bribery to electoral fraud. Right now, the biggest of these scandals is something called Operation Car Wash or Lava Jato. And the idea there is they started in 2014 and the allegations are that Petrobras, which is the state oil company, was overcharging for contracts to construction firms and that then, these construction firms were kind of giving kickbacks and other bribes to elected officials, to Petrobras executives.
FRIEDMANPotentially, there is currently an investigation into whether these corrupt funds have any kind of direct link to the reelection campaign of Dilma Rousseff and her vice president, Michel Temer in 2014. And so that is, like, kind of the hub of all these investigations, but there are many more that go along with that.
DESJARDINSWell, let me jump in right there. So the vice president is also under investigation. And then, how about the second in line for president, the Speaker Of The House?
FRIEDMANYeah. When you look at the line of succession, it's kind of a depressing exercise in a way because you have -- so the president is -- there's this budgetary scandal going on. The vice president hasn't been named in these -- isn't currently under investigation for the Petrobras scandal, but he could be in trouble for a variety of reasons, one, he might be impeached for the same reason that Dilma is being impeached, which is the budgetary scandals. That's unlikely to happen. There doesn't seem to be any political will for that.
FRIEDMANAnd then, the Speaker Of The House, Edwardo Cunha, is accused of taking millions in bribes and putting them in offshore accounts. Again, actually, he's current -- there are many investigations pending against him, but it's unclear exactly -- the case is with the Supreme Court and that's a very overloaded court right now so it's unclear exactly where that will land.
DESJARDINSOkay. Monica de Bolle, I see you shaking your head and writing furiously. So what do you make of all this?
BOLLEWell, it is obviously and extremely unfortunate situation, to say the least. I wanted to make a couple of points of things that have been mentioned. Let me say one thing about the issue with the vice president. I mean, of course, you know, the investigations are ongoing and obviously a number of things can still come out, but the charges or at least the so-called charges, which are not exactly charges at this point, against him, which Uri mentioned are similar to Rousseff's, they're really not.
BOLLEAnd actually, the federal accounts tribunal in Brazil has already issued a report saying that what Michel Temer has done is completely different from what Dilma Rousseff has done. So this hasn't actually gone up for a vote. This needs to be voted on and people need to properly evaluate this issue. But as it stands right now, what touches on Michel Temer is not the same thing that touches on Dilma Rousseff.
DESJARDINSAnd we should point out that unlike in this country, the president and vice president are from two different political parties.
DESJARDINSThey are not from the same political party significantly. And I want to get you, Monica, to talk a little bit more broadly about why all of this matters to the United States, you know, why this is more than some Netflix series. This is a very serious economy, the world's sixth largest economy. We're seeing unemployment really start to take off in Brazil, especially among Brazilian youth. But why does this matter to the rest of the world?
BOLLEWell, it's Latin America's largest economy and Latin America is a region that a lot of the world had been looking at, you know, in recent years because it's a region that, apart from a few countries that advanced quite substantially in reducing inequality, in alleviating poverty, you know, Brazil itself, as Brian mentioned, was a success story in many ways.
DESJARDINSIt was becoming a model almost, right?
BOLLEIt was becoming a model. And it is a country that, you know, despite the fact that it's a very large country and Latin America's largest economy, it's a very closed economy, Brazil. And it's an economy that naturally lends itself for increased relations with the U.S., you know. It is definitely a country that will be looking, as we go forward, to open its trade and open itself to investment.
DESJARDINSQuickly, Paulo Sotero.
SOTEROWell, Brazil is also the largest Democracy in Latin America. This is a very important point. And I think Brazil is undergoing a self examination process. There is a new generation of young judges, young prosecutors in Brazil that are forcing Brazil to face our flaws and the idea of impunity is no longer accepted in Brazil. I think Brazil -- it's very painful. The outcome is not clear, but I think the country has -- society in Brazil has the courage to confront this and amazingly, we are confronting this in relative peace.
SOTEROThe confrontations that you see are in other countries around Brazil, are not happening this. There is a lot of polarization, a lot of unhappiness, but I think democracy is holding and is holding quite well.
DESJARDINSWe're talking about Brazil, a young democracy with a young population. We're gonna take a short break, but please stay with us. We'll be right back.
DESJARDINSWelcome back. I'm Lisa Desjardins with the PBS NewsHour sitting in for Diane Rehm. Today, the Olympic torch arrived in Brazil, a country that is -- that had been ready to celebrate on the world stage, now finds itself in political crisis. And with us, we have an all-star panel to discuss what's happening in Brazil. This hour will help you understand one of the world's most complicated countries. And I want to go straight to the phones. Travis from Louisville, Ky., what's your question? Travis, are you -- do you hear me?
TRAVISGive me -- in the 2000s, there was a great electoral -- there were many great electoral victories of the left all through Latin America. And there was an effort to try to distinguish between the so-called good, moderate left, led by Brazil, versus the so-called radical, bad left. And those aren't my words. And the effort was to try to divide the left in Latin America. And we see Nicaragua, Ecuador, Bolivia, Cuba to a lesser extent, members of the bad left, coming along pretty well, with perhaps some examples of the good left not doing so good. So my question is this, if Brazil was set up as such a model to try to divide Brazil from Venezuela back then, why are things not much better in Brazil than they are in Venezuela?
TRAVISI mean, if Brazil, by being more moderate, more pro-U.S., more market friendly, more on the right path, why are they having such trouble?
DESJARDINSThank you for your phone call, Travis. I also think, touching on this in some way is an email we got from Frank in D.C. He writes, crucial to the success of prosecutors and judges in the anti-corruption effort has been massive public demonstrations. Can the panelists talk about the emergence of this phenomenon in Brazil? Brian Winter, I want to ask you about these two-pronged ideas of a good South-American leftist government, or a bad one. Is there -- is this -- all of this corruption we're talking about, how did that paint Brazil? And what is the actuality on the ground, as Frank is writing about in D.C., there has been an anti-corruption effort?
WINTERYeah, believe it or not, this is all a good news story...
WINTER...right? I mean, everything that we're talking about here -- and it was funny, I was listening during the previous segment, all of the, you know, so-and-so is charged with this and 60 percent of Congress, and it just sounds like a mess. But it's actually progress because it's a product of an independent judiciary and other institutions like the media, like even the maligned Congress, working more or less as they're supposed to. You know, I would strongly disagree with the notion that some of these other, more extreme-leftist countries in Latin America are doing well, marching right along. Certainly not the case in Venezuela.
WINTERAnd I think that -- I've talked to, for example, people from Mexico, where things are relatively okay, but they have tremendous institutional problems with corruption. And they are envious of what Brazil is going through right now.
WINTERBecause they say, at least Brazil is going through this process that has a chance of squeezing out some of the corruption and changing this system that has probably been in place for decades and decades, if not forever.
DESJARDINSAnd a reminder, send us your emails and your questions. You can email us to email@example.com, on Facebook, or you can send us a tweet, or you can call us, 1-800-433-8850. Monica de Bolle, I want to go to you from Johns Hopkins and talk about the economy and the pressures in the Brazilian economy that I think we may see appearing in this political crisis.
BOLLEI will do that. Let me just add one thing to…
DESJARDINSAnd also respond to Brian.
BOLLE...add to one thing to what Brian was saying. So we have this impeachment vote by the lower house. And this is to play up on the, you know, how things can actually progress from here on. We have this impeachment vote at the lower house happening, you know, a few weeks ago. And to be, you know, it was extraordinary that 58 percent of the Brazilian population were actually tuned into the live streaming of this vote...
BOLLE...as it was taking place. And afterwards, many people were actually shocked by what they saw, you know, these politicians were basically, you know, doing grandstanding and...
DESJARDINSThere was confetti at this.
BOLLEConfetti and things of that sort. And this shocked the Brazilian population to a large extent. And I think it's a positive in that respect as well. Because given that Brazil is a young democracy, this is an opportunity for people to realize that they have a say in whatever, you know, course the country takes. And they have a say in who they want to see elected to Congress in 2018.
DESJARDINSPaulo Sotero. Thank you.
SOTEROJust to complement something that Brian mentioned about the institutional changes in Brazil. In 2013, we had massive protests in the streets because people came out -- the government was surprised, the opposition was surprised, the media was surprised by what was going on. There was a new animal in the street -- the Brazilian people protesting, demanding quality in things, quality in governance. Now, as a result of that, the Brazilian Congress ended up approving some changes in the way we prosecute people, allowing for the first time in Brazil, plea bargaining.
SOTEROThe whole process of the investigation, the Petrobras scandal, is based on plea bargaining. It's based on confessions by people that recognized their fault in the assault of the largest company in Brazil by the Workers' Party, by the PMBD, the party of Mr. Temer, by the party -- a third party allied to that, destroying the largest company in Brazil. Dilma Rousseff, during all this period, she was minister of energy...
DESJARDINSThe president, yeah.
SOTERO...the president. She was minister of energy and a member of the board for, the chairperson of the board or president of Brazil. She had the reputation of being a hands-on manager, detail-oriented manager. People in Brazil look at Petrobras, look at Dilma Rousseff and say, what happened?
DESJARDINSYou're saying, even if she's not accused of corruption in the Petrobras scandal, that she perhaps should have at least known and could have.
SOTERONo. At least by omission. She's completely at fault in this and more. She is now, and this was announced this morning in the newspapers -- the attorney general in Brazil will likely charge her and her predecessor for an effort to obstruct justice in the investigation of the scandal in Petrobras. So it is not directly linked to impeachment but it provides sort of the environment in which the impeachment is -- will decide in.
DESJARDINSI know there is so much to say about this scandal. But I want to take this conversation to be more broad. Let's talk about corruption in Brazil and the economy. Those two things I think have been very firmly linked obviously to the oil industry, not completely but sometimes. I'm interested in any of your thoughts about whether this anti-corruption movement has succeeded and is this impeachment trial perhaps a step back or a step forward? Have there been cultural changes in the Brazilian government in terms of rooting out corruption? Or is this a one-time, plea-bargain deal? Paulo Sotero.
SOTEROI can say something about this. In 2005, when the first corruption scandal emerging, the Lula administration, it took seven years to -- with a vote-buying scheme in Congress -- it took seven years for us to investigate this and to bring it to try at the Supreme Court in Brazil. We could not believe, at that time, that people in high places in Brazil would be found guilty or sent to jail. To our own surprise, we did that. The chief of staff of President Lula, the president of the Workers' Party, the speaker of the house and the treasurer of that party were sent to jail and served. You know, jail in Brazil is not build -- was not programmed for that kind of people.
SOTEROJail in Brazil is programmed for poor, black and prostitutes. And for the first time, we had this change. And now we have 10 years of that, there has been CEOs of large companies in Brazil now serving time in jail. This is the transformation. I think it's progress in the sense that there is the rule of law imposing itself.
DESJARDINSUri Friedman with The Atlantic.
FRIEDMANAnd I would note, when the previous vote-buying scandal that Paulo mentioned broke in 2005, the next year, in 2006, Lula, the president at the time, won reelection. It's interesting to note that now there seems to be a kind of groundswell publicly of rejection of the, you know, a large segment of the political class. Sixty percent of people want Dilma impeached, the current president. But around the same percentage don't want Michel Temer either.
FRIEDMANThey want new elections. They want a chance to vote for people who don't seem tainted by these scandals, who seem to not be having engaged in business as usual. So there is a large public support for (word?)
DESJARDINSBut there doesn't seem to be that leader that they're coalescing around yet. Is that correct, Brian Winter?
WINTERYeah, there's nobody there yet. I mean, what's different between now and 10 years ago is obviously it's the economy. And a cynic could look at this and say, oh, well the only reason they want to toss these people out now is because the economy is bad. I, you know, I think that something has structurally changed within the Brazilian political system. And, look, regardless of whatever the causes are, there is nothing quite like seeing a president investigated. Some of the most powerful politicians and business leaders in the country have gone to jail.
WINTERAnd, again, whatever the background reasons were for that, it is a fact that these images of these incredibly powerful, previously though untouchable people were led away in handcuffs. That's a powerful thing. Now, how will it all end? The judge who's overseeing the Petrobras case has taken Mani Pulite, the Italian massive corruption scandal of 25 years ago, as inspiration. He has said this openly. The problem and the risk for Brazil is that, of course, Mani Pulite ended up with what? With Silvio Berlusconi.
WINTERSo, you know, it's unclear exactly how this is going to end in Brazil. Success is not guaranteed. But as it stands right now, it looks like a positive things.
DESJARDINSMonica de Bolle, let's talk about the economy in Brazil. There was one point in the last decade that Brazil's economy was growing more than 7 percent a year. That's unbelievable growth. And in the last two years, we've seen the economy actually go the other direction to the tune of 3 or 4 percent. To put that in perspective for Americans, our Great Recession, we only had one year where the GDP contracted. It was by less than 3 percent. So can you talk about the effects of the Brazil economy. How stable is the economy right now?
BOLLESo there are two issues here. I mean, on the one hand, a very deep recession that Brazil is facing, and the other one, which is an issue that I think the American audience can relate to less, which is inflation. I mean, despite the fact that recession has been very deep in Brazil in 2015 and is likely to be deep still in 2016, has not precluded inflation from rising. And, in fact, inflation last year hit almost 11 percent per year. And this year, it's falling a bit but it's still, you know, very close to 10 percent.
BOLLESo economists have this thing called the misery index, which is a way, you know, to kind of measure the quality of life or the well-being of, you know, a country's citizens. And it's a very simple index. It's basically the sum of inflation and unemployment. And if you do that calculation for Brazil today, the number would be something around 20, if you, you know, add up unemployment to inflation. But the really striking thing is that, if you do the same calculation for the vulnerable middle class...
BOLLE...that index, the misery index, is about 40 percent higher for the vulnerable middle class than it is for the country as a whole. In other words, the vulnerable middle class are the ones really suffering here from very high inflation and very high unemployment.
DESJARDINSI'm Lisa Desjardins with the PBS News Hour. You're listening to "The Diane Rehm Show." And let's look a little deeper at that theme of the classes in Brazil. It seems this is as much a political class war. We see different parties -- who we see marching in the streets of Brazil. What does this tell us about who the winners have been in the last decade, who the losers are now and how they're reacting? Brian Winter.
WINTERYeah. There's a bit of misperceptions around this issue. The -- Dilma Rousseff's party has worked very hard to portray the protests as being led by members of the upper middle class. And that part is actually true. I mean, they've done polling on the people who have come out on the days when you saw a million people in the streets across Brazil and it's a fact. And that's a function partly of middle-class people having a little more extra time to be able to go out on Sundays. I mean, it's just, the working class in Brazil would rather not make that two-hour commute into the city on their one day off.
WINTERBut the reason I mention this is because actually in the polling that they've done -- Datafolha and other very respected pollsters -- there is support for impeachment across the classes. It is roughly the same amount...
DESJARDINSHmm. It's notable.
WINTER...across all income groups. And that number is about two-thirds.
DESJARDINSOkay. I want to go to the phones now. And we've got a caller who is Brazilian. Maria Lucia from California, you're on the line. What is your question or comment?
MARIA LUCIAHi. I have a comment actually, as a Brazilian, I have to say that I'm very proud of my people, as they react to this whole sad economy and politics. Corruption has been historical in Brazil since the colonial times. And I think that what has changed is not only the political structure, as was mentioned by one of your guests, but mostly the perception from the population about the politicians and how they react to it, making sure that they are heard, that they are unhappy and they're going to be watching over whoever comes on board, you know, either Temer or whoever comes on board, will be very aware that the population is watching them.
DESJARDINSThank you for your phone call. Paulo Sotero with the Woodrow Wilson Institute, do you think this reflects the idea of most Brazilians? Are they optimistic? Are they pessimistic? Angry? All of the above?
SOTEROOh, Lisa, optimism is our middle name in Brazil, so. But we are...
DESJARDINSI did not know that.
SOTERORight now, we are kind of not optimists. We are hopeful.
SOTEROAnd this hope is reflected in one information that I find very interesting. We have the politician in Brazil by the name Marina Silva. She is a founding member of the Worker's Party. She was illiterate until the age of 14. She was a minister of environment. She was a senator. And she is, if I would put in American context, she is the closest to Senator Bernie Sanders that you can find. It's a person that defends...
DESJARDINSSee the panel nodding. Yes.
SOTEROYes. It's a person that -- in her favor, she is the only Brazilian politician right now who's favorability ratings are going up. Because she's seen as sort of -- is this positive version of President Lula, who was such an important leader in Brazil, such a transformation of leader in Brazil.
SOTEROThe first man of the people in one of the most unjust societies on earth to reach the presidency in his fourth attempt. And so you see in Marina's favorability rating, this hope that I was mentioning.
DESJARDINSYes, Uri Friedman, when is the next election scheduled for Brazil?
FRIEDMANCurrently it's 2018. There's a chance -- the Superior Electoral Court is currently looking into potentially and early election if there were corrupt funds. But in 2018 is when the election is called for.
FRIEDMANAnd so there is some time. And it's unclear exactly how this will play out in the interim. But I think a new election would really help people have confidence again in the system, more than a kind of interim president.
FRIEDMANBecause it would be people really exercising their right to vote in a more forceful way.
DESJARDINSHow much are you paying attention to Brazil, past the Olympics? And how important is it to you? What do you make of all of this? Give us a phone call at 1-800-433-8850. Email us at firstname.lastname@example.org. We're going to take a short break and we'll be right back.
DESJARDINSAnd welcome back. I'm Lisa Desjardins with the PBS NewsHour, sitting in for Diane Rehm. We're talking about Brazil this hour, and we have a phone call from Virginia. Joshua, what is your question?
JOSHUAHi, thank you all for having me on, by the way. I have a question for the entire panel, actually. I was just simply curious, given the upcoming Olympic Games in Brazil, just how badly this is going to affect this Brazilian economy that just seems to be in dire straits. It seems that modern history tells us that any time the country, especially a country that is suffering economically, hosts these games, that it never works out for them in the end. It ends up creating more problems than it ends up solving. So if y'all could just simply touch upon that and maybe even more specifically on what exactly might happen given...
DESJARDINSWonderful, thank you for you call, Joshua. Monica de Bolle of the Peterson Institute and Johns Hopkins, what do you think?
BOLLEWell, that's a very good question, and in fact, you know, it's a first where we'll have a country that's not only suffering through a major economic crisis, as well as a very serious political crisis, hosting the Olympics. I will leave for Paulo Sotero the very optimistic comments about the Olympics, but let me say one thing about the economic implications of the Olympics. I mean, we have already seen that the state of Rio de Janeiro and the city of Rio de Janeiro, in fact, are having severe fiscal problems and financing problems, you know, as a result of the Olympics and of financing a number of infrastructure projects and other projects related to the Olympics.
BOLLESo I expect that the legacy that will be remaining in terms of, you know, further fiscal problems for the state finances, as well as for the municipal finances, will not be good and will have to be resolved at some point.
DESJARDINSAnd if you're just joining us, I want to remind our listeners of who's here with us in studio to talk about Brazil. Paulo Sotero is the director of the Brazil Institute at Woodrow Wilson International Center. Uri Friedman is staff writer at The Atlantic. Monica de Bolle, who you just heard, is with Johns Hopkins University, she's a macroeconomist. And Brian Winter is editor-in-chief at Americas Quarterly.
DESJARDINSLet's come back to the Olympics. Paulo Sotero, you have a thought about the Olympics as being good for Brazil?
SOTEROYou know, you should never underestimate the capacity of Brazilians to throw a party. We are good at that. And I think depending on where we are in the impeachment process, you will be -- the opening of the Olympics could be a very cathartic moment for us. We -- I think we need some sort of release, some sort of celebratory moment in Brazil, and I believe that the Olympics could provide that.
SOTEROThe economic side, precisely what Monica said, but I believe we can indeed, you know, welcome the world in Brazil, and I'm curious about one thing, how we are going to do that opening show where you highlight what's good, who are we. Are we going to sort of call people's attention that we have this -- we are pursuing justice in Brazil?
SOTEROIn a way I would love to see that because we are that, also. We are a country of some virtues, and I would love to see that displayed in the opening show of the Olympics.
DESJARDINSBrian Winter, Paulo Sotero just made a good point about this is a country that could use a celebration and is able to unify over celebration, but of course, and I don't mean this glibly, after a major party, there always -- there often can be a rough few days or weeks or months or years. What in the end do you think will be the long-term effects, if any, of this Olympics? Can Brazil afford it? I think it's costing $15 billion, something like that.
WINTERI think it depends on how it goes, and I -- Brazil of course also hosted the 2014 World Cup, and in the run-up to that there was a lot of hyperventilating on the part of the media about what could potentially go wrong. I know this because I was part of that hyperventilating. I was a reporter in Brazil from 2010 to 2015. I wrote a lot of these stories, saying oh my gosh, here's all the things that could go wrong.
WINTERAnd for the most part it ended up being the opposite of what people expected. I was -- logistically it was beautiful. The only disaster was when the Brazilian team lost on the soccer field seven to one. And it was a success. I mean, they did polling of the people who went to Brazil afterwards, and something like 87 percent of the people who went said that they would love to go back. Why? Because Brazilians are the world's nicest people. That sounds like a gross generalization, but I actually believe it to be true, tremendous hospitality.
WINTERSo the question becomes, well, does that mean that we shouldn't worry about these Olympics? I actually am a little bit worried, and the reason why is because of course the economy is much different now. The politics is different. We saw the collapse of this bike path, which was recently built in Rio I guess 10 days ago that killed two people, raises questions about a lot of the infrastructure that was built in hurried fashion, often with nepotism involved, as was the case with this bike path.
WINTERThe state of Rio de Janeiro is basically broke, and so I think that they're going to take whatever resources they have an throw them at making sure that it's a good party, as Paulo says, but I am actually more concerned about these Olympics than I was about the World Cup, even with this self-awareness that I described.
DESJARDINSIt struck me in preparing for this segment that going into the World Cup, as President Rousseff was under a very tight re-election bid, we did not know that there was this issue with the deficit that was being hidden. That's of course her impeachment charge we've talked about. It's about $11 billion, a huge amount of money. But the cost of these Olympics is even more. So in a way those are two economic burdens lumped together that were not in the public eye entering the World Cup. That's a lot of heavy economic pressure.
DESJARDINSUri Friedman of The Atlantic, what do you think?
FRIEDMANYea, I mean, I think, you know, it's important to keep in mind, ahead of any Olympics, there's always a narrative of hand-wringing. You know, before China it was human rights abuses and the air pollution. Before Russia it was a gay propaganda law, and is the snow going to melt, are the buildings going to be done in time. So you know, that's why I think we should be a little skeptical of a lot of hand-wringing coming into this one.
FRIEDMANOn the other hand, this is an exceptional situation. You might have -- conceivably the president could still be suspended but not yet removed from office when the Olympics roll around, which are coming in early August. So this could be a real kind of luminal political moment. And then the one other thing is I think there really is a question of when the Olympics are gone whether the investment will have a payoff for Brazilians in Rio de Janeiro State.
FRIEDMANYou know, there's always promises in the lead-up that these investments are going to have long-term benefits, and I think that's a real question mark now.
DESJARDINSLet's go to the phones and to Gainesville, Florida, and Joe. Joe, what is your question about Brazil?
JOEI'd like to ask, what is the Brazilian military's response to the current situation, and are they a player in any way?
DESJARDINSExcellent question, and Paulo Sotero with the Woodrow Wilson Institute wants to answer.
SOTEROThe military in Brazil are behaving exemplarily. They are the most respected institution in Brazil today. They left, in order, they left politics, they have indicated to politicians in Brazil that they are not going to get involved. You messed up, you fix it. I think that their posture is something that we as a people can be proud of.
SOTERONow I have one concern about the Olympics actually that may involve the military, which is the security aspect. All this vulnerability creates opportunities for people that are up to no good in the world to use the Olympics to do something bad. That is the real concern I have. But the military I think are acting institutionally and are forcing by their behavior the elected officials to face their responsibilities.
DESJARDINSBrian Winter, do you agree with this assessment of the military?
WINTERI do. Amid all this chaos and all these incredible things that have happened over the last year, I always tell people the one thing that absolutely will not happen in Brazil is a military coup.
DESJARDINSBut perhaps a congressional one. I guess they're accused of it, but you don't believe it's a coup, anyway.
WINTERI think that's a misuse of that word.
DESJARDINSIt's a professional-class military is what you're saying. That's the most stable institution in Brazil as you see right now?
WINTERYeah, I mean, again you have to look at everything that's happened in the context of the evolution of not just Brazil but of Latin America. You know, going back to why is -- why are these scandals happening now. It's partly a result of the prosperity of last decade. You had 40 million people come out of poverty and into something that could be called the middle class, and suddenly for those people, issues like unemployment and hunger, hunger which was a real issue in Brazil as recently as 15 years ago, believe it or not, with everything going on, with all the political chaos, with all the problems with the economy, the number one problem in Brazil as cited by Brazilians in polls is corruption.
WINTERAnd that's a reflection of the fact that people are a little more comfortable now, they're not just worrying about hand-to-mouth issues. They want better quality governance, and they're demanding it. And, you know, that's -- that's democracy working, and it's happening not just in Brazil but a lot of other countries in Latin America, too.
DESJARDINSAnd on that note, let's go to Miami, Florida, and Mertha. Mertha, what is your question or comment?
MERTHAActually agreeing what he just said. We have seen a big change in politics in Latin America in the last past four years. People are being empowered and have opened their eyes to the need of intellectuals in government. And it brings me to this curiosity. How is this process of empowerment and revealed corruption that Brazil has started going to affect Latin America in the future? For example in my country, we've had the need of having presidents who actually think of the people and bring the people, hence why we have Danilo Medina. How is this going to affect the rest of Latin America and your country for that -- for example you have candidates like Bernie Sanders.
DESJARDINSAnd Mertha, for our audience that doesn't know, can you tell us more about which country you're from? And when did you come to the U.S.?
MERTHADominican Republican. It's in the Caribbean. I actually came to the United States two years ago. I actually work as a diplomat for the government.
DESJARDINSExcellent. Thank you for your phone call, we appreciate it. What do you make of -- could there be an anti-corruption effect across Latin America from Brazil, anyone? Monica de Bolle.
BOLLEWell, I think most certainly there could be. I mean, Brazil being Brazil and being, you know, such an important player in the region, it is a country that naturally other countries look up to. And of course, you know, the depth of this -- of these investigations, what all the other panelists have already said about it and the way that it's been ongoing, has been setting a new precedent not just for Brazil but I think for the region as a whole. So it can be potentially extremely positive.
DESJARDINSI'm Lisa Desjardins with the PBS NewsHour. You're listening to the Diane Rehm Show. Let's tackle inequality. There are many ways in which Brazil stands out, but certainly as you all have remarked in this hour, this shift in inequality over let's say the last decade has been remarkable. What is happening with that inequality now in Brazil? Monica de Bolle, let's go back to you.
BOLLESo there were three things that were transformative for the country in the last 10 years. So these things were, A, the inclusion of a number of people, as Brian was saying before, the inclusion of a number of people in the so-called middle class on the one hand. Second there was a lot of labor market transformation. So a lot of people who had been in the informal economy, in the informal sector, were able to actually access formal labor markets. That was the third, you know, the third transformation.
FRIEDMANAnd I guess -- the second transformation. And the third transformation really was access to education and the extent to which, you know, a number of people who previously were unable to access education because perhaps they had to leave early and work were now able to actually, you know, spend a few more years in school, and even if the quality of education in Brazil is still very lacking, the very fact that they were able to stay in school longer of course makes a difference.
DESJARDINSPart of the Worker Party programs, as I understand it, would pay families to meet some of these broader goals, like make sure your kids are in school, reward them monetarily for these sort of social improvement ideas.
BOLLEWell exactly. I mean, the origins of the program called Bolsa Familia came from actually Cardoso's government, so the previous government, the PSDB government that came before the Worker's Party government. And the idea of those programs was precisely to get kids into school, especially in less privileged places around the country, where this wasn't possible. The issue that we're seeing now in Brazil, especially in the last year and a half as the crisis deepened, is that these three pillars, in other words, you know, the increasing middle class on the one hand, you know, the labor -- the labor market transformations on the other and the access to education on the third front, these three things are reversing as we speak in view of the very difficult economic situation that we're facing.
DESJARDINSI want to go quickly to the phones and to East Hampton, New York, and JB. JB, you want to ring in on this.
JBYes, thank you for having such a wonderful program about Brazil. We need more of that. And I'm Brazilian, and I moved to the United States about 26 years ago due to the government. The government gave to the people and give every day samba, soccer and Carnival and (unintelligible) and that's the opiate of the people. Schools are being closed every day, and the Brazilians are not learning how to read and write. And I grew up under the dictatorship of General Figueiredo and Garrastazu Medici, and things worked much better.
JBNow nepotism is what is killing the Brazilian society. Every politician wants to bring in 20, 30 members of their families, and they want to do better than the other families, that is stealing more and more.
DESJARDINSJB, I want to -- JB, let me ask you, when you say things were much better then, what do you mean specifically?
JBWe went to school, and if we didn't have the grades, we would not move up to the following grade.
JBNow there is no need for that. You just go to school, and you pick your Bolsa Familia, and you are in business. You don't need to learn how to read or write. And I have nephews who have gone to work in Germany and other countries just because Brazil offers them, and my nephews are all engineers.
DESJARDINSOkay, thank you for that call, JB. Everyone on the panel wants to comment on this. Let me go to Paul Sotero, Paulo.
SOTEROI think it's a simplification. Yes, there are flaws in the program. And by the way, talking about Brazilian Latin America, this program, Bolsa Familia, originates in Mexico actually, let's recognize this. And the other thing that you talk about, what other countries in Latin America can learn from this, actually we had the panel the other day at the Wilson Center, and someone said about the corruption investigations, this is all we hope to have in Mexico what you are going through in Brazil.
SOTEROI think that, you know, we have the opportunity now, when we have the need now, to adjust those programs, the anti-poverty program, to focus the money to achieve better results.
WINTERPaulo mentioned earlier that optimism is Brazil's middle name, and that's -- that's actually rooted in a very rational thing, which is if you read Brazilian history, you see how much things have progressed over the last 60, 70 years, in just one lifetime. To take one specific example, Pele is about 75 years old. When Pele was a kid in the 1940s...
DESJARDINSThe soccer player, I don't know if everyone knows, yes.
WINTERThe soccer player, yes. Half -- in the 1940s, when Pele was a kid, half of Brazil was illiterate. Half of Brazil suffered from malnourishment. Half of Brazil did not wear shoes. These are -- I mean, these are facts. And now literacy is somewhere around 90 percent. Hunger is no longer a major issue. The middle class has grown. And so are there problems? Yes, but if you take the long view on Brazil, it's a tremendously positive story.
DESJARDINSWe could talk about this story forever, but I want to wrap this up by asking a few of you, what are the questions you have for the next few months. What are you watching most closely, Uri Friedman, as you cover Brazil?
FRIEDMANOne thing is just how this political process will play out and who will rise up as a leader, who can get, you know, a significant portion of the population to back them. And I think also a question of what kind of reforms are going to come, political and economic.
DESJARDINSMonica de Bolle?
BOLLEWell, for me the most important thing to sort out in the short term and to signal in the medium term is where the economy is going to go. This is the crucial fact that's going to impede the reversal in middle class transformation that we've seen in the country and, you know, going back to the reduction in inequality that we so desperately need.
DESJARDINSA fascinating story to be continued day by day over the next few weeks. I'm Lisa Desjardins. You've been listening to the -- not the Desjardins show, "The Diane Rehm Show." Thank you for listening.
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