Foreign Policy Blogs

Corruption Always Foreshadows a Future Economic Downgrade

Critics of Putin’s Russia have recently taken to public forums to promote the idea that Mr. Putin himself is in the unique position of being seen as a public hero, while amassing a great deal of personal wealth. To some, he was the one Russian leader who could fight the oligarchs for the sake of the Russian public. According to critics, he has taken so much money from state institutions and preferred oligarchs that he is conceivably the wealthiest individual in the world today.

Putin has been able to keep his reputation above water in Russia by appealing to long standing popular ideas among the Russian public. Controlling the media message and removing opposition voices has left Putin in power and maintains his wealth. While Russia’s economy dives further into the red and Brazil’s becomes an economist’s unfriendly puzzle, corruption feeds into economic policy and political decisions are made to simply maintain undeserved power.

Along with Russia, fellow BRICS nation Brazil has taken a turn for the worst. A hard fought political campaign last year edged incumbent Brazilian President Dilma Rousseff back into power, but a recent scandal with Petrobras, Brazil’s national oil company, has amplified the public narrative of corruption and waste against her government. The scandal shows that many government officials from her PT party may have taken kickbacks, diverting at least one billion dollars away from suffering public.

Brazil started to show signs of issues when large development projects announced by the government made many in the public weary. After years of economic turmoil before the mid-90s, Brazilians always lent a cautious eye to government actions. With a boom in the BRICS nations, Brazil was seen as success story for all those who did not want to know much about Brazil’s systemic problems. For years, spending projects were there to pull in FDI and R+D. The public kept an eye on their government, expecting a scandal in many cases. With a recent corruption scandal

Now, the mood of the average Brazilian is a mixture of burnt patience and well abused apathy as Brazil is facing few economic options and a recession. The Brazilian public feels truly offended that a wasted opportunity may quickly lead to another lost generation. President Rousseff has been unable to control the narrative, as corruption and the low expectation the public has for government officials cascades over all political issues in Brazil. The scandal has helped drop her approval rating to 28 percent, and may reignite the 2014 FIFA related protests as government spending and corruption blanket the upcoming Olympics and other policy initiatives.

The BRICS nations, of which Brazil and Russia are both part, were seen as these enormous mega-economies that would dominate the world financial order in the next generation. So much currency — reputational and actual — was diverted to these countries that they were able to weather the 2009 recession without major economic losses. While hopes of robust economic development were valid, structural issues of red tape, bureaucratic stalemates and old fashioned corruption halted much of their future potential growth.

But the effect of a one billion dollar loss to the public purse is devastating. Without the elimination of corruption through strong, vocal and effective legal actions and a re-enforcement of trust between the government and the public, there is little success for anyone in those regions beyond a few individuals or a leading political party. For both Russia and Brazil, though, it seems like corruption isn’t going anywhere anytime soon.

 

Author

Richard Basas
Richard Basas

Richard Basas, a Canadian Masters Level Law student educated in Spain, England, and Canada (U of London MA 2003 LL.M., 2007), has worked researching for CSIS and as a Reporter for the Latin America Advisor. He went on to study his MA in Latin American Political Economy in London with the University of London and LSE. Subsequently, Rich followed his career into Law focusing mostly on International Commerce and EU-Americas issues. He has worked for many commercial and legal organisations as well as within the Refugee Protection Community in Toronto, Canada, representing detained non-status indivduals residing in Canada. Rich will go on to study his PhD in International Law.

Areas of Focus:
Law; Economics and Commerce; Americas; Europe; Refugees; Immigration

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