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A Challenging August for Dilma

Brazil's President Dilma Rousseff (L) talks with Vice President Michel Temer during the launch ceremony of Brazil's 2015/2016 agriculture program, at the Planalto Palace in Brasilia, Brazil, June 2, 2015. Brazil's farm budget for the 2015/16 crop year will be more than 180 billion reais ($57 billion), according to a Tuesday presentation from the ministry of agriculture. An increase of at least 15 percent from last year's budget of 156 billion reais is a surprise, given that President Dilma Rousseff's government is cutting spending this year. Agriculture remains one of few bright spots in Brazil's economy. REUTERS/Bruno Domingos

Brazil’s President Dilma Rousseff talks with Vice President Michel Temer during the launch ceremony of Brazil’s 2015/2016 agriculture program in June.  REUTERS/Bruno Domingos

A poll on Thursday revealed new lows for embattled Brazilian President Dilma Rousseff, with her approval rating hitting eight percent – the lowest of any Brazilian president in the last three decades. Datafolha, the polling institute, found that 71 percent of respondents described her administration as “bad” or “terrible,” up from 65 percent in a June poll. Only eight percent percent described it as “great” or “good,” compared to 10 percent in June. More importantly, Brazilians are fed up – two out of three said they would support her impeachment.

Support for Rousseff’s impeachment has grown in the last several months and has been largely fueled by growing unrest triggered by the country’s worst economic downturn in 25 years. Inflation hit a multiyear high of 9.25 percent in mid-July, and the long-running political kickback scandal at state-run oil company Petroleo Brasileiro (“Petrobras”) has captured headlines.

Although Brazil has a formal mechanism for impeachment and has impeached leaders in the past (former President Fernando Collor de Mello was impeached in September 1992), calls for Rousseff’s impeachment by legislators have so far been muted. Former President Fernando Henrique Cardoso and other senior leaders of the opposition Brazilian Social Democracy Party (PSDB) have so far not publicly backed impeachment. Even one of Rousseff’s main opponents, Eduardo Cunha (speaker of the lower house of Congress) wrote an opinion piece last Friday arguing an impeachment is too risky for Brazil’s fragile democracy.

But legislators’ patience is wearing thin. Last Wednesday, the governing coalition in Congress failed to pass a lower chamber bill intended to raise salaries for police officers, prosecutors and government attorneys. This latest failure comes just six months Dilma’s second term, and it reveals the waning confidence of her allies and a possible turn toward her opponents. Her main ally, the Brazilian Democratic Movement Party (PMDB), reportedly sat down for dinner with senators of the opposition PSDB last week and discussed a potential pact to govern moving forward.

Eurasia Group, a New York-based political risk consulting firm, believes the call for impeachment could be realized if Rousseff’s approval rating continues to drop. Three other conditions must be met: 1.) a direct link between Rousseff and the corruption; 2.) former President Luis Inacio Lula da Silva failing to support the current administration; and 3.) the opposition gathering behind the call for impeachment.

The PSDB is hoping to establish a direct link between Rousseff and bribe money used to fund her re-election campaign. Yet they may not need it – Dilma is now being accused of manipulating government accounts. Should that link be established by a federal audit court ruling in late August, impeachment proceedings by Cunha could be initiated in the lower chamber.

And former president Lula’s support for Rousseff may falter, after news last Monday of another arrest tied to the Petrobras kickbacks – that of Jose Dirceu, the ex-president’s former chief of staff. Lula is also being investigated for helping influence the award of contracts to Odebrecht, a Brazilian construction company, for contracts in Panama and Venezuela. Many of the allegations date back to Lula’s administration and may weaken his standing and ability to protect Rousseff.

The final condition, that of the opposition gathering behind impeachment, could gather steam should Rousseff’s popularity continue to fall and ability to govern become more impaired. Opposition leaders are increasingly facing pressure from protestors, many of whom gathered last Thursday night in major cities to bang pots and honk horns during the television broadcast of a political commercial featuring Rousseff, Lula and other Workers’ Party officials. The next test could come on August 16, when crowds are expected for a nationwide protest against Rousseff – the first protest the PSDB will openly support.



Gary Sands

Gary Sands is a Senior Analyst at Wikistrat, a crowdsourced consultancy, and a Director at Highway West Capital Advisors, a venture capital, project finance and political risk advisory. He has contributed a number of op-eds for Forbes, U.S. News and World Report, Newsweek, Washington Times, The Diplomat, The National Interest, International Policy Digest, Asia Times, EurasiaNet, Eurasia Review, Indo-Pacific Review, the South China Morning Post, and the Global Times. He was previously employed in lending and advisory roles at Shell Capital, ABB Structured Finance, and the U.S. Overseas Private Investment Corporation. He earned his Masters of Business Administration in International Business from the George Washington University in Washington, D.C. and a Bachelor of Science in Finance at the University of Connecticut in Storrs, Connecticut. He spent six years in Shanghai from 2006-2012, four years in Rio de Janeiro, and is currently based in Ho Chi Minh City, Vietnam. Twitter@ForeignDevil666