A Tale of Two Brazils

Jocky McLean

Friday 9th September: As Britain prepares to forge free trade deals globally, Jocky McLean, Politeia’s Assistant Director, reflects on the importance of the rule of law for developing economies.

For Brazil, it was not meant to be like this. The Olympic Games are a perfect opportunity to celebrate the host-country’s identity on the world stage. China’s Games of 2008, for example, showed a resurgent country ready to take its place as a super power. London 2012 was also seen as part of developing Britain’s new post-imperial identity. For Brazil, however, the cariocas and caipirinhas of celebrations for having pulled off the Games have been marred by a serious political crisis. For ordinary Brazilians, the Games were a sideshow to the political trial of President Dilma Rousseff for irregularities in the state budget. Shortly after the closing ceremony in August, the senate confirmed the impeachment sentence against Mrs Rousseff, twice elected to the Brazilian presidency, and her removal from office. Meanwhile, much of Brazil’s political class on all party sides has been tarnished by a corruption scandal involving its biggest energy firm Petrobras.

Brazil’s political crisis stems from its rapid deterioration from its former position as a leading member of the BRIC – the phrase coined in 2001 for the emerging economies (ie Brazil, Russia, India and China) group of emerging powers to serious recession. Brazil went into the global financial crisis on solid ground based on high commodity prices and strong capital inflows. In recent years, however, the fall in agricultural and energy commodity prices and a drop in direct foreign investment have led to a fall in GDP and high inflation. The economic contraction of 3 per cent in 2015 has been compounded by a further contraction of 5.4 per cent in the first quarter of 2016. Brazil’s new president, Michel Temer, takes power as the country faces its longest recession since the 1930s, with unemployment reaching 11.6 per cent in July.

The removal of Mrs Rousseff could be a victory for democratic accountability, however murky the process may have been. It may seem odd to people in Britain, that a parliamentary trial can contradict the democratic vote of the people by deposing a directly elected president halfway through her term. For South Americans it brings a breath of fresh air to countries accustomed to allegations of corruption and abuse of power. This time, accountability and the rule of law won the day. In Argentina, the second power in the region, legal accountability was also upheld when in late August leaders of the military dictatorship of 1976-83 were found guilty of human rights crimes by a local court. And again in Colombia, the agreement between the FARC (Revolutionary Armed Forces of Colombia) to lay down their weapons for integration into the formal political system is an important step. And yet, the economic and political crisis of Brazil cannot be resolved by the controversial trial of a President over what most experts deemed a technicality. Brazil must take the value of the rule of law and democratic accountability to the heart of its new government.

For Britain and the interests of international trade, the political instability in the once up-and-coming BRIC economy matters. The success of the global economy will depend on the growth of developing economies; the defence of the rule of law and economic freedoms needs to be a priority for liberal western powers – a role to which Britain is well suited. If Britain after Brexit is to champion free trade, promoting the rule of law could be a foundation for HMGs new foreign policy.

*Jocky McLean is Assistant Director of Politeia.