What President Dilma Rousseff’s Impeachment Means for Brazil-China Relations
The Impeachment process
On May 11th, the Brazilian Senate voted to open impeachment procedures against President Dilma Rousseff, suspending her from office for up to 180 days while she is tried. She is accused of using fiscal maneuvers — delaying payments from the federal government to public banks — to mask the true state of the government’s accounts, and of signing decrees authorizing additional expenses even though the country was facing a budget deficit. According to Brazil’s Fiscal Responsibility Law, these actions constitute “crimes of responsibility”, which can form the basis for an impeachment trial under the Constitution.
President Rousseff’s defense argues that the fiscal maneuvers are a common practice at all levels of Brazilian government, and that the decrees were signed following court orders, and in any case, did not result in any additional spending.
At the end of the trial, the 81-member Senate will take into account the merits of these claims and another vote will be held. If at least 54 senators vote in favor of impeachment, President Rousseff will be permanently removed from office. Otherwise, the process will be shelved and she will be reinstated.
What are President Rousseff’s chances?
When the Senate voted to open the impeachment process, 55 senators approved the motion. Twenty-five parties are represented in the senate, and votes were roughly along party lines. The majority of the centrist PMDB (13 out of 18 senators) and the entirety of the center-right PSDB (11 senators) voted in favor, with the support of other conservative parties including PP (six senators), PR and DEM (four senators each). President Rousseff’s PT (11 senators) was supported by small left-wing parties and a dissident group of PMDB members. If this voting pattern were to be repeated, president Rousseff would be in fact be impeached.
However, a lot can happen within the next six months. As investigations into the Petrobras corruption scheme continue, it is possible that senators may be suspended or arrested, as was the case with Delcídio do Amaral, formerly of PT. In this regard, PP, PMDB, and PSDB are the most vulnerable parties, as they have the largest amount of senators under investigation. Already, a leaked telephone conversation featuring Minister of Planning Romero Jucá, a senator for PMDB, discussing the possibility of weakening the investigations, led him to temporarily step down from his ministerial post on May 24th.
Any further missteps from the Temer government or its allies before the final vote could push away many of the smaller parties that supported impeachment, but are not ideologically aligned with PMDB. In this regard, the left-leaning PSB (7 senators) could prove crucial. With this in mind, and considering the pressure that can be exerted by protests on the streets, president Rousseff’s impeachment is by no means a foregone conclusion.
What does this mean for Brazil’s foreign relations?
When the Senate voted on President Rousseff’s suspension, Vice President Michel Temer, from PMDB, was sworn in as acting president. He immediately set out to reorganize the government, reducing the number of ministries and naming a nearly entirely new cabinet. He was widely criticized for his choices: there were no women or minorities among the 23 ministers, but there were seven politicians under investigation for corruption. Further, Brazilian actors and filmmakers protested the extinction of the Ministry of Culture in a very visible fashion at the Cannes Film Festival, characterizing the change in government as a coup. The scene was a public relations nightmare, and on May 21st, Temer announced he would recreate the ministry.
Among the new ministers, perhaps the one with the highest profile is José Serra, the new Minister of Foreign Affairs. Serra, an economist who helped found both PMDB and PSDB, and is currently a senator for the latter, ran twice for presidency, losing to Luiz Inácio Lula da Silva in 2002 and to Dilma Rousseff in 2010. Although he is among the ministers investigated for corruption, it is widely believed that he will use his tenure in the ministry as a base on which to build his campaign platform for the 2018 presidential elections. Given this objective, he is likely to seek short term victories and pursue visible gestures that he can present to the public as proof of his competence.
Serra is not known as a particularly good speaker, and in fact, is the first non-diplomat to head the ministry since the 1990s, but his high-profile is expected to return the ministry to relevance. Several years of neglect under Dilma Rousseff’s presidency have left its finances in shambles, with R$3 billion owed to international organizations and R$3.7 billion owed to international banks. As a first measure, Serra requested R$800 million from the Ministry of Planning to attend to the most immediate demands, although the scandal involving Minister Jucá, a personal friend of Serra’s, may jeopardize the disbursement. Among the cost-cutting measures being considered is the closing of diplomatic outposts in Africa and the Caribbean, which are already being audited.
Serra’s New Foreign Policy Directives
In his inauguration speech as minister, Serra also laid out ten directives that he would have the ministry follow during his tenure. Although they don’t necessarily indicate a break with Brazil’s diplomatic traditions, they do indicate a change in tone. The ten directives are as follows:
1. Brazilian diplomacy will reflect the interests of the country, and not those of a single party and its allies.
2. Brazil will speak out in favor of democracy and human rights in all countries and regimes, following international treaties and the principle of non-interference.
3. Brazil will assume special responsibilities on environmental matters, taking on a proactive role on climate change and sustainable development.
4. In the United Nations and other global forums, Brazil will work towards peaceful, negotiated solutions to international conflicts, focusing on the factors the lead to financial and commercial crises.
5. Brazil will not limit itself to the paralyzing adhesion to multilateral negotiations in the World Trade Organization to the detriment of bilateral free trade agreements.
6. Brazil will open new commercial negotiations, using access to its vast domestic market as a bargaining chip, seeking negotiated solutions based on reciprocity.
7. Brazil will focus on its partnership with Argentina, which is seeking a similar economic and political reorganization, and will seek contact with the Pacific Alliance, taking advantage of complementarities.
8. Brazil will seek to increase exchanges with traditional partners such as the United States, Europe and Japan, working with the United States in the short term to further the removal of non-tariff barriers to trade and strengthen partnerships related to energy, the environment, science, technology and education.
9. Brazil will also prioritize relations with Asia, namely China and India, while maintaining strong ties to Africa based on cost-benefit analyses. Interregional forums, such as BRICS, will be used to accelerate commercial exchanges, investments and the sharing of experiences.
10. Brazil’s foreign trade policies will always be based on sound economic analyses, investing in productivity and competitiveness, with an emphasis on reducing the so-called “Brazil cost”.
With regards to the first directive, the Ministry of Foreign Affairs took a heavy-handed tone in notes responding to criticisms from the Union of South American Nations and from Venezuela, Cuba, Bolivia, Ecuador, Nicaragua, and El Salvador regarding the impeachment process, indicating that the new administration is willing to confront those who question its legitimacy. The aforementioned countries were considered partners by Brazil’s previous government, with which they shared an ideological alignment.
Most other countries, including European nations, Russia, China, have abstained from official statements regarding the new administration. The American ambassador to the Organization of American States, however, defended the legality of the impeachment process, stating categorically that it was not a coup. This view was supported by Argentina, which Serra visited on May 23rd, signing a Memorandum of Understanding for the Establishment of a Bilateral Mechanism for Political Coordination with Argentine Foreign Minister Susana Malcorra.
What about China?
Despite the change in tone against left-leaning countries and talk about promoting human rights and democracy, Brazil’s strategic partnership with China is unlikely to be significantly affected by Serra’s tenure. Regardless of which government is in power in Brazil, a healthy trade and investment relationship with China is considered crucial for the Brazilian economy, and China’s support would be instrumental for any international initiative Brazil may pursue. From a both an economic and a foreign policy standpoint, therefore, any ongoing projects should continue unimpeded. At the same time, a potential easing of constraints on bilateral commercial negotiations in the context of the Mercosur could open new opportunities for engagement.
Chinese support will be particularly important in the context of Serra’s tenth directive. Reducing the so-called “Brazil cost”, which refers to the added costs of logistical inefficiency, will require immense investments in infrastructure, particularly in energy and transport. China State Grid, China Three Gorges, CNPC and CNOOC could be joined by other companies, which may enticed by a devalued real and the space opened by penalties against Brazil’s largest construction companies due to their involvement in the Petrobras corruption scandal. Although Temer’s administration may try to cut through some of the red tape in order to accelerate investments, safeguards regarding environmental and social concerns should still stand.
Brazil also presents some challenges, with the added risk of an unstable political, economic and social situation. With rising unemployment, high inflation and an increasingly polarized political scene, protesters could return to the streets at any moment, and the Olympic Games, when the world’s eyes turn to Rio de Janeiro, will present the new government with litmus test.
Rapprochement with the United States and traditional partners
What remains to be seen is whether Temer and Serra are serious about a rapprochement with the United States. Notwithstanding a recent warming, Brazil has kept its distance from the United States throughout Dilma Rousseff’s presidency, with the state of the bilateral relationship punctuated by the NSA eavesdropping affair in 2013.
There are indications that would suggest that both the acting president and the minister of foreign affairs would be active in seeking a healthier dialogue with Washington.
In 2010, Wikileaks revealed conversations which took place in 2009 between Serra, then a serious contender for the presidency, and an executive for the oil company Chevron. Serra reassured the executive that Brazil would eventually open up the pre-salt oil fields to foreign companies, eliminating the concession model which grants Petrobras exclusive exploration rights and a 30% minimum stake in consortiums. Those statements responded to concerns expressed by American diplomats that their companies would be excluded from the market. Indeed, Temer’s chief minister, Eliseu Padilha, announced on May 23rd, that it was indeed the new government’s intention to ease those requirements.
Temer was also featured among Wikileaks’ releases. American diplomatic cables published in 2011 show that he acted as an informant, liaising with the American consulate in São Paulo in the lead up to the 2006 elections. He directly criticized President Lula da Silva’s administration and corruption in the PT, and admitted that PMDB might be willing to withdraw its support or even present its own candidate for the presidency, although it wound up supporting Lula’s reelection. At the time, Temer stated that PMDB supported the Free Trade Area of the Americas, an American initiative which ultimately floundered due to lack of support and disagreements over agricultural subsidies and intellectual property rights. Serra’s mention of using market access as a bargaining chip to reduce non-tariff barriers indicates that Brazil may pursue a bilateral solution to the impasse.
On their own, these cases may not indicate that the United States will be prioritized, and the White House has not reportedly contacted Temer, but Serra’s statements and the American ambassador to the OAS’s defense of the impeachment’s legality, can be considered gestures in that direction.
Thus far, the United States, as well as most European countries and other so-called traditional partners such as Japan and Australia, have been cautious to openly embrace an interim government that may not be around for long. Over the next months, however, as the outcome of the impeachment process becomes easier to predict, we may see countries commit to clearer positions. For now, only one thing is certain: in Brazil, anything can happen.
