BRAZIL: On the Verge?

ANALYSIS-Brazil scandals corrode democracy, growth

Apr 23, 2009 13:22 EST

* Majority of Brazilians wants Congress closed
* Corrupt, inefficient Congress hamstrings economy
* Pressure mounts for sweeping political reform

By Raymond Colitt

BRASILIA (Reuters) - Political scandals are so common in Brazil that many Brazilians have grown not to expect much from lawmakers.

But the petty scams uncovered in Congress in recent weeks have been met with a public uproar, resurrecting calls for electoral reforms while also exposing latent political risks that hold back Latin America's largest economy.

Scores of legislators admitted to using taxpayer money to bankroll air fares for relatives, pay phantom employees and even household servants. One senator's daughter spent 14,000 reais ($6,306) using his official cell phone while on vacation.

Some congressmen sold their quota of congressional postal services and airline tickets, one of which was unknowingly bought by the head of the supreme court.

The shenanigans are the latest in a long laundry list of shady behavior by public officials in Brazil and struck a chord with an electorate increasingly fed up with a Congress that appears detached from reality.

They also highlighted the challenges that Brazil faces to forge a more transparent political culture, a task that has eluded President Luiz Inacio Lula da Silva, whose government has been dogged by a series of corruption scandals.

"Brazilian society is stupefied by the discovery that its representatives in the National Congress have lost all sense of moral sensibility," the O Estado de S.Paulo newspaper said in a recent editorial.

Polls show less than 1 percent of Brazilians trust Congress and more than half favor closing either or both of its houses, posing a threat to the country's relatively young democracy.

"One of the pillar's of Brazil's democracy is cracked," said Gil Castello Branco, of the anti-corruption group Contas Abertas, or Open Accounts, in the capital Brasilia.

"This is worrying in a country with a long authoritarian past," he added, referring to Brazil's 1964-85 military rule.

POLITICAL RISK

Compared to some of its neighbors, where nationalization and social unrest are prevalent, Brazil looks like a beacon of stability. It won an investment-grade credit rating in 2008 and its economy has grown by around 5 percent annually in recent years.

But Brazil's corruption-plagued legislature is slow and inefficient. Its governing coalition is fragile. Much-needed reforms of costly pension benefits as well as unwieldy tax and labor laws have been stuck for years.

"This reform is not a technical but a political problem," Jorge Gerdau Johannpeter, chairman of Brazilian steelmaker Gerdau, said in reference to a stalled bill that would simplify taxes.

"Regarding labor rights, Brazil is out of touch with the global reality," Gerdau told the Senate last week, adding that Brazil's inefficiencies resurfaced during the global crisis.

In 2005, Lula was pushed to the brink of an impeachment process because his party admitted to illegally raising funds for its own campaigns and that of allied legislators. The opposition claims it was buying votes.

Lula, like his four predecessors since democracy was restored, failed to advance a sweeping political reform he pledged during his 2006 re-election campaign to tighten lax campaign financing rules, increase party discipline, and make elections more representative.

"Pushing Congress on these issues would carry a huge political cost," said political consultant Jose Luciano Dias. "So, he's hostage to that mess in Congress."

Under Brazil's complex electoral laws, voters have little direct representation in Congress, meaning legislators have no specific constituencies that hold them responsible.

A lack of clear campaign financing rules means that legislators frequently bend the rules to pay for campaigns.

"Shadow employees, expenses, perks -- much of that pays back campaigners that got congressmen elected," said Dias.

The latest round of corruption allegations was triggered by disputes between governing parties over lucrative leadership posts, underscoring how fragile Lula's 11-party coalition is.

Under public pressure to get tough on fraud, Congress said Wednesday that spouses, children and designated advisors would no longer be entitled to free airline tickets.

But even legislators say they must go much further to gain the public's confidence and repair Congress' reputation.

"We need to overhaul not only our air travel policy but the whole of politics in our country," said Senator Pedro Simon of the centrist PMDB party, the largest in Lula's coalition.

"Brazil cannot be the land of impunity, where only chicken thieves go to prison."


(Editing by Todd Benson and Vicki Allen)






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