Slaying the Octopus
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Slaying the Octopus

Moral corruption of Brasil’s political system is how the country’s special interests, especially its wealthy, preserve power and influence.
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It was at 2am on the morning of August 24th, 1954 that the most dramatic cabinet meeting in the history of Brazil began. Presiding over it in Rio de Janeiro’s Catete Palace was Getúlio Vargas, a former dictator now the elected president of the republic who faced a mutiny in the armed forces. As his war minister, Zenóbio da Costa, detailed the extent of the rebellion in the ranks the door suddenly burst open, making everyone at the already tense meeting jump in their seats. It was not mutinous soldiers but members of the Vargas clan, led by the president’s daughter and closest confidante, Alzira, determined not to be excluded from a meeting that would decide the fate of the family that had dominated Brazilian politics for the preceding quarter century.

Amidst what Alzira would later describe as “honesty, interest, courage, cowardice, a desire to help, the will to betray, friendship and repressed hatreds” the cabinet debated how to respond to the military’s demand that Vargas resign. General Zenóbio warned that defiance would “provoke the spilling of blood”. Justice minister Tancredo Neves urged resistance in defence of the constitutional order, only to be told by the chiefs of the navy and air force that those in uniform who had not joined the mutiny would nevertheless do nothing to prevent it succeeding.
As the debate swirled around him Vargas, according to his daughter, had a smile “of indifference, of stoicism, and I would say more, of profound contempt for what was happening”. Indifference had always been central to Vargas’s political career. Indifferent to ideology, indifferent to allies, indifferent to enemies, he was a mercurial figure who well deserved his nickname of the Sphinx.Though his fame abroad is eclipsed by his Argentine contemporary Juan Domingo Perón, Vargas is the weightier figure, arguably the most important in modern South American history. Perón took a wealthy developed nation and helped set it on the path to decline. Vargas seized control of a backward giant and laid the foundations for its transformation into one of the world’s largest economies. His political legacy nonetheless is an enigmatic one ‑ though rooted in fascism it is now mostly claimed by the left he once persecuted.

Born just seven years before the overthrow of the Bragança monarchy in 1889, Vargas was raised in the positivism of Brazil’s Old Republic. By the time he overthrew it in the revolution of 1930 he was a confessed admirer of Mussolini, though he led Brazil into World War II on the side of the Allies, sending troops to fight in Italy against the remnants of the regime his corporatist Estado Novo (New State) dictatorship imitated in so many ways. He was removed in a palace coup in 1945 as Brazil’s elite tired of the repression it now considered anachronistic in light of the defeat of the Axis powers. There was no tropical götterdämmerung. The dictatorial phase of Vargas’s passage through Brazil’ history was brutal, repressive but never totalitarian, despite some of the trappings. His exit was peaceful because it was a tactical retreat, not a final defeat. He returned to his family’s ranch near the Argentine border in Rio Grande do Sul and from there patiently plotted his return to power. This was facilitated by his huge appeal among Brazil’s rapidly expanding working class,  whichhad seen its movements politically neutered by the Estado Novo but had benefited handsomely from the dictatorship’s labour laws and policy of national industrial development which supplanted the coffee-baron economy of the Old Republic. In the new democratic dispensation Vargas remodelled himself as a populist and capitalising on his position as Pai dos Pobres – Father of the Poor – offered himself as an instrument of the will of O Povo Brasileiro, that mythical entity known as the Brazilian People.

vargasposter
In this role he positioned himself against international capital and the country’s elite now gathered in the National Democratic Union (UDN). In the presidential election of 1950 he expunged the stain of 1945 by winning a clear mandate against the UDN’s candidate, an air force marshal who had fought with him in the revolution of 1930 but broke with him over the creation of the Estado Novo. Once in power Vargas handed the UDN five cabinet posts while relegating his most fervent backers, organised in the Brazilian Labour Party (PTB), to a minor role in his government. Such a conciliatory gesture was not just a concession to democratic times. Even during his dictatorship Vargas had always shown a willingness to co-opt enemies when possible. He was a nationalist moderniser rather than a hardened ideologue. There was always something of the positivist technocratic manager about his presidencies. He wanted to realise Brazil’s potential rather than overthrow existing orders in the pursuit of new utopias. Hence his crushing of the country’s biggest fascist party in 1938, just three years after he put down a would-be communist revolution.

But in a democracy there was less incentive to accept the hand offered than during the Estado Novo. Despite the cabinet gesture the UDN and much of Brazil’s press never accepted their democratic defeat at the hands of the former dictator turned populist. Unfortunately for Vargas he provided the context for this irascible opposition by continuing the old Brazilian practice of using public money for private ends, specifically placing the state-owned Banco do Brasil at the disposal of favoured businessmen. Anger at political corruption and the manipulation of the state apparatus by the coffee barons underpinned the Revolution of 1930. But graft accusations had clouded the end of the Estado Novo and were now resurrected following evidence the bank had provided cheap loans to help a friend of the president to set up a pro-government newspaper.

This allowed the opposition press, led by the journalist Carlos Lacerda, a former communist sympathiser turned UDN politician, to lead a ferocious campaign against him that polarised the country. This state of affairs exploded into the crisis of August 1954, when a gunman attacked Lacerda as he returned home one night to his apartment in Copacabana. Lacerda survived but his bodyguard, a young air force officer who supported his campaign against his own commander-in-chief, was killed. The young airman’s death meant a political crisis was now also a military one. Investigators quickly uncovered the involvement of Vargas’s own security detail, and its head, Gregório Fortunato, the son of slaves who for years had acted as the president’s personal bodyguard. It turned out that the “Black Angel” had used his proximity to power to traffic influence, allowing him to build up a large personal fortune. Involved in his illicit business dealings was Vargas’s own son Maneco. The revelations profoundly shook the president, who told his finance minister: “Underneath Catete there is a sea of mud.”

The cabinet meeting in the early hours of August 24th broke up at 4.20am with no agreement :on how to respond to the military rebellion. Leaving the room, Vargas told his cabinet “Seeing as you sirs have not decided, I will decide”, hinting that he would seek a leave of absence until the investigation into the attack on Lacerda was concluded. But it was a diversionary tactic. At 8:35am a shot was heard in the palace. Sitting up in bed in his striped pyjamas, Vargas had committed suicide with a Colt .32.

He left a suicide note that is one of the most famous political documents in Brazilian history. In it he claimed he was the victim of a plot by the elite and foreign financial interests because of his defence of “the people and principally the humble” through his policies of raising the minimum wage and promoting state-led industrial development. An agnostic, he deployed religious imagery to portray himself as a martyr for the people: “[T]his people who were slaves will no longer be the slaves of anyone. My sacrifice will stay forever in your soul and my blood will be the price of your rescue. Serenely,” he concluded, “I take the first step on the path to eternity and I leave life to enter into History.” Nowhere was there any mention of the “sea of mud”.

Though he had lost the physical and intellectual vigour of his dictatorial phase, Vargas’s suicide was not born of desperation or exhaustion but was rather a supremely calculated political act, as the note makes clear. Broadcast on the radio, it turned the tables on the mutineers and their supporters in the press and UDN. Furious crowds ransacked opposition pressrooms and hundreds of thousands turned out to see Vargas’s coffin leave Rio on its journey back to Rio Grande do Sul. The outpouring of rage and grief made clear, just as the 1950 election had, that in Brazil, with its vast pool of misery and its cruel caste-like inequality, any leader who could raise the living standards of the poor would be forgiven many crimes.

With Vargas dead, power passed to his vice-president and just over a year later the Varguista governor of Minas Gerais, Jucelino Kubitschek, won presidential elections. Lacerda launched a campaign to try and prevent him from being sworn in but in the aftermath of the popular tumult provoked by the suicide there was now no appetite among the military for unconstitutional meddling. With his death at his own hand Vargas had delayed a right-wing coup against his populist movement by a decade, with the generals finally moving in only in 1964 when, backed by the business elite, the middle class, the Catholic Church and the Johnson administration in the US, they ejected Vargas’s former labour minister, João Goulart, from the presidency.

Sixty years on, 1954 and Vargas’s end was recalled by many Brazilians during the second half of 2014. An avid reader, during the bitterly polarised presidential election campaign President Dilma Rousseff relaxed by reading the third volume of Brazilian journalist Lira Neto’s sweeping biography of Vargas, which like the two before it was a national bestseller. She will have spotted many similarities with contemporary politics. Like Vargas, she was running on the social achievements of the Workers Party (PT) since it entered power in 2003 while her opponents made much use of accusations that her government was up to the old crime of fleecing the public sector for private gain.

Neto himself wondered publicly if there was not a “whiff of 1954” about the campaign being waged by the conservative press against Dilma, as she is known to friend and foe alike. In 1954 it was Banco do Brasil at the centre of accusations. Perhaps fittingly, in 2014 it was Petrobras, the state-owned oil company founded by Vargas in 1953 and one of the pillars of Brazil’s state-led industrial development ‑ an iconic symbol of national pride.
Since March, the company has been at the centre of a corruption hurricane – scandal does not do justice to the scale of events unfolding. Federal prosecutors have uncovered what they say is a scheme operated by Dilma’s allies which siphoned billions out of the company. The scheme allegedly operated through companies paying politicians from the ruling coalition bribes to win Petrobras contracts, sums which were then recycled into illicit campaign funds. It seems clear that in return the contractors were then to massively overbill for work done to recover the original expense and thus, as an extra sweetener, boost their profits at the public’s expense, some of which were finally passed onto politicians as licit campaign contributions. A Double Brazilian of sorts.

The prosecutors’ case is being built with the aid of Petrobras’s former downstream director, Paulo Roberto Costa, who was responsible for some of the company’s largest projects, including a new generation of refineries. For almost a decade Petrobras has been unable and unwilling to explain exploding costs at developments such as the new Abreu e Lima refinery outside Recife, which ‑ originally budgeted for less than $2 billion ‑ is now set to cost around $20 billion. The criminal investigation is now providing some of the answers Petrobras would not.
Arrested and charged with corruption, Costa plea-bargained and is offering up what he knows in return for a reduced sentence. That cooperation has seemingly allowed investigators to map out a web of corruption that links ministers in Dilma’s cabinet, key senate allies, her own Workers Party treasurer and coalition partners to some of the biggest names in Brazilian business and figures from the financial sector of Brazil’s criminal underworld.
For months the media have been able to run almost daily updates as police and prosecutors widen the net. Businessmen are now in prison being questioned about what they know while government politicians wait for the next round of charges in which they are expected to feature heavily. The strategic (and illegal) leaks to the press from inside the investigation have sparked a debate about political manipulation by interested parties. Members of congress find their time increasingly dominated by the case as they chase after prosecutors in a bid to cover up their own efforts to bury previous investigations. There are mutual accusations and mutual denials and the overwhelming sense that the Petrolão affair will get worse before it ever gets better.

All this is already a major threat to the president, with the risk that it could turn existential. Brazilians are by nature cynical about political corruption, which has been a constant of public life since the nineteenth century, creating a sense of impunity. But it can be politically lethal for politicians. After all, a corruption scandal toppled President Fernando Collor as recently as 1992, while  accusations of wrongdoing played a significant role in the removal of Washington Luís by Vargas, in the fall of Vargas himself and of his political heir Goulart.
Since the PT came to power in 2003 Dilma has served as energy minister, chair of the Petrobras board and president of the republic. She has denied all knowledge of wrongdoing in the company and has in turn claimed that anyone using details of the investigation to attack Petrobras and by extension her government is unpatriotic, before changing tack and insisting that the problem has now been cleared up, then as the dimensions of the case became clearer, finally offering to lead a crusade against corruption in public life.

Despite the best efforts of the press, however, the scandal did not cost her her re-election. It contributed to a far closer and more bitter campaign than would have been expected just a year before. The anti-government media made great use of the case against her, culminating in a nebulously sourced and ethically dubious cover of the last edition of Veja, the country’s largest-selling magazine, to come out before the final vote which claimed she in fact knew all along of corruption inside Petrobras.

But she won. Proving Vargas right once again, a majority of Brazilians decided that the PT’s efforts to improve the lives of tens of millions of the poor trumped the fact that after twelve years in power it is now as corrupt as the regimes that preceded it, breaking one of its foundational promises to clean up public life.
The irony is that most serious commentators accept that President Dilma is herself personally honest and has sought to run a clean administration. In her first year in power she forced out eight ministers, seven over corruption allegations. But Brazil’s corruption problem is not a question of personnel but rather systemic. Its elections are among the most expensive in the world and the constitution delivers a fragmented congress to each president who must then build a coalition from among parties that care little for ideology but greatly for over twenty-two thousand positions in the public sector that are in a president’s gift and provide the opportunities to illicitly source the funds for those costly elections. Costa was the political appointee of one of the PT’s partners ‑ the Partido Progressista (PP). Once it had installed Costa in Petrobras it operated as if it had carte blanche to use him to redirect vast sums of public money into its party coffers. Or so says Costa himself.

Many of the failings of Dilma’s presidency – and in the area of the economy they are many – are the result of her disdain for the practitioners of this political game. Despite a huge majority in congress, she has managed to pass little legislation of importance because each bill requires bartering with her own grasping base, something she seems loath to do. Therefore it is conceivable that she did not know about or participate in the corruption within Petrobras. But it is also conceivable that she knew where not to look and what not to ask. After all she must have wondered about the insane escalation of costs at a company she has had a large measure of responsibility for during the last twelve years. Did she not inquire because to do so would have forced a decision between complicity and resignation at a time when she was ‑ to the surprise of everyone, probably including herself ‑ set fair for the presidency?

On reaching the Planalto Palace, which replaced the one in Catete after Kubitschek moved the capital to Brasília, Dilma promised to work for political reform but has failed utterly to advance the issue. This failure is rooted in the manner in which she won the presidency, or rather the manner in which her political mentor, Luiz Inácio Lula da Silva, won it for her. A recent blow-in, having only joined the party in 2000, she had no base of her own in the PT and thanks to her fierce temper few friends among its upper echelons after half a decade operating as Lula’s cabinet enforcer. She was unknown to the public and a poor platform speaker. It is fair to say that she wholly owes her victory in 2010’s presidential election to Lula ‑ a brilliant political operator who managed to transfer his huge personal appeal to a successor utterly unlike him in every conceivable way.

Thus Dilma entered the Planalto with little political capital of her own. To her credit she has sought to carve out her own independent space where she can operate autonomously of her mentor. But she lacks political instincts. Displays of political nous are too infrequent, crippling those efforts to accumulate political credit. Her poor management of the economy, made worse by her micro-managing interventionist tendencies, has further hampered her.

And so, despite wearing the presidential sash, she has little hope of leading any reform movement. Her one headline-grabbing effort to do so came during the mass street protests in June of 2013 when protests against poor public services turned into a cri de coeur against the corruption of the political system. But she beat a hasty retreat in the face of opposition in congress, led by her own coalition partners. As president she never looked weaker, quietly shelving the idea within days of announcing it. She sits atop a system she probably loathes but which, despite being president, she has no power to transform.

Lula in contrast has a huge stock of political capital. He has the best claim to be Vargas’s successor as Pai dos Pobres, in part because he is one of them, in part because during his eight years in power his economic and social policies did so much to advance their interests. But he is also respected by much of the country’s business class who always found his door open to them and never made as much money as they did while he was president. His own dominance of the political system was demonstrated by turning the unknown and unlikeable Ministra Rousseff into President Dilma and he is the favourite to succeed his successor in 2018’s election.

It is thus a tragedy that on coming to power Lula did not remain faithful to the PT’s original commitment to probity in public life as more than anyone else among his generation he combines the personal mass appeal and backroom negotiating skills that will be needed to enact political reform. Why he did not only he can answer and given his insistence that PT scandals only show how no party has done more to combat corruption means he is unlikely to do so soon.

The last claim has an element of truth to it. Never before in Brazilian public life have federal police and prosecutors been as free to investigate and charge politicians and their confederates in the private sector for corruption. Chief prosecutors who have investigated the PT owe their appointments to Lula and Dilma. Which only makes it all the more strange that having given the relevant state organs the autonomy to investigate political corruption the PT continued to practise it. It seems to show breathtaking stupidity, or arrogance, or desperation, or perhaps a combination of all three. Political need is part of it. Lula once said that Jesus would have to work with Judas in order to govern Brazil and the off-ledger costs of building coalitions explain the moral swamp the PT is now stuck in. Governability has required an alliance of convenience with the Democratic Movement of Brazil (PMDB) and its leaders, such as José Sarney – former stalwart of military rule, the first civilian president after the dictatorship and kleptocratic overlord of the state of Maranhão, one of Brazil’s internal banana republics. Another key PMDB ally, Renan Calheiros, current head of the senate, well represents what is increasingly the criminalisation of Brazil’s political class. Several cases against him built by public prosecutors languish in the in-tray of the supreme court. Among the accusations made by former business partners is that, like a traditional mafioso, he controlled illegal gambling in his home state Alagoas, statistically Brazil’s most backward. In Rio de Janeiro, the country’s third most populous state, Lula built a close working relationship with its PMDB governor, Sergio Cabral, who was even rumoured to be a possible running-mate for Dilma in 2010. Cabral was from a well-known intellectual Rio family but in power pimped himself to organised crime, whose armed militias had helped get out his vote in the poor Rio suburbs they control. With federal money flooding into the dilapidated state capital ahead of the World Cup and Olympics Cabral set about directing much of it towards the Delta construction company until it was revealed the firm was controlled by the underworld figure Carlinhos Cachoeira (Charlie Waterfall), an illegal gambling kingpin in Brazil’s midwest. The personal relationship between Cachoeira and Cabral came to light as the girlfriend of the governor’s son died when a helicopter owned by Delta crashed while bringing her to a party to celebrate Cachoeira’s birthday. Cabral was also to attend the celebrations.

In 2012 in a bid to have his education minister elected mayor of São Paulo, Lula forged an alliance with Paulo Maluf, the dictatorship’s candidate for the presidency in 1985, beaten in a restricted vote by Tancredo Neves, who died before he could take office, with power thus passing to Sarney. Maluf, a member of the PP that secured Costa his role in Petrobras, cannot step foot outside Brazil as he is wanted on an Interpol warrant in connection with the theft of tens of millions of dollars in public funds from his time as mayor of São Paulo, Brazil’s biggest city. The footage of Lula embracing one of the icons of Brazil’s corrupt, reactionary politics so disgusted Haddad’s running mate that she quit the race. But Lula was not perturbed and won Maluf’s backing for Dilma’s re-election bid. He showed up to vote in a Ferrari.

These cases postdate the PT’s arrival in power but Lula’s problems with corruption go back further than most Brazilians, especially his supporters, now care to remember. The first major scandal to hit the PT had its origins as far back as 1993 when one of the party’s founder members, Paulo de Tarso Venceslau, started denouncing what he said was corruption in PT-run municipalities. The private company involved was Cpem, which offered consulting services to PT-run city halls. Venceslau, a former guerrilla who took part in the kidnapping of a US ambassador in 1969, said the company was paying kickbacks to the PT. The party investigated and he was expelled, while Lula denied any knowledge of wrongdoing, even after it was discovered that Cpem’s lawyer was godfather to his youngest son.

Then, in 2000, Celso Daniel, the PT mayor in the São Paulo satellite city of Santo André and the man lined up to be Lula’s campaign manager in 2002’s presidential election, was kidnapped and murdered. The police declared it an ordinary crime but Daniel’s family, also members of the party, never believed this, claiming their brother was murdered because he had uncovered a corruption scheme that saw municipal contractors pay kickbacks to the PT. Daniel’s brother João Francisco even claimed that his brother’s right hand man, Gilberto Carvalho, once told him how he transported bags of cash to the party’s then president, José Dirceu. Fourteen years later the investigation drags on, made more difficult by the violent deaths of seven people involved in the murder.
Carvalho went on to serve both Lula and Dilma in cabinet before stepping down after Dilma’s re-election victory. But José Dirceu, the man he allegedly delivered the stolen cash to, is currently under house arrest serving the remainder of a seven year and eleven month jail sentence for his role in the mensalão scandal, which saw him and other senior officers in the PT siphon off money from the same Banco do Brasil that Vargas was accused of tapping in order to buy votes in congress, tellingly not from independents or opposition deputies, but among the government’s own base.

When it broke in 2005 the mensalão affair came close to toppling Lula. One of the revelations to come out was that the PR guru of his successful 2002 presidential bid received non-declared payments offshore, which is to say Lula’s charge to the presidency broke the law. It is hard to overstate Dirceu’s influence within the PT and Lula’s first government. He was the party’s likely candidate to succeed him when the time came. Lula once again claimed no knowledge of any wrongdoing, declaring himself shocked at the details. But later he tried to row back claiming the case had nothing to do with vote-buying and was no more than illegal campaign financing, itself a crime bankrolled by stealing from taxpayers. Brazil’s supreme court, including justices appointed by Lula and Dilma, found differently and convicted Dirceu, along with the PT’s president and treasurer.

A year later Lula lost Antonio Palocci, his first finance minister. He was forced out after being caught lying about his presence at parties attended by politicians and lobbyists from his home city at a villa in Brasília where municipal contracts were discussed before prostitutes entertained those present. Palocci was brought in from the cold by Dilma in 2011, becoming her first cabinet enforcer, the role she herself had used as a springboard to the presidency. But Palocci quit within six months rather than reveal the names of clients who had paid millions to him as a consultant during his time outside of the administration. The case reeked of influence-peddling, something Dirceu was accused of as he too dabbled in consulting while he waited for his trial in the mensalão affair.
The closest, in a manner of speaking, that Lula came to scandal was in 2012 when the woman believed to be his mistress, Rosemary Noronha, was fired from her job running the São Paulo office of the presidency following a police investigation into its use for the selling of official favours to companies. That scandal saw Lula fleeing an event through a hotel laundry room rather than face questions about Rosemary from journalists ‑ though some of those now demanding answers from Lula display breathtaking cynicism themselves. This is most clearly illustrated in the Petrolão affair by the involvement of Alberto Youssef, the black market moneyman who helped Costa operate the scheme and who is now also cooperating with prosecutors. He first came to national prominence during the Banestado banking scandal, one of several major corruption crises during the presidency of Lula’s predecessor, Fernando Henrique Cardoso. Nowadays Cardoso thunders against the mensalão, Petrolão and other PT scandals but is coy about the alleged – only alleged because never properly investigated – buying of votes in congress to overturn a constitutional ban on re-election, allowing him an extra four years in power, surely a more serious crime than the mensalão. Cardoso may not have known of the vote-buying but he benefited from it and has made it his business since to play down the affair.

Even the mensalão itself started out as a scheme operated by Cardoso’s Social Democratic Party of Brazil (PSDB) in Minas Gerais before the scheme’s operator, businessman Marcos Valério, switched to working for the PT. Brazil’s Kafkaesque justice system has yet to try the mensalão tucano (after the tropical bird that is the PSDB’s symbol) even though it predated the PT edition, allowing Dilma’s opponent in October, Aécio Neves – grandson of Tancredo – to claim he lost to a “criminal organisation” even while meeting during the campaign with his party colleagues charges in the mensalão tucano case in a show of solidarity. One deceased tucano politician has already been named in the Petrolão affair and others living could yet be drawn into it by Youssef’s testimony.
Perhaps, as his supporters claim, Lula never knew or even suspected that some of his closest advisers were involved in corruption, in several instances for his direct political benefit. It would be a curious blind spot in such a master politician. But the thesis that Lula didn’t know could now be about to be put to its severest test.

After the mensalão convictions its operator, Marcos Valério, finally realised that that his powerful connections could not save him despite his having kept quiet. Instead he got a far longer jail term than the politicians he had served. Only then did he say he wanted to talk to prosecutors about Lula. Among the claims he made was that he had paid a businessman €2 million to silence him from talking about Lula’s involvement in the Celso Daniel affair. Prosecutors listened but seven years and a criminal conviction later it could be too late for his testimony to carry much weight.

Valério’s fate could have a crucial bearing on the Petrolão affair if, as reported, prosecutors are using it as an incentive to induce those they have already arrested to plea-bargain, exchanging information for a reduced sentence. Costa copped a plea and several of the businessmen detained are believed to be seeking them as well. The potential for more explosive revelations is high. In a recent newspaper interview Venina Velosa da Fonseca, a former senior Petrobras manager, told the Valor Econômico newspaper that when she brought up with her boss reservations about what was going on inside the company, Costa pointed to the official portrait of Lula that hung in public buildings across Brazil and asked her if she wanted “to bring down everyone”.

It may be just a straw in the wind but Lula is intimately connected with the companies now under investigation in the Petrobras case. Since leaving the presidency he has made frequent use of corporate jets provided to him by Odebrecht, Camargo Corrêa and OAS when travelling to deliver speeches abroad. In Venezuela, where Odebrecht is carrying out several large public works projects, the country’s opposition joke that Lula is the company’s bagman, delivering speeches on Bolivarian solidarity in public then when the microphones are switched off demanding his hosts stump up payments for his employer. Not coincidently Odebrecht, Camargo Corrêa and OAS were all major contributors to Dilma’s re-election campaign fund.

These companies, along with Andrade Gutierrez, the other member of a club known as the “Four Brothers”, have for decades been umbilically linked to Brazilian politicians, whatever their stripe. They have grown into large conglomerates because of their political sophistication rather than their business acumen. Camargo Corrêa helped Kubitschek build Brasília amid such an extravaganza of overbilling that it provoked an inflation crisis as the president printed money to fund his new capital. Camargo Corrêa also maintained excellent relations with the generals who overthrew the populists in 1964, even helping finance their clandestine dirty war against guerrilla groups like the one Dilma fought in. Odebrecht also worked closely with the military dictatorship, carving out a special and highly lucrative role as principal contractor to Petrobras. They were among the companies that donated illegal funds to Fernando Collor’s campaign so helping him defeat Lula in the presidential race in 1989, the only one since the return of democracy that can claim to have been even dirtier that the 2014 edition.
Lula lost that election in one of the great what-ifs of the Latin left. But he has since publicly given thanks that he did so, saying he was “much more radical” then than when he won in 2002. In this Lula came to justify the faith in him of General Golbery do Couto e Silva, the intellectual ‘wizard’ of the military dictatorship’s moderates, who saw in Lula a potential left-wing leader who, raised in the deal-making pragmatism of Brazil’s union culture rather than that of the defeated guerrilla movements, would not bother with ideological revanchism following any democratic opening.

A former guerrilla now holds the presidency but in Lula’s dispensation she must work with the political supporters of those who tortured her. Thus Lula and the PT have been true to the Brazilian political tradition of long transitions and pragmatic accommodations with the past rather than abrupt ruptures. After twelve years of PT rule Brazilian cities still have avenues named after the generals who led the worst of the repression during the years of lead.

Lula has attempted to extend basic human rights – the right to eat, to a decent salary, to a doctor – to millions of Brazilians previously excluded from these common denominators of citizenship without prejudicing the well-off. In this he has had great success. The top one per cent saw no drop in income under him, while the upper middle class experienced just a small retreat in their share of national income, which was probably compensated by rising asset values such as houses. But it is a measure of just how ungenerous Brazil’s better-off are that this achievement of Lula’s has been met by such hostility, much of it cloaked in outrage at corruption, a practice not confined to the PT but which stains almost all the political class. Aécio attacked Dilma over Petrobras despite having a rap sheet himself from his time as governor of Minas Gerais. Her eventual re-election let the mask slip. Victory despite the Petrobras scandal unleashed a wave of class prejudice and racism directed towards the PT’s poorer ‑ and therefore typically darker-skinned supporters ‑ in the northeast. Even the urbane intellectual Cardoso claimed the PT won because its poorer voters were “less well informed” when in fact they made the eminently understandable decision to reward the party that had increased their share of national income.

But corruption does matter in Brazil and not because the PT is using it to turn the country into a one-party state like Cuba, as some like to claim. Rather it is because corruption, both the illicit corruption being exposed by prosecutors in Petrobras, and the moral corruption of Brazil’s political system, is how the country’s special interests, especially its wealthy, preserve power and influence. It is intrinsic to Brazilian inequality and all the evils that flow from it. Recent social and economic advances are stalling in part because they have occupied as much ground as was made available to them by the democratic opening of the 1980s, Cardoso’s achievement of macro-stability in the 1990s and the PT’s incorporation of tens of millions of poor into the consumer economy since then.
These were all historic achievements but further advances will need better education, more investment and greater productivity and these will require taking on the vested interests whose grip on a corrupt congress blocks reform of regressive tax, inefficient pension and broken justice systems; facing down the private corporations – and behind them the families – who have co-opted the state and its supply of cheap credit; the universe of Brazilian rentiers whose interests the state protects rather than those of the wider population. This will require political reform. Deliver it, and then cut away the dead wood that holds the country back, and the thinkers at the government’s own strategic think tank estimate that within a quarter century what was once the world’s biggest slave colony could be as egalitarian as Canada.

Lula, Dilma and the governments produced by the PT victories of 2002, 2006 and 2010 have failed to carry through this task. It is a difficult one. In 1936 the Brazilian sociologist Sérgio Buarque de Holanda wrote in Root of Brazil, his classic exploration of the origins of Brazilian society and its values: “It was not easy for public officials, who were formed in this society, to understand the fundamental distinction between the private and public domain.” This remains true today and not just for officials but for private citizens who have dealings with them. Vargas modernised Brazil without managing to overcome this deeply ingrained trait that is a legacy of the colonialism practised by the Portuguese. Lula has made his own contribution to Brazil’s modernisation but also failed to create a more bureaucratic, truly impersonal state. His technocratic successor is also flailing at the task of separating out public from private and party. A legitimate debate can now be held about whether the PT, or at least the governments it is now capable of forming, have become an obstacle to further progress. The conservative make-up of Dilma’s second government, the reactionary spirits of several of her cabinet choices, must worry advocates of a more just society. But it is a debate that must acknowledge that unlike the situation before the 2002 election, which first brought the PT to power, there is now no major progressive force in opposition waiting to be tested by office.

Ironically, as more Brazilians are introduced to the rights of full citizenship, these demands are likely to become more frequent. Though they petered out quickly, the June 2013 protests might yet be seen as a shot across the bows, not from an emerging middle class but an emerging citizenry. There is encouragement to be taken in the autonomy anti-corruption institutions are slowly carving out for themselves, as displayed in the Petrolão case. Civil society is mobilising, anti-corruption groups already gathering up the millions of signatures necessary to force a recalcitrant congress to vote on a petition demanding reform. It will be a long campaign. But there is hope that even if the politicians refuse change, their masters, O Povo Brasileiro, will force it on them anyway.

Tom Hennigan is the South America correspondent for The Irish Times and is based in São Paulo, Brazil

Note – An earlier version of this article incorrectly stated that Paulo Maluf is a member of the Partido Popular (PP) founded by Tancredo Neves and subsequently rolled into the PMDB. Senhor Maluf is of course a member of the Partido Progressista (PP) which secured the appointment of Paulo Roberto Costa to Petrobras. The author would like to apologise to Senhor Maluf and his fellow progressives for any confusion caused.

Article republished with kind permission from Dublin Review of Books

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