You are here: Episode 16: Brazil: Does Corruption Corrode Democracy?

Brazil: Does Corruption Corrode Democracy?

Authoritarianism and corruption are on the rise in Latin America, while democracy may be receding. In this episode of Big World, SIS professor Matthew Taylor joins us to discuss politics and corruption in Brazil, which is a bellwether because of its status as the largest democracy in Latin America, the ninth-largest economy in the world, and a member of the G20.

Professor Taylor breaks down what the Lava Jato, or “Operation Car Wash,” scandal has revealed about money laundering and corruption in Brazil (3:14) and how former president Dilma Rouseff’s impeachment in 2016 was related to the corruption investigation (7:08).

He shares the role that corruption played in President Jair Bolsonaro’s rise to power (10:39) and how Brazil’s expensive and inefficient civil service is often incorrectly labeled as simply corrupt (16:54). Finally, Professor Taylor discusses the extreme polarization in Brazilian politics (19:04) and how Bolsonaro fits into the larger trend of countries electing right-wing, nationalist leaders (21:47).

During our “Take Five” segment, Professor Taylor lists the top five lessons that countries interested in fighting corruption can learn from Brazil’s “Car Wash” investigation (13:26).

0:07     Kay Summers: From the School of International Service at American University in Washington, this is Big World, where we talk about something in the world that really matters. Despite a widespread move toward democracy in the 1980s, democracy in Latin America may now be receding, while authoritarianism and corruption are on the rise. Any discussion of Latin American politics must perhaps start with Brazil, the largest democracy in Latin America, the ninth largest economy in the world, and a member of the G20. Today, we're talking about Brazil, its politics, its corruption, and where its headed. I'm Kay Summers, and I'm joined by Matthew Taylor. Matthew is a professor in the School of International Service.

0:46     KS: His research and teaching include state capacity, corruption, and Latin American political economy. He's lived and worked extensively in Brazil and was a member of the faculty at the University of São Paulo from 2006 to 2011. He's the author of Judging Policy: Courts and Policy Reform in Democratic Brazil. Matthew, thanks for joining Big World and welcome back. You've been gone for a while. What were you doing over the past year or so?

1:12     Matthew Taylor: Indeed. I was on sabbatical. Got a lot of work done, a lot of research. I was in Brazil for a good portion of the sabbatical. It was wonderful to be back in the country and get caught up on a lot of the troubles that the country has been through in the past half decade.

1:28     KS: Okay, interesting. All right, so you're really fresh with on the ground insight. A 2018 report by the polling firm Latinobarómetro revealed that every indicator about the health of democracy in Latin America is deteriorating with many at their worst levels since this survey started in 1995. The percentage of people who are dissatisfied with how democracy works has jumped from 51 percent in 2009 to 71 percent last year. I want to start with kind of a broad question, just really top level, what's the state of democracy in Brazil?

2:03     MT: It's an excellent question and certainly things have taken a real nose dive over the past half decade with basically three intertwined crises. A political crisis that was associated with the impeachment of President Dilma Rousseff in 2016, as well as a corruption scandal. There is that political element. The second element was of, course caught up in this issue of corruption. Really massive is almost too small a word for it, but the gargantuan Lava Jato or carwash scandal. Then beginning around the same time, an economic recession, which has been probably the worst in a century, and continues to this day. The country is emerging from the recession technically, but growing very, very slowly and certainly not strongly enough.

2:58     KS: Let's dig into those last five years a little bit. You mentioned the Lava Jato scandal, Operation Car Wash, that began in 2014. Can you tell us a little bit more about Operation Car Wash and what the investigation uncovered? What was the scandal about?

3:14     MT: At the heart of Lava Jato is a mix of a car wash and a gas station. The really interesting thing to investigators was that this car wash somehow was moving hundreds of millions of dollars. An anti-money laundering investigation showed just absurd amounts of money moving through this car wash. They began to dig. The first person that they really hit pay dirt with was Paulo Roberto Costa, the Petrobras executive at the large state owned oil company. Paulo Roberto Costa, who was a sort of second tier executive within Petrobras, in 105 different depositions told the story of how he collaborated with construction firms on the one hand and then also politicians within the governing coalition to defraud Petrobras and to essentially siphon money out of the company.

4:15     MT: I think that there are two things that are really interesting about Car Wash that explain its oversized effect. The first is he showed that the five major firms working in tandem with smaller firms would essentially set prices before any bidding took place. It was almost impossible for auditors to actually discover wrongdoing. This was, I think, significant because there had been a lot of suspicion about corruption, but nobody had been able to prove it. What was happening is these firms were actually setting the terms of bidding before the bidding actually took place. They would sometimes lose on purpose. They would sometimes nominate a firm that was unknown, and therefore it would look like a fair competition, but there was nothing fair about it.

5:07     MT: The second aspect that I think is really very interesting is the political aspect. Brazil has a huge number of parties. At the last election, 30 parties were elected to the lower house of the chamber, known as the Chamber of Deputies, the lower house of Congress. It's very hard for any president to actually govern because there are so many parties, because there's such fragmentation.

5:32     KS: How do you get a coalition?

5:34     MT: Right. Just to give you an example, under the PT, The Workers' Party, the Partido dos Trabalhadores, the PT, the president never had more than around 18 percent of the seats in the lower house. How do you get to 50 percent? How do you get to a supermajority if you need to do constitutional reform?

5:55     KS: Right.

5:58     MT: One of the ways that presidents apparently were doing this was through bribes. What Paulo Roberto Costa, as the first among many plea bargaining witnesses, demonstrated was that nominees to become executives within Petrobras were actually nominated by godfathers, political godfathers, from the major political parties. Then in exchange for that nomination, they would kick back very significant funds through the construction firms. You had this collusion between three major actors. You had the executives in Petrobras, you had coalition members within the political system, and then businesses, construction firms specifically.

6:51     KS: Talking about Lava Jato and its sort of far reaching ramifications in Brazil, the former president Dilma Rousseff was impeached in 2016 and those things are tied together, right? I mean, her impeachment was directly tied to Operation Car Wash?

7:08     MT: That's a million dollar question. I think that the answer is going to be a little bit academic, but I think it is important for us to distinguish the various causes of the impeachment. Far before we get to the corruption investigation, it's important to recognize that Dilma Rousseff was chosen, sort of handpicked by President Lula when he left office to be his successor. By all accounts, Dilma Rousseff was fairly hard-charging, a little bit authoritarian in her treatment of politicians, certainly very direct. That really hurt her political support in Congress. The second problem though was that Dilma Rousseff... Beginning in 2013, there were these massive street protests. The protests arose for a variety of different reasons.

8:00     MT: They started out as protests that were very local to São Paulo, the state of São Paulo, and particularly to the city of São Paulo, protest about bus fares. At that point, the protests, which were taking place over days and then weeks and then indeed months, the protest turned more to public services and to corruption. There were two approximate events that I think were also important to the protests, the World Cup and the Olympics, which were happening in 2014 and 2016. Brazilians I think were understandably quite frustrated with lackluster public services on the one hand and the fact that FIFA, the World Soccer Federation, was getting public support for stadium construction that really looked in many cases like white elephant construction, you know, projects that that would not be used again in the future and that were really just benefiting FIFA.

9:04     MT: As I mentioned at the outset, there was another factor. Beginning in about 2012 having survived and actually thrived during the global financial crisis, Brazil's growth began to peter out. Brazil grew in 2010 when Dilma was running for her first term. Brazil was growing at seven and a half percent, which is out of this world for Brazil. It's a growth rate that's unparalleled in the history of this current democratic regime. By the time she ran for reelection in 2014, growth was essentially zero and there was a fiscal crisis that was so significant that even the opposition candidate was saying, "We're going to have to do something about this."

9:55     MT: You know, there wasn't as much clarity at the time of her reelection about the corruption scandal as we might think now without looking kind of carefully at the timetable. On the other hand, there was a lot of suspicion about corruption, and there was a lot of disgust with overspending on these massive sporting events.

10:20     KS: The current president, Jair Bolsonaro, promised to fight corruption during his campaign. Do you think his election was a result of Operation Car Wash or an electorate increasingly concerned with corruption, or were other forces at play in the electorate to elect him?

10:39     MT: Yeah. I think that there's an awful lot of oversimplification of Bolsonaro's rise. We forget that after Dilma's impeachment, her ally, or one time ally, Michel Temer became president. During his two years in office, Temer was actually caught up in the corruption scandal twice. Congress voted not to allow him to be indicted and charged, but he was living on the razor's edge. I think it's safe to say. Bolsonaro's rise comes about in that situation where not only do you have the Car Wash investigation going on, but you also have a sitting president who is deeply implicated in a corruption scandal. The removal of another, president Dilma Rousseff, who had been impeached, even though she was not known to be personally culpable or not personally corrupt.

11:41     MT: But I think it's hard to say that Bolsonaro was elected because of corruption. Certainly corruption played a part. The recession played a part. But a famous Brazilian columnist said, "It doesn't take a little bit of bad luck to elect Bolsonaro. It takes a lot of bad luck to elect Bolsonaro." There were a lot of sort of events that that accumulated slowly over time to add up to Bolsonaro's election. Among these events, he was stabbed in an apparent assassination attempt. This enabled him to sit out the debates. Bolsonaro has always been... He's been in Congress. Before being elected, he was in Congress for 30 years. He was a sort of unknown back bencher, not particularly well-regarded, not particularly productive in terms of producing legislation.

12:40     MT: To have Bolsonaro suddenly rise to the forefront, you needed a lot of bad luck.

12:45     KS: Right.

12:45     MT: The stabbing helped. I think the corruption scandal helped. The economic situation helped, and then the PT actually helped in its own way.

13:04     KS: Matthew Taylor, it's time to take five. This is when you, our guest, get to daydream out loud and reorder the world as you'd like it to be by single-handedly instituting five policies or practices that could change the world for the better. Specifically, what are the top five lessons that other countries interested in fighting corruption can learn from Operation Car Wash?

13:26     MT: All right. Well, I think the first one is that fighting money laundering is essential to undermining corruption networks. We saw in Car Wash, it all began with an investigation of a car wash. Going after that money and the trails is essential. The second though is international, and I think Car Wash demonstrated that even when Brazilian institutions were working really, really hard, they just gained wind at their back as soon as other governments cooperated in fighting money laundering, offshore banking, and the scandal itself. Third, Brazil I think demonstrates without a doubt that cooperation across agencies is essential to getting to the bottom of corruption.

14:21     MT: For many years, most institutions, most agencies in Brazil were not cooperating. Over time they gradually recognized this and started to build networks where personal ties between members of different agencies were essential to sharing information, sharing tactics, and developing strategies. Fourth, I don't think Car Wash would've succeeded if it weren't for public support. If you don't have public support, it's really easy for politicians to fight back, to push back, to do everything possible to undermine the investigation. Then finally, I think that the biggest lesson I take away is that there are no shortcuts. In fighting corruption, there are no big bangs. You have to go step by step.

15:17     MT: Incremental progress is probably more productive over the long haul than trying to resolve everything in one single investigation, one single fell swoop. Improving institutions is a really long process.

15:32     KS: You don't think corruption without political will, popular support, and a dedicated civil service that actually can affect these types of changes.

15:41     MT: You said it better than I could.

15:42     KS: Okay. Awesome. All right.

15:43     MT: Thanks very much.

15:45     KS: Matthew, I want to circle back to that Latinobarómetro report that I mentioned at the beginning surveying opinions about Latin American democracy. In Brazil, only 7 percent of people surveyed said that government was interested in everyone's well-being. I don't necessarily think that people's perceptions of government corruption are tied directly to whether or not they think government is working for them. I think it matters more where the corruption is and whether or not it's obviously harming their everyday lives or they think it is. It can affect their faith in government and their overall trust in whether or not government cares about them. How does corruption affect average Brazilians?

16:28     MT: It's a great question. I mean, I think that that your question actually points to one of the problems which is that Brazilians, like people everywhere, are often wildly over optimistic about what would happen if we got rid of corruption. We tend to overweigh how much money is drained away by corruption.

16:52     KS: Waste, fraud, and abuse. Waste, fraud, and abuse.

16:54     MT: Waste, fraud, and abuse. That's right. I'm the first to say we should fight corruption, but the problems I think of governance in Brazil are not driven... The amount of money that corruption sucks up is significant, but it doesn't account for lackluster public services. It is not sufficient to explain why public services are as bad as they are. I think though that corruption is also often an umbrella term that we use to cover a lot of different other issues. And in, in the demonstrations in Brazil and in the election, a lot of times when you were hearing corruption, you were hearing an abusive civil service, an abusive public sector. Brazil doesn't have a particularly large civil service.

17:46     MT: It's about on par with the rest of Latin America, and Latin America itself doesn't have particularly large civil services. But Brazil has an extraordinarily expensive civil service. One political scientist, Barry Ames, has famously said, "The state in Brazil serves itself." I think that that's a perception that gets sometimes caught up in perceptions of corruption. When Brazilians, as they increasingly did over the past half decades, say, "Corruption is our number one problem," I think that they're talking about corruption per se, but they're often also talking about these broader problems of an inefficient state that is not achieving the goals that it was designed to achieve.

18:37     KS: I mentioned at the beginning this report about people's thoughts about democracy in Latin America and how there was this move in the '80s toward democratization. Have these corruption scandals had a deleterious effect on the reputation of democracy in Brazil among its citizens? Do you think that people are blaming democracy and saying, "If we had a more authoritarian type of government, we wouldn't have this." Is any of that happening?

19:04     MT: I think one of the hopeful things that comes out of surveys on democracy is precisely that the regime, the democratic regime, is not really in question. There doesn't seem... Polls don't show support for authoritarian responses. I will though say that there are problems. Bolsonaro's appeal, for example, is in some ways a mono duro appeal. He promises more security, less corruption. I'll get rid of the, as he likes to say, vagabondos, the vagabonds, the criminals, the thugs that are out there. There are people who are attracted to Bolsonaro because of this conservative tough supposed rule of law approach.

19:52     MT: But so far what we've seen is that Brazilian institutions and the electorate more broadly I think are pushing back against some of the hardest core of his supporters. This is I think going to be a difficult struggle for Brazil partly because Brazil became so polarized between the left, represented by The Workers' Party, and the center right. This makes it hard to find nuanced solutions to some of the bigger problems like police violence, criminal gangs, poverty in the cities. All of these social issues.

20:39     MT: Right now there's sort of a black and white separation, and oftentimes it seems like Brazilians are forced into a binary choice between the tough on crimes side, even if they don't agree with all facets of Bolsonaro's approach, and the emphasis on social equity, which was the hallmark of The Workers' Party, even if Brazilians don't agree with all aspects of that approach. This polarization is extreme, and I think that the next election will be an interesting one to see if that black and white binary polar opposition can be broken into a more effective form of political representation.

21:28     KS: How do you think Bolsonaro fits or doesn't fit into the trend of countries electing right-wing nationalist leaders? You can include President Trump in that category, some of the leaders in Europe that have sprung up over the last few years. Is he part of a trend?

21:42     MT: I like to think not, but I think probably.

21:45     KS: Yeah?

21:47     MT: I think Bolsonaro is an interesting... He fits the mold in some ways. One way that he fits the mold is his total disregard and disgust with conventional media, his willingness to turn to Twitter, his willingness to break the norms of common convention and how we should treat opponents, how we should treat the press, how we should treat criticism. These are I think more calculated than they appear on the face of it. We tend to interpret these actions as simply the expressions of somebody who is unhinged at some level. But more and more, the more he repeats this kind of aggressive action, it seems calculated to offend in ways that actually build support among a certain parcel of the population.

22:50     MT: I don't think we have to look too far to see other parallels in world politics. On the other hand though, Bolsonaro really does represent some very Brazilian conservative faction. The other aspect is his appeal to evangelicals and Neo-Pentecostals. This is I think a little bit different from the United States right now, although there are some parallels, but Bolsonaro has... He's married to an evangelical, and he has done a lot of outreach to the religious right in Brazil.

23:29     KS: Last question, what do you love about Brazil?

23:32     MT: What do I love about Brazil ?Well, I was in Brazil this past year. Despite everything that's going on, there's no better place to just have a wonderful conversation with people who no matter how dire the situation is are willing to laugh about it. Brazilians are wonderful at poking fun of the situation that they're in, of their own country, but at the end of the day, you get to laugh with them. I love that.

24:00     KS: Thank you for joining Big World to discuss politics and corruption in Brazil. Matthew Taylor, it's been great to speak with you.

24:05     MT: Thank you.

24:07     KS: Big World is a production of the School of International Service at American University. Our theme music is "It Was Just Cold" by Andrew Codeman. Until next time.

Episode Guest

Matthew Taylor,
associate professor, SIS

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