"[background=rgb(252, 252, 252)]Brazil is not Argentina. High inflation is politically unacceptable in Brazil. Any government today that takes the high inflation route is committing political suicide. I am very skeptical that Dilma will finish her term. If an impeachment happens, I expect political change to have profound impact on Argentina's economy. It is Dilma who insists in subsidize Argentina by accepting their violations of the Mercosur treaty without repercussions. Her successor would face tremendous political pressure to change that posture."[/background]
[background=rgb(252, 252, 252)] -Camberiu, July 2015[/background]
[background=rgb(252, 252, 252)]So it came to pass. Today mark the day in which the Dilma government and the 14 year long Lula's reign over Brazil comes to an end. It is the second presidential impeachment in Brazil within the last 25 years. Any presidential impeachment is a traumatic experience, and this one in particular left the nation polarized at a a level we have never seen before. Large segments benefited greatly from Dilma's clientelist/populist policies, and are sad to see her go. While others, overburden by a regime that implemented the heaviest tax burden in the history of the country (much of it ended up stolen) are gleeful to see her go, and welcoming of change. [/background]
[background=rgb(252, 252, 252)]But the big takeaway of the whole process is how much stronger and credible the Brazilian republican institutions have become since the end of the military dictatorship in 1984. In these last 32 years many things happened: we had a popular indirected elected president who died on the eve of taking office and was replaced by a highly unpopular vice president. A new constitution was drafted. It was bloated and overbearing, but also made nepotism within the state apparatus virtually impossible, and allowed for a new generation of police, judges and prosecutors to be hired and promoted exclusively on merit, instead of political connections and affiliations. We elected a populist right wing president who froze the bank account of millions, tried to control inflation with crazy unorthodox economic policies and ended up impeached. He was replaced by Itamar Franco and Fernando Henrique Cardoso, who re-invented Brazil by managing to build the most broad and consensual political coalition in the history of the country. The Real currency was born, the federal budget was balanced and over 100 years of inflation was put to an end. Fiscal responsibility laws were put into place, and the judiciary was charged with oversight and auditing of government finances, and government owned business were privatized. We then elected a populist left wing government, who remained in power for over 14 years and reversed most of the reforms implemented by the previous administration. A while corruption rose to unprecedented, for the first time in Brazilian history, the judiciary rose to the challenge. The rules established by the 1988 Constitution bore fruit , and a new generation of politically unaffiliated police investigators, prosecutors and judges leaped into action and politicians, public servants and extremely wealthy businessmen were investigated, charged, arrested and tried, something unprecedented in Brazilian history. And more importantly, as Dilma is being impeached, as her supporters and opponents stage large and loud protests, the military remains secluded inside their barracks, completely uninterested on the political developments and committed to limit their role to what was specified by the Constitution. Considering that historically, political turmoil in Brazil inevitably lead to political coups, military interventions and bloodshed, that fact that none of that happened over the past 32 years is quite remarkable, and demonstrates that, although still full of problems, the public and the political institutions in Brazil have matured. [/background]
[background=rgb(252, 252, 252)]No one but a true prophet can accurately predict what the political landscape in Brazil will look like moving forward, but the latest developments seem to confirm my expectations that whatever happens moving forward, the faith of the people on the institutions and the rule of law today are at an unprecedented level. [/background]