Is anti-democratic resurgence possible in Brazil?

Published 23.04.2016 01:43

Paving the way for reactionary restoration by usurping the media and judiciary in Brazil and other Latin American countries, as well as Brazil nearly coming to the brink of a military coup is the result of the fact that political achievements in recent years have turned into permanent economic gains. After Dilma Rousseff was re-elected Brazilian president in the October 2014 elections, the Central Bank of Brazil increased the benchmark interest rate to its highest level in the past three years. Rousseff and former President Lula da Silva, both of whom are from the Workers' Party, pursued efficient policies to reduce poverty, strengthen the middle class and accelerate the rise of many poor into the middle class for more than 12 years. The number of those who earned more than four times the poverty threshold in Brazil has soared from 38 million to 61 million over the past 10 years. Brazil's national oil company Petrobras has made major energy moves nationally and throughout the continent during the same period. It started to find new energy fields and make agreements with other energy companies, apart from those from the U.S., in line with national interests. Brazil began opening its energy fields not only to American and British companies but also to Chinese ones. It has risen to a prominent position among BRICS economies - Brazil, Russia, India, China and South Africa - and the cooperation within BRICS grew to become an alternative economic nexus with the emergence of institutions that provide investment financing. In the same period, Lula and Rousseff began creating a program similar to the U.S.'s New Deal for Latin American countries, starting with Brazil.

Afterward, Brazil experienced similar troubles to Turkey, as the state was awakened to the "old" Brazil of the media and judiciary. Brazil witnessed street protests, media disinformation campaigns and probes into the country's most important companies and public institutions on the pretext of their relationship with the ruling party. The major reason reactionary forces devoted to the restoration made progress in this period was the fact that Rousseff could not build independent institutional structures from the outside, though she attained great success in the economy. Rousseff could not do what former U.S. President Franklin D. Roosevelt did after 1935, and she failed to cement this success in institutional terms.

Indeed, leaders such as Lula and Rousseff and President Recep Tayyip Erdoğan proposed a kind of New Deal policy for their individual countries and developing countries generally, especially after the 2008 crisis. We can understand the reasons why Rousseff is being attacked and why Brazil has come to the brink of a military coup by looking at the major initiatives of the New Deal that were developed in the U.S. after 1935. When the Great Depression of 1929 broke out, the 31st President of the U.S. Herbert Hoover was in office. The Republican thought that the system would spontaneously get back on track in the face of the crisis. However, the system did not concern the financial system alone, but also engulfed the real economy and it further intensified, leading to Hoover's eventual desperation. Thus, a good many incidents that happened during and after the Great Depression brought an end to the Hoover administration and brought Franklin Delano Roosevelt to power. Certainly, Roosevelt's New Deal policy was a lifesaver, both for the U.S. and all other countries affected by the crisis. The New Deal policy, which aimed for the reinvigoration of the economy and highlighted government expenditures in almost all respects, enabled the recovery and reconstruction of the U.S. economy. Another aspect of the New Deal that is not widely known, although it constitutes its core, was its systemic struggle with criminal economic structures that derailed the system.

Roosevelt's Keynesian economic policies began being fully applied in 1935 thanks to new laws and newly established institutions, which were previously prepared. For instance, general planning laws were enacted to regulate financial and banking systems and relevant regulatory institutions were established, in addition to supervisory laws and institutions that were founded to ensure competition, regulate labor markets and prevent unemployment. Indeed, there was something paradoxical in this: On the one hand, the state provided employment by regulating the economy, and it smoothed the way for open competition by struggling with monopolies on the other. Therefore, it is not appropriate to describe Keynes' policy prescriptions for that period and Roosevelt's New Deal policies as strictly statist policies. These policies made history as multifaceted policies of renewal that were developed to overcome the crisis. Contrary to popular opinion, the New Deal period purified the system of criminal organizations, money launderers and ill-gotten gains. In this regard, it was not a statist but a completely market-friendly period.

Certainly, it would be nonsensical to recommend that developing countries travel the same path at the moment. However, countries like Turkey and Brazil need to independently create their economic institutions. Thanks to Erdoğan's leadership, Turkey is luckier than Brazil in this regard. Erdoğan's influential political leadership has accelerated democratic institutional structuring and undermined pre-coup institutions in Turkey. However, Turkey has not yet completed this process. This is a task for all institutions and political structures in charge of the economy, starting with the central bank. As such institutions maintain their old structure in Brazil, Lula and Rousseff have not been able to institutionalize their successful economic initiatives. One of the major reasons for this is that Brazil, like Turkey, is still administrated with a constitution issued during the coup period. Let us note that Erdoğan regularly reiterates that Turkey needs a new democratic constitution, as it can no longer be ruled under the constitution issued after the Sept. 12, 1980 coup. The demand for a democratic constitution, beyond any doubt, is an economic must for global integration. Ensuring constitutional guarantees of free market entries and exits as well as competition, thereby protecting investors from political fluctuation is the most important step toward economic stability. Returning to anti-democratic regimes in countries such as Brazil will not cause these countries to lose, but it does mean having the global crisis intensify further and becoming a political stalemate.

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