Brazil Bribery Scandal Inches Closer to Lula

Just a few months ago, he looked invincible. Only illness or injury, it seemed, would deprive Brazilian President Luiz Inacio Lula da Silva of reelection next year.

But another “I” word -- impeachment -- now clouds Lula’s prospects, not just for winning a second term but for completing his first.

Brazil’s worst corruption scandal in a decade, allegedly involving bribes, money-laundering and secret slush funds, has begun edging closer to the leftist president over the last few weeks. Opponents have declared his government finished and pundits debate whether he ought to be removed.

Already, the president’s right-hand man and three top officials of his Workers’ Party have stepped down amid accusations that the party, which lacks a majority, bought votes in Congress and improperly funded election campaigns. With fresh allegations cropping up almost daily in this country’s feisty press, Lula went on national TV Aug. 12 to deny personal involvement in any illegal schemes and to appeal for forgiveness for the mistakes of a party that has prided itself on clean government.

“I feel betrayed -- betrayed by unacceptable practices of which I never had knowledge,” Lula said, addressing the nation directly for the first time about the scandal, which began unfolding in June. “I’m outraged by the revelations that appear each day and that shock the country.”

The speech, however, was roundly criticized by commentators as insufficient to bring the controversy under control or to stem the loss of confidence in his administration.

Whether it was also too late to salvage his presidency, the first by a working-class leader in Brazil, is open to debate.

Polling results released this month showed for the first time that if the presidential election were held today, Lula would be beaten by the man he defeated three years ago, Jose Serra, now the mayor of Sao Paulo, South America’s largest city. The survey gave a nasty jolt to a president whose approval ratings have generally hovered well above 50%.

Even more unsettling are indications that lawmakers might try to impeach him. Some have threatened to do so, especially in light of new accusations that Lula was in the next room when his campaign aides, allegedly with his authorization, are said to have agreed to pay another party millions of dollars for its support in the 2002 election.

That allegation came on top of congressional testimony Aug. 11 by a public relations consultant who said he received money from a secret offshore slush fund that he said was used to fund the campaigns of various Workers’ Party candidates, though not Lula’s own campaign. The disclosure caused some lawmakers to weep openly; afterward, legislator Walter Pinheiro, a Workers’ Party stalwart, called it “one of the saddest days of my life.”

Luciano Dias, a political analyst in the capital, Brasilia, said that the party, known as PT, its initials in Portuguese, was at the end of its tether.

“The PT in the past was three things: the promise of democratic socialism, ethics in politics and ... resistance against neoliberal [economic] policies,” Dias said. The party can claim none of those things now, he said.

But many experts here agree that for the time being, impeachment remains more a rhetorical than a real threat.

Lawmakers are reluctant to have a rerun of the nightmare that was the impeachment and resignation of President Fernando Collor de Mello in 1992, after charges of multimillion-dollar personal corruption. A repeat now would deal a blow to Brazil’s economy, which has been recovering at a steady clip since a slump last year.

And Lula’s plummeting ratings, analysts say, makes it less likely, not more, that he would be run out of office before the end of his term. His political foes may prefer to see him cornered and then defeated at the ballot box rather than ejected midterm.

“Since the beginning of the crisis, the real interest of the opposition has been to dismantle his position for the next election. That’s the real interest -- not to impeach him, because Lula is managing the economy as the opposition wishes,” Dias said. “The opposition needs a weak Lula, not a dead Lula.”

That Lula has been weakened is beyond doubt. His political agenda, including important tax and labor changes, has been stalled because of the ongoing official inquiries, whose televised proceedings have riveted the nation. A Cabinet reshuffle failed to fortify or re-energize Lula’s fragile coalition in Congress.

This month, the Senate defied Lula by approving a 48% increase in the minimum wage, a boost that would add nearly $7 billion to the government’s expenditures at a time when the president is trying to rein in spending. If the lower house also approves the bill, Lula would find himself in the embarrassing position of having to veto the wage increase despite his promises to champion the poor.

Still, the influential newspaper O Estado de Sao Paulo said in an editorial days after the Senate vote that it would be imprudent to ditch Lula now, but called for a complete investigation into all the allegations of corruption.

“In clear Portuguese: bad with him, worse without him,” the newspaper said.