Brazil Could Trade One Presidential Scandal for Another

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The corruption probe responsible for charges against many of Brazil’s biggest political figures, including President Michel Temer, is also hitting the man who stands the best chance right now of taking Temer’s place: former President Luiz Inacio Lula da Silva. Da Silva, president from 2003 to 2010, is on trial after being accused of receiving bribes from Brazilian engineering company OAS. Da Silva is also the current front-runner in Brazil’s 2018 presidential race. If he is convicted before the election in 2018, he’d legally be unable to run for president, which means that his political fate — and consequently the outcome of Brazil’s next presidential election — will be determined by the final verdict.
The Charges and the Legal Strategies

Six corruption charges have been filed against da Silva; the current trial covers only the first. The period for da Silva’s attorneys to present their defense in this first trial ended June 20, and a final ruling by Federal Judge Sergio Moro is expected to be announced in the coming weeks. If Moro rules that da Silva is guilty — an outcome that da Silva seems to believe is likely, according to a report in Epoca magazine — the former president’s defense team is already prepared to appeal to a higher court. And it is this appeals process that will wind up playing a major role in the Brazilian election.

If a higher court reverses a guilty ruling from Moro, da Silva would be allowed to run for president, but if a guilty ruling were upheld, he legally would be unable to compete. A reversal of Moro’s ruling is by no means guaranteed. The case will be sent to the federal court in Porto Alegre that is responsible for reviewing Moro’s decisions. That court has already reviewed several of Moro’s decisions in the corruption probe, and according to a June 16 report in Brazilian newspaper Folha de Sao Paulo, the court either ratified his rulings or increased the sentences he handed down in 70 percent of the cases. In just 17 percent of cases, the court reversed Moro’s ruling and absolved the defendants, and it reduced sentences in 13 percent of cases. One case that illustrates the risk of appealing to this particular federal court is that of Leo Pinheiro, the former CEO of OAS. After Moro sentenced Pinheiro to 16 years in jail, he appealed. The federal court not only ratified Moro’s decision, but it also increased Pinheiro’s sentence to 26 years.

Despite the risk of a harsher sentence, if he is found guilty, da Silva may be willing to appeal, especially if it was the only way he could contend for the presidency. In the event of a guilty verdict, da Silva will try to buy as much time as possible in hopes of securing office before a final ruling is made. Higher courts in Brazil usually take about a year to either ratify or reject a ruling by a lower court. So, regardless of the ultimate outcome, if da Silva finds himself in the position to delay a decision until after the election, he will be keen to do exactly that.

Da Silva could even use Temer’s own corruption scandals to demand that the election date be moved up, a strategy that would further increase his chances of being elected president before the higher court rules. Of course, the likelihood of rescheduling the 2018 presidential vote is low because the decision would require the approval of three-fifths of a Congress that is mostly against it. But it is still a possibility, and one that da Silva would likely pursue.

Da Silva’s Possible Fates

If da Silva ends up being unable to run for president, the election would be much less polarized and much more competitive than any race that included him. Ciro Gomes, the most left-leaning candidate in the race besides da Silva, could be in the position of winning most of the votes that otherwise would have gone to the former president. But it is uncertain whether da Silva’s Workers’ Party would be willing to back Gomes or if it would try to put forth another candidate.

However, if da Silva is able to maintain his legal right to run for president until election day, his chance of winning the office is high. A June 26 Datafolha poll shows him winning the 2018 presidential race with 30 percent of the vote. In second place, according to the poll, would be right-wing candidate Jair Bolsonaro with 16 percent; followed by environmentalist Marina Silva with 15 percent; Sao Paulo’s Gov. Geraldo Alckmin with 8 percent; and Gomes with 5 percent. A presidential race that includes da Silva would essentially pit him against everyone else, and it would likely lead to a runoff. In that scenario, the candidate who most contrasts with da Silva — likely Bolsonaro — would have the best chance against him. Bolsonaro has already adopted the anti-“Lula” (as da Silva is colloquially known) rhetoric that would benefit his side. Still, overall, the election would be da Silva’s to lose.

A da Silva presidency would mean that yet another Brazilian president would be under investigation for corruption. And the struggles Temer has faced on that front provide a clear example of what da Silva could be in for as president. Despite substantial congressional support for his economic reforms, Temer has had to postpone his economic agenda in order to build enough political support to block a possible impeachment. Da Silva would no doubt face many of the same challenges, and Brazil would continue to remain in a state of political uncertainty.

However, one of the factors helping da Silva, despite the investigations against him, is the reputation for fostering financial stability that he earned among many Brazilians during his previous terms in office. In the minds of many, da Silva is the president who reduced economic inequality and unemployment during his tenure. And with Brazil currently in the midst of an economic recession that has more than doubled unemployment rates over the past two years, da Silva is popular among a significant portion of Brazilians right now.

The corruption probes targeting the Brazilian government have shaken the futures of nearly every major politician in the country, including da Silva. But the results of his corruption trial will have particularly wide-reaching ramifications, and da Silva’s presence — or absence — on the political stage will be one of the most critical factors shaping the future of Brazil.

Source: Stratfor Enterprises, LLC. Jul 7, 2017 | 09:01 GMT