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  September 2, 2016

US Shows Support for New Brazilian Gov., But Did It Play a Role in Rousseff's Ouster?

CEPR co-director Mark Weisbrot also discusses how mainstream reporting is reinforcing the false promises of austerity for Brazil
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Mark Weisbrot is Co-Director of the Center for Economic and Policy Research in Washington, D.C. He received his Ph.D. in economics from the University of Michigan. He is author of the book Failed: What the "Experts" Got Wrong About the Global Economy (Oxford University Press, 2015), co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press, 2000), and has written numerous research papers on economic policy. He writes a column on economic and policy issues that is distributed to over 550 newspapers by the Tribune Content Agency. His opinion pieces have appeared in The Guardian, New York Times, the Washington Post, the Los Angeles Times and most major U.S. newspapers, as well as in Brazil's largest newspaper, Folha de Sao Paulo. He appears regularly on national and local television and radio programs. He is also president of Just Foreign Policy.


SHARMINI PERIES, EXEC. PRODUCER, TRNN: It's The Real News Network. I'm Sharmini Peries, coming to you from Baltimore.

Now that Brazil's president, Dilma Rousseff, have been removed from office in what some call a legislative coup, reactions and fallout from the decision is mounting, both in Brazil and the region. The leftist governments in Latin America and Brazil have enjoyed a very close relationship in the past under PT, but now Venezuela, Bolivia, and Ecuador all have withdrawn their top diplomats from Brazil, and the secretary general of UNASUR, the Union of South American Nations, is convening a extraordinary meeting of foreign ministers to discuss the situation in Brazil.

Meanwhile within the country the protests against the impeachment of Dilma Rousseff have been taking place, and numerous social movements have declared their intention to defend the social policies of the last ten years under PT.

To discuss what is going on in Brazil and its new conservative president, Michel Temer, is Mark Weisbrot. Mark is the codirector of the Center for Economic and Policy Research, and he's the president of the organization of Just Foreign Policy and the author of the book Failed: What the "Experts" Got Wrong about the Global Economy.

Thanks so much for joining me again, Mark.

MARK WEISBROT: [Thank you, Sharmini.] Good to be here.

PERIES: So, Mark, let's begin with Brazil's economy. One of the things that the analysts and editorial boards of various newspapers in the West is saying that even if the removal of President Dilma Rousseff was perhaps problematic and questionable, at least the economic situation of Brazil, which is now in a second year of recession, will improve under Michel Temer. What are your thoughts on that?

WEISBROT: Well, I think that's very unlikely. And it is interesting. The media coverage of Brazil is quite unusual, even by the standards that we've become accustomed to. They really seem to ignore that the reason they had this recession and the reason it's been so deep and the reason that Dilma got into trouble is because of the austerity. The economy was already weakening towards the end of 2010 as the global economy slowed, and Dilma's government undertook a series of measures, including sharp cuts in public investment, spending cuts, budget tightening, raising interest rates here--they have the highest interest rates practically in the world--that's the highest real interest rates--and they just don't seem to understand, the media doesn't seem to understand that if this government does what it says it's going to do, which is to double down on the austerity, things are just going to get worse. And I think that's why the Workers' Party is thinking that they'll come back in 2018. And Lula's already preparing for that election.

PERIES: Now, one of the issues that Temer's finance minister has mentioned is that--the need to reduce the state deficit. However, if you look at Brazil's debt-to-GDP ratio, at 66 percent it's lower than many countries in the area. Do you think that more deficit spending, rather than less, is the answer for Brazil at this time?

WEISBROT: Obviously not. And even that figure is a gross debt figure. Their net debt is probably about half of that. And so that's more relevant for most purposes.

The big problem they have is their debt payments, their interest payments on the debt. That's very high. That's over 8 percent of GDP annually, which is much worse than Greece was, even at its peak. And that's because of the extremely high interest rates that they pay on their debt. And that's because, of course, their central bank sets the short-term rates really high, and then the long-term rates follow from those. So it's really, I think, unique in the world in paying these extremely high interest rates on their debt, because in most countries where you have high interest rates--you know, Venezuela, Ukraine--it's because of a risk of default, where in this case it's really because their central bank sets these really high interest rates. This is one of the things that's really going to have to change.

And if you change, you know, if they lowered interest rates on the debt just to what they were a few years ago, they would have an extra 3 percent or more of GDP to spend on public investment and other job creation that would help them get out of this recession. So it really is a big problem that's self-inflicted.

Of course, the whole recession and crisis is self-inflicted. They have $360 billion in reserves right now, so they're not really constrained by any kind of balance-of-payments problem. They could return to growth. But the new government, in terms of what they say, they don't have any plans to do that. And the media is really reinforcing that, both the Brazilian and the international [press], the idea that if they just keep cutting spending more, they will somehow attract so much investment that the economy will recover.

PERIES: What is the reason for this kind of behavior on the part of the financial and international press? I mean, what interests do they have in what's going on with who's governing Brazil?

WEISBROT: Well, for the international media, a lot of it is just ideological. They just believe this stuff. And it's interesting because in Europe you have seen a change in the press coverage after eight years of a very weak recovery there since the financial crisis and world recession, in about seven years. They really--you do see an awful lot of media reports in the major press that accepts that the austerity was a mistake. And even the IMF has published papers saying that it went too far and so on. And here, in regard to Brazil, they just are sticking to the idea that--you know, what Paul Krugman used to call the confidence fairies: if they tighten the budget enough and they have these high interest rates, again it's going to encourage investment. So it is an amazing level of dogma, even for what we're used to in the press.

PERIES: And let's just turn to the international political reaction to what happened to Dilma Rousseff. As I mentioned in the introduction, leftist governments of the region have withdrawn their ambassadors, and UNASUR is proposing a meeting of foreign ministers. The Obama administration and the Organization of American States, the OAS, have remained quiet on all of this. What do you think [of] the reaction (or the lack thereof) of the international community, and particularly the U.S.?

WEISBROT: Well, it's interesting, because Almagro, the secretary general of the OAS, when the impeachment first started he wrote a very good letter saying that it was wrong, that this is a presidential system, you can't just throw out the president because their popularity has fallen or you don't like them, and that you have to stick to the election schedule unless there's really grounds for impeachment. And as we know, even the federal prosecutor who was assigned to this case said that Dilma didn't commit any crime, and the Senate basically said the same thing even as they impeached her and threw her out of office. But then he was very quiet after that, and I'm guessing that the U.S. government, who he's very close to and generally takes their side in issues in the region, I think that he got the idea that he was off-message.

The United States, of course, the situation's much worse than it appears. I think that they're very much in favor of this coup and have been for a while, and the evidence is pretty strong. As you know, right after the lower house of Congress in Brazil voted to impeach Dilma, one of the leaders of the impeachment in the Senate, Aloysio Nunes, came to the United States and met with Tom Shannon, the number-three official in the State Department, also former ambassador to Brazil, and he's obviously the person who's making the decisions for the U.S. on this impeachment. And he didn't have to meet with them, especially at that moment. That was a very strong signal of support for the impeachment.

And an even stronger one was on August 5 when Secretary of State John Kerry went to Brazil and he met with the acting foreign minister, José Serra, and he held a joint press conference with him and said these nice words about all this new chapter in U.S.-Brazilian relations and all the great things that were going to happen. And that was really a very strong endorsement to everybody who was watching. And you have to remember, I mean, he was meeting with--this guy was not really the secretary of state. He was part of an interim government that was really just taking over while Dilma was at that time suspended. So by going there and pretending that this is a new government and this is a great new government to have when it hasn't been decided yet, that's a very, very strong show of support from the United States, probably the most they could get away with, because they can't openly say, we support getting rid of the elected president.

PERIES: And one can only speculate on this, but what role did the U.S. play in what actually happened to the overthrow, in this case by impeaching Dilma Rousseff?

WEISBROT: Well, we don't know what they did under the table. I mean, there are a lot of people in Brazil that think that since Brazil was a major target for the NSA, one of the biggest in the world in terms of their spying, and there was a big conflict over that a year or two ago between Dillma and the--.

PERIES: This is the U.S. listening in to the conversations of Dilma Rousseff.

WEISBROT: Yes, and much more. They spied on Petrobras, for example, the oil company. So a lot of people in Brazil think that they probably fed the opposition information and things that they could use to go after the government. And, now, that wouldn't surprise me. I mean, all we can say for sure is that they were very much in support of the coup. And that's, of course, a big thing, because a lot of these people in the foreign ministry, in the Senate foreign relations committee there, a lot of them are more loyal to the U.S. than they are to their own country. And you saw that even years ago when Lula's first ambassador to the United States, after he left, he went and denounced the government to a right-wing magazine there. And there's--all of these countries have this problem. We have a similar thing in the U.S. where we have kind of permanent government in our foreign-policy establishment and the whole State Department and intelligence agencies and so on. So they have that there, too. And so these people are close to the United States. The United States wanted to get rid of this government very much. And so you have to assume that there was collaboration. But we don't have any hard evidence of that.

PERIES: Alright, Mark. So much more to dig into here. But I thank you so much for joining us and hope to have you back on this topic very soon.

WEISBROT: OK. Thank you, Sharmini.

PERIES: And thank you for joining us on The Real News Network.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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