While Brazil is suffering from a heavy recession and is going through grave political turmoil, coverage has been superficial at worst and topical at best. The (Western) media have not demonstrated great interest, and the public seems to be even less concerned with what is going on in Brazil. Where does this indifference stem from? What can said lack in reporting teach us and what does the economy have to do with it? (Featured Image © Wikimedia Commons)
What about Brazil?
With the closure of the 2016 Summer Olympics in Rio de Janeiro the international focus on Brazil, insofar as it was present, diluted. As expected, over the past months most of the coverage centered merely on the games themselves, the records that were broken, the medals that were won, and occasionally on organizational hiccups such as the polluted water in the Rio De Janeiro bay or “the mystery of the green swimming pool”. After all, these were the games the world had anticipated for four years. Nevertheless, every once in a while, more in-depth articles about socioeconomic issues in Brazil, such as the struggle of local Indian populations or crime and poverty in Rio’s favelas, emerged.1 Whilst they are all laudable pieces of more investigative journalism addressing often overlooked problems, they are unfortunately nothing new under the sun. Indeed, stories of poverty, violence, and displacement of indigenous populations in Brazil and the rest of Latin America are (well-)known throughout the (developed) world.2
Media coverage on Brazil’s (the world’s 9th largest economy in terms of GDP) worst recession in a hundred years and its issue with grave political turmoil, on the other hand, has oddly enough been superficial at worst and topical at best.
Media coverage on Brazil’s (the world’s 9th largest economy in terms of GDP)3 worst recession in a hundred years and its issue with grave political turmoil, on the other hand, has oddly enough been superficial at worst and topical at best. The headlines mainly concerned the impeachment process of President Dilma Rousseff and its intrinsic links to continuous cases of corruption and the tanking economy. What can we learn from this gap in coverage, what are its underlying reasons and how does it relate to the economy?
A brief political background
Brazil is currently living through a major economic recession, combined with one of the largest corruption scandals in its political history. The main characters involved are Dilma Rousseff (the now impeached President)4, Luiz “Lula” Da Silva (former President)5, Michel Temer (the former Vice-President and now President)6 and Eduardo Cunha (former Speaker of the House)7. Da Silva and Rousseff are both members of the Partido dos Trabalhadores or Workers’ Party (PT), the leading left-wing political party that has been in power since 2002. First under Da Silva and since 2010 under Rousseff, the PT was very popular for (gained popularity by) expanding social programs such as the internationally acclaimed Bolsa Família.8 It was under Da Silva that Brazil became a global growth-superpower during the early 2000s’ commodity boom. Later under Rousseff, although the price of commodities fell, expenditure increased leaving Brazil in debt and with rising inflation.
Brazil is living through a major economic recession, combined with one of the largest corruption scandals in its political history.
Furthermore, in 2013 a scandal came to light. During Da Silva’s presidency, the national oil company Petrobras was used in a multibillion fraud, involving many politicians from PT, including Da Silva himself, and other parties.9 When Dilma Rousseff took office, the Petrobras scandal was further investigated under Operation Carwash, which started in 2014 and found evidence of corruption against amongst others Eduardo Cunha, the speaker of the house. Subsequently, Cunha started an impeachment procedure against Rousseff, which leftist voices have declared was a move to avoid persecution. Cunha was later suspended on charges of obstruction of investigation.10 Until now Rousseff has not been linked to any crime, but her membership on the board of Petrobras from 2003 to 2010 and the development of a billion dollar fraud case during ‘her’ party’s government, does not help to improve her image.
Whilst strictly speaking (officially?), Rousseff’s impeachment has nothing to do with any of said (the abovementioned) events, in reality they are all linked. After all, as people’s disappointment with the PT’s involvement in corruption as well as with its economic “mal governance” torpedoed Rousseff’s approval ratings, political opponents saw their chance to remove her from power. Several motions for impeachment were presented and refused, Yet eventually Rousseff was impeached prior to her re-election over cooking the government’s accounts. Such interventions have a longstanding history in Brazil, and although not very legal, they were commonly performed among previous governments. In that sense, the leftists claiming a coup d’état are not entirely wrong, considering the decision to impeach her was thus rather political than legal. More thorough explanations of what is happening in Brazil can be found here.11
The West does not care
Although this story has been extensively reported on by the BBC, Financial Times, and the New York Times, public interest for it in the West has been more than limited. When looking at Google trends for example, it appears people have little to no interest in the impeachment of Rousseff or the economic crisis, and even Netizens12 are barely researching for information about the impeachment of Rousseff or the economic crisis.13 The only country, different from Brazil, with significant search numbers was the US which is not surprising since it has always been strongly invested in “its backyard”. To illustrate, a similar pattern can be found looking at the recent Venezuelan crisis, where only Latin American countries, the US, and Spain were googling it.14 In comparison, “Brexit” was searched intensely in every region around the globe, except for Central Africa (understandable since internet penetration is still relatively low).15
Somehow, it appears that Brazil, and by extension South America, still belong to the information periphery and does not belong to the core which makes the news, unless when it’s about soccer or the Olympics.
Somehow it appears Brazil, and by extension South America, still belongs to the information periphery rather than to the core which makes it onto the news, unless when events concern soccer or the Olympics. The question then is, do people not care because they lack the information, or is the information not presented because there is no demand for it? The answer will be somewhere in the middle with both ignorance and lack of (mouse?) clicks fueling each other.
Why don’t we care? It’s the economy, stupid!
The main reason for not caring about Brazil seems to lie in the fact that Brazil’s problems do not significantly affect global affairs. Indeed, despite its size and international hyping as the B in BRICS16, the Brazilian economy has a remarkably slim impact on the world economy. Studies have shown the impact of the Brazilian recession will be contained largely to South America, mostly because of the rather small percentage in trading volume with the rest of the world.17 In relative terms, Brazil is an important trading partner to the South American countries and Algeria only, as it accounts for 4 to 30% of their exports. Regarding the world’s main trade partners in relative size, i.e. the US and China, however, Brazil comparably merely imports 2,6% and 1,5% of the respective countries’ exports.18 A slowdown of the Brazilian economy thus causes little harm to the world economy.
Additionally, Brazil’s recession is in turn linked to the decelerated growth of the world economy. Whereas Brazil’s spectacular growth in the early 2000s was mostly caused by the commodities boom, the current decline in price of agricultural products and minerals now poses a problem seeing how it undermines the purchasing power of the people. Also, as the Brazilian real dropped in value over the last years imports slumped, withal causing Brazil to remain relatively competitive and avoid a trade deficit.19 However, the truth of the matter is that the export demand for raw materials is just less than it used to be, so that a devalued currency and decreased purchasing power cut even more into people’s domestic consumption, causing the economy to contract further. As if that was not enough, Brazil was hit by a multi-year drought lasting from 2013 to 2016, limiting the country’s energy supply and causing blackouts.20 This further undermined the Brazilian economy and quality of life for many Brazilians.
The Centre for Policy and Economic Research concluded that the crisis was in part worsened by the government. Since it was their own fault, Brazil should not expect any help or understanding from the world, just like Venezuela is barely receiving any help to curb the hunger in the streets.
Although the main reasons seem to be outside of the Brazilians’ control, Western sources like The Economist and even local researchers claim that the crisis is at least partially caused or exacerbated by the government’s policies.21 As we have seen, most of the economic growth before 2011 was attained by boosting domestic demand and heavy public investments. Unfortunately, this barely changed the competitiveness of the Brazilian economy yet increased public debt. The government tried to increase private investment after 2011, but doing so reduced the aggregate demand and only increased companies’ profit margins. Consequently, the government tried to reduce its debt by cutting spending and increasing taxes on consumption. Both measures obviously worsened the economy. The logic behind it seems that the government tried to keep its investment grade status, in order to avoid any external credit constraints.22 Alike The Economist, the Centre for Policy and Economic Research therefore also concluded that the crisis was worsened by the government. Since it was their own fault, the West somehow appears the follow the cruel logic that Brazil should not expect any help or understanding from the world, just like Venezuela is barely receiving any help to curb the hunger in the streets.23
But what about the BRICS?
The lack of interest for Brazil’s crisis is in stark contrast with the international attention it received as part of the BRICS countries. In general, the interest for BRICS has also waned, with the Russian economy barely growing and the country having budgetary troubles24, the South African economy in crisis25, and the Chinese economy slowing down. Only India seems to endure, although it is having less trade than before.26
The sad conclusion of this case must be that unless something directly impacts the West or is a great natural calamity, the West remains highly indifferent.
With all of the BRICS in trouble, the emergence of new markets seems to be short-lived and disappointing.27 The growth potential of these countries, however, remains very big and maybe the overflow of capital on the Western capital markets might persuade some investors to increase investments in the BRICS again soon. Given the circumstances, it seems unlikely however, that the US’ economic hegemony will be challenged anytime soon. China has been actively trying to set up an alternative to the US-led international economy, but for now the US still decide the future of the world economy.28 The role of the BRICS, in that sense remains limited and therefore of little interest to the West.
The sad conclusion of this case then must be that unless something directly impacts the West or concerns a great natural calamity, the West remains highly indifferent. The rest of the world, however, does not have this luxury of selective indifference, because of the West’s centrality in the global economy. At the same time, so many things are happening all around the globe, it is impossible to pay the level of attention to a topic which it deserves. Nevertheless, it appears that for many Europeans, South America remains a distant land.