Streets of Brazil May Hold Key to Rousseff's Future (Correct)

Brazilian President Dilma Rousseff’s struggle for political survival is spilling into the streets, after the latest chapter in a sweeping corruption probe escalated tension in Latin America’s largest country.

Following police questioning on Friday of Rousseff’s predecessor Luiz Inacio Lula da Silva into allegations of bribes for favors, friends and foes of the government have started to mobilize in a race to galvanize public opinion. Both sides have already engaged in isolated clashes and are planning mass demonstrations in coming days.

From bars to soccer stadiums to social media, news that Brazil’s most iconic political figure was taken into police custody has hit on raw nerves in a society tattered by a two-year corruption probe and the worst recession in over a century. The outburst of public sentiment, which risks going violent, may end months of stalemate in Congress over her impeachment, said Gabriel Petrus, a political analyst at business consulting firm Barral M Jorge.

"It’ll be a trial in the streets with the people as a judge -- legislators will have to listen," said Petrus. "The next two weeks will be decisive in tilting the balance for or against Rousseff."

Rousseff herself is not being investigated as part of the sweeping probe into a scheme of kickbacks at state oil company Petrobras, known as Carwash. The opposition-backed impeachment request filed in October of last year focuses largely on Rousseff’s alleged whitewashing of a gaping budget deficit. The president and Lula have repeatedly denied any wrongdoing.

The country’s top electoral court is, however, investigating whether some of the money from Petrobras made its way into her 2014 re-election campaign, a probe that could lead to the annulment of her mandate.

Nationwide Protests

How legislators and judges decide and whether Rousseff may even be forced to step down will depend to a large extent on public opinion and protests in coming days, said Andre Cesar, political analyst and founder of consulting firm Hold Assessoria Legislativa. "Any outcome is possible now."

Rousseff critics have called for nationwide protests on March 13, with some of their leaders vowing to stage the largest anti-government protests yet. As of Sunday night, 150,000 people had signed up on a Facebook event’s page alone for the march in Sao Paulo. Others marches are scheduled in major cities throughout the country.

"Enough impunity. Brazil is not a country of thieves," read a comment on the Facebook page of one event organizer that calls itself VemPraRua, or Come to the Streets in Portuguese. "It’s no good if Lula goes to jail and the PT stays in power as if nothing happened," reads another comment.

Leaders of the ruling Workers’ Party, or PT, and grass roots groups supporting it echoed calls for protests and called for their own demonstrations on March 19. "They lit the fire. Let’s take to the streets," Jose Guimaraes, a PT congressional leader, wrote on his Twitter account after the event.

Lula has been equally defiant, saying that the corruption allegations were an attempt by the country’s elites to remove from power a party that defended the interests of the poor.
"If they want to defeat me, they’ll have to face me in the streets," Lula said at a rally of the bank workers’ union Friday night.

Class Divisions

In a sign of growing concern over escalating violence, Sergio Moro, the federal judge in charge of Carwash, issued statements during the weekend and condemned "the incitement to acts of violence."

Class divisions need to be overcome and harmony between the judiciary, legislative and executive reestablished to pull Brazil out of its current crisis, Vice President Michel Temer, the man who would succeed Rousseff were she to be impeached, said on Sunday.

In a February Datafolha public opinion survey, 60 percent of those polled said they favored a Rousseff impeachment. In Congress, a nearly two-month recess and squabbling over procedural issues have delayed the formation of a committee that is due to recommend to the lower house whether impeachment proceedings against Rousseff should move ahead.

That may now change.

"With the detainment of Lula this has become more than a corruption probe. It’s become a battle over ideas and ideologies," said Petrus from Barral M Jorge. "People are taking their frustrations and hopes to the streets."

(Corrects spelling of Rousseff in fifth paragraph.)

To contact the reporter on this story: Raymond Colitt in Brasilia at rcolitt@bloomberg.net. To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Randall Woods

By: Raymond Colitt

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