Brazil's political crisis has now turned into a full-fledged impeachment crisis. The first to pay the price will be the Brazilian people. It will be months - maybe years - before Congress and the executive agree on the economic reforms needed to get the world's eighth-largest economy growing again. Ironically, this crisis shows that political reform, rather than economic change, should be the number one priority in Brasilia.
The crisis is a political equivalent of the Shootout at the OK Corral. It centers on a clash between two political titans - President Dilma Rousseff and the Workers' Party on one side, and Congress President Eduardo Cunha with part of his Brazilian Democratic Movement Party on the other. But this is no longer mere political theater; Rousseff and Cunha are fighting for their political survival and reputations and are on the cusp of widespread accusations linked to the Petrobras corruption scandal.
Implications go far beyond Brazil's borders. The international community needs this important country to get back on its feet, and fast. Brazil is a powerhouse. It provides important petrochemical, steel, financial services, and aerospace exports to countries around the globe. Its 205 million-person economy is the locomotive of the Mercosur trade bloc. At a time of great change in Latin America, the region needs a strong leader, and Brazil should play that role.
But the country faces a wide array of problems. Negative GDP growth is expected to continue into 2016, and unemployment and inflation are rising steadily.
At the core, Brazil is experiencing a crisis of political legitimacy. The Petrobras scandal has managed to shock a populace already accustomed to political graft. Amid a sprawling corruption scheme involving some of the country's largest private companies and kickbacks to political parties through the state-owned oil firm, the list of implicated government officials just keeps growing. In a country already plagued with a slow and inefficient decision-making process, the inertia emanating from the corruption scandal is catastrophic. Brazil cannot come back without a profound shakeup of its political system.
Much the same happened in Italy after the anti-corruption investigations known as Operation Clean Hands essentially dynamited the political landscape that had been in place since World War Two.
Like in Italy of the 1990's, the Brazilian police and judiciary have implemented corruption investigations with impressive vehemence. For a people disillusioned with their institutions, Brazilians admire the bravery of the judiciary taking on cronyism in government and in the private sectors. Travel to any Latin American capital and you will hear considerable envy of the front-page progress of Brazil's investigations.
However, In Italy's parliamentary democracy, the cycle of accusations, confessions and revelations quickly led to change. New elections with massive electoral losses for the traditional parties were followed by the appointment of a non-political caretaker government under a former central bank governor. This allowed political reforms to pass parliament.
How Can Brazil Move Forward Now?
In Brazil, the path to change is nowhere as clear. There is little doubt that, were a snap election possible, the political parties in charge of Brazil's executive and legislative branches would suffer profound losses and third-way parties would surge. But none of this is possible in Brazil's presidential system.
In the United States, another presidential system, one could envisage naming a bipartisan commission led by former presidents to provide advice on the way forward. But in Brazil's highly polarized atmosphere, a commission headed by former presidents Lula da Silva and Fernando Henrique Cardoso, for example, would only lead to further dispute.
