Energy

Millions Want Brazil’s President To Resign Over Oil Scandal

REUTERS/Ueslei Marcelino

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Andrew Follett Energy and Science Reporter
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An estimated 1.4 million Brazilians took to the streets Sunday, demanding President Dilma Rousseff resign in the wake of a corruption scandal involving the state-run oil company Petróleo Brasileiro (Petrobras).

Protests were amplified by an announcement from state prosecutors Sunday charging the state-run company Petrobras, along with other companies, with corruption. Government prosecutors demanded the accused pay $2 billion in damages.

Protesters hoped the massive turnout will pressure lawmakers to impeach Rousseff on charges of corruption. Rouseff and her political party allegedly skimmed billions from Petrobras’ revenues to illegally finance political campaigns. Police have identified $3.7 billion in suspicious payments. Rouseff is also being investigated for manipulating public accounts to mask a growing government budget deficit.

Rousseff has been dogged by accusations of high-level corruption and graft tied to Petrobras since she assumed office in 2014. The Petrobras scandal has already led to an investigation of popular former President Luiz Inacio “Lula” da Silva and and toppled numerous Brazilian political and business leaders. Rousseff and the Worker’s Party denied the allegations.

“If politicians don’t hear our voices, they will be in trouble,” Oscar Cezar Magalhães, a protester in the northeastern state of Bahia, told The Wall Street Journal. “We are going to the streets to take Dilma out. Then we’ll think about what comes next.”

Some 65 percent of Brazilians call the Rousseff administration as “bad” or “very bad,” according to a December poll.

Brazil’s socialist government has been plagued for months by the sprawling corruption scandal and a related economic meltdown. In December, the country’s credit rating was downgraded to junk status and the strength of Brazil’s currency has declined.

National economies that are overly reliant on oil tend to breed corruption and frequently attempt to use oil revenue to buy their citizens’ approval.

Revenues from oil are inherently unstable and tend to cause epidemics of governmental corruption. Countries that suffer from this “resource curse” or “Dutch disease” tend to grow much slower economically over time as putting oil revenues into a welfare state is much more attractive politically than reinvesting the wealth to boost economic performance. From 1965 to 1998, the GDP per capita of oil exporting countries decreased on average by 1.3 percent per year, while in the rest of the developing world, it grew by an average of 2.2 percent per year.

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