By Paulo Trevisani And Jeffrey T. Lewis
BRASÍLIA--President Dilma Rousseff began her second term in
office with promises to fight corruption and fix the economy,
acknowledging the many challenges facing her and Brazil over the
next four years.
In an inauguration ceremony that was upbeat but drew sparse
applause and little spontaneous celebration by her supporters, Ms.
Rousseff extolled her legacy of poverty reduction while outlining a
vision to get Latin America's largest country back on track.
"We will prove that it is possible to make adjustments to the
economy without repealing rights that have been won or betray
social commitments, " she said in a speech in Brazil's Congress
attended by cabinet members, foreign dignitaries, allied lawmakers
and other officials.
Her pledge came as Brazil confronts flat growth, stubbornly high
inflation, ballooning debt and a potentially explosive corruption
scandal at state-controlled oil giant Petróleo Brasileiro SA, or
Petrobras.
The tone stood in contrast to 2011, when she was first
inaugurated and Brazil's economy was coming off a 7.5% expansion
the year before, fueled by a commodities boom that has long since
ended.
Ms. Rousseff's first administration was marked by a robust
expansion of popular social programs that helped her win
re-election. But her new economic team has already begun
belt-tightening to reduce growing deficits. Earlier this week the
government announced measures that will cut unemployment and
retirement benefits. Lawmakers haven't yet approved the measures.
Economists have urged spending cuts to tame inflation, which for
years have been at the top end of Brazil's 2.5% to 6.5% target
range.
Brazil's current mix of slow growth and high inflation is often
attributed to what some say were economic missteps--such as
excessive government intervention in the economy--by Ms. Rousseff's
administration.
Joaquim Levy, Brazil's new finance minister, is tasked with
preserving Brazil's hard-won investment-grade credit rating,
obtained in 2008, following a downgrade this past year.
But fixing the economy could mean tough political battles, even
with government allies. "We expect the president to be loyal to
calls from workers to advance in labor benefits, not a package of
reforms that hurt workers," said Senator Randolfe Rodrigues, from
one of the several leftist parties that support the Rousseff
administration, to reporters as he walked into Congress for the
inauguration.
A protégé of former President Luiz Inácio Lula da Silva, Ms.
Rousseff struggled at times during her first four years to get
controversial bills approved, even with her broad coalition in
Congress.
Her second term promises to be even tougher. Ms. Rousseff eked
out her narrow victory in the October presidential race, relying on
attack ads to tear down her opponents. Still, her Workers' Party
and most of its allied parties lost seats in Congress.
But the darkest cloud on the horizon for Ms. Rousseff might be
the fast-moving corruption scandal at Petrobras.
Brazilian prosecutors allege that executives at Petrobras
conspired with construction companies to inflate the cost of
contracts, skimming off as much as $1.5 billion, by the estimate of
Brazil's budget watchdog, to enrich themselves while funneling
kickbacks to Ms. Rousseff's Workers' Party and its allies.
Ms. Rousseff hasn't been implicated in the scandal, and leaders
of her party have repeatedly denied allegations of involvement.
Police have already filed charges against 36 suspects, including
two former Petrobras officials.
In her speech on Thursday, Ms. Rousseff said that "corruption
offends and humiliates the workers, the business people and all
honest and good-willing Brazilians. Corruption must be
extirpated."
Prosecutors are expected to start handing down indictments of
elected officials in February. The scandal has emboldened
opposition parties, which are pushing to reopen a parliamentary
probe into the Petrobras case after an earlier one recommended
charges be filed against dozens of people.
"Congress has an obligation to investigate," said Federal Deputy
Antonio Imbassahy, leader in the lower house for Brazil's largest
opposition party, the Brazilian Social Democracy Party, after
listening to the speech on TV. He said his party will fight in the
new legislature, to be inaugurated in February, for a continuation
of the probe that last year.
Given the many difficulties facing Ms. Rousseff, including calls
for her impeachment, she will struggle to turn those challenges to
her advantage.
Thousands of Ms. Rousseff's supporters were on hand for the
celebration, some of them bused in by the ruling Workers' Party.
While many expressed loyalty to the president for expanding social
programs that have pulled millions from poverty, some expressed
doubts that she can fix Brazil's problems quickly.
Sitting on the grass under the shade of some palm trees to get
relief from a blazing sun and 90-degree heat, Ana Paula de Assis, a
38-year old housemaid said she expected the president to "improve
health, safety, education," but doubted inflation could be tamed
anytime soon.
"Our salary never goes up, only prices," she said.
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