Scandal, inflation, and a murder suspect freed: a tough week for Brazil's president

Dilma Rousseff's chief of staff resigned over questions about his personal wealth, and now Italy is furious after Brazil's supreme court released a jailed Italian murder suspect and fugitive.

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    Brazil's former Chief of Staff Antonio Palocci looks on during the swearing in ceremony of Brazil's new Chief of Staff Gleisi Hoffman at the Planalto palace in Brasilia, Brazil, Wednesday, June 8. Hoffman, of the ruling Workers' Party, took over Wednesday from Palocci, who resigned Tuesday night amid questions over the sharp rise in his personal wealth.
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It's been a rough week for President Dilma Rousseff. First, her embattled chief of staff quit in the midst of a corruption scandal, after she'd failed to take action and called in former president Luiz Inacio Lula da Silva to try to contain the political crisis. Antonio Palocci was one of President Dilma's most trusted advisors, although it wasn't the first time he was accused of illicit activities; in 2006, he resigned as Mr. Lula's finance minister after being involved in the massive Mensalão corruption scandal, and he was also accused of corruption while he was mayor of Riberão Preto. Dilma's response was seen by some as slow and ineffective, and Lula's involvement was seen as a last-ditch attempt due to her own inability to handle the problem. Upon Mr. Palocci's departure, Dilma praised her outgoing chief of staff and confessed she was sad he was leaving.

Dilma chose a relatively unknown newcomer, Gleisi Hoffman, a senator from Paraná, to replace Palocci. Palocci was critical to Dilma's success since he was her power broker in the Lula style, while she could attend to the nitty gritty details of her government, as her style is much more bureaucratic and detail-oriented than Lula's. Now, it's up to Ms. Hoffman to prove she can take on the same role and effectively manage the complex array of relationships from the Palácio do Planalto. The media was quick to jump on the new advisor; she supports the Forest Code as it was passed by the House of Representatives, whereas Dilma wants to veto amnesty for illegal loggers. Political analysts say Dilma has to get it right quickly to reestablish order and legitimacy, and she will have to prove that she can step outside her comfort zone to deal with future conflicts more aggressively.

Meanwhile, the Supreme Federal Court finally granted amnesty to accused Italian murder suspect and fugitive Cesare Battisti, and freed him after he spent nearly five years in Brazilian jail. The decision came after the court had initally voted to extradite him, and then Lula granted him amnesty right before leaving office. This week's decision was to determine if Lula's decision was legitimate and if Mr. Battisti's extradition was legal. With the 6-3 decision, filled with highly-charged nationalistic sentiment, the court changed its previous decision and even let him go. The trial itself seemed to be a bit surreal; one of the attorney general's arguments against extradition was that to judge extradition or amnesty is "judgement of supposition or hypothetical judgement, which does not need to be based on concrete facts." (I swear, really.) The Italian government is up in arms, and judging by previous tensions with the case, it's likely to cause problems if Dilma or her government fail to find a way to smooth things over.

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Plus, the decision was highly controversial amongst Brazilians, and some are angry that while an alleged murderer was set free, hundreds of Rio firefighters remain in prison for striking. The crisis has the potential to go national, and the Minister of Justice will meet with Rio officials to try to bring an end to the situation.

And finally, there's the economy. The real is still considered by some as the world's most overvalued currency, and inflation is still rising. (In this recent Bloomberg article, the owner of the Fogo de Chão churrascaria chain explained it's now cheaper to eat Brazilian barbecue in the US than in Brazil.) The Central Bank raised interest rates again this week, the fourth time in an effort to rein in inflation, and more increases are expected. Dilma's government is under pressure to keep inflation in check in the midst of nationwide demands for higher salaries and an increased minimum wage.

Now is Dilma's chance to tackle these issues and get her administration back on track, and to prove that she can be both an effective administrator and power broker.

--- Rachel Glickhouse is the author of the blog Riogringa.com.

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