Political and economic crisis, the Rio Olympics and Internet rights

The political drama in Brazil continued to unfold during what has been an especially eventful week, even by recent standards. In other news, the economic outlook remains bleak, preparations for the Rio Olympics appear to have finally gotten on track, and concerns are being raised about new laws that would affect net neutrality and strengthen censorship on the Brazilian internet.

Politics

A brief review of the week’s events

The movement to impeach President Dilma Rousseff has gained momentum. Last Sunday, during a marathon session lasting over 7 hours, the Congressional Impeachment Committee voted to allow the impeachment process to continue. It will now be voted on by the full lower house of Congress: the highly anticipated vote is scheduled for this Sunday, April 17.

While the committee was still in session, there occurred a suspiciously timed leak of Vice President Michel Temer’s victory speech.  In response, the president accused Temer of committing treason by conspiring to oust her through a coup.

As the vote in the House of Deputies approaches, support for the president among members of Congress has been declining steadily. In a seeming act of desperation, the Attorney General filed an injunction with the Supreme Court in an attempt to annul the impeachment proceedings, but the justices chose not to intervene and voted to allow impeachment to move forward.

As figures across the political spectrum scramble to retain or increase their power, mudslinging and vote-trading has caused an already ugly situation to devolve even further: While the Brazilian political crisis was initially compared to House of Cards, it is now starting to look a lot more like Game of Thrones.

Meanwhile, the Brazilian public remains deeply divided.

Overview of impeachment process

The impeachment process is complex: This Financial Times guide provides a great overview.

Economy

Capital markets have rallied at the prospect of impeachment, with the hope being that Rousseff’s removal would create a more business-friendly environment. Indeed, Vice President Michel Temer has laid out the beginnings of a plan for “a gradual fiscal overhaul.”

However, investors may be getting ahead of themselves. The impeachment process is likely to be drawn out and painful, and there are no quick fixes to Brazil’s many economic problems and deeply polarized political climate.

Meanwhile, Brazilian states are taking advantage of weakness in Brasília to renegotiate their debts with the federal government, creating a potential “time-bomb” that will further increase the already ballooning deficit.

In this context, it is unsurprising that the International Monetary Fund declared the downturn in Brazil to be deeper than expected and revised its previous outlook for 2016 downward.

Rio Olympics

While the state government of Rio de Janeiro is basically broke and dealing with related protests and strikes, preparations for the 2016 Olympic Games remain underway. After many delays and setbacks, it seems preparations are now mostly on schedule. Nevertheless, officials are seeking to lower expectations, saying that the games will not be like those of London or Beijing. Additionally, ticket sales have been lagging.

Potential restrictions on the Brazilian internet

Finally, overlooked amid the barrage of political and economic news are worrying developments that would affect net neutrality and increase censorship on the Brazilian internet.