This week, two major scandals rocked Latin American politics as two former leftist presidents, “Lula” Luiz Inacio da Silva of Brazil (2003-2010) and Ollanta Humala of Peru (2011-2016), face severe charges for their corrupt dealings while they were president.
Lula has been sentenced to nine and a half years in prison for taking 3.7 million reais (1.1 million dollars) from a construction company in exchange for favors. Lula is contesting this charge and has stated that the judge who sentenced him is ignoring other evidence that was presented that would have helped his case. The case with Lula is particularly damaging, as he was a highly beloved president. During his years as president Brazil, skyrocketed onto the world stage. Brazil’s economy boomed, Lula arranged for his country to host major international sporting events, and poverty decreased somewhat due to programs such as Bolsa Familia. One interesting thing about Lula is that, despite being a socialist, he realized that free markets were very important to growth, and supported those policies as well as high social safety spending. Even with the vast population, resources, and potential that Brazil has, Lula’s quasi capitalist policies were not enough to keep his nation afloat. While Lula embraced capitalism to a degree, he embraced a system characterized by state capitalism and cronyism.
As of late, Brazil has been pretty tough on corruption. Former president Dilma Roussef, Lula’s successor as both president and leader of the worker’s party, was ousted last year in an impeachment that was triggered by her government’s involvement in illegal budgeting practices. She also was president of Brazil’s Petrobras state owned oil giant when a corruption scandal wracked that organization. She claims innocence and ignorance in both cases, even going so far as blaming sexism for the justice she received. The current president of Brazil, Michel Temer who is a center/center right politician, also faces charges of corruption. Not just an impeachment, but full on criminal charges.
The situation in Peru is similar but less high profile. Former president Humala and his wife are being put on trial for money laundering charges that stem from illegal campaign donations from the Brazilian construction company Odebrecht, similar to Lula’s case. Odebrecht admits to funneling twenty-nine million dollars’ worth of bribes into Peru, twenty million of which are believed to have been received by president Humala. Humala and his wife could be held for up to 18 months as the charges are prepared. This is due to fears that they would flee the country, as another former president, Alejandro Toledo, fled Peru following bribery allegations. Humala has meekly denounced these claims as political silencing.
The two cases are part of the larger “Operation Car Wash” that has tried to crack down on corruption coming from large Brazilian companies such as Petrobras and Odebrecht in recent years. Former leaders of El Salvador and Panama are also suspected of taking bribes from Brazilian corporations.
How did the corruption situation in Latin America get so bad? Was it socialism? Was it corporate greed that comes from unregulated capitalism? The truth is that this level of corruption comes from crony capitalism. Countries are not willing to implement fully capitalist economies, but they thankfully realize that adopting full socialism will just get them what Venezuela and Cuba have, absolutely nothing. Cronyism abounds in societies like this, as the socialist values of elitism and a marriage of state and business creep in. Thankfully, the people and judicial system of many Latin American countries have finally decided to do something about it. Hopefully these recent anti-corruption efforts will purge the cronyism from societies that have been held back for so long by these bribes and scams. Countries that have already moved towards freer markets and classically liberal policies, such as Chile, have been highly successful.
Latin America is doing something about its corruption problem, when will the United States? The Clinton Foundation is the biggest corrupt political machine that I can think of, and fortunately the Clintons have been defeated, for now. Despite this blow to cronyism, we the American people must challenge corruption and cronyism wherever we see it, whether on the right or the left. With a purge of cronyism from our society, it will be a lot easier to make America great again.