The 5-Minute Briefing: Political crisis in Brazil

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The Independent US

What's the corruption scandal about?

Brazil's left-wing firebrand President, Inacio Lula Da Silva, has proven himself more adept as a coalition builder than expected. But his coalition partners have turned on each other with tit-for-tat corruption allegations. First, Roberto Jefferson, from the Labour party, was accused of engineering kickbacks from state enterprises. Mr Jefferson hit back by alleging that a larger fraud involving bribes offered to opposition MPs to pass government legislation was being overseen by senior members of Mr Lula's cabinet. The President's aide Jose Dirceu fell on his sword after claims that he masterminded the alleged vote-buying. Even Mr Jefferson has stopped short of accusing the President himself.

Is Mr Lula set to become a lame duck?

The former union leader, who swept into power as Brazil's first avowedly left-wing leader in 2002, faces a tough choice. His Worker's Party (PT) is demanding that he unravel the coalition and distance himself from the liberal and right-of-centre partners to return to a more left-wing agenda. But that would strip him of his Congress majority and leave him as a lame-duck president until his term ends in October next year. Indications of his intentions will come this week when he announces a cabinet reshuffle that should signal a shift to the left.

Has Mr Lula abandoned his core support?

The President made much of his past as a lathe operator and his understanding of poverty, saying it would help him to address the needs of Brazil's underclass. Carrying that knowledge into office and effecting change has proved more difficult. Brazil is the developing world's largest debtor and has very high interest rates to ward off the bad old days of hyperinflation. Cautious economic management and impressive growth rates have allowed Mr Lula to improve the minimum wage and create jobs. But the country's richest 10 per cent still own 67 per cent of its wealth, and promised land reform has progressed slowly. Interest rates of close to 20 per cent have transferred money from the poor, who borrow, to the rich, who lend. While luxury goods such as Ferraris are doing a roaring trade among the elite, landless farmers are taking to the streets in protest.

Is the "people's president" heading for the exit?

The balancing act that has seen him become the darling of the same markets that plunged by a third when his election campaign gathered pace is in need of adjustment. The response is on its way in the form of billions in public spending targeted to assist his traditional supporters. The concern is whether Brazil's notoriously cyclical economy will survive a slowing in the growth rate. His predecessors have all failed to engineer a soft landing.

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