The truth about The Edge of Democracy

“The Edge of Democracy”, a documentary by Petra Costa, got into Netflix and nominated to an Oscar, thus being launched over hundreds of millions of unsuspecting victims that know nothing of recent Brazilian history and have little to no access to a fact check, we had to blow the whistle.

A documentary can look at facts and try to extract an interpretation or view from it. We might agree or disagree, but a view is a view. But, the problem starts when a movie attempts to be a documentary, and yet fails to get even basic facts or statistics right.

From this perspective, the documentary by Petra Costa attempts to show what happened before, during and after the Impeachment process of Dilma Rouseff. Althought, it largely ignores the corruption scandals that surrounded Dilma, former president Lula and their Workers party, only passingly mentions the economic crisis they caused, strawmans the opposition, underplays the reason she was impeached, misrepresents facts and even gets basic numbers wrong.

The main lies told on The Edge of Democracy

It affirms Lula achieved the lowest unemployment in Brazilian history. Wrong. It shows Lula saying that he got into politics because only two congressmen of 443 were working-class, when there were never exactly 443 congressmen. It claims Dilma lost her prestige and power because she stood up to banks, when in fact they made enormous profits under her government and high-interest rate policies.

As a bonus, Guido Mantega, one of her former Ministers is under charges of selling privileged information to those banks and funneling the money to the Party, and in her second term she brought them into government in what is today the Ministry of the Economy by hiring Joaquim Levy. If that is standing up to the banks, I’d really like to know what it means to be helping them.

The movie claims Lula created Bolsa Familia, a basic-income-for-the-poor policy that is one of the staples of his government. The fact is that Bolsa Familia is an amalgamation and expansion of different government support programs from the previous governments. Lula should know: he’s on record criticizing those programs.

Another quite curious claim is that Michel Temer, Dilma’s vice-president and president after the Impeachment in 2016, was a traitor of her government from day one of the second term. The record shows differently: he took up heavy pro-Dilma negotiations in Congress and that was widely recognized. One of Dilma’s vice-leaders in Congress, Orlando Silva, was on the news saying so

Those are easily checkable statements that riddle the movie and are easy for a reader who doesn’t know Brazil to understand. The problem is that they are probably the lowest offenders on the list. Explaining that requires quite a bit of context and recent Brazilian history.

The most egregious error is the narrative

People are persuaded to think that Democracy was doing fine championed by Lula and Dilma, they stood up to big interests and got taken down on a coup and democracy was subverted, now being under heavy threat. None of this is true, and it’s not even a matter of interpretation: it’s something that can be settled with basic googling skills by a portuguese speaker.

In 2005 a large corruption scandal erupted: Mensalão. Lula and his party, the Workers Party – PT in portuguese – were caught embezzling funds to buy support in Congress, get nominations and ensure they would rule unchecked. That is not only a corruption scandal but a direct attack on democratic institutions and principles.

In 2014 they were again caught in Petrolão. The scheme was the same, and largely organized by the same people: divert funds, buy support, rule unchecked. That makes them repeat offenders on attempting to destroy the separation of powers and gain control of power by illicit means.

The liberty of the press was also always in play. In 2004 Lula sent a bill to Congress to create a federal council with powers to regulate and punish journalists. That directly contradicts his claim in the movie that he regrets not trying to regulate the media. Almost every year he, Dilma or his party would drum up “regulating the media”, and Dilma even tried to conjure a “limited” constitutional assembly – whatever that means – to discuss the media. 

A relatively minor but symbolically important scandal happened at the beginning of Lula’s presidency. When an American reporter wrote that Lula had a drinking problem, Lula demanded the cancellation of his visa. When his aides told him it was unconstitutional to deport the journalist since he was married to a Brazilian woman, Lula’s reply was ominous: F*** the constitution.

Thus, to imply or overtly say that democracy in Brazil was doing fine under the Workers Party is downright dishonest.

The documentary by Pestra Costa hides the truth about corruption in Brazil

The movie only briefly mentions that Mensalão existed, and treats Petrolão as some made-up charges by Sergio Moro, a judge trained in the US, thus implying mystical foreign power interventions in Brazil. But to quote Roy Jones Jr: they must all have forgotten. In 1992 Dilma took the exact same course that Moro did. 

It also shows that during his court hearing Lula asks Moro how he feels about having collapsed the construction sector in Brazil. One would think it would be relevant to mention that those construction companies were the ones inside the corruption scandal, but somehow the movie didn’t find that very relevant.

Speaking of constructions, Lula was jailed because he got an apartment as a kickback from one of those construction companies. He also is accused of getting a wide-ranging upgrade on a rural property, embezzling millions, commanding the corruption scheme and much more. Yet the movie claims all the judges had on him was an apartment. 

That is also why he could not run for president in 2018. People convicted of a list of crimes, corruption obviously included, cannot run for office for eight years. That is the “Clean Record Act”, known in Brazil as “Lei Ficha Limpa”, sanctioned by Mr. Lula himself. Oddly, the movie doesn’t mention that and instead claims that the conviction by Sergio Moro knocked him out of the race. Moro couldn’t possibly have done that, since the conviction that counts for the Clean Record Act is on an appeals court, and Moro was one step below that. Three other judges not only affirmed Moro’s sentence, but raised the jail time Lula had to serve.

Lula is only free today because the Supreme Court voted that you can only go to jail for non-violent offenses once you lose your case and all appeals at the Supreme Court. The standing before was that you could go to jail once you were convicted in an appeals court.

It’s worth noting that the president of the Supreme Court was and still is Dias Toffoli. He was appointed to the Supreme Court by Lula for the shining honor of having never passed a judge test, and having been Lula’s campaign lawyer. In fact, seven of the eleven Supreme Court judges were appointed by Lula or Dilma. Hardly a hostile court attempting to attack democracy or be partisan to a coup.

But it was not only the construction sector that suffered. The entire economy was in the worst crisis in Brazilian history. Also, the economy is only mentioned about an hour into the movie and even then only as almost an aside. Finally, the depths of it are omitted, but let us clarify that for you.

Fact-checking about the brazilian economy

GDP shrunk by 3,8% in 2015 and 3,6% in 2016. Unemployment shot up from 6% to almost 14% in 2017, when new economic policies under Michel Temer started to knock it back down. Deficits exploded, taking the national debt from 51,5% of the GDP in 2013 to more than 80% today, where we are still making deep reforms to try and tackle deficits and policies still on autopilot from the Dilma years. When pension reforms were approved in 2019, it was considerably clear that if they did not go through, Brazil would go bankrupt.

That was the result of expansionist and interventionist economic policies, interest rate manipulation, accounting fraud, price controls to control inflation and help Dilma’s reelection, and much more. That brings us to: why was Dilma impeached anyway?

The movie attempts to show it as a coup, omitting a simple fact: she clearly and widely broke budgetary laws. Not only did she do so in the interpretation of the law, but also in original intent.

Back quite a way in Brazilian history, it was normal for governors to create state banks, use them to fund deficits, vote-buying policies and general budgetary responsibility, only to declare them bankrupt when they couldn’t carry the piano any longer. This is followed by creating a new bank and repeating the process eternally. The depositors get the stick, the government washes its hands, political players get money, rinse, repeat.

This and many other accounting schemes prompted reforms that created budget laws prohibiting the government from taking loans without congressional authorization, mandating better accounting, and many other good practices.

Dilma used state-owned banks to finance her policies. In practice, she used the banks’ balances as if they were treasury balances. To emphasize: this wasn’t a week-long snafu of account balancing: this was a policy going back to 2009, with 45 billion reais in open balances. For reference, that is a bit less than half of all federal spending on education in 2015. That constitutes a loan without congressional authorization and budget fraud, as verified by the the Federal Audit Court (TCU). Off you go, Dilma.

Did the Workers Party, Lula and Dilma defend themselves of those accusations?

As we have implied above, no. The answer they give is along the lines of this movie: directly state the opposite of what happened, don’t mention what happened, source your arguments with partisan narrative and repeat until something happens.

While it is true that there are still many elements in the right and in the left who want to end democracy in Brazil and take control of state power, the fact remains that the largest threat ever posed to democracy since it returned to Brazil in 1985 and in 1988 with a new constitution was staged precisely by Lula and his Workers Party.

Michel Temer was never a threat to democracy. Was he corrupt? While there are no convictions yet, the consensus in Brazil is a clear yes. Then again, he is at worst, corrupt. And bought and paid for a long time by Lula and his coterie. There is a difference between a thief and a dictator.

Is Bolsonaro a threat to democracy? Maybe. He has had some concerning ideas, but so far has not implemented anything that would constitute a threat. Of course, he has only had one year in power. Yet trying to compare him with a party that twice tried, and for quite some time succeeded, to subvert the separation of powers and control all the levers is disingenuous. His story is yet to be written, while the story of Lula, Dilma, and the Workers Party is already written, part of it in the records of many courts, audits, and arrests.

Finally, the truth about inequality rates in Brazil

Lastly, we have the Hail Mary argument of the movie: well, at least the Workers Party was a hope for the poor, a bastion against inequality. They put up a fight for the common man, and maybe there were mistakes, but at least inequality was tackled. Well, again come those pesky statistics to show otherwise. 

Inequality was already falling in the second term of President Fernando Henrique Cardoso, from 1994 to 1998. It continued to fall at pretty much the same pace during Lula’s presidency, implying he added little to the mechanisms in play, and started to go up again after Dilma’s reelection in 2014. Right after her reelection, many state-controlled prices were allowed to go up, inflation crossed 10% per year and many programs were cut.

Yet when we step back and look at the whole picture, the fact is that inequality has hardly budged. The Gini Coefficient in Brazil went from a high of 58 to a low of 52 during those years. Looking at this over the decades, it almost looks like a straight line. And at the end, Dilma failed to keep it up. 

It’s easy to do a few years of policy when one can raid the balances of state-owned banks, cook the books, buy support in Congress and win elections with billions of Reais of embezzled money. But that model only lasted so long, and came to an end with Dilma in her impeachment. Brazil, however, did not come to such an end. It will struggle for a decade or more to clean up the mess and get back on a path to growth and the reduction of poverty.

Those are not the only lies within the documentary by Petra Costa, here’s the full list.

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Raphaël Lima


Fundador e CEO do Ideias Radicais.