There was an error in this gadget

Tuesday, March 17, 2015

Coup d'état possible in Brazil?

Well, as of yesterday, scores of persons in Brazil gathered in major cities in protest of the government. Over 1.5 million people gathered in the national stadium in protest and the numbers are expected to grow.

The protestors have asked for President Dilma Rousseff to resign immediately amidst a corruption scandal coming out of the state run oil company, Petrobras. This isn't the first major protest Brazil had experiences, and most recently was the protests prior to the World Cup 2014- cries of wasteful spending, lack of spending on the poor and wide spread theft were the most serious allegations about the process.

This Petrobras scandal, however, has rocked the country, leaving people wondering about the state of the country's finances and the fragility of the political peace as the scandal from Petrobras has hit a nerve amidst lower oil prices.

Of course, this author sorta know that social instability in oil producing and oil export dependent countries would happen.

When countries budgeted for a certain price for oil, in the case of Brazil, over $100 dollars a barrel for oil, and then oil prices plummeted to under $50 dollars, you can imagine the public accounting nightmare and the financial collapse that would ensue- money would not be spent on social projects, capital infrastructure projects, people start to watch the pennies a little more closely and then issues such as wastage- which would have been moderately acceptable at $100 per barrel- simply would not be tolerated and excesses, regardless of how long it's been going on, will be scrutinized and blames will be bandied about.

Venezuela is going through similar challenges as well. In fact, there were thwarted attempts to oust the current Venezuelan president, Nicolás Maduro Moros. Venezuela in particular had a break-even point of $115 dollars per barrel.

With all that being said, the social instability will continue. Watch out for Middle Eastern countries and other countries that produce oil.
Post a Comment