Operation Lava Jato (Car Wash) started in Brazil as a small-scale operation in 2014. It focused on targeting money laundering operations that were using car washes as a front. The investigation grew in importance and attention as big names in Brazilian politics and economy started popping up, linking them to money laundering schemes. Now, the investigation dictates the pace at which the country moves. The investigation has taken a toll on Brazil’s political and economic system; the remaining question is whether the price being paid in the short-run is worthwhile for Brazil’s development in the long-run.
Operation Car Wash is now in its 40th round of investigations and indictments. The police investigation has yielded serious indictments and arrests of powerful names in Brazilian politics and economy. This is especially significant because Brazilian politics has been synonymous with corruption for decades, as politicians never seemed to be held accountable for their transgressions. President João Collor, for example, was president of Brazil from 1990 to 1992 until he was impeached on corruption charges. Instead of being cast away by the political system or facing any criminal consequence, he is currently serving his second term as a senator. For the first time in Brazilian history, politicians have started facing jail time.
Some critics believe that Operation Car Wash should not continue because its negative short-term effects will not benefit the country in the long-term. Others, backed by public support, believe that the operation should continue regardless, as punishing those that have broken the law should be a priority. Operation Car Wash’s impact in Brazil can be felt in both the political and the economic sphere.
Operation Car Wash’s impact on the Brazilian economy is undeniable. The political uncertainty and the arrests of Brazil’s industry titans have furthered the country’s economic recession. According to some experts, Operation Car Wash accounts for a significant part of Brazil’s GDP shrinkage, from 3.8% in 2015 and 3.6% in 2016. Some consultancy firms estimate that Operation Car Wash accounts for 2 to 2.5% of that decrease during those years. Construction and oil and gas, the two sectors most affected by the scandals, have fired almost 3 million people between 2015 and 2016, contributing to the rising unemployment rates, now around 14 million. This is the biggest unemployment contingency in Brazil’s history.
Despite this, the public strongly believes that the investigations should continue. According to an as of yet unpublished report discussed at a forum in Washington, D.C. in June 2017, the polling firm Idea Big Data reports that 66% of Brazilians believe that continuing the investigation is as important as Brazil’s economic recovery. The majority of the population wants the investigation to continue regardless of the negative short-term economic impacts. One analyst writes that the shrinking GDP is a small price to pay for a renewal of the crumbling Brazilian political system.
Perhaps more important than the economic instability, the operation has caused a wave of political uncertainty. One third of Congressmen and Senators are currently under investigation by Operation Car Wash. President Michel Temer’s future is now under question as recordings implicate him in obstruction of justice. This disruption in the political sphere has all but halted meaningful reforms from passing in Brazil’s legislative branch. Analysts who argue against the Operation believe targeting past transgressions does little to address the systemic issues that allowed this rampart corruption to exist. One lawyer described the Operation as merely dealing with the consequences of the system and confusing every aspect of Brazilian life, rather than dealing with the source of the corruption.
The popularity of Sergio Moro, the federal judge in charge of Operation Car Wash, however, is a sign of public support of the investigations. In a recent poll calculating the popularity of twenty major players in Brazilian politics, Moro was the only one with a positive approval rating, at 65%. All other figures had a disapproval of more than 50%. It is clear that the Brazilian population supports the public face of Operation Car Wash over the current political class and system.
Brazil is at an inflection point. Political and economic elites are being held accountable as their role is being questioned by Brazilian society. Although this is a moment that has caused the Brazilian economy to bleed more than it would if Operation Car Wash did not exist, it is a necessary investigation. Its potential result outweighs the current short-term effects it is having. Brazil will emerge a stronger country at the end of this process, a country where those that don’t play by the rules are punished, while those with Brazil’s best interest at heart flourish. A country where the political system regains the confidence of its people can drive Brazil forward.