Bolsonaro: The Good and The Bad

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It is not easy to build and sustain democracy.  The process requires commitment, resource mobilization and participation.  Brazil’s democracy has not yet matured, nor can it be taken for granted.  Still since the end of military governments in 1985 and direct elections, the movement has been halting but generally in the right direction.  From 1994 to 2018, elected Presidents were either from the left of center (some say “neo-liberal”) or from the left leaning PT (Worker’s Party).

Jair Bolsonaro, a long term Congressman, with a history of switching parties and a limited record, broke this cycle on an anti-crime, anti-corruption campaign which demonized the left and the prior administrations.  The basic question that the new president’s election raises is the durability of Brazil’s nascent democracy.  Bolsonaro has a military background, favored dictatorship, openly supported torture and has never been friendly or open to identity type politics advocating support for minorities whether they be racial, ethnic or identity related.  Many say he threatens Brazilian democracy.

The 57 million people who voted for Bolsonaro were willing to run this risk and accept his conservative and authoritarian nature based mainly on his promise to reduce crime and end corruption. So what are the good things and the bad things that have transpired under his watch and can Brazil’s institutions brake bad tendencies and survive?

Let’s start with the good.

  • Bolsonaro is gradually recognizing that he cannot dictate as much as he would like to. Thus, he is having to negotiate and, even horse trade, with Congress.  This is typical and happens in democracies even though the President might call this “fake news”.
  • The Ministry of Infra-structure is making progress through the use of PPPs in the construction of roads and ports.
  • The Mercosur-EU trade agreement has been signed after over 20 years of negotiations but it still has to ratified.
  • Against strong odds and opposition, the pension reform has passed the lower House of Congress and is likely to be ratified by the Senate.
  • Bolsonaro promised a reduction in criminality and homicide rates have apparently fallen at least in Rio.
  • The President reduced the number of Ministries from 29 to 22 and thousands of contracts have been rescinded.
  • Bolsonaro has reduced or eliminated the mandatory contributions in support of unions.
  • Visas are no longer required for tourists coming from the US, Canada, Japan and Australia.
  • The current administration approved the 13th month payment for Bolsa Familia, Brazil’s main income transfer program.
  • The President has voiced support for joining the OECD and received a verbal pat from President Trump, however the process will take a minimum of 5 to 6 years.
  • Bolsonaro has managed to keep Paulo Guedes in place as his Super Minister of Finance and the Bovespa has reached recorded highs.
  • Brazil’s energy sector continues to expand production offshore and Bolsonaro generally supports privatization in distribution favoring more foreign investment which Brazil needs to expeditiously exploit oil and gas.

Now let’s take a look at the bad.

  • President Bolsonaro has not delivered economic growth or significantly reduced employment.
  • The current administration has dismantled or neglected mechanisms for protecting the Amazon. Indeed, Bolsonaro rejects the preservation and extension of land reserves and parks for native population, favoring instead the opening of lands to mining and farming.  Deforestation has once again increased in rate and scope while the government has imposed controls on the release of information.
  • Bolsonaro has substantially reduced investments in education and health. Federal universities have been targeted as ideological hotbeds of leftism and left with stagnant or declining budgets.
  • Brazil’s foreign policy establishment has been redirected to alignment with the US and has given up on an “independent” and South – South alignment that the previous administrations sought to create. It remains to be seen if Brazil will benefit by alienating China, its largest trading partner.
  • The Ministry of Agriculture has eliminated or reversed its policy on restricting or reducing the use of insecticides and toxic products so Brazilians are concerned that their food chain is increasingly contaminated.
  • Bolsonaro and his immediate family participate in and avidly promote nationalistic and nativist policies. The President intends to nominate his son, Eduardo, a staunch supporter of Trump, as Ambassador to the US although he has no diplomatic experience or background.
  • The President, in his speech and public activities is a loose cannon. He has posted a pornographic video, made many likely illegal statements and vile accusations and generally has reduced the dignity of the presidency.
  • Under the new administration, the police forces have gained “carte blanche” and the number of executions and assassinations by men in uniform have increased dramatically. At the same time, informal militias which reportedly are associated with the Bolsonaros continue to expand the scope of their activities.  Gang related violence in prison once again erupted just this week nearly 60 executions in a riot at a prison in the Amazon region.
  • President Bolsonaro exudes self-righteous intolerance to any and all who would disagree or contest his positions thus setting an adversarial tone that is detrimental to dialog and exchange. His approach has fostered increasing polarization, making it difficult for anyone seeking middle ground.
  • Although Bolsonaro campaigned and was elected on his anti-corruption promises, he, his family, and members of his administration have been ensnared in nefarious activities large and small. The faces have changed but the corruption prevails.
  • Bolsonaro’s choice for Minister of Justice, Sergio Moro, was a national hero for his role as the judge who confronted corruption and jailed the elite including for President Lula. Now Moro is tainted by purloined hacks of his unethical and perhaps illegal communications with prosecutors.  This connivance certainly puts the tarnish on a once super hero and mainstay of the Bolsonaro administration.
  • Bolsonaro has threatened investigative journalist Glenn Greenwald with “a little jail time here” for his release of the compromising communications between Moro and prosecutors. By extension, the President is threatening press freedom and the right to information and open communication.
  • Like Trump, Bolsonaro uses social media extensively to express his contempt, dislikes and prejudices as well as promote his policies and inclinations. Unlike Trump, he does not have a docile political party with a majority in the Senate.  Bolsonaro’s political party (PSL) is a loose coalition of self-interested individuals seeking advantage from proximity to power.  To date, Bolsonaro has been ineffective in controlling his own party, and, much less, the whole Congress.

This Santa Claus listing of deeds and misdeeds could be more extensive and detailed.  However, the major concern must be can Brazil continue to develop its institutions?  This is more crucial than the question: Can Brazil’s economy grow?  Confidence in the rules of the game and predictability are minimum requirements for investment which, in turn, is essential for growth.  Bolsonaro is a transitory phenomenon and while, his administration undoubtedly impacts public administration and the economy, the deeper issue is the resiliency of Brazilian civil society and how people either acquiesce or come to demand their basic needs in terms of education, health, sanitation, security and employment.

For years Captain Bolsonaro was an outlier, so much so that he was judged a “bad soldier” and ousted from the military.  In the age of Trump, Boris Johnson, Orlan, Dutarte and others, there is a risk of normalization of poor behavior.  However, my expectation and hope is that the pendulum will gradually swing back just because the extremes are economically inept in the long run.  And Brazil can ill afford another decade of stagnation and decline.  We will see.

 

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Brazil: The Long Run

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It is curious how we demand answers, service and satisfaction.  In the US, things are fast paced and fairly efficient.  In Brazil and particularly in the daily news and in the social media, things too are immediate.  People want solutions but the cascade of events, some random and some predictable, always brings new problems before the old ones are remediated.  Looking back over the past year, we see a choppy ocean with froth and white caps.  It seems that the surface may never calm.  If we look below the surface, however, we might see a slower and less agitated situation.  Everything changes and nothing changes.

The basic problems of economic stagnation, inequality, an ineffective educational system and basic institutional weakness continue to hold the country back.  The question is why can’t Brazil address these fundamentals?  Since civilians wrested power back from the military in 1985, the country has had a rural oligarch (Sarney), a right wing populist (Collor), a left leaning moderate (Itamar Franco), a Social-Democrat (Fernando Henrique Cardoso), a Socialist (Lula), a leftist technocrat (Dilma), a traditional center-right politician (Temer) and finally a right-wing retired Army Captain (Bolsonaro) as Presidents.  All promised change and, undeniably, there has been some progress.  The 1988 Constitution came under Sarney.  Collor promoted an economic opening.  Itamar and Fernando Henrique stabilized the currency ending hyperinflation.  Lula benefited from a favorable expansion in foreign trade (mainly with China), economic growth and some improvement in distribution.  Dilma and Temer, while political opposites, inherited and worsened a declining economy and a political and moral crisis resulting in the election of Bolsonaro who channeled discontent into votes but thus far has failed to deliver growth or maintain popularity.

Through 8 presidential secessions, 2 impeachments, regular elections at all levels, the doubling of the population from 100 million to over 200 million, some 8 World Cups of which Brazil only won 2 in the period, the country has survived but only with a remnant of satisfaction and a huge growth of frustration and political polarization.  The complaints about crime and corruption continue through all with politicians and the political system receiving the blame.

Undoubtedly corruption is rife.  Street crime and organized criminal enterprises have expanded and violence and thievery comingle with individual politicians and have a foothold in politics and the market.  Over the last 20 years, the population has become increasingly skeptical and distrustful of all things political as the press and social media revealed the ever-increasing scale of malfeasance.  Unfortunately, most fail to recognize that corruption and crime are really symptoms while the real causes are the lack of transparency, uneven acceptance or blatant bending of the rules of the game and selective enforcement of the law by policing authorities.   These three factors collectively portray institutional immaturity and weakness.  While Brazil’s media are dynamic, incisive and investigative, oligopolistic groups also largely control them.  Rede Globo commands the lion’s share of broadcast media.  Similarly, newspapers and magazines are consolidated in the hands of relatively small groups.

As people recognize this concentration, they suspect the promotion of special interests.  Likewise, the Brazilian justice system is notoriously slow, inefficient and generally perceived as favoring the powerful.  The maid of color is condemned to years in prison for stealing a pound of butter while the rich and powerful kill and pillage with impunity.  Similarly, the enforcers or the police are also viewed as suspect and in Rio; for instance, the police and milicianos can barely be distinguished or separated.  Again, this is the breakdown or the lack of institutional maturity.  Without a functioning police power, it is hard to impede petty crime and much more difficult to discover and breakdown organized criminal endeavor embedded in the power structure.

Looking at Brazil from this perspective, it is positive to see the progress that has been made in bringing, over the past 10 to 15 years, major politicians and their accomplices to justice.  Yes, there is institutional improvement but it is slow and disproportionate to the challenges.  And again the enforcement and application of the law appears to be uneven.  Brazilians still believe the old saying: “Para meus amigos tudo, para os inimigos a lei.” (For my friends everything, for my enemies, the law.)

The public clamor in support and then in withdrawing support from “populist saviors” or “salvadores da patria” manifests the weaknesses that sufficiently sharp politicos attempt to use to their advantage.  While President Bolsonaro’s campaign against crime and corruption was sufficient for his election, it is proving to be not enough to guarantee governance or even a coherent program.  To date, albeit it is only 6 months, his accomplishments are meager, fortuitous and contradictory.  Meager as exemplified by the removal of radar from the highways, and fortuitous and contradictory as the closing of the Mercosur – EU agreement reveal.  The European Union deal has been in negotiation for over 20 years and Macri’s Argentine government wanted it and need it more than Brazil.  It also contradicts the philosophical guidance promoted by Itamaraty’s current leader, Ernesto Araujo.  Still it is an achievement.

Just as Trump is constantly plagued by his past of womanizing and abuse, Brazil’s polity and openness also brings comeuppance.  Currently, Brazil’s hero of the day, crusading judge and now Justice Minister Sergio Moro, is being tarnished by leaked or hacked communications which purportedly showing him conniving with prosecutors to guarantee Lula’s imprisonment and even trying to illegally interfere in the affairs of Venezuela.  Lava-Jato (Car Wash) has become Vaza-Jato (Empty Wash) at the risk of reversing the supposed gains against corruption.  While it is apparent from the published purloined messages that the judge overstepped all bounds of propriety, he denies all wrongdoing.  In the end, this new scandal may ultimately strengthen respect for and adherence to judicial procedure, but in the short run, the messages and ongoing debate only generate more polarization.  In Brazil, it is generally accepted that the story is more important than the facts and different competing stories separate those who see Moro as a hero and those who see him as a villain.

As in war, truth is the first casualty in Brazil’s tumultuous and conflicted setting.  It is important to question, to try to be informed, to participate and to be present.  Institutional improvement will come as civil society makes its demands and as these demands crystallize and become more coherent.  Democracy is still young in Brazil and it may not even survive. But Brazil is overdue for improvement and economic growth and the reason the country is not growing is because the people do not have confidence in tomorrow as they have to focus on surviving today.  Turning inward is a private solution that many Brazilians will take.  Enjoy the beach, the beer, the holidays but the seeds for improving are there and when the individual alternatives such as emigration become too onerous, and as people and resources create opportunity, education, equality and access will gradually improve, in spite of the obstacles.  Brasil tem jeito, pelo menos ate provar ao contrario.

 

 

 

Institute of the Americas XXVIII La Jolla Energy Conference – Institutions, Resources, Sustainability

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In the world of instant communications, in locus conferences tend toward the arcane and sometimes even extinction. Still in the high tech world, the La Jolla Conference stands out for its relevance, durability and because it successfully attracts decision makers, equity fund executives, energy company honchos and institutions with deep knowledge and very significant investments in Latin America’s energy sector. Face to face interaction and debate uniquely allow the validation of perceptions and interpretations on a level that cannot be matched by web and other virtual contact. The now three day event includes a start off with team building hikes at Torrey Pines, kayaking at La Jolla Cove and ends with beers and competitive corn hole matches, where multinationals may wish to throttle consultants, academics and journalists.

I have attended the conference for over 10 years and the most remarkable shift, in my opinion, is the recognition by the majors such as BP, Shell, and state run oil companies that the days of the fossil fuel based economy are indeed limited. Different from the fears of “peak oil” the 70’s and 80’s, the awareness today is that climate change is indeed real and impacted by oil and gas production and use. The general outlook is that there is enough oil and gas in the ground for the next 20 to 30 years with the likelihood of finding more and processing previously non-viable fields. However, the limitation that exists relates to Co2 and climate change. This, in turn, demands the development of alternative and sustainable energy sources. The 16-year-old Swedish climate blogger Greta Thunberg was held up as example of the future energy conscious consumer. If she is truly representative of her generation, the world will use much less non-renewable energy.

Absolutely aware of this shift, Jeremy Martin, the able VP of Energy and Sustainability at the Institute, is forging new alliances in Spain and Europe with companies, funds and institutions vested in Latin American. Jeremy’s program will join the Madrid Initiative building toward a future where the energy industry transitions to clean with limited climate impact by minimizing and mitigating Co2 emissions. It will theoretically avoid “green washing” and promote sustainable growth. The millennial generation does not see the future of energy in oil and the energy companies need to know their customers or fail in the market place. Interestingly, all this is to take place with the blessing of big oil.   Thirty billion dollars have been set aside by majors like Shell, Chevron and 30 other companies to stoke this effort.

While including sustainability, the conference also focused on specific countries and in each case the basic questions were the perpetual ones. How can my company enter in or continue given Latin America’s precarious institutions? Where and what are the major obstacles that energy companies face when they mobilize massive financial resources?   Can investors expect transparency, predictability, integrity and honesty in contractual relationships?

The answers varied. Venezuela represents the current worst-case scenario with the unresolved struggle between the Cuban supported and very corrupt Maduro regime and the questionable legitimacy of upstart Juan Guaido. In spite of the break down and conflict in the country, eyes are still on Venezuela’s massive oil reserves. The feeling is that once Maduro departs, there will be a rush of companies to restart the once productive fields and that Venezuela can gradually recover. There are no guarantees but, with its resources, the industry feels confident in its role.

In the case of Brazil speakers wondered if the energy sector might be more stable than the erratic moves of the Bolsonaro government. Brazil seems to be forging ahead with liberalization, privatization and opening of upstream and downstream sectors but at the same time, it was remembered that the new right wing President Bolsonaro, like leftist Dilma Rousseff before him, recently intervened in the market at a critical point to control fuel price in order to meet special interest demands. This move immediately raised doubts about his liberal market commitment.   So the question remains: can Petrobras really sell a 60% stake in its refineries if the government threatens to control pricing? Can new and old companies participate in the development of the massive pre-salt fields without undue government interference? There are rules but can the institutions actually enforce them or will ad hoc political pressures triumph?

Similar doubts exist in Argentina. President Macri’s government is running out of steam and out of time as new presidential elections approach. Former President Christina Fernandez has decided to run for Vice-President with her former chief of staff leading their populist and left leaning ticket. His more pragmatic views pose a serious threat to Macri’s reelection and the continued market driven movement in oil and gas. In the past, the Fernandez with their Peronist supporters expropriated the holdings of the Spanish oil company Repsol. With inflation running above 40% per year, foreign energy investments are often seen as the low hanging fruits for hard currency income. Again institutional stability and opaque rules of the game come into conflict with companies that have resources and investments.

Colombia has also discovered new fossil fuel sources both on shore and off. Moreover, since the peace agreement with the FARC guerrillas, the country has gone through two presidential cycles with a recently elected conservative government led by Ivan Duque. Still, all is not rosy as Colombia struggles between left and right and is currently taking the brunt of the Venezuelan exodus.   Presenters touted Colombia’s relative advantages but onshore the oil fields are small and offshore other sites such as the Guyana may be more attractive with fewer competitive disadvantages.

Mexico under Andres Manuel Lopes Obrador (AMLO) is also a big question mark. While AMLO has to date respected contracts and agreements of the previous administration which made unprecedented moves toward denationalizing Mexico’s energy sector, AMLO philosophically looks back to the past when PEMEX the national oil company provided a major share of the government budget as well as being a useful niche for providing employment, as well as sinecures. Basically, the business sector lacks trust and Mexico’s economy has reverted to a path of slow growth. In spite of AMLO’s nationalism, San Diego’s Sempra continue to expand and promote its billion-dollar investment in Ensenada as an export terminal for U.S. LNG to the growing Asian market.

Aside from institutional analysis for risks and opportunities, panelists noted that resources and new technologies are more readily available now then even in the recent past. Private Equity funds are apparently ready to cut checks in Latin America starting at 500 million dollars for the right projects with the proper guarantees. New technologies such as the use of DNA in tracking oil flows in fracking promise to recover billions in additional resources. The times are exciting even with Latin America’s uneven institutional progress.

Once again congratulations to the Institute of the Americas and Jeremy Martin for bringing experts, funding and opportunities to the lovely and unbeatable La Jolla setting.

Here is the link to the full conference program: https://www.iamericas.org/programs/energy-sustainability/la-jolla-energy-conference/

 

De Volta (Ao Passado)

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Faz um pouco mais de uma semana que cheguei do Brasil.  Passei 3 semanas viajando entre São Paulo, Rio de Janeiro, Belo Horizonte e Campinas.  Enfim as cidades do Sudeste do pais e a região, em principio, mais rica.

Quem me lê com certa freqüência, sabe que sou normalmente bem otimista com relação ao Brasil, suas cidades, seu dinamismo e seu potencial.  Entretanto em abril e maio de 2019, a impressão que tive me lembrou exatamente de 1990.  Collor havia assumido a presidência com a promessa de caça aos “marajás” e com um projeto para “consertar” o Brasil de suas deficiências promovendo uma abertura no comercio internacional para melhorar as “carroças” fabricados na época com novos modelos de veículos.  Collor implantou o confisco de marco de 1990 como tentativa fracassada de controlar a inflação e cumprir suas promessas.  Infelizmente, o Brasil continuou com a hiperinflação e o Presidente sofreu “impeachment” por motivos de corrupção.

A grande diferença de hoje é que a inflação ainda está sob controle e há uma consciência, um conhecimento, vontade política e mecanismos disponíveis no Banco Central e no Ministério da Economia que vem evitando um novo ciclo de hiperinflação.

Mas a economia não recupera e hoje existe o perigo de voltar para um crescimento negativo.  A expansão pífia desde o final de 2016 vem apesar da derrocada da Dilma e do final do governo tampão do Temer.

A falta de crescimento vem basicamente da falta de confiança.  Quem investe ou quer investir ou quem produz ou quer produzir está basicamente desconfiado sentindo a falta de previsibilidade.  Há talvez uma certa confiança que a reforma da previdência vai passar.  Mas ninguém sabe o tamanho e o impacto real.  Enquanto isso as outras reformas, por exemplo, das leis trabalhistas, e a simplificação dos impostos não saem do chão ou ficam sem impacto maior.

Embora o Presidente Bolsonaro tem sua legitimidade com seu 58% do votos validos, ele e sua administração vem desperdiçando tempo e recursos.  Medidas inócuas como acabar com o horário de verão passam enquanto as manobras políticas e cortes mal explicados em outras áreas como educação acabam criando problemas e solapando a capacidade administrativa.  É muito curioso observar a briga interna entre os militares e ministros e administradores nomeados.  Pior ainda, parece que o Presidente não tem o gosto e nem a capacidade política para apaziguar os ânimos e fazer progredir um projeto positivo.

Haviam dois super ministros: Paulo Guedes e Sergio Moro.  Moro já perdeu o seu status de “super” e hoje está longe do prestigio que tinha como o “juizão” da Lava-Jato.  Paulo Guedes destaca ainda mas sua atuação acaba sendo prejudicado e limitado pelas atrapalhadas da administração como demonstrou muito bem o caso do aumento dos combustíveis em abril.

Sem coesão e articulação política no Congresso, o Presidente é incapaz de cuidar melhor da imagem do Brasil no exterior.  Assim fica muito difícil o Brasil organizar seus recursos internos e ainda conseguir um fluxo de investimentos estrangeiros que são necessários, ainda mais, num pais que não consegue fazer poupança interna.  Guedes está apostando suas fichas nas economias da reforma mas isso só vira a longo prazo.  Ele também espera arrancar recursos do setor energético através das privatizações e da exploração de óleo e gás.  As duas alternativas podem dar um alento mas a economia do Brasil é e bem complexa não pode depender de um só setor ou produto.  O motor do Brasil é de 8 cilindros mas no passado recente apenas um ou dois pistões estão funcionando.  As tarefas da equipe econômica são complexas e de difícil solução mas o trabalho político é ainda mais importante. Mas no quadro de hoje as divisões e brigas impedem a recuperação normal.  A previsão normal que o pais cresça a 3 % ao ano e na realidade ele mal supera 1%.

Vejo em conversas com empresários e investidores a vontade de progredir.  Com a lentidão interna, muitos estão olhando para o mercado externo mas também pensando na emigração.  E aí reside um grande perigo porque o Brasil perde talento e a situação interna não está favorecendo porque só existe a iminencia de cortes e dificuldades.  Os desafios são imensos e há setores governamentais e empresariais avançando apesar dos pesares.  Veja por exemplo o caso do Ministério de Infra-estrutura que pratica uma boa cooperação entre o privado e o publico.  Entretanto, é pouco.

Atualmente, a economia mundial avança com muitas oportunidades nos EUA, na Europa e ate na Ásia.  Algumas empresas como a Gerdau, a WEG, Klabin e outras avançam mas no geral os empresarios estão confiança e animo apesar do reconhecimento do caminho.

Minha expectativa é que empresas com nichos e com quadros pensantes vão sobreviver e progredir no mercado interno e externo.  O progresso seria maior se houvesse maior confiança no esquema político.  Paciência!  Vem eleições municipais em 2020 e com a lenta construção institucional e quem sabe o surgimento de novas e mais competentes lideranças políticas desvinculadas dos interesses que travam o desenvolvimento.

Talvez seja mais um sonho de um otimista do que expectativa real.

 

All Abroad Consulting and Talk 2 Brazil Interview

I recently returned from a three week sojourn to Brazil and while there I was interviewed by Tom Reaoch on his Talk2Brazil Program.

Here is the link:

https://talk2brazil.blogspot.com/p/steve-scheibe.html

The interview is in English and last about 25 minutes.

Also below is the introduction from the Talk2Brazil site:

Steve Scheibe, Brazil Expert, President at All Abroad Consulting.

 Steve Scheibe, President at All Abroad Consulting

All Abroad, based in Southern California, specializes in consulting, match-making, export management, sales and follow up for customers in Brazil, Mexico and the United States. Additionally, provides services such as virtual office, customer service, basic research and translations.

Specialties: Assist Brazilian and Mexican companies with export management, distribution and sales and market research. Working with US companies doing set up, sourcing and location analysis in Mexico and Brazil. All Abroad has excellent contacts in the food and beverage, reclaimed wood, furniture, pulp, paper and industrial packaging industries.

All Abroad also provides services to US companies interested in selling to or manufacturing in Brazil and have also expanded activities to include franchising.

 

 

Bolsonaro e Trump: O Brasil pode ser relevante?

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Presidente Bolsonaro está em Washington acompanhado de ministros e assessores incluindo o filho “diplomata” e Senador Eduardo.  A reunião de Trump e o Presidente do Brasil está marcada para terça feira, 19/3.  O Chanceler Ernesto Araújo já se declarou admirador do Presidente Americano mas ao mesmo tempo parece mais alinhado filosoficamente com Steve Bannon e Olavo de Carvalho.  É notório aqui que Trump tem interesses e não amigos e que Bannon talvez já foi útil, mas no momento está as margens.  Então a propagada convivência entre Bannon, Carvalho e Araújo não resultará em nada a não ser uma confraternização anti-globalista.  Em termos diplomáticos, o mais importante para a política americana é a resolução da crise na Venezuela, mas do lado brasileiro, o Ministro Araújo perdeu preeminência a favor do Vice Presidente General Hamilton Mourão.  Pompeo, concederá na agenda dele um espaço para o Embaixador Araújo mas já sabendo que ele é “damaged goods” e assim de importância diminuída.

Não tenho a agenda do Ministro Paulo Guedes.  Com certeza deve ter um encontro com Steve Mnuchin do Tesouro americano onde pautara o progresso da reforma da Previdência além  da tentativa de abrir o mercado brasileiro para investimentos americanos.  Mas os fatos persistem e quem pensa em por dinheiro no Brasil ainda está na espera para ver como é que vai ficar.   O Ministro das Minas e Energia, por sua vez, está sinalizando a abertura para investimentos em energia nuclear e urânio.  Guedes e Bento Albuquerque ainda vão acertar garantias (para os EUA) para o aluguel de Alcântara como base de lançamento de satélites.  É algo bom para os EUA e talvez renda um trocado para o Brasil.  Além disso, talvez os sul americanos consigam parar os lançamentos que terminam em explosões.  A ver.

Não há notícias de um Free Trade Agreement entre Brasil e os EUA.  Teve um pequeno avanço com um acordo sobre a tributação previdenciária mas ainda não ha nada sobre Imposto de Renda, o que complica a vida individual e de empresas dos dois lados.  Os Estados Unidos já foram o primeiro parceiro comercial do Brasil.  Mas a China superou os americanos há quase duas décadas, como consumidores dos principais produtos do Brasil: óleo, ferro, soja e celulose ou seja, commodities que os americanos também tem.

Os Estados Unidos estão se tornando um exportador de petróleo e gás, sendo ainda o maior produtor de soja.  Depois do Canadá, o Brasil é o segundo maior fornecedor de minério de ferro para os EUA, mas  o mais importante consumidor de ferro do Brasil  é a China.  Concorrência e conflitos existem, portanto, entre os dois países.

O Senador da Florida, Marco Rubio que depois de derrotado por Trump, tornou-se seu interlocutor para a América Latina mas Rubio mal conhece o Brasil, a não ser pelas laranjas (as frutas e não os “laranjas” da família de Bolsonaro).

Ha fábricas boas no Brasil, que fazem bons produtos industriais, mas normalmente não competem com similares chineses e talvez seria prudente esperar que a guerra comercial entre Trump e China abrisse alguma possibilidade. Entretanto, as empresas mais dinâmicas do Brasil, tipo Braskem, WEG, Gerdau e Tramontina já tem fabricas e distribuição nos States.  As companhias fazem parte da economia globalizada que os “Trumpistas” querem combater.

No lado do setor primário, se sobressai o café, que não tem concorrência americana como a soja, a cana, o milho e o arroz.  Já a carne é um caso especifico,  com a liderança de mercado de JBS , que comprou varias empresas americanas, além de redes de abatedouros.  Por outro lado, resta saber se vai ter caixa com a investida de Paulo Guedes contra o BNDES.

O Ministro Moro, por sua vez, acaba de sofrer mais uma derrota no Brasil com o Supremo votando 6 x 5 a favor de transferir os processos de Caixa 2 para a justiça eleitoral, já que estranhamente para o Supremo, Caixa 2 não é corrupção.  Resta ao Moro conjuntamente com seu amigos do FBI, resolver como os turistas americanos podem chegar no Brasil sem visto.  Em compensação, o Brasil poderá participar da Global Entry, um programa dos USA, o  qual não e novidade nenhuma, pois já é  usado por brasileiros, faz tempo.  Então, a famosa reciprocidade sempre exigida pelo Itamaraty, não tem peso.  O Brasil também deve se comprometer a prover mais informações aos Estados Unidos sobre seus cidadãos, e por quem passa pelo Brasil.  Enfim, as denuncias sobre a atuação da NSA (revelados por Snowden), que impediram a visita de Estado da Presidente Dilma, já foram ao que parece, esquecidas ou superadas.  A ver  as reações da ABIN e dos militares.

Enfim, Trump está preocupado com a sua reeleição.  Ele tem simpatia por Bolsonaro pelo apoio de Bolsonaro ao Nethanyahu e a postura anti-global.  Com certeza, Trump dificilmente sentira a mesma intimidade que tem com o ditador da Coreia do Norte e provavelmente vai desprezar o sapato ou corte de terno do Presidente Bolsonaro.  Assim, a visita não será mais do que protocolar.  Hoje há pouca visibilidade na imprensa dos USA,  o que indica que será rapidamente esquecida.  Talvez Trump resolva nomear um embaixador para o Brasil, o que seria progresso, mas a América Latina normalmente não está no mapa cognitivo do Mr. President.

O Brasil atual se encontra atualmente entre ser irrelevante, ou ser mais um @#$%hole.  Talvez ser irrelevante em Washington seja a melhor das opções.  Cabe a expressão e postura americana de “benign neglect”, onde talvez o Brasil venha a se tornar eventualmente um destino relevante, com praias boas, um futebol razoável, e um povo bonito e alegre.

Brazil: Always a Challenge, Always a Mess (Bagunça)

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Wow! Brazil has messed up my head once again.  You know the clichés: land of contradictions.  Carnaval, spelled with an “a” to emphasize that the carnal has just come to an end, but not before the President remonstrates against licentiousness.  How? By posting his own pornographic video and inquiring about a type of shower.  Mangueira, one of the most traditional samba schools wins the parade competition with a liberal, alternative retelling of Brazil’s history with an emphasis on the evils of slavery and pays homage to assassinated councilwoman, Marielle Franco.  But, most samba schools including Mangueira are sponsored by the Brazilian version of the numbers game and the illegality comes with ties to paramilitary militias, the drug traffic and various and assorted corrupt connections to politicians at all levels of government.  Liberal, pornographic, creative, conservative, corrupt: It is all there.

We are not even 90 days into the New Year and the new presidency and Brazil has suffered a slew of predictable but avoidable tragedies.  In the past few days, torrential rains have destroyed homes and killed in São Paulo.  Everyone knows the rains will come and that mudslides will follow.  So as people say, destiny or better still in Portuguese: “falalidade”.  In Rio, 10 teen athletes were tragically burned to death in a fire at Flamengo Football Club training center.  Of course, the converted ocean container had never been inspected or approved for safety.  Another “falalidade” followed the police “intervention” in Santa Teresa, which took out 13 “bandits” apparently shot in close quarters after not “surrendering”.  In January, Vale, the world’s largest iron ore exporter, and the protagonist of Brazil’s biggest environmental disaster in November 2015 did it again.  This time in Brumadinho.  Instead of killing only a few the body count is higher than 300.  Nevertheless, the local, state and national government feel the need to preserve this “jewel” of Brazil’s productive system.  Vale is one of the major sources of revenue in Minas Gerais and typically accounts for over 80 percent of municipal budgets in towns where it operates.

Underdevelopment, like war, has been defined as boredom interrupted by tragedy.  Such is the case in Brazil.  Once the country hoped to be a modern industrial power, but its manufacturing has been far surpassed by China and even South Korea, both of which were behind Brazil in the late 70’s.  Brazil has gradually reverted to its comparative advantage in agriculture but the inefficiencies of logistics and infrastructure make it much less competitive than it could be.  Moreover, it is worth remembering that Brazil is over 80% urban and that soybeans and cattle do not require much labor.  The agricultural sector is highly mechanized on large properties and income concentrates at the top with a reduced multiplier effect.  Agriculture, especially monocultures such as soybeans and eucalyptus for pulp, will contribute little to reducing inequality.  At the same time, although the government likes to state its environmental concerns, the agricultural advance is in competition with the preservation of the rainforest.

President Bolsonaro was swept into power with a landslide victory as people wearied of the PT and beause of his promise to fight crime and corruption for which the left took perhaps more than its fair share of punishment.  Yet since he has been in office, his family has been tainted with numerous scandals ranging from the kick backs controlled by his sons to the extended family being favored through policy as exotic as inhibiting the import of bananas.  Apart from Bolsonaro and his family problems, corruption became systemic and touches the whole political spectrum.

Olavo Carvalho, a Brazilian residing in Virginia, appears to be the eminence grilse of the current government.  He claims to be a philosopher but has no degree and before becoming popular on YouTube had seriously studied astrology.  He is reputedly behind the selection of Ernesto Araujo as Brazil’s Foreign Minister and Ricardo Velez, as the Education Minister.  Araujo had never occupied an Embassy and is basing his programs, not on Itamaraty’s vaunted traditions but rather on the so-called Christian and nationalistic outlook favored by Steve Bannon and his ilk.  Velez, although he has been in Brazil for over 40 years, reportedly speaks Portuguese heavily accented by his home country Colombian Spanish and is said not to be able to write well in the Brazilian idiom.

On the left, the outcry against the current government is immense.  And as a result, the supporters of Bolsonaro resort to calling everyone critical of the government a communist or socialist.  Thus Brazil’s largest media organization, which has always been aligned with the right, now is attacked as a left wing radical opponent, even though it took the lead in promoting the impeachment of President Dilma Rousseff.

The left hates Sergio Moro, the judge who condemned Lula to prison and who became Moro’s Justice Minister promising to fight crime and corruption.  As a judge, Moro presented himself as above politics but now he is in a tight spot as his reputation has shrunk due to his presence in the new government.  His failure to address the various scandals have shaken the new government.  Reportedly, the popular judge would like to parlay this into a run for the presidency an obvious contradiction with his statement that he was not political.

While the opposition piles on any and every misstep (and there are many), they fail to give any credit.  Thus while Bolsonaro recently tweeted and promoted support for the much needed reform of the social security system, the press focus was instead on the failure to find Marielle’s assassin and the dearth of females in the administration.  Bolsonaro then responded that his 2 females Ministers were each equivalent to 10 men so things were even.  He also proclaimed on the International Day of Women that he was eliminating “femicidio” by calling it homicide thus solving the problem.

Brazil’s big problems are well known and pressing, but the impression is that the government is failing to address them.  The economy needs to find a path to sustainable growth and Brazil’s gross inequalities need to be reduced.  The right blames the PT for the recent and ongoing low growth and lack of investment.  The government has promised to reduce the presence of the state through privatizations as a solution.  Indeed, the Presidents tweets about privatizing the airports and some infrastructure but in Brazil things take time.  Everyone agrees that bureaucracy is excessive.  But it is also true that any change affects special interests and cliques within the state.  Judges, prosecutors and other in the judiciary are jealous of their privileges, as are large groups of high-ranking public servants.  These “patriots” slyly attack reforms as harmful to the working class poor and thus need to be stopped in the “best” interests of the nation.

Education and basic sanitation are keys to both a lasting path forward and a reduction of inequality.  Yet, the Ministry of Education, which recently copied, many say plagiarized, a patriotic representation from Mexico is more concerned about fighting an inexistent “socialist/gramsci” inspired agenda of cultural dominance rather than actually teaching the ABCs and math.  Under the PT, the educational system expanded but declined significantly in quality.  What was “politically correct” on the left, i.e. sex education and gender equality were vented as important and progressive.  The new right appears to want to reverse the PT by essentially repeating the same ideological error (now from Olavo Carvalho) on the other side by pushing for salutes to the flag and singing the national anthem, with boys dressed in blue and girls in pink.

While all of this commotion is taking place, Brazilians are forced to live their day-to-day lives thankful that they have not yet experienced the anarchy of Venezuela but skeptical that change will really happen.  Unprecedented numbers want to leave Brazil for better pastures. But with a slowing world economy and increasing restrictions on immigration, many of the opportunities that existed a few years ago are now gone.  So people have to do the best they can and largely they do.  They are creative and develop survival strategies. Brazil, given its size and potential, still offers much opportunity.  Brazilians continue to be torn by pride and shame, by the will to progress and by the weight of so many obstacles that seem intractable.  It is not an easy situation but Brazilians are resilient even in the face of such daunting odds and a history of accommodation, inertia and passivity.

It is unlikely that DeGaulle actually said, “Brazil is not a serious country.”  But given all the contradictions, tragedies, crimes and only halting progress, the saying has its own validity.  Composer Tom Jobim also stated “Brazil is not for beginners.”  And even though my Brazil experience goes back to the early sixties, I am ever confounded and surprised, yet still optimistic about this beautiful land and its crazy inhabitants.  It clearly has a future, but it remains to be seen if the country can actually find its way.