Tragic Events and Business as Usually Unusual in Brazil

November finds continued confusion in Brazil. In spite of ample evidence of undeclared monies from corrupt activities, Eduardo Cunha carries on as President of the House of Representatives and Congress is stalled and unproductive. Meanwhile, Judge Sergio Moro continues to hold a large group of Brazil’s business elite in jail on related charges including the Petrobras scandal. President Dilma appears perturbed, yet aloof.

On November 5, the Samarco disaster in Mariana, literally muddied everything from my home state of Minas Gerais east to the Atlantic Ocean. On Friday the 13th, the jihadists killed and injured hundreds in Paris in another act of wanton, but purposeful, violence.

Mariana and Paris serve as symbols of public victimization and impotence.

In Brazil, the President paid little attention to the mounting death toll and environmental catastrophe in Mariana and Minas Gerais. She only visited the locale a week after the tailing dam ruptured. Meanwhile, families went without help and bodies turned up willy-nilly kilometers downstream. The Brazilian Ministry of the Environment put out numerous statements that it was taking care of the problem. But on the ground, there was little indication of the government’s urgency or presence. Mariana’s mayor wound up in the hospital with exhaustion after vainly trying to mobilize state and federal resources as the tragedy unfolded.

In France, there is a growing public sense that there is little the government can do, but the Parisians, at least according to new reports, firmly resist being terrorized and driven into submission. The people will acquiesce to Hollande’s state of emergency and declaration of war but more importantly, they will gather and march in solidarity against the Islamic State’s barbaric acts and eventually probably against the French government as well.

Unfortunately, in Brazil there will be no such mass mobilization even as the mud and mineral waste flow some 500 kilometers to the ocean leaving behind ruined water supplies, degradation, dead animals of all sorts and as yet uncounted human deaths. Most people are at once anguished over the environmental disaster while also feeling there is little they can do personally to resolve the problem.

So it is business as usual, Samarco, the mining company held by Vale and BHP Billiton has agreed to pay $250 million dollars in fines. This is a pittance compared to the approximately $50 billion in revenues going to BHP Billiton and Vale. The $250 million fine certainly seems an attempt to get off the hook on the cheap. Environmentalists in Brazil state that the spill has killed the Rio Doce River and has also directly hurt maybe a million people. From the pictures of the massive devastation, we know that it is way too early to put a dollar amount for just compensation and rebuilding what has been poisoned and destroyed

As of today, Nov. 20, neither the federal nor the state governments have come up with a recovery plan. The Brazilian treasury is broke and the sad state of infrastructure in Minas Gerais bears witness to its frailty and dependency.

The distressing thing for both France and Brazil is that the tragedies are human made and as such completely avoidable but are not.

France is a politically advanced society with the Republican ideal of liberte, igualite and fraternite. The country will survive and indeed be strengthened, although it must face the challenge of dealing with integrating its large immigrant population, many of them Muslims.

Brazil is a country still lurching along a crooked path to political participation and social and economic development. The country of “order and progress ” seems at risk of losing its achievements due to its inability to come to terms with inequality and the proper role of the state. While immigrants originally populated the country, Brazil’s problem is fully integrating those born there.

What does this all mean for business? Brazil’s economy is floundering. Minas is losing its main source of revenue as iron prices decline and now the forced suspension of some activity. It will miss the tax revenue from Samarco and it will incur enormous expenses to try to clean up the damage wrought by the spill.

Still business goes on and the logic of the market place demands that enterprise (private, public or semi-private, i.e. Vale) find immediate solutions for cash flow so that the enterprise can survive. While there should be strategic thinking, disaster and the threat of collapse favor short-term fixes in the attempt to shore up sinking stock prices and further difficulties in raising money on the market. BHP, for example, is being forced to reexamine its renowned dividend payments

Tears over Mariana are quickly drying, Paris is resolute in getting back to business and life. A new outrage unfolds in Mali, yet unless we believe in the apocalypse (as some IS members apparently do), the task is to keep living. In Brazil, this means striving to mobilize and educate but also to work and provide. In France, this means the same with the advantage of being able to refer back to a stronger social contract, better functioning institutions and an elite a bit more attuned to the country’s needs; one that is perhaps less tone deaf and selfish as compared to their Brazilian counterparts.

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One comment on “Tragic Events and Business as Usually Unusual in Brazil

  1. celio Franca says:

    Dilma, Cunha and Lula, they are all tied in the same chain….They’ll keep suffering before the final political death…. Let’s hoppe it’ll come soon. The Mariana disaster results from crazy choices: the unsustainable Lula’s miracle requires more and more exports of primary goods…. PT, Dilma & partners look like Chaplin in Modern Times, trying to putt more power in to increase production without any other consideration…. The devastation of Amazon for cattle raising and soy is the other side of the same coin….

    Like

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