Abuse and Other Addictions: USA x Brazil

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Source: FrostSnow.com, Rio Gold Medal Winner Simone Biles and Larry Nassar

 

I can’t but help compare the actions of Larry Nassar, the so called Michigan physician in charge of the US Olympic gymnastics team and the many abuses that take place in Brazil on a daily basis.  Curiously, I am not thinking of sexual abuse under the guise of authority.  Maybe this type does not frighten that much.  After all, for years, Brazilian women would not go to their doctor unaccompanied under the presumption of abuse.  What I have in mind is the type of malfeasance causing furor on Brazilian social media: the current outcry over a housing stipend for judges.

The Nassar story in the US caused outrage because young girls and women were victimized for years, no one complained, a pattern of acceptance of authority prevailed and there supposedly was a reward (gold medals) at the end of the story which perhaps resulted in complicity and connivance.

In recent years, with the rise of social media, Brazilians have identified corruption as their most detested form of systemic abuse.  However, corruption is only a symptom

Brazilians are strivers and see competition and tests as a means to meeting their goals.  These public exams cover everything from being hired as a primary school teacher, a highway patrolman, a public servant, a public prosecutor, a university professor or a judge.  In the end, all of these positions are offered and controlled within the state apparatus.  In most cases, these positions offer success in that once you pass your public exam, you have job stability, with benefits and compensations for life.

On the gymnastics team, Nassar somehow created, and my feeling is that he was not alone, an image that he was instrumental to athletic triumph.  It is well known that sports involve training, physical and mental preparation and possible injury.  Nassar positioned himself as one who could help, assist, facilitate, advise, support and contribute to winning at the highest levels of competition.

The state and those in control are thus positioned similar to Nassar.  The paternalistic state authority offers power, influence and reward to those who are willing to participate and win as well as those who participate and fall by the wayside.  People make assumptions, play the game and render authority in a cavalier fashion.  The state channels and even censures, and its actions are not transparent.  Participants accept the state’s paternalistic power, a certain the invasion of their privacy and a loss of political autonomy.  All this, in the hope that the same state will offer something in return, i.e., a sinecure or a contract.

In Nassar’s case, many, if not most, of his victims were minors.  They lacked experience, knowledge, maturity, information and strength.  He apparently described his actions as necessary even as they were physically painful and mostly unrelated to anything but the satisfaction of his own perverse desires.

While the Brazilian state does not usually engage directly in sexual assault, it does consider the citizenry as uninformed, inexperienced, weak and vulnerable.  As such the individual is subject to abuse and even becomes, as with the athletes, accustomed to it.

Many in Brazil are upset that judges are abusing the public trust by accepting a housing subsidy and other largesse.  These bonuses are seen as unneeded, immoral and corrupt.  Yet most Brazilians seek public employment or public contracts with an eye to enjoying similar perks.  If we look at the many unions, associations and labor organizations in Brazil we discover that each category has its own lobby whose mission is self-preservation through gaining and protecting benefits.  Thus when one category discovers that magistrates, for example, receive a housing allowance, another caste seeks isonomy or equalization.  Brazilians are well known for being creative with taxes. They are apt to copy revenue enhancements from anywhere in the world.  What people do not know is that Brazilians also create many publically funded perquisites ranging from special commissions, “jetons”, attendance awards, repayments, special compensation, 13th, 14th and even 15th month salaries, vacation stipends and much more.  Moreover, these additional benefits are codified and as such are not seen as special favors but legally sanctioned endowments.

While this is the system, Brazilians miss the mark complaining about corruption while failing to recognize their own participation in and sanctioning of institutional advantages which are viewed (from the outside) as un warranted and immoral .  Larry Nassar is certainly a despicable individual but it is hard to believe that he acted for so many years abusing so many without institutional support and societal connivance.  Likewise, Brazilian only fool themselves if they think they will solve the systemic problem by attacking the individual housing allowance or even the beloved 13th month salary.  As the expression goes, “O buraco é mais embaixo.” (The problem runs deeper.)

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Lula: Estou Triste

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A condenação do Lula por unanimidade certamente é um marco na historia recente.  Talvez não seja surpresa, mas ainda assim mexa com as emoções.

Pessoalmente, o que me deixa triste e frustrado é aquilo que talvez podia ser sido e não foi.  Me lembro muito bem das eleições de 1989: Lula contra Fernando Collor.  Embora o Collor apareceu do nada como algo modernizante num Brasil saindo das trevas da ditadura, Lula tinha mais historia e oferecia uma narrativa de justiça muito mais atraente do que o garoto dourado que de repente galgou toda a simpatia da mídia tradicional.

Na época, Lula ainda tinha as origens de pobreza.  Ele ainda não tinha o transito fácil entre as elites.  Ele pregava uma mensagem de mudança e de esperança baseado na sua historia de migrante nordestino, de militância sindical, na sua luta contra os governos militares pelo menos desde Geisel e na personificação de uma mudança radical que prometia mais igualdade, diminuição das diferenças, libertação de jovens e mulheres e todo um projeto de busca de modernização à parte das oligarquias tradicionais.

Não tinha jeito e Collor foi eleito.  Somente, depois de uma nova passagem de construção e evolução com Fernando Henrique Cardoso, o plano Real, e a crise econômica do inicio do século, que Luís Ignácio finalmente conseguiu com todo direito e todas as honras sua eleição como presidente batendo nitidamente o candidato Tucano, Geraldo Alckmin em 2002.

Lula, eleito inicialmente criou um ambiente de incerteza, mas logo, logo com a indicação de Antônio Palocci e a carta ao povo brasileiro, Lula acabou tranquilizando o mercado financeiro e assim eliminou uma grande e potencial fonte de instabilidade.  Apaziguado o mercado, Lula galgou a simpatia não só de sua base tradicional, mas também das elites diante de sua atuação em prol das politicas econômicas tradicionais.  Prometeu e deu continuidade a politica econômica de seu antecessor.   O ambiente externo favorável puxou o crescimento e Lula soube administrar a expansão no sentido de corrigir de uma forma mais acentuada o salario mínimo e também ampliar o programa fome zero para bolsa família.  Como Presidente, ele continuou e melhorou as medidas de correção já iniciadas.

Entretanto, o grande desapontamento foi que a partir do discurso de maior igualdade, o Presidente Lula acabou aceitando e elevando uma proposta para firmar o PT no poder.  E assim começou a ampliação do poder através de medidas cooptativas e de compra aberta de votos e aliados não com o intuito de redistribuir, mas com o objetivo de criar uma base de poder assentada no controle da maquina publica usando a em favor de um projeto de acomodar aqueles que trocavam apoio politico pelo acesso aos recursos da administração publica.  Lula usou e abusou o sistema, expandindo sem preocupação, os postos de trabalho na maquina publica.

A politica de cooptação através do uso do estado a nível nacional, estadual e local funcionou até certo ponto.  Mas foi uma expansão aonde o PT e os partidos aliados não se preocuparam tanto com a boa administração, mas muito mais com o acesso aos recursos e seu uso “liberal”.  Lambuzaram-se no poder.

Infelizmente, Lula não usou educação e cultura para melhorar a aprendizagem e escolaridade.  Embora foram criadas escolas técnicas e universidades, perdeu-se em qualidade e recursos produtivos. Infelizmente, educação não foi seu enfoque.   As taxas de aproveitamento escolar não melhoraram e a baita diferença de qualidade entre a escolas publicas e privadas permaneceu.  De forma semelhante, aconteceu o mesmo com a saúde e reformas no setor primário.  Lula foi tolerante ou conivente com o MST, mas na realidade não fez nenhuma reforma agraria com assentamentos e reais inovações na oferta de recursos para trabalhadores sem terra.  Em vez disso, os supostos trabalhadores viraram apenas massa de manobra na luta politica com objetivos limitados que pouco tinham a ver com produção rural.  Durante o governo Lula e do PT expandiu-se a fronteira agrícola de mãos dadas com os latifundiários que tiveram basicamente mão livre nos cerrados e na Amazônia.  O mesmo ocorreu com a aliança desenvolvimentista do governo e os empreiteiros na construção das barragens e obras antiecológicas.  Bel Monte começou com Lula e foi em frente com sua agressão antropológica e ambiental no governo Dilma.

Enfim, Lula aprimorou um discurso baseado na sua narrativa de nordestino, trabalhador, engajado, progressista, consciente e reformista.  As boas intenções revolucionarias de mudar a distribuição de renda funcionaram enquanto os ambientes internos e externos proviam recursos suficientes num ciclo positivo.  No entanto, quando reverteu como sempre reverte, não havia uma base de sustentação.  Lula não criou nada solido no sentido de oferecer alternativas reais para os desfavorecidos.  Como sempre, a educação foi insuficiente e de baixa qualidade, a saúde também e até a mobilização politica das pessoas foi feita em troca de favores em vez de objetivos reais de mudança e participação politica.

Infelizmente, o sistema absorveu Lula e ele ofereceu pouca resistência.  Acabou aceitando um projeto de poder para favorecer, em primeiro lugar, um circulo pequeno de sicofantas, em segundo lugar um grupo de oportunistas coniventes de ocasião e em terceiro lugar aqueles que já se apoderavam da maquina publica e continuaram aproveitando de forma conivente com um governo que ficou ideologicamente cego.

Pode-se culpar Lula.  Pode-se chama-lo de grande chefe do esquema criminoso, mas é mais acertado ver Lula como quem chegou e acabou acomodando aos sistemas tradicionais do poder e distribuição de favores.  Ele chegou ao topo do sistema, mas o sistema foi maior do que ele como individuo e ele acomodou na aceitação e administração de demandas.  Assim, ele se confirmou como um populista de esquerda nos moldes do Getúlio da década de 50.

É triste porque, em principio, Lula poderia ter sido mais.  Ele poderia ter liderado a costura de um acordo nacional mais sustentável e favorável às novas classes que emergiram com a estabilidade da moeda (Plano Real e controle da inflação).  Em vez disso, ele optou por um caminho de reformas fáceis e de alcance limitado, e que hoje estão sendo revertidas.

Esta primeira condenação (com apelo) do Lula não será a ultima.  Mas o pior é que Lula se perde hoje na falta de autocritica, não admitindo nenhum erro.  Ele se acha a alma mais honesta, além de ser a própria encarnação o povo.  O que é um auto definição sem base e sem fundo.  Não houve um caminho de construção nem no sentido politico e menos ainda no sentido de um modelo econômico funcional.  Se Lula voltar, é só com as mesmas e cansadas fórmulas anti-mercado, anti-capital e anti-investimento que nunca funcionam.  Definir um modelo sustentável a longo prazo num pais com a tradição escravocrata que o Brasil tem não é fácil, mas está mais do que claro que o estado lotado e capturado por um partido, aliados e/ou castas estatais, se tornou um grande empecilho ao desenvolvimento e redistribuição.  Lula tinha em mãos a forca politica para promover alterações importantes, mas no final do dia isto não aconteceu e ficamos hoje com sua condenação, decepcionados com ele, frustrados e sem projetos.

Há gente feliz, dizendo que as instituições funcionaram.  Não é a verdade completa.  A justiça também anda capenga como a sociedade.  A construção vai ser lenta e resta saber se há um projeto no Brasil que ultrapasse Lula populista ou as elites eternamente enraizadas.

 

 

Is Brazil a $%*@hole?

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In discussing immigration, Donald Trump recently referred to numerous countries in a very derogative fashion.  Naturally, the foul language caused upset and revolt.  But perhaps, beyond political partisanship, one should use the opportunity to evaluate and honestly reflect whether such an accusation has any substance and how problems might be addressed.

In spite of years of recession and now weak growth, Brazil continues to rank in the 10 largest world economies as measured by GDP.  It still has the world’s fifth largest population and although Brazilians increasingly seek opportunities abroad, they are not considered a major problem migrant population in any of the countries where they have a big presence, with the possible exception of Portugal.

Trump’s America first nativism portrays, when generous, immigrants from the less developed world as advantage seekers, exploiters and opportunists taking away from Americans by overloading the welfare and health care systems and by competing with natives for jobs.  In more drastic, dramatic and derogatory terms, Mr. Trump has called Mexico a place of criminals, rapists, and the unwanted so much so that he demands a wall to be built to keep out what he described as sewage.

Mainly because of Mexican migration and higher birth rates, “Hispanics” threaten, in demographic terms, the US’s Caucasian plurality.  Brazilians hate to be called Hispanics or even Latinos; having an inherent sense of superiority.  Still in Brazil, there are record levels of self-hate, depression and a desire to emigrate.  Problems abound, but do they make the country a latrine worth avoiding or abandoning?

Let’s admit the poverty, inequality, ignorance, crime, gangs, drugs, venality, monopolies, selfishness, immorality and incompetence that haunt Brazil. One could maybe say it is just Brasilia, the capital.  But, sin for sin and defect for defect, it could also be Washington, DC.  Latrine for latrine…no country is perfect.

Still, we can agree that Brazil’s current ranking leaves room for improvement.  The path to a cleaner future is pretty clear.  The photo introduction reportedly shows the WC at the Curitiba lock up where former Rio governor Cabral is being held. While it may not compare favorably with Trump’s purportedly golden throne, it serves as an illustration and allusion.  The human condition involves waste creation and need for disposal.  Brazilians need to improve and this requires just two main components: 1) responsibility and 2) institutions.  If prisoner Cabral uses the hole responsibly and doesn’t miss the mark, that is a first step.  The second is that society has to have institutions in place so that there is water to drain the hole and, hopefully, does not overflow.  The two together represent progress.

The following recent video shows that forward movement in Brazil is tenuous. Instead one sees opportunism, lack of responsibility and perhaps the notion that institutions are not reliable.  While making a transaction at the lottery store, an old lady drops an object which is either a wallet or cell phone.  An adult male approaches from behind and surreptitiously moves the object and puts it in his pocket without inquiring anything of the lady or attendant.  Certainly, the appearance is of petty theft.  The man shows no responsibility to the victim and apparently has only limited concern about being caught and punished.

Here is the link to the video in Porto Uniao, Brazil: http://www.canal4.tv.br/video-senhor-e-flagrado-furtando-carteira-de-idosa-na-fila-de-loterica-em-porto-uniao/

Does this video illustrate the current state of Brazilian culture?  Does it make the country fall into Trump’s despicable categorization?

Certainly, the malfeasance demonstrated by business people and politicians have set a tone.  But, you should also know the man in the video was arrested by police according to press reports.  So the security camera served a purpose. It remains to be seen how the institutions will function in handling the accused.  Similarly, this week ex-President Lula’s corruption conviction and appeal will be judged in Porto Alegre and perhaps more important than the decision will be society’s reaction. Will the institutions show Brazil as a country under the rule of law and institutions which people respect? Or will there be further breakdown and more systemic weakening?  In an election year, with Brazil’s short term hanging in the balance, it is hard to predict.

 

 

 

 

 

Predictions and Evaluations – 2017 and 2018

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Predicting the year ahead and then evaluating how precise my forecasts were last year always gives me pleasure, even if it’s a bit perverse.

Last year, I posted in January, “2017-Predictions for Brazil –Happy New Year???”(https://allabroadconsulting.wordpress.com/2017/01/04/2017-predictions-for-brazil-happy-new-year/)

My best prediction for 2017 was that Temer could be removed from office because of his lack of legitimacy and unpopularity.  However, I said that people would have to take to the streets for this to happen. Indeed, Temer could have and probably should have lost his job with the JBS recording and the bag full of money carried by his lackeys.  But it did not happen because no one pounded on pans or took to the street.  Certainly people were and are generally disgusted but prefer not to spend the energy mobilizing, marching and chanting.  Dilma fell partially because of the pressure from the street, but Temer remains because he proved a better politician in that he was able to bend a venal Congress to his will through favors and offers of protection.  And the population just looked on and essentially said “Ok, there is nothing more we can do.”

I also mentioned the mayors that took office in January of last year.  Noting that while they (especially Doria in Sao Paulo and Crivella in Rio), played populist politics to get elected and tried to represent something new, neither was successful.  Doria, after initially pursuing a presidential hope, has become more modest in his aspirations.  Crivella has almost dropped out of sight and the Cariocas are only sometimes complaining about his absence.  In other words, “Who cares?”.

It was easy to be skeptical about progress in Brazil in 2017. And indeed it was another of those years that as you put them together lead to a lost decade.  Certainly the lack of political mobilization was uninspiring. It was sad to see Congressmen vote to absolve and protect themselves.  On a less pessimistic note, the economy stopped moving backward and showed minor signs of recovery where negative cycles eventually end.  TheTemer government boasted about low inflation and the lowest real interest rates ever.  With the end of the depression, foreign capital continued to flow into Brazil seeking deals in oil, gas, and alternative energy, especially wind.  While Brazilians lack the will to invest, foreigners with a long view and a sense of opportunity are taking chances given the capital made available by the generally positive world economic scene.  Investment capital is out there and seeking attractive and profitable projects.

A year ago, I concluded my iffy thoughts on people feeling empowered to make a difference.  It didn’t happen.  In 2018, the people will vote.  There will be winners and losers, so in this light, let me make 10 predictions.

Here we go:

  1. Lula will not win the presidency either because he will be condemned in his appeal or he will lose outright to a more centrist politician.
  2. Barring a health issue, Temer will finish his term and seek to define his successor and his party and the PMDB will continue to have weighty and oligarchic influence.
  3. The economy will grow in 2018 between 1 and 2 percent. This is less than the consensus prediction by Brazil’s central bank.  Poor but an improvement.
  4. There will be little renewal in Congress. While Brazilians claim to hate their politicians, they are re-elected and the campaign finance/electoral reform passed in 2017 favors those currently in elected positions.  Furthermore, pension reform will be kicked down the road to 2019.
  5. Inflation will pick up with money being spent to influence the election as well as kitchen gas, gasoline, electricity and health costs all running ahead of official inflation numbers.
  6. The Selic interest rate will once again go to 8% or more from the current record lows.
  7. Brazil will continue to be a country at war with itself. There will be over 60 thousand homicides and another similar number of traffic deaths.
  8. The World Cup in Russia will be a great distraction and Brazil will finish in the top 4 but will fall short of winning the Cup for the sixth time.
  9. The military will not intervene and Bolsonaro’s presidential candidacy will fail. Alternative candidates such as Joaquim Barbosa, Marina Silva, Henique Meirelles, Ciro Gomes, Luciano Hulk or Joao Doria will also fizzle.
  10. Geraldo Alckmin of Sao Paulo will win the presidency much to everyone’s consternation.

As predictions go, at least these are measurable and verifiable.

Happy 2018 e para o Brasil Happy 2019 que 18 será mais um ano perdido.

2017 – 10 Constrangimentos e 1 Orgulho

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Para o Brasil, 2017 foi mais um ano de constrangimentos.  Aqui vai 10 e com certeza a lista pode crescer.

1- Constrangimento no executivo. O Presidente Temer não tem legitimidade.  Ele, de fato, ajudou a desconstruir alguma solidez institucional com sua participação na saída da Dilma.  Há justificativas mais obvias para seu próprio impeachment, mas ele vem conseguindo ficar no poder sabendo como manipular votos no Congresso e apoiado na realidade que não tem uma alternativa real.  Além disso não existe uma mobilização popular contra apesar de ninguém apoia lo.

2 – Constrangimento na economia. Os governos estaduais e municipais não têm recursos para investimentos e em casos como Rio de Janeiro e outros estados nem para quitar a folha de pagamento.  Os funcionários estão a mingua.  O governo federal não tem como socorrer que também está falido.  Temer e Meirelles propagam a recuperação e o controle da inflação, mas gás, gasolina, saúde e taxas escolares não refletem o que o governo divulga.

3 – Constrangimento das reformas. Basicamente todos admitem que o pais precisa, mas não há consistência ou coerência.  A complexidade e o alcance das transformações são mal compreendidos e o debate acaba simplificada nas posturas de direita e esquerda.  Este e o caso da reforma previdenciária e da reforma trabalhista.

4 – Constrangimento da justiça.  Ate 2016, a Lava Jato e o Dr. Sergio Moro eram motivos de alivio por processar poderosos pela primeira vez.  Contudo, a Lava Jato vem sendo esvaziado pela falta de julgamento de políticos (principalmente que não sejam do PT e por manobras como as do Ministro Gilmar Mendes e outros.  Ao mesmo tempos, o Ministério Publico quando defende seus privilégios especiais, acaba se revelando incapaz de dar um exemplo de desprendimento.

5 – Constrangimento no Congresso. Os parlamentares não transmitem a impressão de honestidade.  Ao contrario, são praticamente todos suspeitos e muitos sob investigação.  Seus votos são em defesa própria e de interesses muito restritos.  Seus votos são comprados abertamente com cargos, comissões e dinheiro vivo.

6 – Constrangimento do povo. A população assiste atônita ou de verdade bestializada.  As manifestações de rua que afloraram em 2013 não existem mais.  O povo esta cansado e cínico fazendo o julgamento que não vale a pena participar marchando ou batendo panelas.  A saída da Dilma não resultou em nenhuma melhoria.  Ao contrario, todo o sistema institucional ficou ainda mais desacreditado.

7 – Constrangimento da violência: O Brasileiro tem medo de sair de casa e tem medo de ficar. Vive enjaulado cercado de arame farpado, câmeras de segurança, e trancada a múltiplas chaves.  As taxas de homicídios e latrocínios são dos mais elevados do mundo.  E ainda há mais de 50 mil mortes anuais no transito.

8 – Constrangimento nas artes. Na década de 60, o Brasil tinha razoável projeção internacional com bossa nova, musica clássica, arquitetura e até no cinema.  Hoje, Anitta que veio da igreja e acabou encontrando o rebolado sertanejo, caiu no agrado popular.  É constrangedor, mas não tanto quanto a provocação e reação com relação as exposições misturando ataques a religião, suposta incentivo à pedofilia e outras atividades “avant-garde”.  A TV por sua vez continua “politicamente correto” “patrocinando” LBGT, mulheres oprimidas e minorias ignorando ou apenas enfeitando a dura realidade que muitos sofrem.

9 – Constrangimento com o Brasil: Em 2009 e 2010, muitos brasileiros expatriados resolveram voltar para a terra. A alegria durou pouco.  O pais não oferece oportunidades para os seus e assim há outra vez grande migração para Portugal, outros países europeus, Austrália e ate os EUA apesar da politica anti-imigrante do Trump.  Enfim a decepção e grande.

10 – Constrangimento das “cabeças pensantes”. Era uma vez que a intelectualidade brasileira tinha ideias vivas e projetos que poderiam transformar instituições. Minha geração pelo menos tinha o projeto de combate a ditadura.  Hoje as universidades estão em crise, sem verba, sujeitas as invasões.  O debate em torno da economia e da construção institucional é frustração e reclamação só.  Ideias e projetos para melhorar o sistema politico estão engavetados.  Há apenas uma vaga sensação da necessidade de chegar as eleições de 2018 e empurrar as coisas com a barriga.  Melhor isso do que aceitar um “salvador da pátria. “

E agora, o orgulho: Há ainda pessoas bonitas, integras, alegres, trabalhadores, estudando, e procurando de forma decente uma vida digna.  O sol se levanta diariamente numa terra rica, privilegiada e bonita por natureza.

 

Christmas – 2017

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 Photo: Estado de Minas, Dec. 12, 2017

Make a resolution to enjoy the holidays.  A lot of people complain about the consumerism, the false sense of obligation, the forced camaraderie and the need to be “whatever”.   And, you know, they are right.  Nevertheless, individually, we can be sincere, develop meaning, create understanding, express solidarity and just be friendly, kind and sympathetic without being maudlin or without being pretentious.

Celebrate with family, with loved ones, with friends and if you have none of these, then celebrate with others by giving of yourself and not worrying about perceptions and consequences.

Those of us who are in the United States, we have to recognize the materiality and wealth existent here.  No doubt, we have certain advantages because of the wealth, but being cognizant of this fact, there is no need for pride and pomp.  Those of us in Mexico and Brazil and other parts of the world know that our relative lack of material wealth actually brings us closer together.  Our circumstances almost force an extended network of interdependence, which, in the end, favors our recognition of others and our own humanity.  The greater unpredictability of life in the lesser-developed world makes us rely more on God and each other with somewhat greater sincerity.

Even as we turn the last page of the 2014 calendar, we look to an opportunity for renewal, hope, optimism and to facing challenges and obstacles as we begin a new story or continue a storyline already in progress but not yet quite finished.  We can write new pages in our lives and the Christmas period.  The ongoing and renewed chances of family, friend and person-to-person contact provide inspiration and a new start.

Think about the message you are sending.  What do others read, feel and see in your presence?  Think about what is really meaningful and what you want to project.  Think about where you want to go from here.  Take into account the people that you have in your journey and those you want to include as significant parts of your narrative.  Reach out and make the effort who you are and who you want to be.  Do it with your feelings, your words, your art, your music and the look on your face.

Birth, a new start, new settings, new gifts, new opportunities, renewed efforts and ongoing experiences and traditions come together nicely at this time of year.  Make the most of these even if it takes some effort on your part.

Happy and healthy days, reasonable expectations, fulfilled hopes, new challenges and enhanced solidarity are my wishes for the season.

Institute of the Americas: Rio Roundtable on Gas and Energy in Brazil – Disruption in a Disruptive Setting

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The Institute of the Americas held a high-level meeting on Nov. 8, 2017 in Rio de Janeiro to discuss Brazil’s energy sector with a focus on gas as a “disruptor”. Brazil’s offshore pre-salt production has been well publicized and Brazil currently surpasses Venezuela in oil supply. The gas sector, on the other hand, has not received as much attention. It represents a new resource for Brazil’s energy matrix and Brazil’s growing role in the global energy market.

Natural gas as a disruptor links closely to oil production in Brazil’s offshore fields. Officials are increasingly recognizing the need for more market friendly policies in line with the international oil industry. In essence, the policy direction is to open the fields to international investment requirements, promote competition and reduce state intervention. Petrobras, the national oil company, will continue to participate and own production. But Brazil’s oil and gas sector will increasingly be partnering with private companies for the exploration, production and distribution of gas and oil. This shift has attracted attention to the renewed rounds of oil and gas field auctions.

Decio Oddone, Director of Brazil’s Petroleum Regulatory Agency (ANP), summarized the current state of gas production from the Presalt formation. Almost 80 percent of the 114 million cubic meters of gas produced a day comes from off-shore wells. Currently, a substantial percentage of this production is reinjected, burned off or not used due to insufficient pipelines and infrastructure to bring the gas to the market. The objective of the “Gas for Growth” program is to radically change this scenario by making the product available at a competitive price. According to ANP, Brazil has over 600 billion cubic meters of gas in proven reserves with probably over twice as much in as-yet-to-be explored fields. Brazil has abundant energy, which can be used effectively in the midterm given sufficient investment and adequate management.

The production and market challenges include ramping up production to reduce unit costs, improving delivery infrastructure and reducing the marketing strictures. Currently Bolivia is Brazil’s main source of natural gas with sporadic imports from other countries on the spot market. James Story, the United State Consul General in Rio, noted in his presentation that the US has exported LNG to Brazil six times during the past year.

Brazil expects to develop a new gas market through a step-by-step process that has already started. It should be completed within the next 4 to 5 years.

Melissa Mathias of ANP listed these major steps:

  • Implementation of best international practices
  • Attract investors
  • Recruit a wider range of participants and agents
  • Promote access to information and a dynamic investment environment
  • Participate with those now in the sector
  • Promote and open up competition in the supply of natural gas
  • Adhere to contracts

Looking at the production and supply chain, the movement is away from the state monopoly held by Petrobras. Petrobras has overseen production, transportation, distribution and price regulation for the wholesale market. Brazil’s oil and gas industry will eventually provide access to other companies at all levels from production to delivery to the end user.

The proposed liberalization represents a major shift in the ongoing evolution of Petrobras and Brazil’s strategy.   Presently, there are only 3 LNG terminals located in Pecem (north/northeast), Salvador (northeast) and Sao Paulo (southeast). Some 9409 kilometers of gas pipelines are currently tightly regulated by ANP and Petrobras. The new proposal would open this system of storage and transportation and attract investment funds for new infrastructure. Companies would compete in a more transparent market. This will certainly include major building of infrastructure for production, storage, transportation and end user delivery with an increasing focus on electricity from gas.

“Gas to wire” is becoming more important for electricity generation. As is well known, Brazil’s power costs are among the highest in the world even though hydroelectric plants generate more than 70% of the nation’s electricity. However, draughts, changing weather patterns, increasing demand and frequent fluctuations in hydroelectric supply open an immense field for gas and other alternative forms of energy.

Additionally, there is consensus among all productive sectors that “custo Brasil” has created an unacceptable drag on economic growth. Thus, “Gas for Growth” should help Brazil recoup industrial production and advance in the global market, through deregulation, opening and making competitive an underused energy source.

Nearly all of the 20-plus speakers at Institute of Americas’ Rio event were positive about Brazil’s economic and energy outlook. Statements ranged from Brazil being “back on track” to “making up for lost time.” Many were also optimistic about the enthusiastic participation of major oil producing companies in the recent rounds of auctions. Exxon Mobil, Shell, Total, Sinopec and others paid significant premiums for exploration rights. On the other hand, several speakers brought a dose of moderation to the proceedings. Concerns included the need to view gas as closely tied to oil production. There has long been a standing nationalistic view that Petrobras to safeguard Brazil’s oil. This “oil is ours” (O petroleo é nosso) mentality could thwart efforts to open up Brazil’s oil and gas sectors to others. There’s also worry about exactly how Brazil will open up its oil and gas sectors. Brazil is notorious for promoting policies that later get bogged down in execution. Much of this is due to preexisting laws and regulations that inhibit the movement of enterprise and the factors of production. For example, even as ANP has promoted the opening and competition of these sectors, it has also controlled and intervened, possibly defeating its own best intentions. Mauro Storino from Fitch, a rating agency, spoke of an important topic for financial markets. Brazil’s fiscal crisis has led to the loss of investment grade status. Further downgrades could come if Brazil fails to implement major spending reforms. Given that 2018 brings a presidential and general election, politicians are wont to give up their strong hold on Brazil’s pork barrel projects. This likely will make international financing for the gas sector more competitive and harder to achieve.

At the end of the day, knowledgeable people recognize the many contradiction inherent in Brazil’s erratic modernization. Certain sectors lead and then lag. Petrobras for instance is at the forefront in the development of deep-sea oil exploration and production. At the same time that the company developed this technology, it also almost succumbed to the most rampant and extensive multi billion dollar corruption scandal in history. Brazil’s has had two presidents in the last four years. Dilma Rousseff fell, officially, for fairly minor but illegal budget maneuvers. In reality she was brought down by her own political incompetence and radicalism. Her successor, Michel Temer, is a better and more experienced political manager. But he and his administration are much more deeply tainted by outright thievery, favoritism and connivance among a small yet dominant group of elite politicians. Even so, Temer has received some business backing because of his willingness to at least battle to reform the archaic labor code and the highly unequal social security system. The system protects a caste of public sector employees who enjoy benefits totally out of proportion with the vast majority of the private sector. Such are the contradictions in the system.

Many of the fiscal problems will be pushed onto the next administration. The smart money seems to favor a center right successor to Temer. Meanwhile, Lula, the popular, populist leftist former president, awaits a chance to run for president again. This will depend on the success of his appeal to corruption-related charges.

In Brazil, there can be significant uncoupling of political and economic activities. Today, for example, the agricultural sector is thriving and driving Brazil in spite of the general economic malaise. Petrobras and the oil and gas sector also seem to have uncoupled and it is likely that a market friendly outlook in the sector will prevail even if a left leaning candidate wins the election. Once in power, politicians act pragmatically in following the money. Also, given the oil sector’s recent past of malfeasance, there is a strong inclination that the company has survived the poison. However, like a recovering alcoholic, there is a chance that it might fall off the wagon, but the pressure for sobriety is strong.

Gas for growth can be a disruptor but it remains to be seen if Brazil’s disruptive politics will prevail and inhibit progress.

 

Here is the link to the program with a list of the speakers and as well as access to presentations: https://www.iamericas.org/en/events-sp-1138149363/2299-brazil-energy-roundtable-gas-power-and-disruptors