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.

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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.

 

Descaso, Acomodação e Fatalismo: A Morte Anunciada em Brumadinho

mortevidaseverinaGravura do livro: Morte e Vida Severina

 

Joao Cabral de Melo Neto escreveu sua obra Morte e Vida Severina na década de 50 retratando a epopeia de sofrimento, morte e a esperança da vida sertaneja.  Na década, milhares de nordestinos migraram em direção aos centros do sudeste do Brasil, inclusive a Região Metropolitana de Belo Horizonte.  Ainda na década de 50, a estatal CVRD estava começando a ganhar corpo como um gigante futuro na mineração.  Minas está no nome.  Lá reside o nascedouro do rio que era uma vez doce.

Aprendemos criança que Minas Gerais é prodígio em riquezas naturais, principalmente, do subsolo.  O estado, nos ensinaram, tem um coração de ouro dentro de um peito de ferro.  O ouro e depois os diamantes e pedras financiaram as igrejas coloniais e as riquezas de Ouro Preto, Diamantina e muitas outras cidades.  Sua transferência para a matriz (Portugal) e de lá para Inglaterra ajudou a financiar a revolução industrial dos séculos XVIII e XIX.  De minas e Minas Gerais vem a riqueza que não fica mas transforma.

Ouro e diamantes poderiam ser extraídos de uma forma artesanal e seu transporte era feito por tropeiros com suas mulas.  O alto valor do produto permitia.  Hoje, a escala é outra e a produção já não se mede em gramas, quilates ou onças, mas em toneladas.  A principal riqueza hoje é o minério de ferro que vai em imensos comboios de vagões e navios gigantes.  A escala industrial tomou corpo no Sec. XX e sua transformação continua no Sec. XXI.  O que era uma agressão ambiental localizada virou grande problema para as cidades e o pais.

Apesar dos pesares e da relutância do Ministro de Relações Exteriores, o Brasil inseriu-se cada vez mais no capitalismo globalizante.  As industrias e a mineração cresceram com o capital estrangeiro e com as varias associações e parcerias com capital do Estado e capital nacional.  O processo nem sempre desenvolveu sem percalços, mas sem duvida tornou-se algo cumulativo e irreversível.  O Brasil é cada vez menos uma autarquia, fechado em si.  Vale é uma empresa mundial e segue até hoje como “campeão nacional. “ Se a Vale cair, será por seus próprios erros e não o anti-globalismo do Min. Ernesto Araújo.

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Marca da Vale

O processo de crescimento do capitalismo periférico e desigual trouxe certamente a expansão econômica e a produção de mais riqueza, mas sem atenuar as desigualdades e sempre afastado e alheio às vontades mal definidas da população.  A transformação politica é sempre mais lenta.

O Estado representando predominantemente as elites e seus interesses não podia ignorar totalmente a população, e sempre seguiu uma politica de antecipar necessidades e de prover para o “povão” de uma forma paternalista.  Aí temos “avanços” começando com a Proclamação da Republica e o sufrágio ampliado para ter depois a implantação da legislação trabalhista do Estado Novo de Getúlio em “prol” do trabalhador. As medidas de saúde, de um decimo-terceiro salario, de criação de um sistema de previdência sempre foram dadas em avanço às demandas.  Foram basicamente outorgas do Estado para os clientes com o efeito de sempre controlar ou enfraquecer movimentos partidários e sociais.  Assim os grandes partidos “populares” como o PTB do Getúlio ou o PT do Lula se aliaram as elites retrogradas ganhando acomodação, mas perdendo coerência programática.

Há mais de um século, fala-se da incorporação através do desenvolvimento econômico liderado pelo estado e seus aliados.  Mas apesar da evolução, o analfabetismo real e funcional permanece e até expande.  Da mesma forma, ate hoje 50% da população não tem conexão a rede de esgoto e acaba sofrendo as consequências, antigamente na forma de disenterias intestinais e febres, e agora agravados pelo aparecimento de dengue, zica, chikungunya e a volta da malária e febre amarela que haviam sido extirpadas.

Todas as desgraças ecológicas e sociológicas resultam em parte da manutenção da população na ignorância e na pobreza.  As estruturas de mudanças existentes apenas reforçam a passividade, fatalismo e acomodação.  O Brasileiro está acostumado a tragédia.  Tem todo ano mais de 60 mil mortes criminosas, mais de 40 mil mortes no transito, deslizamentos de terra todo ano com as chuvas resultando em desabrigados feridos e mortos.  Com o desenvolvimento as elites aceitam o descaso e desleixo e aí encaixa Brumadinho, uma tragédia que repete de forma humana mais nefasta do que o caso de Mariana onde a mesma Vale do Rio Doce e seu parceiro Samarco foram responsáveis.  Já são mais de 100 mortos em Brumadinho e ainda mais de 200 desaparecidos.  Chocante, mas como dizem os sobreviventes que esperam que não repete o “azar”.  Enfim o povo acomodado com a morte, com a desgraça, com o desleixo do Estado, e ainda bestializados sem saber como reagir.

Temo que não permaneça a repugnância e raiva.  Penso que não dura a revolta e estou preparado para que Brumadinho, depois do Carnaval e depois de uns tempos, acaba no esquecimento como já foi esquecido as tragédias da Gameleira e de Mariana. Pode ser e espero que esteja enganado.  Afinal das contas, cada vez mais estão morrendo não só pobres, mas também os instruídos.  Será que a classe media e setores da elite podem desvincular da ganancia, da necessidade de manter o apartheid social e de sua complacência?  Será que o brasileiro poderá conseguir transformar sua tristeza, sua angustia e seu desespero em algo diferente.  Na ultima eleição os eleitores deram uma vitória a um ex-militar para supostamente acabar com a corrupção.  Será que vai ficar aparente que a corrupção é sintoma e não causa e que as causas precisam ser combatidas?  Será que o Presidente e sua administração poderão reconhecer os problemas reais que impedem um desenvolvimento verdadeiro e possível?

Brumadinho sem duvida é uma grande tragédia e um crime contra as pessoas e a natureza mas se o Brasil seguir o mesmo percurso de sempre, as mortes e danos simplesmente passarão como parte da rotina normal de descaso, acomodação e fatalismo que caracterizam a cultura brasileira.

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Foto tirado Internet apos o rompimento da barragem em 25/01/2019

Uma nota pessoal: Prof. Marcio Mascarenhas e sua familia foram vitimas.  Marcio foi meu colega no ICBEU na década de 60 e 70 em Belo Horizonte.  Lamento muito sua morte e transmito minha solidariedade para a família e amigos.

 

Tragic Events and Business as Usually Unusual in Brazil

Passividade e acomodacao diante da repeticao da tragedia!

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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…

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Brazil Predictions – 2019

Handwritten text showing word 2019 Predictions. Business concept writing Forecast Predictive Written on sticky note paper, wooden background with space office view with folded yellow paper

After reviewing and grading my predictions for last year (https://allabroadconsulting.wordpress.com/2019/01/10/2018-e-as-previsoes-passadas/), I want to put forth a new set for 2019 before the month of January comes to an end.

This year, to me at least, seems particularly convoluted and difficult.  President Bolsonaro is trying to get a grip as are the members of his cabinet.  Thus far, things have been following a zig zag course with the Bolsonaro sons suspected of corruption and nepotism or perhaps just doing business as usual in spite of the moralistic tones that helped the president get elected.  Because people have bought into the Bolsonaro presidency with their emotions, they will accept and rationalize pretty much anything for the time being.  However, it seems likely that the exposure of corrupt actions by Bolsonaro family members and associates will show that honesty and uprightness were only a campaign façade and that the clan is part of the cheating that has long been considered normal among politicians, especially in Rio.

People will also have some forbearance with cabinet members such as Ernesto Araujo in the Foreign Ministry and Judge Sergio Moro in Justice.  In the long run, Moro, in particular, must show that he can deal with official corruption and organized crime.  This is a big order as he no longer occupies a judgeship but instead has become a political appointee subject to whims and pressures.  By trading up, he has lost authority.

Araujo too, has declared that he wants to help rid Brazil of globalism, socialism and cultural Marxism through an affirmation of Christian values.  This is another immense challenge. He has set up straw men to destroy but his work most likely will be futile.

So let’s start our predictions here, beginning with the political:

  1. While Araujo may survive one year as Foreign Minister, his crusade against the “plot” of globalized economic growth will enter into shock with the Finance Ministry policies and either he will change his tune or he will not last at the top of Itamaraty. Furthermore, it is less and less likely that Brazil will actually move its Embassy to Jerusalem, in spite the President’s declarations and Nethanyahu’s presence at his inauguration.  Also, Araujo’s admiration of Trump will look less and less favorable legal difficulties increase and the threat of impeachment hovers.
  2. Justice Minister Sergio Moro will step down to preserve his standing as a possible presidential candidate and because he will not be able to escape the corrupt actions of the Bolsonaro clan and his government. He will not be able to tolerate such cognitive dissonance if he is honest with himself.
  3. Finance Minister Guedes will continue preeminent and will push through some social security reform still in 2019. However, if this reform does not go through or seems too little, Guedes will be fired or will resign.
  4. The Social Security reform itself will be approved but only in a weakened form that preserves the perks and benefits of the military, judges, politicians and other high level public servants. Congress continues subject to the pressure of these entrenched castes.
  5. Some analysts on the left have suggested that Bolsonaro will not finish his term. I disagree and predict that he will not be removed from office before the end of his term.
  6. Vice-President, retired General Mourao, will not be the President of Brazil except as permitted by the Constitution. Although he has been a loose cannon, his objective is not to be President, nor do his military colleagues seek this.  They prefer the current situation with a President favorable to their interests without having all the burdens of power, which have heavily strained the military during the dictatorship (1964-1985).

The Economy

  1. With some pension reform and the natural upswing of the economic cycle, Brazil will grow at 2.2% (plus or minus 0.2).  This rate is not spectacular but an improvement over last year and should set the stage for higher growth in 2020 and 2021.  It most likely will not be higher because the government will not discretionary funds to invest.
  2. Last year, I expected inflation to rise to 8% and according to official data, I was wrong. The Central Bank’s Focus prediction for 2019 is slightly above 4%.  My guess is something above 6% as the economy improves.  New Central Bank President, Roberto Campos Neto will be under pressure not to inhibit growth.
  3. The Selic interest rate is currently at 6.5% and should rise to 8% by the end of the year. This will be needed to help keep inflation in check.  It remains to be seen how much independence the Central Bank will maintain.
  4. Foreign direct investment will continue above 60 billion dollars per year with new investments from China in spite of Bolsonaro’s stated objection that the Chinese are buying everything. New US investors will remain wary and have other options.
  5. Under Bolsonaro and Guedes, inequality will increase as measured by the Gini index.

Social Policies:

  1. Bolsonaro’s policy of loosening firearm regulations will not reduce violence in Brazil and again there will be over 60 thousand homicides and over 5000 killings by police forces. Violence will not diminish.
  2. President Bolsonaro has started his term by putting at risk the preservation of Indian and Quilombola lands but will be forced to backtrack by pressure from civil society and international organizations. This prediction will be difficult to measure but it may be ironic that Bolsonaro’s policies actually help indigenous and minority communities better define their resistance, goals and means.
  3. Brazil will not withdraw from the Paris Agreement as has been threatened.
  4. Social mobilization and opposition with civil society will grow as Bolsonaro’s flaws and lack of political skills become apparent and this will lead to the decline of his popularity. His latest approval ratings are above 75% and will fall to less than 50%.
  5. The pendulum has swung from left to right in Brazil and it will swing back again and eventually become more centered as Brazil slowly develops its institutions and democratic process. This will be shown in the 2020 mayoral elections.
  6. Brazil’s infrastructure, especially basic provision of water and sewage, will improve, if for no other reason that it makes economic sense. Currently, almost 50% of Brazil’s population is not connected to sewer system. This has to get better.
  7. Brazil’s evangelicals will continue to increase their numbers in the so called Bancada da Biblia (Bible caucus) but aside from espousing anti-corruption, anti-abortion, anti-secular and critical of homosexual behavior, there will be an increase in violence with the rejection of identity politics. This increase will be noted in the press and evangelical leader Damares Alves, the Minister of Women, the Family and Human Rights will be replaced.

Steven Pinker, the forward thinking optimist and Harvard profesors states that “knowledge, prosperity, connectivity will not go into reverse” and that a “richer world can better afford to protect the environment, police its gangs, strengthen it social safety-nets and teach and heal its citizens.”  Brazil’s leadership and its most selfish elites will try to prove him wrong by bucking world trends.  They will not be successful in the long term.

My friend Benicio Schmitt, a political scientist from the University of Brasilia recently quoted Francis Fukuyama, who wrote, “Our present world is simultaneously moving toward the opposing dystopias of hypercentralization and endless fragmentation…”  Indeed, Bolsonaro would like a strong central government but given Brazil’s size, its democracy and the federal system, the institutional framework is not there to support this desire.

Social fragmentation is present and an ever increasing individuation exists as people engage in the freedom and restraints of the modern world.  But in spite alienation and anomie, Brazilian society will not break down like Venezuela nor will it revert to a right wing military dictatorship.

So maybe outside of Brazil, the perception of dystopia will prevail but Brazilians themselves still have their elected change of leadership, the tropical land of sun, beaches, beer and beauty, and they can say “carnaval” is coming and we have “futebol” so screw the rest and let us muddle through.

 

 

 

2018 e As Previsões Passadas

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Todo ano, gosto de fazer um blog com previsões.  E depois gosto de voltar e avaliar o que acertamos e o que erramos.  O ano passado quando escrevi o blog, achei que as previsões de anos anteriores eram frouxas e então tentei fazer previsões passiveis de conferir.  No blog de 10 de janeiro de 2018,(https://allabroadconsulting.wordpress.com/2018/01/10/predictions-and-evaluations-2017-and-2018/), fiz 10 “profecias” (será que a palavra ficará na moda no novo governo?).  Aqui são:

  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.

Item um: Acertei. Lula, embora tenha sido o grande favorito nas pesquisas, não ganhou a presidência já que estava preso e foi impedido de candidatar-se.

Item dois: Acertei que Temer terminaria seu mandato, mas errei quanto a influencia do seu partido o MDB (antigo PMDB).  Na Câmara o numero de deputados caiu praticamente pela metade (66 em 2014 para 34 eleitos em 2018).  No Senado, o partido do Temer caiu de 14 para 7 Senadores, mas mesmo assim ainda tem a maior bancada entre os 21 partidos representados.

Item quatro: A terceira previsão também estava corretíssima entre 1 e 2%.  Enquanto o Relatório Focus do Banco Central, esperava um crescimento de 2 a 3 por cento, o resultado real foi de apenas 1.3% do produto interno bruto.  Enfim, apesar do fim da recessão o Brasil continua empobrecendo já que a população tem crescimento maior do que a expansão econômica.

Item quatro: Um erro e um acerto.  O acerto é que a reforma da previdência não saiu em 2018.  O erro é que houve uma surpreendente renovação no Congresso: Cerca de metade dos políticos com mandato não foram reeleitos.  Um fenômeno de renovação.  Entretanto, é preciso analisar melhor quem são os novatos e como foram eleitos.  O partido do PSL do Presidente Bolsonaro ficou com o segundo numero maior de deputados e representa um terço de toda a renovação.  Com certeza, o efeito Bolsonaro foi amplo.

Item cinco:  A inflação oficial de 2017 foi de 2.95% enquanto a inflação (IPCA) de 2018 foi de 3.69%, conforme eu havia previsto, exceto que achava que seria ainda maior.  Acredito que a população sentiu ainda mais nos aumentos dos preços do botijão de gás, gasolina, saúde e educação.

Item seis: Minha previsão foi de mais de 8% na taxa SELIC e na realidade o Banco Central manteve a taxa de 6.5% que foi ainda mais baixa do que a taxa anual de 7.1% em 2017. Então minha estimativa estava equivocada.  Ainda assim, os bancos ganharam um bom dinheiro mantendo o spread.

Item sete: Outro acerto fácil.  O Brasil matou mais de 65 mil estabelecendo um novo recorde.  E as mortes de transito em 2017 foi em torno de 47 mil pessoas sendo que os dados para 2018 ainda não foram confirmadas.  Um alento e que parece que as mortes de transito estão diminuindo ao longo da ultima década.

Item oito: A previsão do resultado da Copa foi triste já que os Belgas eliminaram o Brasil nas quartas de finais, ficando o Brasil em sexto lugar na Copa 2018.  O resultado não foi ruim, mas refletiu a qualidade do futebol europeu que vive um momento bem superior ao futebol sul Americano.

Item nove:    . Enquanto os militares não promoveram nenhum golpe, Bolsonaro derrotou Haddad por quase 10 ponto percentuais.  Nenhum outro candidato chegou perto embora Ciro Gomes especula ate hoje, que ele teria vencido Bolsonaro.

E finalmente item dez: O meu maior erro foi a falta de clareza na minha bola de cristal.  Previ que o Alckmin seria eleito. Alas! Ele nem chegou a repetir a façanha de 2006 quando no segundo turno ganhou menos votos do que no primeiro.  Desta vez, não chegou nem perto do segundo turno, dando fim a sua carreira politica e levando junto seu partido, o PSDB.  Afinal, o Brasil optou por uma saída de messias, ou seja, Jair Messias Bolsonaro.  Previ que a população ficaria consternada com o ex-governador de São Paulo, mas por enquanto, o novo presidente está em lua de mel com altos níveis de popularidade.  É provável que o desapontamento e constrangimento aparecerão no futuro, mas por enquanto cerca de dois terços da população acha que a economia vai melhorar e a aprovação do Presidente esta acima de 70% atingindo então níveis Lulistas.  Vamos ver ate quando.

Ao final de contas, me daria uma nota de 7.  Não é perfeição e vamos tentar aprimorar junto com o Brasil em 2019.  Será?

 

Mexico and Brazil: AMLO x JB

Latinoamerica

On New Year’s Day, former Army Captain Jair Messias Bolsonaro (JB) will be sworn in as Brazil’s new president. At the same time, Andres Manoel Lopez Obrador (AMLO) will also complete his first month as Mexico’s chief executive.  Brazil, in spite of its downturn, is still Latin America’s largest economy and Mexico while having grown a bit more steadily is the second largest, and by far US’s largest trading partner in Latin America.

The political changes in both countries are significant.  With AMLO, Mexico has elected its first leftist leader since the 1930’s.  Brazil, on the other hand, has turned to the right with Bolsonaro after twenty plus years of socialist and social-democrat leaning governments.

Interestingly, both Lopez Obrador and Bolsonaro used similar rhetoric in achieving their substantial victories at polls.  In Brazil, the right achieved nearly 56% of the popular vote in the second round against the PT’s (Workers Party). Fernando Haddad as former President Lula could not run due to his conviction on charges of corruption.  In Mexico, AMLO claimed about 53% of the vote in a field of 4 major candidates.

Both JB and AMLO are populists and appeal to the “people” shouting nationalist and my country first slogans, much like Trump with his MAGA sloganeering.  All three politicians want to appeal to the ideal of national greatness rooted in the character of people and their struggles against the traditional elites that have openly and surreptitiously been exploiting and extorting for years but now can be saved by integrity, intelligence, honesty, hard work and forthright action of the new leadership in concert with the backbone of the nation.

Bolsonaro has been in Brazil’s Congress for nearly 30 years but only achieved notoriety for his ardent support of the military governments of 1964 to 1985, his defense of torture, his attacks on women, gays and minorities, and his tough verbal stance on corruption and crime.  Although Bolsonaro is a traditional politician, he positioned himself as an outsider and indeed he was not a member of any of the three political parties that have dominated over the past 20 to 25 years.

Likewise, AMLO presented his case directly to the people railing against corruption and impunity of the traditionally dominant PRI political party and against the PAN the traditionally “safe” foil to the PRI.  This was AMLO’s third attempt at Mexico’s presidency and he undoubtedly showed a defter touch to become the favorite of the Mexican electorate.  He promises to reduce violence by talking of amnesty in the war on drug cartels, he plays to the teachers by promising to reverse reforms demanding exams and competence in education, and by providing more resources to students and higher pensions for the elderly.  All this he promises can be done by eliminating waste through the reduction of the top salaries of public servants including his own.  He plans to sell the luxurious presidential plane. He also has scrapped the multi-billion-dollar development of the new airport for Mexico City.  Distinct from Bolsonaro, AMLO has vouched for minorities and the indigenous population of Mexico.

Bolsonaro presented himself as a crusader for family values dear to the emergent evangelical population and Brazilian traditionalists.  He argues that he as a military man wields moral and material authority and can eliminate the corruption that stains Brazil.  He calls on the people to support his crusade for Brazil’s Christian majority and their desire not to be trampled by the so called “politically correct” minority demands for rights as blacks, women or homosexuals.  Instead JB states he will end the culture of “pampering” minorities.  And, most Brazilians apparently have faith in the election slogan that reads: “Brazil above everything and God above all.”

On economics and production, Bolsonaro has confessed his lack of knowledge and made Paulo Guedes, a Chicago School economist his “super minister”.  After years of socialist leaning central planners in charge of the economy, Brazil’s private sector shows a strong liking for Guedes proposals to reduce the presence of the state and free up market forces through reduction of red tape and the selloff of state controlled enterprises, even in the energy sector, which has always been a national treasure.

AMLO’s economic team, in turn, is made up of relatively unknown technocrats and the President has pointedly stated that the people are in charge, not the markets.  AMLO’s victory   unsettled financial elite but things have more or less stabilized since his inauguration and the initial signing of the new trade agreement with Canada and the United States, sometimes called NAFTA II.  After only a month in power, business and markets are still in a wait and see mode.

However, AMLO likes to use popular referendums and so called super delegates.  In the case of the new airport, for example, AMLO essentially used limited polling to justify quashing the 13-billion-dollar project.  Super delegates are his Morena party appointees that will be in charge of the execution of federally funded projects and obviously will compete with local authorities.  Both of these “innovative” means of governance create concerns for investors.

In Brazil and Mexico, there are numerous risks with the election of populist candidates.  Bolsonaro, in particular, has no prior experience in economics, management or public administration.  His rise has been as meteoric as it has been unexpected.  It is true that the market, industry leaders and agriculture have put faith in Guedes, the Finance Minister and in crusading judge, Sergio Moro, the new Justice Minister.  Still Guedes background is mainly in finance and not production and neither he nor Moro have run large organizations.  Politically, JB’s limited political negotiation skills will be severely tested as he needs to get major reforms through a fractious Congress, the most pressing of which is the Social Security system’s reorganization.

In Mexico, AMLO’s biggest challenge will be keeping the faith of the Mexican elite.  He has super majorities in Congress, but his announced three-year moratorium on new foreign investment in the oil sectors is viewed as a return to the 1970’s when PEMEX and oil production were the major source of income for the country.  With oil prices in the 40 to 60 dollar per barrel range, there will not be enough income for the many populist and pet projects.  Mexico’s Central Bank is autonomous and its major concern is controlling inflation.  If foreign investment shrinks, that challenge will be more difficult.

Immigration is another crisis that can have a major negative impact.  Northwestern Mexico is currently carrying the burden of thousands of Central American immigrants seeking entry into the US.  Brazil, in turn, shares a border with Venezuela and Venezuela’s economic crisis has led to a federal intervention in the state of Roraima.  Bolsonaro has declared his enmity with Venezuela’s President Maduro. Maduro could create a situation similar to that of the Marielitos fleeing Castro’s Cuba in the 1980’s leading to an even larger rush of immigrants into Brazil.  Roraima’s public services have already been overwhelmed by tens of thousands of Venezuelan refugees which are only a small portion of those that have fled the country thus far.

Thus while there is hope in Mexico and Brazil for the new administrations, the deep lying structural problems and the limitations of personality based leadership will certainly emerge.  Both Mexico and Brazil are strong and resilient, but institutions need building and it remains to be seen if the projects of the right in the case of Bolsonaro or of the left in the case of Lopez Obrador can find firm footing in a rapidly changing globalized economy.