How to undermine 40 years of Middle-East diplomacy in two days

Good morning! The Brazilian government has undermined 40 years of Middle-East diplomacy in two days.

President Jair Bolsonaro claimed Brazil was finally becoming “balanced” in regards to the Middle East. His visit, however, was filled with steps which were seen as insults by Muslim-majority countries. <ul><li>Mr. Bolsonaro became the first Brazilian head of state to visit the Wailing Wall accompanied by Israeli authorities, going with Prime Minister Benjamin Netanyahu. Traditionally, Brazilian presidents go there alone, in deference to Muslim countries.</li><li>After announcing the opening of a business office in Jerusalem, Mr. Bolsonaro once again talked about placing an embassy in the city claimed by both Israelis and Palestinians.</li><li>As significant as what Mr. Bolsonaro did, is what he didn’t do. He didn’t include visits to any Palestinian city or Muslim country on his schedule, as Lula did in 2010.</li></ul> Ambassadors of disgruntled Muslim-majority countries have formally requested a meeting with President Jair Bolsonaro and Foreign Minister Ernesto Araújo, but the Brazilian diplomacy has reportedly not yet replied. Mr. Bolsonaro’s moves pander to one of his bases, evangelicals, but go against the interest of another: big agro. Muslim-majority countries account for 6% of Brazilian exports and 10% of agricultural exports—a scenario which took over 40 years of effort to establish. “Brazilian products could be replaced by other countries, such as India or Thailand (for sugar), and the U.S. and Argentina (for soybeans and corn),” said Michel Alaby, who worked at the Brazil-Arab Chamber of Commerce for 35 years. <ul><li>Go deeper: <a href="https://brazilian.report/opinion/2019/01/04/bolsonaro-diplomacy-foreign-policy/" target="_blank" rel="noreferrer noopener">The groups clashing for Brazilian foreign policy control</a></li></ul> <hr class="wp-block-separator"/> <h2>Don’t let yesterday fool you</h2> Monday was a positive day for Brazilian assets, with the Brazilian Real gaining 1% against the U.S. Dollar, and the São Paulo stock market closing up 0.67%. The results, however, have more to do with China’s strong manufacturing data, which helped allay investor concern about a slowdown in global growth. Internally, investors are still focusing on the progress the pension reform will have in Congress. The bill is stalled in the House’s Constitution and Justice Committee—which is supposed only to determine whether or not the proposal is constitutional. But party leaders are already moving to water the reform down before the real debates begin. They oppose the government’s proposal to make further changes to the pension reform possible without amending the Constitution—thus taking power away from Congress. Other changes could come from congressmen: there are calls to alter employers’ participation in pension capitalization, lower the minimum retirement age for women, and reduce the minimum length of service for teachers. President Bolsonaro is set to meet later this week with leaders from centrist parties, hoping to get their support. Today, Chief of Staff Onyx Lorenzoni will meet with 15 leaders. Tomorrow, the Economy Minister is expected to talk to the committee, which could approve the constitutionality of the reform in two weeks time. Then, a special committee to debate the merits of the bill will be formed. <ul><li>Go deeper: <a href="https://brazilian.report/power/2019/02/18/brazil-pension-reform-congress-path/" target="_blank" rel="noreferrer noopener">The path Brazil’s pension reform must take in Congress</a></li></ul> <hr class="wp-block-separator"/> <h2>Brazil’s shrinking trade a red flag</h2> Brazil registered a USD 4.99bn trade surplus in March—22% smaller than one year ago (USD 6.42bn), thanks to a strong rise in imports. Exports amounted to USD 18.1bn, down 1% from March last year, while imports were up 5%, reaching USD 13.1bn. For this year, the government expects a USD 50bn surplus—which would be the third-largest on record, but 15% down from last year. A shrinking trade surplus is another sign of a still-sluggish economy. Last week, the Central Bank reduced its growth forecast from 2.4 to 2%. Markets, meanwhile, expect even less: 1.98%, according to the latest Focus Report, a weekly survey with top-rated investment firms. “Brazil’s Q4 2018 was disappointing, and that negative trend has continued in 2019. Our first quarter smells bad, and projections will converge towards 1.5% as the year goes on,” said Affonso Celso Pastore, a former Central Bank president. Mr. Pastore believes that the pension reform, if approved without being overly watered down (and that’s a big if), will only generate optimism for 2020. <ul><li>Go deeper: <a href="https://brazilian.report/money/2019/03/29/unemployment-brazilians-formal-workforce/" target="_blank" rel="noreferrer noopener">Brazilians still out of the formal workforce</a></li></ul> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li>Rio. Rio’s City Council will vote on an impeachment request against Mayor Marcelo Crivella today. He is accused of defrauding contracts for outdoor advertising displays. Last year, Mr. Crivella <a href="https://oglobo.globo.com/brasil/analise-as-estrategias-de-freixo-crivella-para-2020-23934894">faced</a> <a rel="noreferrer noopener" href="https://brazilian.report/power/2018/07/12/impeachment-mayor-rio-de-janeiro/" target="_blank">another impeachment request</a> but won the Council vote. Even if Mr. Crivella wins again today, his political crisis won’t be over. Other requests are being lined up, ready to be used by city councilors.</li><li>Education. After leading the country’s <a rel="noreferrer noopener" href="https://brazilian.report/money/2018/08/30/brazilian-publishers-crisis-readers/" target="_blank">two largest bookstores to court-supervised administration</a>, Brazil’s publisher crisis has hit another giant: RR Donnelley—one of the world’s biggest printers—which filed for bankruptcy in Brazil and decided to leave the country. RR Donnelley prints the Enem, the national university entrance exam. Until May, the government must find another printer capable of ensuring the secrecy of the questions, so the Enem can take place in November.</li><li>Agro. Brazil’s Agriculture Minister Tereza Cristina will today launch a Permanent Self-inspection Committee—one of the changes to Brazil’s sanitary controls which was announced by the new government. In the new system, producers are responsible for the quality of the product being sold, not the government. In recent years, Brazil has witnessed a number of scandals in which auditors accepted bribes in exchange for fraudulent permits.</li><li>Construction. Government-funded housing projects currently account for two-thirds of Brazil’s new real estate units. However, as the Ministry of Regional Development has failed to pay companies on time (debts reportedly amount to BRL 450m), the sector is expected to fire up to 50,000 employees in 10 days. Before the recession, construction companies employed 3.4m workers. Today, there are only 2m.

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