A schism in the Bolsonaro administration

. Apr 22, 2019
Six months of Bolsonaro The tug of war in Brasilia congress

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Good morning! A schism in the Bolsonaro administration. Trying to avoid a truckers’ strike. What is ‘super’ about Paulo Guedes?

A schism in the Bolsonaro administration

Less than 4 months after taking office, the Jair Bolsonaro

administration is already heading towards a dangerous rupture: a cold war between none other than the president and his vice. If the disagreements between Jair Bolsonaro and Hamilton Mourão weren&#8217;t clear enough, the president did away with any remaining ambiguity. He published a video of self-proclaimed philosopher Olavo de Carvalho lashing out against Mr. Mourão and the military on his YouTube channel, only to remove the video less than 24 hours later.</span></p> <p><span style="font-weight: 400;">The episode occurred alongside an article in newspaper O Globo, in which the content of WhatsApp audio messages exchanged by the president were leaked. He congratulated a supporter for bashing his vice president on social media, and said Mr. Mourão was in for a &#8220;little surprise&#8221; come 2022—suggesting that the VP would not be on his re-election ticket. It remains to be seen whether the disagreements between the government&#8217;s top 2 men has reached the point of no return.</span></p> <p><span style="font-weight: 400;">So far, the VP has pushed his own agenda in office. His schedule has been filled with meetings with diplomats, executives, union leaders—and he doesn&#8217;t miss an opportunity to contradict Mr. Bolsonaro, positioning himself as a &#8220;voice of reason&#8221; in an otherwise disorganized administration. With top military officers in key government positions, a confrontation with Vice President Mourão—a recently retired general, popular among the military top brass—could be ill-advised.</span></p> <p><span style="font-weight: 400;">Historically, a strong VP means a weak president. Of Brazil&#8217;s 37 previous heads of state—8 began as vice presidents.</span></p> <p><span style="font-weight: 400;">Go deeper: </span><a href="https://brazilian.report/power/2018/07/25/important-vice-president-brazil/"><span style="font-weight: 400;">How important is the vice president in Brazil?</span></a></p> <hr /> <h2>Trying to avoid a truckers&#8217; strike</h2> <p><span style="font-weight: 400;">After Petrobras announced a 4.8% bump in diesel prices from refineries to distributors, the government is scrambling to avoid a new truckers&#8217; strike—with a protest scheduled for next Monday. Today, Infrastructure Minister Tarcísio de Freitas will meet with the national confederation of autonomous truck drivers.</span></p> <p><span style="font-weight: 400;">A new strike, however, is not a consensus among truckers&#8217; leaders. Some unions see good faith in the government&#8217;s recent gestures (such as creating the possibility of pre-paid diesel, or enabling a credit card for truck owners with public banks and promising to improve roadways). The sector&#8217;s main complaint is the lack of enforcement of the minimum freight pricing table.</span></p> <h4>2018: strike or lockout?</h4> <p><span style="font-weight: 400;">A recent study shows that last year&#8217;s strike ended up hurting autonomous truckers—and benefiting cargo transport employers instead. The latter say their earnings jumped by 28% since May 2018, while the former lost 20% of their revenue. This reinforces the suspicion, floated at the time of the stoppage, that the strike was in fact not a strike at all, rather a lockout promoted by employers for their own benefit (which is illegal)</span></p> <p><span style="font-weight: 400;">Go deeper: </span><a href="https://brazilian.report/power/2018/07/25/important-vice-president-brazil/"><span style="font-weight: 400;">One year after the truck drivers’ strike, what has changed?</span></a></p> <hr /> <h2>What is &#8216;super&#8217; about Paulo Guedes?</h2> <p><span style="font-weight: 400;">When Jair Bolsonaro won the 2018 election, economist Paulo Guedes was immediately hailed the &#8220;Super-Minister&#8221; of the Economy. As the head of state admitted to not knowing &#8220;the first thing about economics,&#8221; all decisions would be centralized in Mr. Guedes&#8217; office. The economic tsar, however, has not enjoyed all the power he was promised. After losing many battles against Big Agro on protectionist issues, he now faces opposition to privatize public assets.</span></p> <p><span style="font-weight: 400;">Mr. Guedes established a goal of raising USD 20bn this year by auctioning public companies and reducing their budgets. But some of these companies are hiring, instead. Even the Brazilian Communications Company (EBC), which President Bolsonaro once argued should be made extinct, has now become part of the government&#8217;s plans. In the oil and gas sector, Petrobras officials are resisting Mr. Guedes&#8217; plan to end the firm&#8217;s monopoly over the gas market.</span></p> <p><span style="font-weight: 400;">Not to mention the pension reform bill—which is yet to be embraced by President Bolsonaro. The bill has stalled in Congress and will face fierce opposition from civil servants—who have drafted 12 amendment proposals to be presented by congressmen, essentially reducing the savings proposed. On multiple occasions, Mr. Guedes suggested that if he doesn&#8217;t get his way, he would leave the administration.</span></p> <p><span style="font-weight: 400;">Go deeper: </span><a href="https://brazilian.report/power/2018/07/25/important-vice-president-brazil/"><span style="font-weight: 400;">Why does Brazilian industry keep shrinking?</span></a></p> <hr /> <h2>What else you should know today</h2> <p><span style="font-weight: 400;">Ombudsman. Foreign investors will now have an ombudsman within the federal government to whom they can voice their complaints, doubts, and proposals. The position was envisioned by former President Michel Temer, but would be restricted to countries which have cooperation deals with Brazil. Now, it will be available to multinationals from every country. </span><a href="http://www.casacivil.gov.br/brasil-ocde/eventos/2017/workshop-sobre-a-solicitacao-de-adesao-do-brasil-a-ocde-desafios-e-oportunidades/curriculos-dos-palestrantes/carlos-pio.pdf"><span style="font-weight: 400;">Carlos Pio</span></a><span style="font-weight: 400;">, a foreign affairs professor, will take the job. </span></p> <p><span style="font-weight: 400;">Pensions. The Economy Ministry has sealed the studies and technical reports which served as the basis for the government&#8217;s pension reform bill—shielding them from the Access to Information Act. The move has sparked criticism even among the government&#8217;s supporters, and gave opposing members of Congress a reason to question the effectiveness of the reform.</span></p> <p><span style="font-weight: 400;">Vale. Mining giant Vale has been notified of the first lawsuits filed by relatives of the victims of the Brumadinho dam collapse. One family is asking for BRL 40m in reparations for the death of four people, who were in a bed &amp; breakfast which was engulfed by mud spilled from the Vale dam collapse. Three months after the disaster, activity at 32 Vale dams has stopped—and at least 9 will be permanently shut down.</span></p> <p><span style="font-weight: 400;">Image crisis. According to Edilson Camara, global CEO of Egon Zehnder— the world&#8217;s largest privately held executive search firm—the amount of bad news coming from Brazil has tarnished the image of Brazilian executives. Once known for their adaptability, Brazilians are now being associated with corruption. According to Mr. Camara, the lack of English proficiency in the country is also a major barrier.</span></p> <p><span style="font-weight: 400;">Marijuana. In 2018, Brazil&#8217;s national sanitary agency granted 70% more import licenses of medicinal marijuana than in the previous year. Last week, the Brazilian market was listed among the world&#8217;s most promising by Marijuana Business Daily, a publication followed closely by investors in the sector.

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