What to make of Bolsonaro’s UNGA speech

. Sep 25, 2019
UNGA speech Bolsonaro Jair Bolsonaro delivers his speech at the UN General Assembly

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Good morning! Today, we analyze Jair Bolsonaro’s speech at the UN—and what Brazil’s Congress did while the president was away. Also, Petrobras lobbies against local content requirements. And a possible blow to Operation Car Wash. (This newsletter is for platinum subscribers only. Become one now!)

What to make of Bolsonaro’s UNGA speech

The scene was the United Nations General Assembly, but

it might very well have been a provincial political rally. Despite speaking to representatives of 193 nations—not to mention the millions watching on television—Jair Bolsonaro delivered a speech filled with talking points that would only resonate with Brazilians. And not even <em>all</em> Brazilians. He addressed a fringe part of the electorate—the 12 or so percent who will stick by him no matter what.</p> <p>On environmental issues, Mr. Bolsonaro adopted a confrontational stance against France, Europe, and the press—vintage Bolsonaro, in fact. He also failed to acknowledge any responsibility of Brazil on increasing Amazon deforestation rates, and said that labeling the rainforest as world heritage is a “fallacy.”</p> <p><strong>Why it matters.</strong> Filled with falsehoods, Mr. Bolsonaro’s lines on the Amazon give European countries keen on blocking (or at least amending) the Mercosur-EU trade deal the perfect argument to adopt protectionist measures against Brazil. “His rhetoric signals to the world that, unless countries adopt economic sanctions against Brazil, he won’t engage in anti-climate change initiatives—nor will it abide by previous commitments,” international relations professor Matias Spektor told our <em><a href="https://open.spotify.com/show/4Y4LwDEoRM5fQb9dr8XdN9">Explaining Brazil</a></em><a href="https://open.spotify.com/show/4Y4LwDEoRM5fQb9dr8XdN9"> podcast</a>, which will be released today.</p> <p><strong>South America.</strong> Mr. Bolsonaro also lashed out at the Latin American left—associating it with corruption. In a moment when left-leaning parties are gaining momentum in countries such as Argentina, Uruguay, and Colombia, this move could further isolate Brazil in South America. That could be a serious problem, making it harder for Brazil to coordinate transnational anti-drug trafficking policies—a major issue for the country, which has become a hub for drug distribution to Europe and Africa.</p> <p><strong>Missed opportunity. </strong>By speaking first (and just before the U.S.) at the UN General Assembly, Brazil has a privileged position to present the world with its key agenda points. In the past, other leaders used their speech to underline Brazil’s commitments to human rights, reforms to international governance bodies, or its fight against poverty. Mr. Bolsonaro, however, opted for radicalism and isolation.</p> <p><strong>Internal struggles.</strong> The Bolsonaro administration is a political patchwork of forces that not only don’t share the same interests—but often want opposite things. The president’s UN speech proves that the anti-globalist wing (which includes Mr. Bolsonaro’s sons) has the president’s ear—to the detriment of agricultural lobbyists or libertarian economists.</p> <hr class="wp-block-separator"/> <h2>… Meanwhile, in Brazil</h2> <p>There’s a saying in Brazil: when the cat leaves the house, the mice have a party. With President Jair Bolsonaro in New York City, the Senate caught the government off-guard, postponing a vote on the pension reform until next week, and cancelling a number of vetoes Mr. Bolsonaro issued on recent legislation passed by Congress. Perhaps the move could have been avoided if Secretary of Government Luiz Eduardo Ramos, who is the president’s liaison with Congress, hadn’t traveled to New York with Mr. Bolsonaro.</p> <p>Led by Senate President Davi Alcolumbre, the upper house is reacting to last week’s Federal Police operation against Senator Fernando Bezerra—who is also the government whip in the chamber. Senators considered the move an outrage, and were particularly displeased by the government’s silence—which they interpreted as support for the investigations.&nbsp;</p> <p><strong>Why it matters.</strong> Being at odds with the Senate could be dangerous: the upper house will vote on the most sensitive issues for the government this year, such as the pension reform, tax reform, and the confirmation of Eduardo Bolsonaro for the job of ambassador to the U.S. (if the president goes ahead and names his son).</p> <p><strong>Vetoes.</strong> Congress struck down 18 of Mr. Bolsonaro’s 36 vetoes to the so-called “Abuse of Office Act,” a law to curb excesses from law enforcement agents. The law, however, may limit actions by investigators—and critics fear that it could give politicians a free pass.</p> <hr class="wp-block-separator"/> <h2>Petrobras lobbies against local content</h2> <p>In a meeting with members of the House’s Constitution and Justice Committee, Petrobras CEO Roberto Castello Branco tried to convince them not to support a push to set a minimum percentage of local content in equipment and technology used for drilling oil from soon-to-be auctioned reserves.</p> <p><strong>Why it matters.</strong> Under Presidents Lula and Dilma Rousseff, the National Petrol Agency (ANP) established minimum rates of local content for Petrobras to follow. While praised by local industrialists, the move was severely criticized by experts, who pointed out Brazilian industry’s incapacity to match up to foreign competitors in meeting the technical specifications, deadlines, and costs of Petrobras&#8217; demands. It created market reserves that, in the end, did little to foster investments from Petrobras contractors.</p> <p><strong>Not codified.</strong> One person who took part in the meeting said Mr. Castello Branco “understands the importance of favoring local content.” However, it shouldn’t be in the law, as it can scare off investors—especially foreign ones.</p> <hr class="wp-block-separator"/> <h2>Operation Car Wash’s future</h2> <p>The Supreme Court will begin a trial today that could ultimately nullify many of the convictions from Operation Car Wash. Justices will decide whether or not defendants who collaborate with the investigations should have to present their final arguments before other defendants.</p> <p>The potential change is the result of a plea from defendants who claim their right to a fair hearing is being curbed. Their argument is that state witnesses implicate other defendants, who are not given the right to fully analyze the accusations against them in order to defend themselves.</p> <p>Last month, a panel of five Supreme Court Justices annulled the conviction of former Petrobras CEO Aldemir Bendine based on that same principle—sending the case back to a trial court. Now, the entire Supreme Court (all 11 members) will decide if that right should be extended to all similar cases.</p> <p><strong>Why it matters.</strong> The decision could be a major setback to Operation Car Wash—and would benefit the investigation&#8217;s &#8220;great while whale,&#8221; former President Lula, who has been in prison since April of last year.&nbsp;</p> <p><strong>Worry.</strong> Operation Car Wash prosecutors issued a statement saying they are &#8220;worried&#8221; that the Supreme Court could overturn &#8220;almost every conviction&#8221; related to the probe, which could mean that several defendants could benefit from the statute of limitations to recover a clean slate. That would certainly be a blow to the anti-corruption fight—which, however, does not justify procedural errors in prosecuting defendants.</p> <hr class="wp-block-separator"/> <h2>What else you need to know</h2> <p><strong>Finance.</strong> Globo, Brazil’s most powerful media conglomerate, has silently invested in the financial world. First, it acquired a stake at an investment guidance firm. Then, it joined forces with payments company Stone to create solutions for small companies. Now, Globo has invested BRL 35 million in fintech Bom Pra Crédito, a platform to compare loans. Should we expect a Globo Bank coming soon?</p> <p><strong>Prosecutor general.</strong> Named as Brazil’s next prosecutor general, Augusto Aras will be questioned by the Senate’s Constitution and Justice Committee today. He will have to answer where he stands on Operation Car Wash, environmental issues, and human rights. Over the past couple of weeks, Mr. Aras has met with most senators, trying to lobby for his confirmation. He needs 41 of the Senate’s 81 votes.</p> <p><strong>Brumadinho.</strong> Eight months after the Brumadinho dam collapse, the Federal Police have declared it has no timetable to conclude its investigations. Last week, 13 people from Vale (which owned the dam) and consultancy Tüv Süd (which attested to the structure&#8217;s safety, despite glaring structural issues) were indicted for fraud and use of false documents. However, nobody has been arrested so far.</p> <p><strong>Jobs.</strong> Today, the Labor Ministry will publish data on job creation for August. The previous report showed the Brazilian economy created 43,820 net formal jobs in July. However, since the labor reform was approved, in November 2017, 15 percent of all formal job posts created were for intermittent positions—which pay much less than regular ones.</p> <p><strong>Rio de Janeiro.</strong> The Federal Police launched an investigation into an alleged scheme to sell verdicts in Rio’s top state court. The main target was a judge named Siro Darlan, notable for his controversial rulings—often favoring politicians. One of his most recent decisions freed two former governors of Rio de Janeiro who had been arrested for corruption.

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