Brazil could lose voting seat at the UN

. Nov 29, 2019
Debt could cost Brazil voting seat at the United Nations Photo: Diego Grandi

Good morning! We’re covering today Brazil’s debt with the United Nations. Will the Central Bank change rules for paying in installments? And the latest Supreme Court mega important trial. (This newsletter is for platinum subscribers only. Become one now!)

Debt could cost Brazil voting seat at the United Nations

Brazil’s diplomatic body requested emergency funds

from the Economy Ministry. The country is reportedly one month away from <a href=";utm_medium=email&amp;utm_content=29112019&amp;utm_campaign=news_veja_noticiasdamanha">losing its voting seat</a> at the United Nations General Assembly for being a bad debtor. Between 2016 and 2019, the country has amassed debts of USD 416 million—which, in today&#8217;s currency exchange, amounts to BRL 1.7 billion, more or less.&nbsp;</p> <p>The country must pay at least the minimum installment of USD 126 million by January 2020.&nbsp;</p> <p><strong>Why it matters.</strong> Over the past decade, Brazil has had an underwhelming international presence, which could be capped off this year with immense international shame.</p> <p><strong>&#8220;Anti-globalism&#8221;.</strong> President Jair Bolsonaro has a certain aversion to the United Nations. During the 2018 electoral campaign, he called the organization a &#8220;communist meeting place,&#8221; and threatened to pull Brazil from it. The president and the United Nations certainly having diverging agendas, especially when it comes to indigenous rights—something dear to the international community, but which Mr. Bolsonaro has shown little regard for.</p> <p><strong>Image. </strong>In September, Mr. Bolsonaro delivered what was arguably <a href="">the most aggressive speech by a Brazilian head of state</a> at a United Nations General Assembly. Prior to that moment, the government spent around BRL 40 million on a campaign to boost its international image.</p> <p><strong>Losing soft power.</strong> Brazil’s image problem abroad is far from being caused by Jair Bolsonaro alone. Instead, it is the result of erratic foreign policy without continuity and clear objectives for the global stage, <a href="">as we showed in our <em>Explaining Brazil </em>podcast</a>.</p> <p><strong>Not the only one.</strong> Brazil&#8217;s debt to the United Nations might date back from 2016—but the country is hardly the only one to skip its payments to the organization&#8217;s budget this year, according to the following map (via Statista).</p> <figure class="wp-block-image"><img src="" alt="Debt could cost Brazil voting seat at the United Nations" class="wp-image-28292" srcset=" 960w, 300w, 768w, 610w" sizes="(max-width: 960px) 100vw, 960px" /></figure> <script src="" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>Central Bank to tackle payments in installments</h2> <p>If you know anything about how Brazilians consume, you are aware that paying in several installments using a credit card is common practice. That could change, though, depending on the Central Bank, which could restrict this form of payment. In the minds of regulators, paying in installments is a form of credit, and contributes to Brazil having skyrocket interest rates, currently at around 317 percent a year.</p> <p><strong>Why it matters.</strong> In Brazil, credit cards and installment credit are widespread, with over 77 percent of households <a href="">exposed to them in some way</a>.</p> <p><strong>Big changes. </strong>After <a href="">slashing overdraft fees in half</a>, the Central Bank could now change a key way through which Brazilians buy pretty much anything. While wealthier families may use installments to increase their liquidity, lower-income families with less financial education easily get entangled in debt.&nbsp;</p> <p><strong>Congress.</strong> In an interview earlier this week, João Manoel Pinho de Mello, the Central Bank&#8217;s director for the organization of the financial system, said that &#8220;in some circumstances, competition alone is not able to correct the market&#8217;s distortions—when that happens, intervention is needed.&#8221; The bank tries to get ahead of a group of senators sponsoring a proposal to establish a cap for bank interests in credit operations in Brazil.</p> <hr class="wp-block-separator"/> <h2>Supreme Court issues defeat to Bolsonaro in tax info case</h2> <p>In a 9-2 vote, the Supreme Court considered it legal for tax authorities to flag suspicious transactions to law enforcement even prior to a court order. These reports are usually the starting point of several probes into white-collar crime—but a group of politicians, led by Senator Flávio Bolsonaro, called it a &#8220;perversion&#8221; of due process.</p> <p><strong>Why it matters.</strong> Over 900 investigations were put on hold, waiting for yesterday&#8217;s decision—including parts of the probe into the murder of Rio de Janeiro City Councilor Marielle Franco.</p> <p><strong>Gray area. </strong>Justices failed to rule on whether prosecutors will be allowed to ask for tax auditors to look into possible illegal transactions made by specific people. In an <a href="">exclusive interview</a> with <strong>The Brazilian Report</strong>, Brazil&#8217;s former Solicitor General Luiz Inácio Adams called that &#8220;fishing,&#8221; saying it should not be allowed.</p> <p>The justices were equally unclear on whether their ruling also concerns the money laundering enforcement agency—where many white-collar investigations begin. The trial will resume on December 4, when justices will rule on that point.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <p><strong>Infrastructure.</strong> On Thursday, Congress passed a resolution to fast-track a bill establishing a new framework for the sanitation sector—<a href="">opening it up to private companies</a>. House Speaker Rodrigo Maia expects a vote to happen before the end of 2019 (which is overly optimistic)—or, at the latest, early next year. The government expects private players to invest around BRL 700 billion over the next 10 to 20 years.</p> <p><strong>Uruguay. </strong>Center-right lawyer Luis Lacalle Pou, 46, has been confirmed as Uruguay&#8217;s new president-elect, ending a 15-year stretch of the center-left in government. The country&#8217;s presidential election took place on Sunday, but results were considered too close to call. Over the past four days, the country staged a thorough recount of votes—which gave Mr. Pou a 1-percent lead. The change in the ruling coalition comes as Uruguay sees a surge in violence levels (murder rates rose by 45 percent since 2017) and the economy shows signs of strain.</p> <p><strong>Water. </strong>The Brazilian Amazon has entered the premium water market. For the past ten years, a company called Ô Amazon Air Water has developed a bottled water series containing the rainforest&#8217;s air humidity. This new water type—which could be used in cocktails—is about to be sold in France for EUR 70 every 750-milliliter bottle. The firm wants to make a place for itself in the &#8220;fine waters&#8221; market.</p> <p><strong>E-commerce.</strong> Brazil was the country with the biggest growth rate in sales during &#8220;Singles&#8217; Day,&#8221; a sort of reverse Valentine&#8217;s Day holiday created by e-commerce behemoth AliExpress. In 2019, Brazilians bought three times more than they did one year ago.</p> <p><strong>Environment.</strong> In an interview with <em>Folha de S.Paulo</em>, Environment Minister Ricardo Salles admitted to the need for a &#8220;long-lasting strategy&#8221; to curb deforestation rates. Mr. Salles added that, if Brazil reaches a less-than-25-percent bump in deforestation rates in 2020, it will be an &#8220;achievement.&#8221; Rates of the destruction of native forests in Brazil have reached peak levels this year—and many experts single out President Jair Bolsonaro&#8217;s laissez-faire stance one of the key reasons.</p> <p><strong>Intolerance.</strong> According to the Anti-Defamation League (an anti-discrimination Jewish non-governmental organization), Brazil is becoming more intolerant with Jewish populations, based on a regular survey. In 2014, the league identified 16 percent of people with anti-semitic views. That rate is now at 25 percent. For 70 percent of Brazilians, Jews are more loyal to Isreal than to their own country of birth.

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