Is a Bolsonaro v. Moro clash inevitable?

. Jan 24, 2020
President Bolsonaro (L) and Justice Minister Moro. Photo: Alan Santos/PR President Bolsonaro (L) and Justice Minister Moro. Photo: Alan Santos/PR

Good morning! We’re covering the latest clash between Jair Bolsonaro and Justice Minister Sergio Moro. How Brazil is preparing to stop the coronavirus from reaching the country. And how the government is silently getting closer to privatizing Petrobras. (This newsletter is for premium subscribers only. Become one now!)


You heard it here first

Yesterday, President Jair Bolsonaro published a decree to kick off the privatization process of Serpro—Brazil’s Federal Data Processing Service. But The Brazilian Report subscribers learned about the move (and its risks for data privacy in the country) back in December. Read the full report again→


Sergio Moro: from trophy-minister to nuisance

President Jair Bolsonaro said on Thursday

that he could split up the Justice and Public Security Ministry into two. The change would mean the Justice Ministry would lose its power over the Federal Police and National Prison System—which correspond to over 75 percent of the ministry&#8217;s budget—remaining responsible only for policies related to anti-drug efforts, refugees, repatriation of overseas assets, and indigenous rights.</p> <p><strong>Why it matters.</strong> If confirmed, the move would deflate the powers of Justice Minister Sergio Moro, who was initially lauded as a &#8220;<a href="https://brazilian.report/power/2018/11/02/sergio-moro-brilliant-stupid/">super minister</a>&#8221; back at the beginning of the government. He would lose any power to implement his anti-corruption agenda, putting him on a collision course with the president.</p> <p>Allies of the minister say he would step down if the change is confirmed, but there is no indication how serious his threats are. After all, Mr. Moro has already put up with a lot that he promised he wouldn&#8217;t, including scandals linked to the president&#8217;s family.</p> <p><strong>Rationale.</strong> The move makes some sense. After all, murder rates in Brazil have been declining since the previous Michel Temer administration—which created the structure Mr. Bolsonaro wants to revive, investing in policies carried out with state administrations. But the biggest sign that splitting up the ministry is a shot at Mr. Moro is that the cabinet minister wasn&#8217;t even invited to the meeting with state security secretaries during which the idea was introduced.</p> <p><strong>Previous. </strong>This would not be the first time the president dilutes Mr. Moro&#8217;s powers. Last year, he took the money laundering enforcement agency away from the Justice Ministry, despite his numerous statements saying the agency was instrumental in fighting corruption. Mr. Bolsonaro also failed to support the &#8220;anti-crime bill,&#8221; Mr. Moro’s biggest accomplishment in the cabinet.</p> <hr class="wp-block-separator"/> <p><strong><em>Update:</em></strong> President Bolsonaro has backpedaled from his position, saying there is &#8220;zero chance&#8221; he will deflate Mr. Moro&#8217;s powers. With a caveat: &#8220;I don&#8217;t know about tomorrow, because everything changes in politics, but the intention is not to create [the Public Security Ministry].&#8221;</p> <hr class="wp-block-separator"/> <p><strong>Popularity. </strong>Several reports suggest the president is disgruntled with Mr. Moro&#8217;s popularity and &#8220;Teflon reputation&#8221;—nothing bad seems to sticks to him. Despite the <a href="https://brazilian.report/power/2019/07/05/lava-jato-leaks-veja-sergio-moro-bolsonaro/">Car Wash Leaks</a>—which revealed how he behaved improperly when he was a federal judge—recent prison breaks orchestrated by Brazil&#8217;s biggest criminal gang, and the growing perception of government corruption, Mr. Moro remains the most popular figure of the government—even more so than the president himself.</p> <p><strong>Moro for president?</strong> On Monday, Mr. Moro took part in &#8220;Roda Viva,&#8221; Brazil&#8217;s most traditional political interview program. Like never before, he adopted the behavior of a candidate—and said he wouldn&#8217;t commit to not being on the ballot in 2022. Seen by millions as an anti-corruption symbol, Mr. Moro would certainly be a tough opponent to beat should he decide to run for office.</p> <p>On Thursday, he enhanced his social media presence, creating himself an <a href="https://www.instagram.com/sf_moro/">Instagram account</a> and amassing over 1 million followers in 15 hours.</p> <hr class="wp-block-separator"/> <h2>Brazil still unfazed by coronavirus</h2> <p>So far, authorities in Brasília, São Paulo, Rio Grande do Sul, Minas Gerais, and Santa Catarina informed the federal government of suspected cases of coronavirus infections—but Health Ministry officials say all five cases were dismissed, as they &#8220;don&#8217;t fit the criteria set by the World Health Organization (WHO).&#8221;&nbsp;</p> <p>Still, the government has created an emergency committee to monitor the situation, raising the country&#8217;s alert levels. Currently, the country is at level 1, on a scale that goes up to 3. Brazil’s sanitary surveillance agency Anvisa has issued guidelines for maritime navigation companies on how to proceed and will meet with airlines today.</p> <p><strong>Why it matters. </strong>Since emerging in mid-December, the coronavirus outbreak has killed at least 26 people and infected over 830, according to official figures. But the outbreak started in China, and Beijing is traditionally opaque in disclosing such data. Experts believe the number of infected patients could be closer to 10,000.</p> <p><strong>Confident.</strong> Interim Health Minister João Gabbardo said Brazil won&#8217;t take stricter measures in airports for now—as the country has no direct flights to or from China. However, he guarantees &#8220;Brazil is ready to deal with the coronavirus.&#8221;&nbsp;</p> <hr class="wp-block-separator"/> <h2>Is Petrobras being slowly privatized?</h2> <p>Despite Economy Minister Paulo Guedes&#8217; will to privatize every single one of Brazil&#8217;s 138 federally-owned companies, President Bolsonaro has already said he will keep a hold of the &#8220;crown jewels,&#8221; such as oil giant Petrobras and banks Caixa and Banco do Brasil. But, in Petrobras&#8217; case, some curious movements indicate otherwise. We explain:</p> <p>On Monday, we reported that Brazil&#8217;s National Development Bank (BNDES) <a href="https://brazilian.report/newsletters/brazil-weekly/2020/01/20/hollywood-prison-break-raises-security-brazilian-border/">wants to sell its minority stock</a> in several public and private companies—including Petrobras. Its stake in the oil giant alone (about 10 percent of ordinary shares) would raise an estimated BRL 23 billion. Once the sale is done, the government would retain 50.26 percent of voting capital—just enough to keep a controlling status.</p> <p><strong>Why it matters.</strong> One year ago, the federal government held (directly and indirectly) 63 percent of Petrobras&#8217; voting capital—including shares sold by BNDES and Caixa, which sold its stake in June 2019.</p> <p><strong>Stocks.</strong> Since the beginning of the year, Petrobras ordinary shares (<a href="https://www.investing.com/equities/petrobras-on-historical-data">PETR3</a>) have slipped 3.34 percent.</p> <div id="buzzsprout-player-1144127"></div> <script src="https://www.buzzsprout.com/299876/1144127-60-is-privatization-the-answer-for-brazil-s-economy.js?container_id=buzzsprout-player-1144127&amp;player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <p><strong>Corruption.</strong> The leader of Operation Car Wash&#8217;s division responsible for investigating politicians has resigned—claiming &#8220;incompatibility&#8221; with the new Prosecutor General, Augusto Aras, who is seen as a buffer between investigators and high-profile politicians.</p> <p><strong>Taxes.</strong> Economy Minister Paulo Guedes defended the adoption of a &#8220;sin tax&#8221; in Brazil, that is, higher taxes on products that are harmful to people&#8217;s health—such as cigarettes, sugary products, or tobacco. A new sugar tax has been widely debated worldwide—with the UK adopting it in 2018—but it remains too soon to determine its public health effects. <a href="https://brazilian.report/podcast/2018/12/12/brazil-crackdown-sugar/">Brazilians consume 50 percent more sugar than what is recommended</a> by the World Health Organization—an average of 18 teaspoons per day.</p> <p><strong>Doomsday Clock.</strong> The risk of a social collapse from nuclear warfare and the climate crisis has never been higher, says the <a href="https://thebulletin.org/doomsday-clock/current-time/#full-statement">Bulletin of the Atomic Scientists</a>—which moved forward its symbolic &#8220;doomsday clock&#8221; to just 100 seconds to midnight, the closest since its creation in 1947. Brazil, &#8220;which dismantled policies that had protected the Amazon rainforest,&#8221; was singled out by the scientists, as was the U.S.</p> <p><strong>Elections.</strong> Attending the World Economic Forum in Davos, Switzerland, for the second time, TV presenter Luciano Huck spoke to an audience of 40 executives during a Thursday luncheon. However, after being called &#8220;Brazil&#8217;s next president,&#8221; he was once again coy about his presidential aspirations. <a href="https://brazilian.report/power/2018/02/09/luciano-huck-2018-election-back/">Mr. Huck mulled over running</a> for the country&#8217;s highest office in 2018, but ultimately stayed put. Since then, he has adopted a discourse against inequality. Very well-known for his Saturday afternoon program on TV Globo, Brazil&#8217;s leading channel, Mr. Huck polls as high as 15 percent—depending on the survey.</p> <p><strong>Cyclone.</strong> On Tuesday, the Brazilian Navy issued a cyclone alert for Rio de Janeiro, but the information was only confirmed on Thursday evening. Until January 25, meteorologists expect that Cyclone Kurumi—which is currently located 250 kilometers from the coast of Rio de Janeiro—will affect a coastal stretch between Rio and Bahia, causing winds of up to 87 kilometers per hour and waves up to 5 meters high. Towards the southern coast of Brazil, the effects will be milder, with winds of up to 61 kilometers per hour.

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