Why are the Ceará police on strike?

. Feb 21, 2020
Understanding the crisis of Brazilian police forces Police officers in Ceará are on strike. Photo: José Cruz/ABr

We shed light on the creeping police crisis in Brazil. The rise of Brazil’s deepwater oil in international markets. And Vale’s billion-dollar losses in 2019.

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Our newsletter services take a break for Carnival, but we’ll be back on Ash Wednesday. Meanwhile, we will continue to have fresh content every day on The Brazilian Report website.


Understanding the crisis of Brazilian police forces

Demanding higher wages and better working conditions, law enforcement officers in the state of Ceará have

been on strike since Wednesday. Following a violent showing that finished off with a senator trying to <a href="https://brazilian.report/power/2020/02/20/senator-cid-gomes-shot-police-strike-could-spread-across-brazil/">literally bulldoze a police picket line</a>—and being shot twice—leaders of the protest sat down with the state government to negotiate, but turned down any proposal of a deal and will continue the strike—which, by Brazilian law, is illegal.</p> <p><strong>Violence.</strong> In the first 24 hours of the police strike, the state of Ceará registered 29 murders. During the early hours of Friday, two more killings were confirmed. The government is sending Army troops to contain the situation.</p> <p><strong>Why it matters.</strong> The current crisis underlies a deeper problem in Brazil&#8217;s security apparatus: the increasing politicization of police forces has essentially turned administrations into hostages of their cops.&nbsp;</p> <p><strong>Powder keg. </strong>Police strikes create panic and plunge governors into political crises—and the mere <em>threat</em> has become a powerful bargaining chip. Moreover, these illegal moves usually go unpunished—as lawmakers (many of whom are former policemen) tend to give them amnesty shortly after. Between 1997 and 2017, Brazil witnessed 715 police strikes, according to researcher José Vicente Tavares.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/1429329"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>Spreading.</strong> In the state of Paraíba, members of the Fire Department, Military Police, and Civil Police stopped work and could begin a strike of their own. In Rio, municipal guards have threatened to walk out during Carnival.&nbsp;</p> <p>Yousseff Abou Chahin, São Paulo&#8217;s head security officer, said that if cops on strike are not &#8220;punished exemplarily,&#8221; this will become a nationwide trend.</p> <p><strong>Bolsonaro.</strong> President Jair Bolsonaro has been sympathetic to the police cause. He is himself a former Army captain whose <a href="https://brazilian.report/power/2018/10/14/jair-bolsonaro-military-career/">career was cut short</a> by insubordinate acts in the pursuit of better wages. Many governors say they believe cops are holding these mutinies because they feel the president has their back.</p> <p><strong>Timeline of the crisis.</strong> The current crisis has been brewing since December 2019.</p> <ul><li><strong>Dec. 5.</strong> Police officers and firefighters staged a protest for better wages.</li><li><strong>Feb. 6.</strong> The State Congress was to vote on a government proposal of a BRL 4,000 monthly salary—but officers asked for more.</li><li><strong>Feb. 13.</strong> The governor raised his offer to BRL 4,500, which wasn&#8217;t enough for a group of disgruntled officers.</li><li><strong>Feb. 17 and 18. </strong>A court&#8217;s decision authorized the government to arrest cops on strike, as the police do not have the right to strike in Brazil. Three officers were arrested after slashing the tires of police cars.</li><li><strong>Feb. 19. </strong>Senator Cid Gomes tried to break the siege of a police battalion with a bulldozer—and was shot twice.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>Brazil&#8217;s deepwater oil on par with Brent prices</h2> <p>New rules by the International Maritime Organization to reduce sulfur emissions in seaborne transportation have boosted the prices of Brazil&#8217;s pre-salt deepwater oil—which has low rates of sulfur. While the new regulation is yet to be enforced, companies are already adapting, which heats up the market for the Brazilian product. During Q4 2019, Petrobras got USD 63 per barrel of its pre-salt oil—only USD 0.25 below the Brent international standard. In Q1, the gap was USD 4.15.</p> <p><strong>Why it matters.</strong> The rising demand for low-sulfur oil has been a boost for Petrobras and helped the company post BRL 40 billion in net profits last year—a nominal record.</p> <p><strong>Exports.</strong> Brazil&#8217;s oil exports soared 25 percent in 2019—with China being the destination of 71 percent of the total volume. Analysts say that the latest fears of the Covid-19 outbreak—which has forced many industries to shut down temporarily in China—would reduce the output this year, but Petrobras seems unfazed.</p> <p><strong>Premiums. </strong>In September, consultancy firm Argus Media launched a price indicator for oil from the Lula pre-salt field at the Shandong Port, pricing it at USD 4 premium per barrel.&nbsp;</p> <hr class="wp-block-separator"/> <h2>Vale earnings reports: USD 1.68 billion in losses</h2> <p>Brazil&#8217;s mining giant Vale has <a href="http://www.vale.com/brasil/en/investors/pages/default.aspx">posted</a> a net loss of BRL 6.7 billion (USD 1.68 billion) last year—only the second time in the past 20 years the company closed a year in the red, with the last negative year coming in 2015. The company says the biggest factor was the Brumadinho dam collapse in January 2019—which killed 270 people, 11 of whom have never been found.</p> <p>In its report, the company listed the main factors leading to the losses:</p> <ul><li>Decommissioning risky dams (BRL 11.3 billion), provisions and expenses with reparations (BRL 18.5 billion);</li><li>Provisions related to a fund to help mitigate the environmental impact of recent dam disasters (BRL 2 billion);</li><li>Write-off for nickel operations in New Caledonia, due to production and processing problems (BRL 10.3 billion);</li><li>Write-off for Mozambique operations (BRL 6.9 billion).</li></ul> <p><strong>Stock prices.</strong> Since the Brumadinho tragedy, Vale&#8217;s market value has quickly bounced back—with rising oil ore rates being the biggest driving force in stock prices.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Currency.</strong> Brazilian markets are set to stop over the next few days for Carnival—but the rest of the world keeps spinning. The global scenario of uncertainty has made the U.S. Dollar an even more powerful hedge. Analysts predict the American currency should surpass the BRL 4.40 threshold soon—and that there is no sign that the Central Bank will intervene by selling international reserves on the spot market. </li><li><strong>Coronavirus.</strong> Suzano, one of the world&#8217;s leading paper and cellulose producers, made a donation of 200,000-plus surgical masks to China to help contain the Covid-19 outbreak. The material should arrive at Brazil&#8217;s Embassy in Beijing today, and will be delivered to Chinese authorities.</li><li><strong>Culture.</strong> Governments usually support their countries&#8217; exports, whether it be avocados or military technology. This year, however, the National Cinema Agency decided not to make a single gesture in support of the 19 Brazilian movies participating in the Berlin Film Festival. Brazilian production &#8220;All the Dead Ones&#8221; is running for the Golden Bear—the main prize of the festival. The movie depicts the reality of black families just after the abolition of slavery.</li><li><strong>Oil &amp; gas.</strong> After 20 days, the union of oil workers announced it would suspend its strike, in a new push to negotiate with Petrobras. The union protests the shutdown of one of the company&#8217;s fertilizer subsidiaries, which will result in the layoff of roughly 1,000 people, among them employees and contractors. If no deal is possible, the union promises to resume the strike. CEO Roberto Castello Branco said the company won&#8217;t backpedal on its decision.

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