Sources: Political leaders negotiate Bolsonaro’s impeachment

. Mar 24, 2020
Sources: Political leaders negotiate Bolsonaro's impeachment Photo: Marcos Correa/PR

Today, we bring an exclusive report detailing impeachment talks in Brasília. The government’s attempt to allow companies to suspend contracts was dead on arrival. And the Central Bank’s move to ensure security to the financial system.

SCOOP: Bolsonaro impeachment brewing in Brasília

Since Jair Bolsonaro took office,

15 months ago, his relationship with Congress has been, to say the least, highly dysfunctional. But the government&#8217;s utter inability to deal with the coronavirus crisis—especially from an economic standpoint—has perhaps <a href="https://brazilian.report/newsletters/brazil-daily/2020/03/17/congress-wants-to-place-bolsonaro-in-political-quarantine/">tipped the scales against it</a> in a definitive way. We have already reported that the I-word has begun to float around the corridors of Brasília, but sources close to the country&#8217;s top political players have informed our Brasília correspondent Brenno Grillo that behind-the-scenes negotiations for an impeachment process have already begun.</p> <p><strong>What&#8217;s happening.</strong> Four leading Brasília sources, with close ties to House Speaker Rodrigo Maia, as well as right-wing liberals in Congress, and the most politicized Supreme Court justices have all confirmed the story. Mr. Maia sees the president&#8217;s approval rating (hovering around 35 percent) quickly eroding once the effects of the Covid-19 recession begin to hit Brazil. This could create the perfect moment for an offensive, according to a source who talked with the speaker over the weekend.</p> <ul><li>There are currently <a href="https://brazilian.report/power/2020/03/20/will-the-coronavirus-be-jair-bolsonaro-kryptonite/">17 impeachment requests</a> sitting at the Brazilian House—and Mr. Maia holds sole power to shelve or accept them. Two lawyers who took part in some of the impeachment talks claim that the request presented by the Socialism and Liberty Party, motivated by Mr. Bolsonaro&#8217;s endorsement of anti-Congress protests, might be the strongest legal case of them. But, in fairness, once the economy tanks and popular disgruntlement rises, almost anything could potentially spark an impeachment process. </li><li>While the flat-earthism and truculence of government officials and the regular attacks on the press have been tolerated as unimportant eccentricities—the mismanagement of the coronavirus spread could cost tens of thousands of lives and cause significant to the economy for years to come.</li></ul> <p><strong>The &#8220;enemy.&#8221;</strong> The real threat to Mr. Bolsonaro doesn&#8217;t come from the left (Lula has actually indicated that he is opposed to impeachment proceedings). Instead, Bolsonaro’s most dangerous enemy might prove to be the so-called &#8220;<a href="https://brazilian.report/opinion/2018/07/31/brazil-big-center-2018-president/">Big Center</a>&#8220;—a loose coalition of conservative forces that drove Dilma Rousseff out of power in 2016— who have placed a target on the president&#8217;s back.</p> <ul><li>The straw that finally broke the camel&#8217;s back was Mr. Bolsonaro&#8217;s recent public attacks on Health Minister Luiz Henrique Mandetta—a member of the Big Center–– who has received widespread praise from experts and opp for the measures taken against Covid-19, to the chagrin of the president. This was further accentuated after the president accused state governors of lying to the people about the severity of Covid-19.&nbsp;</li><li>Unless the government breaks from its current course, Brazil won&#8217;t be able to protect workers from the imminent depression that forced self-isolation will inflict on the economy—risking possible social unrest and throwing millions into poverty.</li></ul> <p><strong>Why it matters. </strong>As things stand, the impeachment seems more a matter of <em>when</em> than <em>if</em>.</p> <p><strong>Missing pieces. </strong>Over the past seven days, Brazilians in the country’s largest urban centers have protested from their windows and balconies, banging pots and pans and chanting, “Bolsonaro out.” Business leaders who once supported Mr. Bolsonaro and his Economy minister now openly criticize their policies. But the final push must either involve: (1) a signal from the Armed Forces that they would not interfere; (2) more widespread displays of discontent from middle classes.</p> <p><strong>Mood.</strong> A recent poll shows that 79 percent of Brazilians expect the economy to be “severely hit” by the Covid-19 crisis.</p> <div id="buzzsprout-player-2913238"></div> <script src="https://www.buzzsprout.com/299876/2913238-98-should-congress-impeach-jair-bolsonaro.js?container_id=buzzsprout-player-2913238&amp;player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>Saving the economy—but not at a human cost</h2> <p>On Sunday evening, President Bolsonaro issued a provisional decree allowing companies to suspend contracts for up to four months—sparking a huge backlash––the term “Genocidal Bolsonaro” reached the top of Twitter’s trending topics in Brazil on that day. Before noon on Monday, the president backpedaled, announcing he would strike down that part of the decree.</p> <p><strong>Why it matters.</strong> The public reaction to the move was overwhelmingly critical—as the move would leave workers in an even more precarious position. “People would have to support themselves with their savings or money from family members,” economist Daniel Duque told <strong>The Brazilian Report</strong>.</p> <ul><li>The problem is that few Brazilians have any savings. A 2019 survey showed that only 8 percent of workers could afford to set some money aside.</li></ul> <p><strong>Markets.</strong> Despite the government&#8217;s clear prioritization of business interests over workers the financial markets still haven&#8217;t given their approval to Jair Bolsonaro&#8217;s approach to the looming crisis. Case in point: Brazil&#8217;s stock market has sunk lower than any world market according to Goldman Sachs, and the U.S. Dollar exchange rate has been above BRL 5 for six straight trading sessions. Investors clearly don&#8217;t see Brazil as a safe place for business right now, in large part due to the government&#8217;s mishandling of the coronavirus crisis.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/1660039"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>Central Bank to the rescue</h2> <p>On Monday, Central Bank Chairman Roberto Campos Neto announced a series of measures to ensure liquidity to the Brazilian financial system. The plan could reach as much as BRL 1.2 trillion (or 16 percent of GDP). According to Mr. Campos Neto, this will be the biggest liquidity injection in Brazilian history. Among other moves, the decision lowers reserve requirements for banks by BRL 68 billion from March 30 onwards.</p> <p>Financial institutions will also be granted more flexible rules for issuing credit letters for agribusiness and the buyback of low-liquidity bonds.</p> <p><strong>Why it matters. </strong>The move allows banks to meet their commitments and guarantee customers&#8217; withdrawals.</p> <p><strong>No worries.</strong> Mr. Campos Neto said Brazil&#8217;s financial system is healthy and does not face any systemic risk. He added that the Central Bank is simply &#8220;getting ahead of other sectors&#8221; in doing its part to keep the economy working. &#8220;We will not hesitate to use the entire Central Bank&#8217;s arsenal if the situation so requires,&#8221; he told reporters.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Quarantine.</strong> The city of Rio de Janeiro and the state of São Paulo wll enter quarantine today. Stores will be closed—with the exception of pharmacies, supermarkets, and other &#8220;essential&#8221; businesses.</li><li><strong>Operation Car Wash.</strong> The Federal Prosecution Office has reached a plea bargaining deal with businessman Eike Batista. Once associated with power, fame, and a boatload of cash, Mr. Batista has been the poster boy for how Brazil&#8217;s crony capitalism works. He was convicted to 30 years in prison for his part in a vast corruption scheme. In exchange for information—plus a BRL 800-million fine— prosecutors agreed to lower his sentence to four years, with only one year served behind bars.</li><li><strong>Corruption.</strong> A Rio de Janeiro state judge has lifted the suspension regarding a <a href="https://brazilian.report/newsletters/brazil-daily/2019/12/19/bolsonaro-trouble-son-flavio-investigation/">money-laundering investigation against Senator Flávio Bolsonaro</a>, the president&#8217;s eldest son. He is suspected of running, while serving as a Rio state lawmaker, a rudimentary—and frankly common—corruption scheme, in which his staffers were forced to kick back a portion of their salaries to Flávio. In her ruling, the judge cited that the coronavirus outbreak has disrupted the courts&#8217; procedures and that keeping the suspension risked letting the case fall outside of the statute of limitations.</li><li><strong>Tests.</strong> The state of São Paulo is set to launch tomorrow a network that can test up to 2,000 people for Covid-19 per day, thanks to a partnership with 17 labs linked to the University of São Paulo and the Butantã Biological Institute. Meanwhile, the state&#8217;s leading infectious disease expert, David Uip—who leads the administration&#8217;s task force to contain the spread—has himself tested positive for Covid-19.</li><li><strong>Fake news.</strong> Twitter and YouTube have recently begun to take down coronavirus-related content posted by Jair Bolsonaro supporters labeled as misinformation. These posts include material shared by the likes of Senator Flávio Bolsonaro, Environment Minister Ricardo Salles, and self-proclaimed philosopher Olavo de Carvalho, an influential advisor to several members of the administration. Mr. Carvalho has gone as far as to declare that the coronavirus &#8220;doesn&#8217;t exist&#8221; and that &#8220;not a single Covid-19 has actually been recorded.&#8221; The move is rare, as tech giants have tended to adopt a lackadaisical approach to the circulation of falsehoods posted presumably in defense of &#8220;freedom of speech.&#8221; Just last week, <a href="https://www.bbc.com/news/technology-51975377">Twitter gave Tesla CEO Elon Musk a pass</a>, after he said kids are &#8220;essentially immune&#8221; to Covid-19.

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