Government turns to sanitation overhaul to kickstart economy

. Jun 02, 2020
Government turns to sanitation overhaul to kickstart economy Chemical toilet in Salvador, Bahia. Photo: Joa Souza/Shutterstock

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Sanitation investments are Brazil’s bet for the post-pandemic economy. A bill against fake news to be voted on by the Senate. And the latest crisis in Rio de Janeiro.

How the government hopes to reactivate the economy

A new regulatory

framework for sanitation services is the government&#8217;s gamble to attract investments and stimulate the economy in the post-pandemic period. The Economy Ministry hopes that the bill — which has been in discussion since the Michel Temer administration (2016-2018) — will finally be put to a vote late in June. </p> <ul><li>Brazil&#8217;s sanitation sector is mainly controlled by state-owned companies. Allowing private corporations into the market would attract some BRL 700 billion in new investments, according to estimates.</li></ul> <p><strong>Why it matters.</strong> Sewage services remain accessible to just 50 percent of the Brazilian population, while 35 million Brazilians have no access to treated water. Sanitation is not only an economic concern, it is also a human rights issue.</p> <ul><li>The number of Covid-19 deaths per 100,000 inhabitants is significantly lower in areas with better sanitation coverage.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/2676526" data-url=""><script src=""></script></div> <p><strong>All set. </strong>During a webinar on May 29, Economy Minister Paulo Guedes said the new regulations bill is &#8220;ready,&#8221; and promised that Brazil would &#8220;dazzle&#8221; the world.&nbsp;</p> <p><strong>Security.</strong> Brazil&#8217;s perpetual political crisis is actually <em>not</em> the biggest deterrent for foreign investment; the unpredictability of its courts is the major issue. The new framework would end that, creating clear rules for all players. The proposal would see Brazil’s National Water Agency (ANA) centralize all powers to set guidelines and enforce regulations.</p> <p><strong>Yes, but … </strong>A new sanitation regulatory framework depends on delicate political negotiations, as many states oppose the move, fearing private competition would run public companies out of business. And the coronavirus-related war between President Jair Bolsonaro and governors — as well as Congress —&nbsp;makes things much harder.</p> <hr class="wp-block-separator"/> <h2>Senate to vote on fake news bill</h2> <p>Brazilian senators are scheduled to vote today on the Internet Responsibility and Transparency Act —&nbsp;also known as the &#8220;Fake News Act.&#8221; Among other things, the bill forbids social media platforms from allowing the use of bots to automate content transmission, the use of dummy accounts, or the publication of sponsored content without disclosing the company behind it. Opponents of the bill say it represents a violation of free speech.</p> <p><strong>Why it matters. </strong>Online disinformation campaigns have blurred the public debate and are considered a major threat against democracies around the world. Meanwhile, social media giants cash in on those campaigns, often using freedom of speech card as an excuse to dodge liability.</p> <p><strong>Tensions.</strong> The bill goes to a vote at a particularly explosive moment between Brazil&#8217;s branches of power. Just last week, the Supreme Court greenlit a Federal Police operation into an alleged far-right fake news network, targeting several pro-Bolsonaro social media influencers.</p> <ul><li>Pollster Ibope shows today that <a href=";utm_medium=email&amp;utm_campaign=newsdiaria">90 percent of Brazilians</a> believe social media platforms should be forced to protect society against disinformation. Another 76 percent are in favor of clamping down on bots.</li></ul> <p><strong>Controversy. </strong>Several key points of the bill were removed due to a lack of consensus — such as an article encouraging platforms to remove demonstrably false content with the help of independent fact-checkers. Now, platforms will only be able to act on &#8220;inauthentic profiles.&#8221;</p> <ul><li>The bill defines the spreading of disinformation by civil servants or elected officials as misconduct in office. The Jair Bolsonaro administration has poured ad money into platforms accused of promoting hate speech and falsehoods.</li></ul> <hr class="wp-block-separator"/> <h2>Another loss for Rio Governor Witzel</h2> <p>The Rio de Janeiro State Accounts Court unanimously rejected the 2019 accounts presented by Governor Wilson Witzel&#8217;s administration. Members of the court found at least seven irregularities, including the fact that the governor failed to meet the minimum requirements for investments in healthcare and education, established by law.</p> <ul><li>Accounts courts in Brazil operate under the legislative branch —&nbsp;and their decisions only have power if confirmed by lawmakers. In this case, Rio&#8217;s State Congress.</li></ul> <p><strong>Why it matters.</strong> Mr. Witzel could be prosecuted for misconduct in office. The rejection of his accounts is also an impeachable offense.&nbsp;</p> <p><strong>Perfect storm.</strong> Momentum against the governor has built up recently, with corruption accusations piling up against his administration. His former deputy health secretary was arrested for corruption, and Mr. Witzel himself was targeted by a Federal Police operation. He is suspected of heading a criminal ring to embezzle Covid-19 funds.</p> <ul><li>Mr. Witzel calls the investigation a &#8220;<a href="">political hit job</a>&#8221; ordered by President Jair Bolsonaro, who has become a political enemy.</li></ul> <p><strong>Impeachment?</strong> The governor faces seven impeachment requests and has struggled with support from local lawmakers. Things took a turn for the worst last week when he fired his chief of staff —&nbsp;a key figure in his own Social Christian Party — which further reduces his support base. In order to block impeachment proceedings, Mr. Witzel needs 36 out of 70 lawmakers onside — suggestions are he would be unable to whip a third of that amount.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Economy. </strong>Brazil posted a USD 4.5-billion trade surplus in May, as exports fell more steeply than imports amid the coronavirus crisis. This was the lowest surplus for the month since 2015. Brazilian exports are struggling despite the fact the country&#8217;s currency is performing poorly, which should, in theory, make Brazilian products more affordable. In May, the exchange rate reached a nominal low of close to USD 1 : BRL 6.</li><li><strong>Probe.</strong> Supreme Court Justice Celso de Mello, who oversees an investigation on whether President Jair Bolsonaro illegally interfered with the Federal Police, denied a request by opposition parties to seize Mr. Bolsonaro&#8217;s cell phone to look for evidence. The government&#8217;s military wing had threatened &#8220;unpredictable consequences&#8221; should the justice have decided in favor of the plaintiffs. Still, Justice Mello took a shot at the president, saying that failing to abide by any Supreme Court ruling is an impeachable offense.</li><li><strong>Tax reform.</strong> An <a href="">overhaul of Brazil&#8217;s complex tax system</a> was supposed to have been one of the flagship projects of 2020. But as the government failed to present its own bill, Congress started debating its own proposal — which was halted by the coronavirus. House Speaker Rodrigo Maia, however, believes it will be possible to resume debates &#8220;within three or four weeks.&#8221; Back in February, the idea of <a href="">creating a value-added tax</a>, unifying several different state- and federal-level taxes, was highly consensual.</li><li><strong>Rebellion.</strong> Prosecutor General Augusto Aras is facing tremendous opposition within his office, with hundreds of federal prosecutors preparing an open letter accusing him of acting like a cabinet member of the Bolsonaro government, as opposed to an independent official. Over 500 prosecutors have reportedly signed the document — which intends to put pressure on him to resign. Mr. Aras was appointed in September 2019 to act as the &#8220;queen&#8221; on the &#8220;government&#8217;s chessboard,&#8221; as President Jair Bolsonaro described it. And he has met expectations, in many occasions acting <a href="">more favorably to the government</a> than the Solicitor General.

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