Without flattening the curve, São Paulo and Rio to reopen

. Jun 10, 2020
Without flattening the curve, São Paulo and Rio to reopen São Paulo pharmacy. Photo: Rovena Rosa/Shutterstock

This newsletter is for PREMIUM subscribers only. Become one now!

São Paulo and Rio reopen — and we should see impacts in no time. A pivotal Supreme Court trial for President Bolsonaro. And Petrobras’ plan to resume activities.

Beware of the reopening

Before ever really shutting down its economy

to contain the coronavirus, Brazil is accelerating its reopening process, with its two largest cities set to resume business this week. Street commerce will begin operating again in São Paulo — with reduced hours and under several sanitary conditions&nbsp;— two weeks after Governor João Doria announced a &#8220;gradual reopening.&#8221; In Rio de Janeiro, authorities won an appeal and may authorize the return of inter-municipal travel and public transport.</p> <p><strong>Reopen: why so soon? </strong>Brazilians are fed up with social isolation, as millions simply cannot afford to stay home. Besides the country&#8217;s 40 million informal workers, 2.2 million people filed jobless claims since March —&nbsp;an all-time record.</p> <ul><li>On Tuesday, the country registered the lowest isolation rate since quarantines were first implemented: just 38 percent.</li></ul> <div class="flourish-embed flourish-map" data-src="visualisation/2791227" data-url="https://flo.uri.sh/visualisation/2791227/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>Why it matters.</strong> Inland cities began reopening sooner —&nbsp;and are experiencing a surge in coronavirus infection and death rates. It is as if a second wave of the disease started before the first was even over.</p> <p><strong>Problems ahead. </strong>While the push for reopening is understandable, a report by the Inter-American Development Bank shows that Brazil and other Latin American nations are not doing it correctly. They have failed to adopt measures that will help companies get back to work —&nbsp;such as digitizing economic activities, helping workers develop skills, and creating safety protocols for the new workplaces the pandemic will create.</p> <ul><li>Almost four full months since the coronavirus reached Brazil, meat-processing plants still await a federal protocol to lower contagion rates within their facilities —&nbsp;despite slaughterhouses being identified as <a href="https://brazilian.report/business/2020/05/30/role-meat-plants-coronavirus-spread-brazil-countryside/">major breeding grounds for the virus</a>.</li></ul> <p><strong>Side effects. </strong>Besides the direct human toll a new spike in cases would cause, there are severe economic implications. The Organization for Economic Cooperation and Development says that a second wave would push Brazil&#8217;s GDP contraction from -7.4 to -9.1 percent.&nbsp;</p> <ul><li>A <a href="https://brazilian.report/power/2020/03/25/rock-hard-place-bolsonaro-favors-economy-over-health/">November 2019 study</a> links increases in unemployment with higher mortality rates.</li></ul> <hr class="wp-block-separator"/> <h2>Supreme Court to decide on fake news probe</h2> <p>The Supreme Court will analyze whether or not to continue with its investigation into the use of fake news and disinformation by political groups. The trial has been much-anticipated ever since close allies of President Jair Bolsonaro were <a href="https://brazilian.report/newsletters/brazil-daily/2020/05/28/supreme-court-fake-news-probe-brazil-unemployment-pandemic/">targeted by a Federal Police operation</a> two weeks ago.</p> <p><strong>Why it matters.</strong> The scope of the investigation encompasses the 2018 election campaign and the suspicion that some of the suspects operated an illegal scheme to send millions of messages to voters via WhatsApp, attacking Mr. Bolsonaro’s rivals. If a link between the Bolsonaro campaign and this scheme is found, it would be grounds for voiding the election, ousting both President Bolsonaro and his VP and leading to new elections.</p> <p><strong>Complications.</strong> The case has additional explosive potential. If the investigation moves along, justices could later decide that its findings may be shared with the Superior Electoral Court —&nbsp;which is also investigating the use of an illegally-funded fake news ring during the 2018 campaign.&nbsp;</p> <ul><li>Government officials fear that the president&#8217;s recent spats with the Supreme Court will weigh on justices&#8217; decisions.</li></ul> <p><strong>Context.</strong> The way the probe has been carried out cannot be described as being &#8220;by the book.&#8221; It was launched early last year by Supreme Court Chief Justice Dias Toffoli, who handpicked Justice Alexandre de Moraes to oversee it&nbsp;— against the court&#8217;s regular process of drawing lots to choose who leads which case. It also has been used to censor press organizations.</p> <ul><li>Last year, the environmentalist Rede party filed a lawsuit claiming the inquiry was illegal, comparing it to dictatorial behavior. The outrage vanished, however, after the Feds began zeroing on the president&#8217;s inner circle. Technically unable to drop its initial lawsuit, Rede filed a new one —&nbsp;requesting its original lawsuit to be shelved.</li></ul> <p><strong>Our take.</strong> While disinformation has become a severe risk for democracies, the Supreme Court probe has <a href="https://brazilian.report/power/2020/05/28/bolsonaro-says-the-supreme-court-is-out-to-get-him-he-not-wrong/">too many problems to continue</a>. It is yet another example of law enforcement and judges bending the rules in the name of a &#8220;greater good.&#8221;</p> <hr class="wp-block-separator"/> <h2>Petrobras to resume activities in July</h2> <p>Brazilian state-controlled oil and gas company Petrobras is planning to resume in-person activities early next month, after presenting trade unions with a de-quarantine plan on Monday. In a statement, the firm says the situation of each unit and building will be decided based on multiple &#8220;internal and external factors.&#8221;</p> <ul><li>Covid-19 — and the oil crisis it entailed —&nbsp;took a huge toll on Petrobras, which finished Q1 2020 with losses of BRL 48 billion.</li><li>Nevertheless, the company exported 1.1 million tons of oil fuel in May, a 10-percent increase from its previous record. Management said the results reflect its strategy during the pandemic, to concentrate efforts on products that maximize profit margins.</li></ul> <p><strong>Why it matters.</strong> Hundreds of municipalities that depend on oil royalties to make ends meet are crossing their fingers for the company to go back to work.</p> <p><strong>Unions.</strong> Labor representatives have criticized Petrobras&#8217; plan —&nbsp;and accuse the company of hiding the real number of workers who tested positive for Covid-19. At least 1,100 employees have been contaminated with the coronavirus.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Marielle.</strong> Rio de Janeiro police arrested Military Firefighter Sergeant Maxwell Simões Corrêa this morning, believed to have been involved in the March 2018 assassination of City Councilor Marielle Franco. Mr. Corrêa, 44, is the right-hand man of former cop and alleged trigger man Ronnie Lessa, and is suspected of having disposed of the murder weapon.</li><li><strong>Real estate.</strong> The immediate impact of the pandemic on the real estate business was, unsurprisingly, negative. Economic uncertainty led most families to postpone purchases and housing loans. However, with remote work set to be a more integral part of Brazilians&#8217; labor routines, the sector expects a surge in demand for bigger, more decentralized properties in the mid- to long-term future.</li><li><strong>Stocks.</strong> The Ibovespa stock market index has gained 52 percent since reaching its lowest point of the year on March 23 — despite the pandemic showing no sign of a slowdown in Brazil. This disparity is explained by the fact that the index is made up of the largest, best-structured companies in the country —&nbsp;which have much easier access to credit and are more able to weather the crisis. And as stock prices went down in March, many of such companies became low-risk-high-reward opportunities.</li><li><strong>Elections. </strong>Of Brazil&#8217;s 32 political parties registered in 2014, 31 were <a href="https://epoca.globo.com/carolina-brigido/tse-cobra-27-milhoes-de-partidos-por-mau-uso-do-fundo-partidario-24469925">convicted by the Superior Electoral Court</a> for irregular use of the &#8220;partisan fund,&#8221; a publicly-financed stipend allowing parties to finance their activities. Combined, the parties will have to pay, by year-end, BRL 27 million (USD 5.5 million) in penalties. Only the far-left Free Fatherland Party, now extinct, escaped punishment.

Our content is protected by copyright. Want to republish The Brazilian Report? Email us at contact@brazilian.report