Trump shoves Bolsonaro for influence in Latin America

. Jun 17, 2020
Trump shoves Bolsonaro for influence in Latin America Donald Trump delivers speech in rally. Photo: Evan El-Amin/Shutterstock

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We’re covering today Donald Trump’s latest move on Latin America. The effects of the pandemic on the job market. And key moves in the aviation sector. 

Trump’s hawkish move for U.S. influence in Latin America

U.S. President Donald Trump wants to nominate

one of his advisors to lead the Inter-American Development Bank (IDB). Mauricio Claver-Carone, a Florida-born attorney known for defending a hardline policy against Cuba and Venezuela, would be the first non-Latin American person to head the bank since its foundation in 1959.</p> <ul><li>Besides breaking with tradition, Mr. Trump&#8217;s decision scuppers the Jair Bolsonaro administration&#8217;s intention of naming the bank&#8217;s first Brazilian president —&nbsp;following Colombian diplomat Luis Alberto Moreno&#8217;s 15-year tenure.</li><li>The Brazilian government had worked for weeks trying to build a consensus around Rodrigo Xavier, the former head of Bank of America and UBS in Brazil — and was counting on the White House&#8217;s support to make it happen.</li></ul> <p><strong>Election.</strong> A candidate must secure the support of 15 out of 28 nations (among 26 borrowing members, plus the U.S. and Canada), but also more than 50 percent of the voting capital. Controlling 30 percent of the vote, the U.S. has more weight than any other country.</p> <p><strong>Why it matters.</strong> Mr. Trump is pushing to <a href="http://bizrepublic.com/china-dejara-en-latinoamerica-deuda-y-corrupcion/">reassert U.S. influence</a> in Latin America, after years of China increasingly calling the shots in the southern part of the continent.</p> <ul><li>“The number one complaint forever about the IDB is that the U.S. didn’t care enough about the IDB, that the U.S. doesn’t pay attention,” <a href="https://www.sfchronicle.com/news/article/Testing-tradition-Trump-taps-US-official-to-lead-15345173.php">said</a> Mr. Claver-Carone. “In the Trump administration we&#8217;re changing that.”</li><li>That hawkish view comes as <a href="https://brazilian.report/latin-america/2020/04/13/china-continues-latin-america-loans-pandemic-coronavirus/">China cuts back on loans</a> to Latin America. “China is no longer acting as a financial lifeline for the region’s more fragile economies,” said a report from Boston University and think tank The Inter-American Dialogue.</li></ul> <p><strong>Not-so-soft power.</strong> The IDB has been a major financier of development projects in Latin America, lending almost USD 472 billion to <a href="https://www.iadb.org/en/projects">4,294 endeavors</a>. The U.S. Treasury Department said the bank should provide key leadership to help the region overcome the coronavirus crisis. Mr. Trump&#8217;s three and a half years in office, however, show us that cooperation always has some strings attached.</p> <hr class="wp-block-separator"/> <h2>Pandemic keeps 28 million out of work</h2> <p>The Brazilian Institute of Geography and Statistics has published preliminary reports on its &#8220;Covid-19 National Household Survey,&#8221; which aims at monitoring the transformations of the labor market during the pandemic. Despite record drops in retail sales and industrial output, the <a href="https://brazilian.report/podcast/2020/04/02/explaining-brazil-podcast-brazil-facing-a-job-apocalypse/">unemployment rate</a> remained fairly stable, going from 10.4 to 11.4 percent (which represents 11 million people). However, there is more than meets the eye:</p> <ul><li>The unemployment rate only accounts for people who are <em>actively</em> seeking a job. The survey shows that, out of 74.6 million people of working age, 17 million say they aren&#8217;t looking for a job but would like to work. Many mentioned the fears of the coronavirus as a reason.&nbsp;</li><li>For millions more, remaining employed means a significant drop in revenue, as companies are cutting hours and wages (which will be partially compensated by the government) as part of a program to avoid layoffs.</li></ul> <p><strong>Why it matters.</strong> The government&#8217;s response to the crisis has been slow —&nbsp;and data shows that millions need swift action to stay afloat.</p> <p><strong>At-risk debtors.</strong> A study by Brazil&#8217;s Central Bank analyzed Brazil&#8217;s 4.6 million &#8220;at-risk debtors.&#8221; To be considered one, a person must meet at least two of the following criteria: be in default for 90-plus days; spend over half of earnings on debt payments; have multiple types of debt; or income below the poverty line.</p> <ul><li>Interestingly, the study shows that most at-risk debtors are not poor. But that&#8217;s because low-income people are not even getting access to credit in the first place.</li></ul> <hr class="wp-block-separator"/> <h2>Azul and Latam join forces. Prelude of a merger?</h2> <p>Airlines Azul and Latam announced codeshare and frequent flyer agreements on Tuesday. Customers will be able to connect between the two carriers&#8217; domestic networks in Brazil, with the ability to earn points in the frequent flyer program of their choice.&nbsp;</p> <ul><li>Codeshare deals for domestic flights are rare in Brazil. In a move clearly intended to not tick off antitrust authorities, the partnership will be limited to 50 routes with no overlapping.</li></ul> <p><strong>Why it matters.</strong> The deal comes as Azul is flying at 20 percent capacity and Latam&#8217;s parent company <a href="https://brazilian.report/newsletters/brazil-daily/2020/05/29/covid-19-sees-unemployment-skyrocket-in-record-time/">filed for Chapter 11 bankruptcy protection</a> in the U.S. Analysts see the move as a first step towards a future merger.</p> <p><strong>Coronavirus. </strong>With only three major airlines operating (after Avianca folded last year), Brazil&#8217;s aviation market is exceedingly concentrated. But as the sector was hit hard by the coronavirus, which grounded most planes worldwide, experts believe that there might not even be room for three major carriers in post-pandemic Brazil.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Investigation.</strong> The Supreme Court probe into an illegal ring that spreads fake news and funds anti-democracy protests advanced further, with the Federal Police carrying out 21 search and seizure warrants on allies of President Jair Bolsonaro on Tuesday morning. The high court also allowed the police to scrutinize the bank and phone records of 11 members of Congress. On social media, the president said he can&#8217;t &#8220;watch rights being violated and ideas being persecuted in silence,&#8221; and promised &#8220;legal action.&#8221; The Supreme Court resumes its trial today on whether the probe is constitutional and should be allowed to continue.</li><li><strong>Coronavirus.</strong> With 923,189 confirmed Covid-19 infections, Brazil is expected to reach the 1-million mark by the end of the week. So far, 45,241 deaths have been confirmed by the Health Ministry.</li><li><strong>Deaths. </strong>Brazil&#8217;s coronavirus death curve seems to be trending towards stabilization, in the form of a <a href="https://brazilian.report/newsletters/brazil-daily/2020/05/14/high-debt-levels-prevent-v-shaped-recovery-for-brazil/">plateau instead of a peak</a>. There are two important caveats, though: (1) due to the government&#8217;s data tampering, the reliability of the numbers have come into question; and (2) with states reopening their economies, the curves could quickly jump back up. On Tuesday, São Paulo posted record-setting numbers of coronavirus cases and deaths.</li><li><strong>Privacy.</strong> One year ago, Brazilians went crazy for Russian app FaceApp, which uses facial recognition technology to simulate how people could look like when they are old. Now, the app is going viral once more, this time allowing people to &#8216;swap genders&#8217; and see what they might look like as men or women. In August 2019, however, the São Paulo Consumer Protection Service (Procon) <a href="https://brazilian.report/tech/2019/09/06/brazil-internet-users-google-investigation/">fined both Google and Apple</a> for abusive data collection policies. Terms and conditions stipulated that users gave FaceApp “perpetual, irrevocable, nonexclusive, royalty-free, worldwide, [and] fully-paid” rights to their photographs — which could be used for a myriad of purposes, including creating <a href="https://brazilian.report/power/2019/10/30/deepfakes-videos-moral-panic-or-harmless-fun/">deepfake videos</a>, security breaches, or feed facial recognition software.

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