Congress horse-trades while Brazil expects “multiple death waves”

. Sep 11, 2020
coronavirus Congress horse-trades while Brazil expects "multiple death waves" Burials at the Vila Formosa cemetery, in São Paulo. Photo: BW Press

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Today, we talk about the long-term impacts of the coronavirus pandemic. Power struggles in Congress. And 5G in Brazil.

Government expects “multiple death waves” following coronavirus

Interim Health Minister Eduardo Pazuello said on Thursday

that Brazil is set to face four death waves related to the coronavirus pandemic. Besides the casualties directly caused by the virus, many others will die as a result of the economic impacts caused by the coronavirus crisis. To add to this disaster, millions of people have halted their treatments for other illnesses (like cancer or AIDS) as they avoided health units due to fears of Covid-19 contamination. Mr. Pazuello also said the government expects an uptake in suicides and cases of fatal domestic violence, as the <a href="">mental health effects</a> of the crisis also <a href="">take their toll</a> on Brazilians.</p> <p><strong>Why it matters.</strong> The coronavirus&#8217; impacts on Brazil will outlast the pandemic in years and could fracture the social fabric of the country —&nbsp;which will emerge poorer and more unequal. Not to mention the trauma caused by the <a href="">single deadliest event</a> in Brazilian history (barring colonization and slavery, atrocities which took place over centuries).</p> <p><strong>Vaccines.</strong> The Brazilian government still hasn&#8217;t decided whether or not to join the COVAX Facility, a global Covid-19 vaccine allocation plan co-led by the World Health Organization. “If we opt for membership, Brazil could be the biggest contributor,” said Mr. Pazuello.</p> <ul><li>President Jair Bolsonaro is seemingly trying to spark an anti-vaccine movement in Brazil. Over the past few days, he has defended people&#8217;s freedom not to be vaccinated on multiple occasions.&nbsp;</li><li>An <a href="">Ipsos-Mori poll</a> showed that 88 percent of Brazilians say they would take a coronavirus vaccine as soon as one is available — which could suggest an anti-vax movement has very limited reach in Brazil. But a study published in medical journal The Lancet just yesterday shows that <a href="">confidence in vaccines may be waning </a>in the country.</li></ul> <hr class="wp-block-separator"/> <h2>Civil service reform: quid pro quo</h2> <p>Last week, the Jair Bolsonaro administration presented Congress with its <a href="">administrative reform proposal</a> — an overhaul of civil service in the country, meant to streamline it and reduce the costs of salaries and pensions. But a reform of this magnitude is not an easy sell to make to lawmakers — especially in an election year. House Speaker Rodrigo Maia and Senate President Davi Alcolumbre know this, and will use the reform as a bargaining chip to advance their own political goals, Brasília correspondent Débora Álvares explains.</p> <ul><li>Messrs. Maia and Alcolumbre are pushing for a change in the Constitution that would grant both an additional two-year term leading their respective congressional chambers. They want the government to support a constitutional amendment allowing them to remain in office.</li></ul> <p><strong>Why it matters.</strong> The House Speaker and the Senate President have significant powers to set the agenda for Brazil’s legislature, including deciding which projects get voted on. They can be a president&#8217;s best ally —&nbsp;or worst enemy. The Speaker also has the power to make or break presidents––&nbsp;as the only person who can initiate impeachment proceedings against a president.</p> <p><strong>Emergency salary.</strong> The administrative reform is not the only bargaining chip in play: there is also the matter of the coronavirus emergency salary. Through a provisional decree, President Jair Bolsonaro halved the benefit from BRL 600 to 300 (USD 112 to 56). However, the decree needs to be confirmed by lawmakers within 120 days before it expires.</p> <ul><li>The administration actually wants the decree to expire, because it knows there is a major risk Congress will vote for keeping the benefit at BRL 600 —&nbsp;which is much more than the government can afford. Whether or not the matter goes to a vote depends on Messrs. Maia and Alcolumbre.</li><li>Besides the financial part of the issue, the decision on the emergency salary will have profound effects on Brazilians. As <a href="">yesterday&#8217;s Daily Briefing</a> showed, Brazil’s poorest 10 percent is expected to lose 44 percent of its current income after the 50-percent cut in payments. When the grant ends — which is expected to happen after December — it will drop to 77 percent.</li></ul> <p><strong>Tug of war.</strong> One of the obstacles Mr. Maia faces for a fourth consecutive two-year term as Speaker is the sheer number of candidates trying to succeed him. The list includes Arthur Lira, from the Northeastern state of Alagoas, one of the leaders of the group known as the &#8220;Big Center,&#8221; a loose coalition of conservative parties which have recently become much closer to the government. Mr. Lira has the strong support of President Bolsonaro.</p> <p><strong>Alternative.</strong> If a compromise with the government becomes impossible, Messrs. Maia and Alcolumbre could get their way in the Supreme Court — which is set to rule on the matter in the coming weeks or months.</p> <ul><li>The heads of Brazil’s legislature have been heralded as “the adults in the rooms” who tame President Bolsonaro&#8217;s wildest impulses. This argument has become in Brazil something of a carte blanche for them to <a href="">bend the rules to their self-interest</a>, providing the justification is to “counter Jair Bolsonaro.”</li></ul> <hr class="wp-block-separator"/> <h2>5G in &#8220;April or May 2021,&#8221; says government</h2> <p>Communications Minister Fábio Faria said during an interview that the auction of 5G frequencies in Brazil will &#8220;definitely happen between April and May 2021.&#8221;&nbsp;</p> <p><strong>Why it matters. </strong>According to the U.S. Senate Republican Committee, “the country that leads the world in the adoption of 5G technology will have a distinct technological, economic, and national security advantage over other countries.” So far in Brazil, 5G technology has only been rolled out in limited areas and <a href="">using spectrums of older technologies</a>, such as 4G.</p> <p><strong>Huawei. </strong>About a possible ban of Chinese manufacturer Huawei in Brazil — accused by the U.S. of handing over customer data to the Chinese government — Mr. Faria said a decision on this matter would come only from President Jair Bolsonaro.</p> <ul><li>Brazil has shown increased hostility towards Beijing recently, and has adopted an unequivocal pro-U.S. stance in all trade matters. But a decision on Huawei has yet to be made.</li></ul> <p><strong>Coverage.</strong> The pandemic has accelerated the expansion of internet coverage in Brazil. Operators have now set up 4G networks in 408 new municipalities, an 8.9 percent increase over the 12 months. Now, 4G is available in 4,997 of the country&#8217;s 5,570 municipalities.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Supreme Court.</strong> Luiz Fux took office as Brazil&#8217;s Chief Justice —&nbsp;a position he holds for the next two years. In his inaugural address, he defended Operation Car Wash and said a harmonious relationship with the other branches of government shouldn&#8217;t be mistaken for submission —&nbsp;taking a shot at his predecessor, Justice Dias Toffoli, who was accused of bending over backwards to please President Jair Bolsonaro. But Chief Justice Fux has failed to show a clear path forward to <a href="">restore the court&#8217;s prestige</a>, its reputation is currently at an all-time low due to its inconsistency in interpreting the law and constant overstepping of its boundaries.</li><li><strong>Cannabidiols.</strong> The Health Minister said medicines based on cannabidiols could be included in the list of drugs provided by Brazil&#8217;s public healthcare system as early as February 2021. Interim Minister Eduardo Pazuello said the government will not oppose the move.</li><li><strong>Aviation. </strong>A U.S. bankruptcy judge denied a USD 2.45-billion bankruptcy loan to Chilean-Brazilian carrier Latam Airlines, Latin America&#8217;s biggest airline. The proposal consisted of a USD 1.3-billion loan from asset management firm Oaktree Capital and a USD 900-million convertible loan from key shareholders. The court found the convertible loan would amount to &#8220;improper&#8221; treatment of other shareholders. The denial is a major setback to Latam, who is carrying USD 18-billion debt and desperately needs short-term liquidity.</li><li><strong>IDB. </strong>Mexico and Argentina failed in their attempt to postpone the election of the new head of the Inter-American Development Bank. Florida-born attorney Mauricio Claver-Carone is expected to be elected over the weekend, <a href="">breaking with the IDB tradition</a> of always having a Latin American president. The U.S.&#8217;s decision to endorse Mr. Claver-Carone scuppered the Bolsonaro administration’s ambition to name the bank’s first Brazilian president. The move also comes as <a href="">China cuts back on loans</a> to Latin American countries.&nbsp;</li><li><strong>Investing.</strong> Brokerage firm XP Investimentos will launch a hedge fund today that will only invest in companies that have women in leadership positions. The initiative comes after research suggests <a href="">firms with female leaders</a> have a better overall stock price performance. According to XP, 20 percent of the revenue from management fees (0.5 percent a year) will fund the As Valquírias Institute, which provides education for women and teens living in extreme poverty.

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