Brazil’s Economy Ministry faces split

. Oct 09, 2020
guedes lose power Image: André Chiavassa/TBR

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Today, how Economy Minister Paulo Guedes continues to lose power. What is positive about Brazil’s recent job numbers. And a shift by Argentina that could rock Venezuela.

The Paulo Guedes realm to be fragmented?

When Jair Bolsonaro won the 2018 presidential election, he unveiled his economic advisor Paulo Guedes as a “super minister.”

His Economy Ministry was the result of <a href="https://oglobo.globo.com/economia/fusao-de-pastas-na-economia-faz-governo-cortar-29-mil-cargos-23415343">merging</a> four existing cabinet ministries: Finance, Industry and Trade, Planning, and Labor. But as Mr. Guedes&#8217; influence within the government wanes and Mr. Bolsonaro cozies up to traditional parties, rumors of a split in the Economy Ministry began circulating in Brasília corridors.&nbsp;</p> <p><strong>What they are planning.</strong> A first step could be recreating the Labor Ministry, according to reports. But sources told Brasília correspondent Débora Álvares that the old Trade Ministry might also see a rebirth.</p> <p><strong>Why do it?</strong> From a political perspective, the move would give Jair Bolsonaro attractive assets to offer parties in exchange for support in Congress.&nbsp;</p> <ul><li>But besides giving the president horse-trading tools, it could also make the administration more effective. The Economy Ministry encompasses areas that require several fields of expertise, and senior officials told <strong>The Brazilian Report</strong> that &#8220;the minister himself doesn&#8217;t grasp all the subjects under his responsibility.&#8221;</li></ul> <p><strong>Why it matters.</strong> Even if Paulo Guedes has lost much of the power bestowed upon him in 2018, markets still see him as a bastion of libertarianism within the administration. Splitting up his realm would be a major downgrade for him —&nbsp;and could deepen the distance between the Economy Minister and the president.</p> <ul><li>Mr. Guedes has told aides he resents the recent public scoldings he has endured from Mr. Bolsonaro. Still, he has shown no interest in resigning.</li><li>The Economy Minister is also not popular among politicians. He and House Speaker Rodrigo Maia have traded barbs publicly since last year (the two celebrated a &#8216;<a href="https://blogs.correiobraziliense.com.br/vicente/mercados-reagem-positivamente-a-tregua-entre-maia-e-guedes/">truce</a>&#8216; this week), and members of Congress say his political demeanor is &#8220;clumsy.&#8221;</li></ul> <p><strong>Will the move happen?</strong> As with everything with the Bolsonaro administration, it is hard to predict how things will develop. The fact that the rumors are running rampant shows that the idea is very much on the radar, but Mr. Bolsonaro loves to float ideas to feel how his voter base — or in this case, the business community —&nbsp;would react to consequential moves.</p> <ul><li>On Twitter, Mr. Bolsonaro called reports on the issue &#8220;fake news.&#8221;</li></ul> <hr class="wp-block-separator"/> <h2>Fewer jobless claims now than in 2019</h2> <p>According to data from the Economy Ministry, there were 466,000 jobless claims in the country in September —&nbsp;slightly higher than in August, but 10.6 percent below September 2019 levels. Monthly tallies show a stabilization in the job market, as social isolation rules are lifted around the country.&nbsp;</p> <div class="flourish-embed flourish-chart" data-src="visualisation/3961497" data-url="https://flo.uri.sh/visualisation/3961497/embed" aria-label=""><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>What the numbers tell us.</strong> Almost one-third of jobless claims were filed by people in their 30s. Most (59 percent) have only a high school diploma, confirming trends observed earlier in the pandemic, that the bulk of jobs lost due to the coronavirus crisis were those of less-skilled workers.</p> <ul><li>Almost half of the claims (42 percent) came from workers previously employed in the services sector, the backbone of the Brazilian economy. Agricultural workers, meanwhile, accounted for less than 5 percent of requests.</li></ul> <p><strong>Timid recovery.</strong> A look at formal employment data shows that services, commerce, and industrial companies fired more people than they hired between January and August. But all sectors of the economy netted positive numbers in the July-August span.</p> <ul><li>That piece of data is certainly positive but doesn&#8217;t factor in informal jobs —&nbsp;an important part of the Brazilian economy. According to data published by the Senate, some 95 million Brazilians were not in paid work by September 18.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/3961520" data-url="https://flo.uri.sh/visualisation/3961520/embed" aria-label=""><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>U-turn in Argentina’s foreign policy&nbsp;</h2> <p>Argentina surprised South America after voting to support investigations of <a href="https://brazilian.report/power/2019/10/16/maduro-makes-bolsonaro-look-palatable-to-un-human-rights-council/">human rights violations</a> by the Venezuelan government. Argentinian <a href="https://brazilian.report/latin-america/2020/10/07/venezuelan-embassy-big-enough-both-brasilia/">diplomacy</a> went in favor of a report by the United Nations High Commissioner for Human Rights, Michelle Bachelet — which was presented to regional multilateral body the Lima Group — defending that Venezuelan President Nicolás Maduro steps down from power.&nbsp;</p> <ul><li>Up until now, the left-leaning Alberto Fernández administration sided with Caracas —&nbsp;making Argentina one of the few countries to support the <a href="https://brazilian.report/podcast/2020/10/01/explaining-brazil-podcast-protection-becomes-repression/">increasingly authoritarian</a> government of Mr. Maduro. But <a href="https://brazilian.report/latin-america/2020/05/25/argentinas-long-debt-default-history-imf/">Argentina&#8217;s reliance on foreign creditors</a> may have forced the government into taking a more moderate stance.</li><li>But the U-turn did have its consequences within the Fernández administration, leading to the resignation of Alicia Castro, a diplomat linked to Vice President Cristina Fernández de Kirchner.&nbsp;</li></ul> <p><strong>Why it matters.</strong> The move makes the moribund Maduro administration even more isolated and seemingly incapable of dealing with the full-scale socioeconomic collapse the country has endured for several years.</p> <p><strong>End of the oil era?</strong> Buenos Aires turns its back to Venezuela when the Caribbean country faces perhaps its most dire moment.&nbsp;</p> <ul><li>Highly dependent on oil, Venezuela has seen the industry collapse over the past couple of years, as most international oil companies have stopped drilling in the country or buying Venezuelan oil.&nbsp;</li><li>A decade ago, Venezuela earned about USD 90 billion a year in oil exports. In 2020, that figure is expected to hover around USD 2.3 billion. “Venezuela’s days as a petrostate are gone,” Risa Grais-Targow, an analyst at consultancy Eurasia, told <a href="https://www.nytimes.com/2020/10/07/world/americas/venezuela-oil-economy-maduro.html">The New York Times</a>.</li><li>Crippling fuel shortages —&nbsp;not to mention a lack of supplies for Venezuelans&#8217; basic needs — have sparked a wave of protests. And abandoned oil-drilling equipment which continues to contaminate the environment serves as a creepy reminder of what were once major oil towns.</li></ul> <iframe src="https://open.spotify.com/embed-podcast/episode/7tVCS7li5aMyvvzneLBWKp" width="100%" height="232" frameborder="0" allowtransparency="true" allow="encrypted-media"></iframe> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Election 1.</strong> In absolute numbers, no other Brazilian city has registered more Covid-19 cases or deaths than São Paulo. And while curves are trending downward, experts say the effects of the pandemic on the municipal health network will be felt for the entire year of 2021. However, only five of the city&#8217;s 14 <a href="https://brazilian.report/podcast/2020/10/07/explaining-brazil-podcast-elections-in-the-time-of-covid-19/">mayoral candidates</a> have any proposal related to the coronavirus. Incumbent Bruno Covas and former São Paulo Governor Márcio França, two of the main contenders, mention the importance of preventing Covid-19 infections — but offer no detail whatsoever to do so.</li><li><strong>Election 2.</strong> According to pollster Datafolha, voters in São Paulo are more likely to go out and vote on November 15 than to stay at home for health reasons. Some 28 percent of voters still believe that in-person voting is &#8220;not safe at all,&#8221; down 6 points from September 22.</li><li><strong>Election 3.</strong> Supreme Court Justice Luís Roberto Barroso — who presides over the Superior Electoral Court — signed an agreement to allow the Organization of American States to observe the 2020 municipal elections in Brazil.&nbsp;</li><li><strong>Butting heads. </strong>The Superior Electoral Court has allowed Google to provide users with search results for candidates who paid for ads even when the user searches for one of their competitors. The decision, however, goes against a precedent set by the Superior Court of Justice — Brazil&#8217;s second-highest judicial body —&nbsp;and could force the Supreme Court to step in.</li><li><strong>Supreme Court.</strong> Despite accusations that Federal Judge Kássio Nunes, recently picked by President Jair Bolsonaro for a seat on the <a href="https://brazilian.report/newsletters/brazil-weekly/2020/09/08/brazilian-supreme-court-new-chief-justice-luiz-fux/">Supreme Court</a>, doctored his résumé and plagiarized parts of his Ph.D. thesis, there is reportedly a majority in the Senate&#8217;s Constitution and Justice Committee willing to confirm his appointment. According to newspaper O Estado de S.Paulo, at least 14 of 27 members said they will vote in favor of Mr. Nunes on October 21, when his confirmation hearing is scheduled to take place.

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