Senators hope to recreate multilateral Amazon forum

. Nov 05, 2020
amazon parliament Negro River. Photo: Paralaxis/Shutterstock

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Today, we cover the Senate’s initiative to create a multilateral body to discuss Amazon issues. Red flags about Brazilian pensions. And the return of foreign investors to Brazil.

Brazil moves to reactivate Amazon Parliament

With Brazil suffering mounting pressure over Amazon deforestation, the Senate is working to reactivate the so-called “Amazon Parliament,”

a multilateral forum formed by the nine countries across which the rainforest spreads.&nbsp;</p> <ul><li>Created in 1989, the Amazon Parliament has been dormant for at least a decade. According to Senator Nelson Trad — who champions the initiative as chairman of the Senate&#8217;s Foreign Affairs Committee — this forum would allow for countries to cooperate on anti-deforestation measures, while &#8220;preserving the region&#8217;s autonomy and sovereignty.&#8221;&nbsp;</li><li>Mr. Trad first vented the idea of reactivating the Amazon Parliament earlier this year, but the initiative was halted due to the pandemic. As Congress slowly resumes in-person activities —&nbsp;and its committees return to work —&nbsp;the idea has resurfaced.</li></ul> <p><strong>Why it matters. </strong>Almost two-thirds of the Amazon Basin are within Brazilian borders, making the country pivotal for the success of any multilateral body on the issue.</p> <p><strong>At arm&#8217;s length.</strong> Mr. Trad made a point of <a href="">saying</a> the Senate&#8217;s initiative is independent from the federal government — a strategy considered to be pivotal for giving it credibility. Almost two years after its inauguration, the Jair Bolsonaro administration has been heavily criticized for not enforcing environmental controls, while forest fires reach unprecedented levels both in the Amazon and the <a href="">Pantanal wetlands</a>.</p> <ul><li>Under Mr. Bolsonaro, the government has moved to allow for mining ventures in the rainforest, as well as energy production projects. His positions have driven Germany and Norway to suspend their financing of a fund to foster sustainability in the Amazon.</li></ul> <p><strong>Not just deforestation.</strong> Besides wildfires, the Amazon region has increasingly battled another major issue: drug and arms trafficking. Gangs have used Amazon rivers as <a href="">major drug routes</a>, increasing violence rates in the region. Late in October, the government deployed over 4,000 troops to patrol bodies of water <a href="">near the jungle border with French Guiana</a>. According to the Defense Ministry, the task force has seized 146,000 tons of illegal manganese, 86 grams of gold, several shipments of undocumented timber, and destroyed 3,000 marijuana plants.</p> <ul><li>This is typically the kind of issue that can only be solved through a joint effort between multiple countries — as it is impossible to monitor the entirety of Amazon borders.</li></ul> <hr class="wp-block-separator"/> <h2>Brazil&#8217;s pension system drops in global ranking</h2> <p>Despite passing a <a href="">pension reform in 2019</a>, Brazil has dropped three positions in the <a href="">Mercer Global Pension Index</a> — which benchmarks pension systems of 39 countries based on adequacy, sustainability, and integrity. Brazil was placed in the 26th position — behind neighbors Chile, Colombia, and Peru, but ahead of Mexico and Argentina.</p> <ul><li>In terms of adequacy and integrity — measuring both how well the pension payments fit the economic reality of the country and prevalence of fraud — Brazil fared relatively well, scoring 72.5 and 70.7 on a scale of 100, respectively. With monthly payments capped at BRL 6,100 (USD 1,076), the country&#8217;s pension system is deemed adequate to local living standards, and no substantial fraud was found by observers.</li></ul> <div class="flourish-embed flourish-radar" data-src="visualisation/4258711"><script src=""></script></div> <p><strong>Yes, but … </strong>The weak spot for Brazil comes with regard to <a href="">sustainability</a>, in which Brazil (rated at 22.3 out of 100) only fared better than Austria (22.1) and Italy (18.8). According to Mercer, Brazil&#8217;s problem lies in its heavy dependence on public pensions —&nbsp;with less than 15 percent of workers relying on private retirement plans.&nbsp;</p> <p><strong>Challenges.</strong> The pandemic has aggravated the deficit of Brazilian pension systems. A massive unemployment crisis — which has yet to peak, according to experts — has substantially reduced the financial base. Moreover, record-low interest rates have made it all the more daunting for pension funds to ensure the same level of benefits to be paid in the future.</p> <p><strong>Silver linings.</strong> Mercer says that the effects of last year&#8217;s pension reform have yet to be felt, and that things could improve in the future. The consultancy believes Brazilians should be encouraged to have complementary private pension plans in order to avoid massive income drops at an elderly age.</p> <div class="flourish-embed flourish-scatter" data-src="visualisation/1226344"><script src=""></script></div> <hr class="wp-block-separator"/> <h2>Foreigners slowly return to Brazil&#8217;s stock market</h2> <p>This year has been marked by a massive flight of foreign capital from Brazil&#8217;s stock market, but a weak Brazilian Real could be luring international investors back. In October, the São Paulo stock exchange registered a net inflow of BRL 3.1 billion (USD 547 million) in Brazilian assets.</p> <p><strong>Why it matters.</strong> This was only the second month of positive inflows in 2020. Since January, foreigners have taken BRL 65.7 billion (USD 11.6 billion —&nbsp;already including investments made in IPOs and follow-on offerings).</p> <div class="flourish-embed flourish-chart" data-src="visualisation/4248135"><script src=""></script></div> <p><strong>End of the year.</strong> Global stock markets have reacted well to the most probable outcome of the U.S. election: a <a href=";module=Spotlight&amp;pgtype=Homepage">Joe Biden win for president</a>, but a Republican Senate. That would reduce his ability to pass massive stimulus packages and boost health and tech stocks. Brazil has followed the global trend, with the Ibovespa index rising almost 2 percent on Wednesday, and the Brazilian Real gaining 1.89 percent against the U.S. Dollar.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Loyalty.</strong> Speaking to supporters on Wednesday evening, President Jair Bolsonaro said that &#8220;hope is the last to die&#8221; when talking about the U.S. election and the now remote possibility of Donald Trump winning another four years in the White House. After flipping Michigan and Wisconsin, former Vice President Joe Biden has a clear path to victory. As the Trump team pursues legal challenges in key states, the Brazilian government will <a href="">avoid congratulating</a> Mr. Biden should he get the necessary 270 Electoral College votes today.</li><li><strong>Taxes.</strong> Lawmakers struck down a presidential veto which prevented the extension of payroll tax cuts to 17 sectors until December 2021. Industry representatives celebrated the move, saying that the tax break of around USD 1.7 billion should allow them to hire more workers in 2021.</li><li><strong>Vaccine. </strong>The University of Oxford hopes to present late-stage trial results on its potential Covid-19 vaccine next month, raising hopes that it will be able to roll out a successful vaccine in late December or early 2021. Early results suggest that the vaccine produced a <a href="">solid immune response</a> among elderly patients, the group most vulnerable to serious illness and death. The Brazilian government has a deal in place with British-Swedish pharmaceutical company AstraZeneca to purchase 30 million doses of the vaccine.&nbsp;</li><li><strong>Money laundering. </strong>More details around the <a href="">money-laundering charges</a> presented against Senator Flávio Bolsonaro have surfaced. A woman who was formerly employed by the president&#8217;s eldest son during his stint as a Rio state lawmaker told prosecutors that she never actually worked at his office — and she surrendered 90 percent of her monthly wages to the now senator. Her bank statements show regular wire transfers between 2011 and 2017, amounting to BRL 160,000 (USD 28,000).</li><li><strong>Outage.</strong> A fire at an energy transmission plant left most of the northern state of Amapá without electricity on Wednesday night. The federal government has created a <a href="">crisis cabinet</a> to deal with the situation — as Amapá has no alternative for energy supply outside of the said plant and relies entirely on energy produced in other regions.</li><li><strong>Supreme Court.</strong> The Brazilian Supreme Court will hold an inauguration ceremony today for its newest justice, <a href="">48-year-old Kassio Nunes Marques</a>. The first justice appointed by President Jair Bolsonaro will be tested right off the bat, as the court is expected to decide on cases very dear to Mr. Bolsonaro: whether coronavirus vaccination should be made mandatory; whether his son, Senator Flávio Bolsonaro, should be granted parliamentary immunity in a money-laundering case, and a far-right proposal that would ban any political elements from subjects taught in schools.

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