Forces align ahead of crucial Speaker vote in February

. Dec 10, 2020
Speaker race Brazil Bolsonaro Arthur Lira (left, with white mask) is Jair Bolsonaro's name in the Speaker position. Photo: Pedro Menezes/SEI

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Today, the first moves in the race for House Speaker. Interest rates remain low, but not for long. And Brazilian industry shows a pulse.

The Speaker race begins

Congressman Arthur Lira, from the northeastern state of Alagoas, has formally launched his bid for the House Speaker position

— to be decided on February 1, 2021. As the main leader of the so-called &#8220;Big Center,&#8221; an amalgam of rent-seeking conservative parties with influence in Congress and proximity to President Jair Bolsonaro, Mr. Lira automatically becomes one of the front-runners and will likely face off against a contender handpicked by the current speaker, Rodrigo Maia.</p> <p><strong>Why it matters.</strong> The House Speaker holds <a href="https://brazilian.report/newsletters/brazil-weekly/2020/10/13/forget-mayors-house-speaker-election-race-counts/">tremendous agenda-setting powers</a> and is the only person who can initiate impeachment proceedings against a sitting president.</p> <p><strong>Path. </strong>Mr. Lira has had his eyes on the Speaker&#8217;s chair since at least 2017. At the time, though, he was persuaded to withdraw his name from the race to support Mr. Maia, who in turn pledged to support Mr. Lira two years later. But after the incumbent broke his promise and pushed for another term himself, relations between the pair soured.</p> <ul><li>That move drew Mr. Lira and the Big Center to President Bolsonaro, who offered the group cabinet positions in exchange for congressional support. In his latest attempt to <a href="https://brazilian.report/power/2020/12/09/bolsonaro-tries-to-cement-coalition-with-cabinet-reshuffling/">cement this alliance</a>, the president jettisoned his Tourism Minister in order to accommodate Mr. Lira&#8217;s allies in the government.&nbsp;</li></ul> <p><strong>In the other corner … </strong>Speaker Rodrigo Maia has rallied the support of six parties (mostly right of center), but has yet to select who will run as his successor. The lack of a decision has sparked internal conflicts between the multiple factions who eye the Speaker job —&nbsp;and could weaken Mr. Maia&#8217;s power.</p> <p><strong>Belle of the ball. </strong>With the center-right split, the left has seen itself in a rare position of power. Despite being the single biggest party in the House, the center-left Workers&#8217; Party has been sidelined since Mr. Bolsonaro rose to power. Now, it finds itself being courted by both sides of the dispute, as its 54 of 513 votes could tip the race one way or another.</p> <p><strong>Photo finish.</strong> Don&#8217;t expect this race to be decided now. The majority of behind-the-scenes negotiations will take place after the end-of-year parliamentary recess begins in two weeks. And with the possibility of controlling the House in the final two years of Mr. Bolsonaro&#8217;s term, we expect a fierce vote-whipping battle up to the very last second before ballots are cast.</p> <p><em>— with Débora Álvares</em></p> <hr class="wp-block-separator"/> <h2>Interest rates stay put. For now</h2> <p>As expected, the Brazilian Central Bank kept the country&#8217;s benchmark interest rate at the record-low level of 2 percent a year, first reached back in August. But in the minutes of its latest meeting, the bank&#8217;s Monetary Policy Committee paved the way for future rises if inflation continues to increase. While there was no indication as to <em>when</em> this rise could happen, it is clear that it will come gradually —&nbsp;and perhaps only by mid-2021.</p> <p><strong>Why it matters.</strong> The Central Bank finds itself in a catch 22 situation: rising interest rates could cool off investment (which is already low), but keeping them at the current level could leave inflation unchecked.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/4623147"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>Inflation during Covid times.</strong> Brazilian inflation has observed different cycles this year. During the first months of the pandemic, prices did not rise significantly —&nbsp;hovering below the 4-percent target. But in the second half of the year, food prices have skyrocketed and Brazil approaches 2021 with a 12-month inflation rate above the target.</p> <p><strong>For 2021.</strong> Besides the interest rate, the big question for next year is whether the government will be able to tame public spending. In 2020, a parallel budget was created by Congress in order to accommodate coronavirus-related spending, but both the government and party leaders say that will not happen in 2021, despite mounting signs of a massive job crisis in the making.</p> <hr class="wp-block-separator"/> <h2>Industrial production recovers pre-pandemic levels in 9 states</h2> <p>Data from the Brazilian Institute of Geography and Statistics shows that industrial production in eight of 15 researched states have recovered pre-pandemic levels. The positive results are mainly propelled by the states of São Paulo — Brazil&#8217;s economic center — and Paraná, in the south.</p> <ul><li>Over the past six months, São Paulo&#8217;s industrial production has increased by 47 percent.</li></ul> <p><strong>Why it matters.</strong> Industrial sectors were hit hard by the pandemic and have threatened a <a href="https://brazilian.report/business/2019/04/15/brazilian-industry-shrinking/">production crisis</a> for years now. Any sign of recovery is encouraging at this point.</p> <p><strong>Yes, but … </strong>The recovery could have been even bigger, if not for a lack of inputs. A survey by the National Confederation of Industry (CNI) shows that 75 percent of Brazil&#8217;s transformation industries (from textiles to electronics producers) faced problems in obtaining basic products — with 54 percent reporting deliveries being affected.</p> <ul><li>According to CNI, the disruption was caused by the abrupt halt of the economy, followed by a quicker-than-expected recovery — which hasn&#8217;t given supply chains time to re-establish themselves.</li></ul> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Vaccine 1.</strong> The federal government has once again changed its stance on a nationwide coronavirus vaccination plan, with Health Minister Eduardo Pazuello saying distribution could start as early as late December, provided that Pfizer can speed up the delivery of &#8220;some doses.&#8221; With the government <a href="https://brazilian.report/podcast/2020/10/21/podcast-electoral-calculations-around-covid-19-vaccine/">reluctant to endorse</a> the Chinese-made CoronaVac, a group of lawmakers want to force Brazilian regulators to greenlight any vaccine that has been approved by respected international agencies within 72 hours.</li><li><strong>Vaccine 2.</strong> On a positive note, airlines Gol and Azul — which combine for over 60 percent of the domestic aviation market — announced that they will transport vaccines across the country <a href="https://www.poder360.com.br/coronavirus/vamos-transportar-de-graca-qualquer-vacina-diz-presidente-da-azul/">for free</a>. Latam, the other sector giant, has yet to announce a similar move, despite being the first local player to obtain certification to transport pharmaceutical goods.</li><li><strong>Bolsonaros. </strong>The Superior Court of Justice, Brazil&#8217;s second-highest court, is set to resume a trial next week involving Senator Flávio Bolsonaro, the president&#8217;s eldest son. He is suspected of running a <a href="https://brazilian.report/power/2020/08/12/corruption-case-against-jair-bolsonaro-son-fabricio-queiroz/">money-laundering scheme</a> during his years as a state lawmaker in Rio de Janeiro. The senator&#8217;s defense team is trying to nullify decisions made by a lower court — which would bring the case back to square one.</li><li><strong>Gun rights.</strong> The Brazilian government has scrapped a 20-percent import fee on revolvers and handguns, starting on January 1, 2021. Under Jair Bolsonaro, Brazil has seen gun licenses and imports <a href="https://brazilian.report/power/2020/08/31/gun-licenses-and-imports-shoot-up-in-bolsonaros-brazil/">skyrocket</a>, as the president has worked to increase access to firearms in Brazil by lifting controls over purchases and making it harder for authorities to track bullets during police investigations.</li><li><strong>Corruption.</strong> Brazil&#8217;s antitrust watchdog Cade has inked <a href="https://politica.estadao.com.br/blogs/fausto-macedo/cade-faz-acordo-com-empreiteiras-em-processo-da-lava-jato-multa-sera-de-r-61-milhoes/">deals</a> with three construction companies to end investigations which began on the coattails of anti-corruption probe Operation Car Wash. For their role in bid-rigging schemes in public procurement processes, OAS, Odebrecht, and Carioca Engenharia will pay a total of BRL 61 million (USD 11.8 million) in fines. Meanwhile, Philips Medical Systems has agreed to pay BRL 59.9 million to settle a <a href="https://brazilian.report/power/2018/07/05/philips-brazil-corruption-rio/">corruption investigation</a> into 33 companies accused of siphoning an estimated BRL 600 million from contracts with a state-run trauma institute in Rio de Janeiro.</li><li><strong>Abortion rights.</strong> The Argentinian Congress begins its debate on a bill granting women the <a href="https://brazilian.report/society/2018/06/15/abortion-brazil-argentina/">right to interrupt pregnancies</a>, with a vote expected to take place as early as tomorrow. According to an estimate, support for the bill is inching closer to the necessary 129 votes —&nbsp;with 124 lawmakers publicly supporting it, against 110 who oppose, and 20 congressmen who remain undecided.

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