Former ally dishes more dirt on the Bolsonaros

. May 18, 2020
Jair Bolsonaro and his son Flávio in the background. Photo: Carolina Antunes/PR Jair Bolsonaro and his son Flávio in the background. Photo: Carolina Antunes/PR

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This week, we bring more evidence of wrongdoing by the Bolsonaro family. The hardships facing the Panama Canal. Brazil’s spending to mitigate the effects of Covid-19 compared to other countries.

More evidence piling up against the Bolsonaro family

On April 24, Justice Minister Sergio Moro quit the cabinet, claiming President Jair Bolsonaro was trying to meddle with the Federal Police.

The allegation was that the president wanted to get his hands on confidential police reports that would help him shield his family and friends from investigations, which is, of course, illegal. On Saturday, newspaper <em>Folha de S.Paulo</em> published an interview with businessman Paulo Marinho, a former Bolsonaro supporter who was elected as a substitute for Senator Flávio Bolsonaro. It was hoped that his revelations could shed light on why the president wanted more control over the Federal Police — especially in Rio de Janeiro.</p> <p><strong>What did he say? </strong>Just after the first round of the 2018 election, a detective reportedly tipped Flávio Bolsonaro off that he would be targeted by a police operation into money laundering schemes within the Rio de Janeiro State Congress. Flávio was a state lawmaker at the time.&nbsp;</p> <ul><li>A group of pro-Bolsonaro marshals moved to postpone the operation until <em>after</em> his father&#8217;s presidential runoff election — but told Flávio to &#8220;make arrangements&#8221; in the meantime.</li><li>The detective also reportedly advised Jair Bolsonaro to fire his friend and driver <a href="https://brazilian.report/newsletters/brazil-daily/2019/12/19/bolsonaro-trouble-son-flavio-investigation/">Fabricio Queiroz</a>, as well as his daughter. Both worked at his congressional office and are suspected of being dummy employees involved in a money-laundering scheme. They were laid off right before the runoff election.</li></ul> <p><strong>Yes, but … </strong>Paulo Marinho has cut ties with the Bolsonaros and is now cozying up to São Paulo Governor João Doria —&nbsp;one of Mr. Bolsonaro&#8217;s main political opponents. Moreover, the events described happened in 2018, which makes any collection of evidence difficult. Even if Mr. Marinho&#8217;s accounts are detailed — and he names other witnesses — it is unlikely to have any short-term legal effects without a thorough investigation of its own.</p> <ul><li>The Prosecutor General&#8217;s Office requested Mr. Marinho be summoned to testify in the probe around Mr. Bolsonaro&#8217;s possible interference with the Feds.</li><li>In a statement, Flávio Bolsonaro said that Mr. Marinho has ulterior motives: should he lose his Senate seat, the businessman would replace him.</li></ul> <p><strong>Why it matters.</strong> The revelations will at least enhance the political crisis and make Jair Bolsonaro all the more politically isolated. And in the president&#8217;s horse-trading efforts to buy the support of centrist parties known as the &#8220;<a href="https://brazilian.report/opinion/2018/07/31/brazil-big-center-2018-president/">Big Center</a>,&#8221; the price just went up.</p> <p><strong>Videotape.</strong> More evidence could surface against the president this week. Supreme Court Justice Celso de Mello is expected to rule today on whether or not to release the <a href="https://brazilian.report/newsletters/brazil-daily/2020/05/15/bolsonaro-i-wont-wait-for-the-feds-to-f-over-my-family/">video recording of an April 22 cabinet meeting</a> to the public.&nbsp;</p> <ul><li>The footage is key evidence in an investigation into whether the president tried to illegally meddle with the Federal Police. The Solicitor General&#8217;s Office pleaded that the court only use segments of the video in the case, citing &#8220;national security&#8221; reasons. Lawyers of former Justice Minister Sergio Moro — whose accusations ignited the probe — ask for the full video to be released.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>Panama Canal in hot water</h2> <figure class="wp-block-image size-large"><img src="https://brazilian.report/wp-content/uploads/2020/05/shutterstock_468292088.jpg" alt="The Panama Canal. Photo: Galina Savina/Shutterstock" class="wp-image-39550" srcset="https://brazilian.report/wp-content/uploads/2020/05/shutterstock_468292088.jpg 1000w, https://brazilian.report/wp-content/uploads/2020/05/shutterstock_468292088-300x200.jpg 300w, https://brazilian.report/wp-content/uploads/2020/05/shutterstock_468292088-768x512.jpg 768w, https://brazilian.report/wp-content/uploads/2020/05/shutterstock_468292088-610x407.jpg 610w" sizes="(max-width: 1000px) 100vw, 1000px" /><figcaption>The Panama Canal. Photo: Galina Savina/Shutterstock</figcaption></figure> <p>The Panama Canal is going through some choppy waters. Canal administrator Ricaurte Vazquez says the Covid-19 pandemic has dramatically reduced the number of ships crossing the isthmus connecting the Atlantic and Pacific Oceans. “In April, we registered 169 fewer crossings than we had projected.” Mr. Vazquez expects numbers to remain low in the upcoming months, due to the coronavirus-led slowdown in the economy of its main client, the U.S. — for which the International Monetary Fund projects a 5.2-percent drop in GDP this year.</p> <p><strong>Not only Covid-19. </strong>The Panama Canal is also suffering from historic low levels in Gatún Lake, its main source of water. In 2019, rainfall was down 20 percent from the historic average, amounting to the fifth-driest year on record and forcing the canal&#8217;s administration to implement a series of water-saving measures.&nbsp;</p> <ul><li>These measures shall be funded by new fees charged on all vessels over 125 feet. Plus, a 1-to-10-percent fee will be applied, depending on the lake&#8217;s water levels.</li></ul> <p><strong>Why it matters.</strong> Around 6 percent of the global economy crosses the 80-kilometer-long canal. Each year, it is visited by around 12,000 ships from over 160 countries.</p> <p><strong>History.</strong> The idea of a passage across the isthmus of Panama dates back to at least the 1500s, as King Charles of Spain wanted a route that allowed ships to reach the Pacific without having to cross the dangerous Cape Horn south of Chile. Construction was deemed impossible at the time — and would only begin in 1879, by French businessman Ferdinand de Lesseps, who had previously built the Suez Canal. The French enterprise would go bankrupt and ended up being purchased in 1902 by the U.S., for USD 40 million.</p> <p><strong>U.S. influence.</strong> When the U.S. was denied permission to build in what was a Colombian province, the White House backed a movement for Panamanian independence —&nbsp;negotiating a deal giving the U.S. exclusive rights with the new government. Transition to a local administration started with a 1977 treaty —&nbsp;but the Panama Canal would only truly become Panama&#8217;s in 1999.</p> <p><em>— with Lucas Berti</em></p> <hr class="wp-block-separator"/> <h2>Markets</h2> <p>As a side effect of the depreciation of the Brazilian Real, steelmaker CSN saw its net debt balloon to BRL 32.8 billion — or 4.8 times its EBITDA (earnings before interest taxes depreciation and amortization), from a previous ratio of 3.8. Credit Suisse believes the company is unlikely to bring this down to sustainable levels without divestments. For BTG Pactual, stocks will fall, &#8220;unless markets are convinced there is a path to sustainable reduction to BRL 20 billion or so in leverage.&#8221;</p> <p class="has-text-align-center"><strong><em>Natália Scalzaretto</em></strong></p> <hr class="wp-block-separator"/> <h2>Big efforts, not where it counts</h2> <p>The Central Bank published an interesting piece of data last week, showing how much countries are spending, in proportion to GDP, to mitigate the economic effects of Covid-19, in relation to their debt-to-GDP ratio. It shows that Brazil is spending more than many Asian countries. However, Brazil is failing in one key issue: controlling the spread of the coronavirus.</p> <div class="flourish-embed flourish-scatter" data-src="visualisation/2449291" data-url="https://flo.uri.sh/visualisation/2449291/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>Looking ahead</h2> <ul><li><strong>Carte blanche.</strong> Last week, President Jair Bolsonaro issued a provisional decree which shields public agents — including elected officials — from any legal responsibility for acts related to fighting Covid-19. Except if they commit a &#8220;clear, intentional, and inexcusable mistake.&#8221; The decree says that courts shall take into account the &#8220;context of uncertainty about the adequate measures to face the pandemic.&#8221; It was attacked by many in the political establishment, and is expected to be struck down by Congress — or challenged at the Supreme Court.</li><li><strong>Waiting.</strong> The financial aid plan to help states and municipalities has sat waiting to be enacted for a whole week, requiring a simple signature from the president. But Jair Bolsonaro has stalled, due to tensions between lawmakers and his Economy Minister Paulo Guedes over a list of public professions to be made exempt from salary freezes. At first, Mr. Bolsonaro said he would veto these exceptions, only to later say he hasn&#8217;t yet made up his mind on the issue. On the brink of financial collapse, states issued a <a href="https://6minutos.com.br/economia/secretarios-de-fazenda-pedem-a-bolsonaro-sancao-imediata-do-socorro-aos-estados/">letter</a> urging the president to make a quick decision.</li><li><strong>USD 1 : BRL 6? </strong>Last week, the Central Bank intervened heavily to stop the foreign exchange rate reaching BRL 6 to the U.S. Dollar. But with the political crisis continuing at high levels, the Brazilian currency is set to have another rocky week. Analysts are eager to see if the bank&#8217;s actions were a one-off — or if the monetary authority is keen on avoiding a further slide.</li></ul> <hr class="wp-block-separator"/> <h2>In case you missed it</h2> <ul><li><strong>Top 4.</strong> Brazil has confirmed a total of 241,080 coronavirus infections, making it the fourth country with the highest number of cases, behind only the U.S., Russia, and the UK, according to the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University. The country also has recorded 16,118 Covid-19 deaths —&nbsp;the sixth-largest in the world. The real situation could be even worse, as Brazil has tested at least 10 times less than the countries ahead of it in case and death numbers.</li><li><strong>3 ministers, 1 month.</strong> Two days before his one-month anniversary at the job, Nelson Teich resigned from the Health Ministry without publicly justifying his decision. Having taken office amid the worst pandemic in a century, Mr. Teich had an unremarkable stint and was criticized by state authorities for appearing to be &#8220;lost.&#8221; He clashed with President Jair Bolsonaro on two aspects: social isolation (he is for and the president is against) and the use of antimalarial drug chloroquine for all Covid-19 patients, which Mr. Bolsonaro is all in favor of. Mr. Teich&#8217;s deputy, Army General Eduardo Pazuello, is taking over the job and is already preparing a new protocol to prescribe chloroquine not only to severe Covid-19 patients, but also for those showing mild symptoms.</li><li><strong>Tests.</strong> President Jair Bolsonaro kept the proof of his Covid-19 tests a secret for one month, before they were made public following a Supreme Court order. All three of the tests in question had come back negative, as the president had claimed. Then why hide the results? &#8220;One of [the president&#8217;s] political hallmarks is creating a situation in which people don&#8217;t believe in anything,&#8221; said Filipe Campante, an associate professor at Johns Hopkins University, speaking to our <a href="https://brazilian.report/podcast/2020/05/13/explaining-brazil-jair-bolsonaro-keep-covid-19-test-results-secret/"><em>Explaining Brazil</em> podcast</a>.</li><li><strong>2020 elections.</strong> The center-left Workers&#8217; Party chose former Congressman Jilmar Tatto as its candidate for the São Paulo mayoral race. In what is an increasingly nationalized election in Brazil&#8217;s biggest city, the party chose a candidate that has a low profile outside of its ranks. Moreover, sectors of the Workers&#8217; Party were left disgruntled by the primary system, which only allowed party leaders to vote.

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