Bolsonaro to make first Supreme Court pick

ending what is the longest tenure by anyone in Brazil&#8217;s highest court, after taking the seat in August 1989. Justice Mello was already set to retire on November 1 — when he reaches the mandatory retirement age of 75 — and his decision to bring his retirement forward 19 days was not trivial, as Brasília correspondent Débora Álvares reports.</p> <ul><li>Justice Mello presides over an investigation into President Jair Bolsonaro, and upon retirement, all his cases would normally be handed over to his replacement … who will be appointed by President Jair Bolsonaro. According to sources within the Supreme Court, Justice Mello&#8217;s early retirement put pressure on Chief Justice Luiz Fux to draw lots to determine who will take over the investigation.</li><li>Regardless, government officials have celebrated the retirement announcement, as Celso de Mello has been among the members of the Supreme Court who has most opposed the Bolsonaro administration. Earlier this year, Justice Mello compared Brazil&#8217;s current political situation to the <a href="https://brazilian.report/power/2020/09/12/supreme-court-jair-bolsonaro-feud-new-chapter/">crumbling of the Weimar Republic</a> in Germany, as Adolf Hitler became chancellor.</li></ul> <p><strong>Why it matters.</strong> Justice Mello&#8217;s retirement will hand Mr. Bolsonaro his first Supreme Court appointment.</p> <p><strong>Frontrunners.</strong> In May 2019, Mr. Bolsonaro <a href="https://brazilian.report/opinion/2019/05/13/moro-supreme-court-bolsonaro/">announced</a> he would appoint then-Justice Minister Sergio Moro to fill the first available vacancy in the court. That bridge has been burnt, after Mr. Moro left the government <a href="https://brazilian.report/power/2020/04/24/could-sergio-moro-bring-down-second-president/">accusing the president of malfeasance</a>. Débora Álvares goes through the leading candidates for the country&#8217;s highest court.</p> <ul><li><strong>Ives Gandra Filho.</strong> A member of the Superior Labor Court, the uber-religious Mr. Gandra Filho is a favorite among Jair Bolsonaro&#8217;s military advisors. He is seen as an &#8220;incorruptible&#8221; man who donates half of his salary to charity and lives in a small room in a Brasília parish. His father recently said <a href="https://brazilian.report/power/2020/06/02/brazil-far-right-has-created-a-legal-way-to-stage-a-coup-bolsonaro/">President Bolsonaro has a &#8220;legal&#8221; way to stage a military coup</a>, as he mischaracterized an article of the Brazilian Constitution.</li><li><strong>Jorge Oliveira.</strong> If the pick is made among Bolsonaro&#8217;s sons, it would go to the current Secretary-General — who Mr. Bolsonaro calls <em>Jorginho</em> (&#8220;little Jorge&#8221;). A lawyer and retired member of the Military Police, Mr. Oliveira has worked for the Bolsonaros for over 20 years, and has a personal bond with the president&#8217;s family.</li><li><strong>André Mendonça.</strong> The current Justice Minister is a respected legal scholar, with over 20 years of experience in the Solicitor General&#8217;s Office. He would check the box of being &#8220;<a href="https://brazilian.report/power/2019/08/26/jair-bolsonaro-outsmarted-sergio-moro/">extremely evangelical</a>,&#8221; which Mr. Bolsonaro has said will be a prerequisite for a Supreme Court appointment. Moreover, Mr. Mendonça&#8217;s actions as Justice Minister showed loyalty to the president — including actions widely disapproved by legal scholars, such as creating a <a href="https://brazilian.report/power/2020/08/01/is-bolsonaro-launching-his-own-private-intelligence-agency/">secret dossier with information on almost 600 civil servants</a> and law enforcement agents monitored for being self-declared “anti-fascists.”</li><li><strong>Other potential picks.</strong> Prosecutor General Augusto Aras and João Otávio Noronha, a member of the Superior Court of Justice (Brazil&#8217;s second-highest judicial body), are also in contention —&nbsp;albeit in the outside track. They have distinguished themselves to the president by bending over backward to please Mr. Bolsonaro with their legal decisions, in what observers say is an attempt to audition for a Supreme Court seat.</li></ul> <p><strong>Consequential.</strong> Besides Celso de Mello&#8217;s seat, Jair Bolsonaro will have at least one more Supreme Court nomination before the end of his term — as Justice Marco Aurélio Mello retires next year. If he wins re-election in 2022, Mr. Bolsonaro would have two more seats to fill, meaning he could have four appointments out of a total of 11 justices.</p> <hr class="wp-block-separator"/> <h2>The government&#8217;s plan for tax reform</h2> <p>After weeks of negotiations, the Bolsonaro administration will present Congress with its second set of proposals to reform Brazil&#8217;s tax system —&nbsp;which are rumored to include the creation of a new levy. According to the Economy Ministry, a novel 0.2-percent tax on financial transactions is the only way the government can make ends meet in 2021. In exchange, the government proposes a cut in payroll taxes.</p> <ul><li>This need for increased revenue becomes all the more pressing as President Jair Bolsonaro leads the creation of a new welfare program to replace the coronavirus emergency salary, which is<a href="https://brazilian.report/power/2020/08/20/what-happens-when-brazils-coronavirus-emergency-aid-ends/"> set to expire</a> in December.&nbsp;</li></ul> <p><strong>Why it matters.</strong> The emergency aid has had a tremendously positive impact on Mr. Bolsonaro&#8217;s approval ratings (more below). But the cash-strapped government still struggles to structure a new program for 2021 and beyond.</p> <ul><li>The government&#8217;s new tax is a new version of the <a href="https://brazilian.report/business/2019/09/11/cpmf-economy-ministry-central-bank-new-tax/">CPMF</a> —&nbsp;a tax on financial transactions which was enforced between 1997 and 2007. Brazilians loath this levy — and the fact that 2020 is an electoral year makes it a tough sell to Congress.</li><li>President Jair Bolsonaro has reportedly signed off on the new tax —&nbsp;as long as the Economy Ministry finds a way to avoid it harming his public image.</li></ul> <p><strong>Maia.</strong> The government hopes that House Speaker Rodrigo Maia&#8217;s vanity could work in its favor. After success in 2019&#8217;s pension overhaul, Mr. Maia wants to go down in history as the Speaker who managed to approve two major reforms in as many years. But Mr. Maia — who is weighing up running for governor in Rio de Janeiro in 2022 — might not be so keen on attaching his name to such a reviled tax.</p> <ul><li>According to sources in Congress, Mr. Maia is likely to lend his support to another tax reform bill being discussed in the House. This proposal merges several federal and state taxes into a single VAT charge.</li></ul> <p><strong>Calendar.</strong> Don&#8217;t expect major reforms in 2020. Activity in the House will decrease, as members engage in local electoral races. And contentious reforms usually take several months to pass, even in a best-case scenario.&nbsp;</p> <hr class="wp-block-separator"/> <h2>Markets</h2> <p>Global banks saw their share prices plummet last week, after a journalistic investigation showed that major institutions had engaged for years in knowingly handling up to USD 2 trillion in dirty money. In Brazil, however, banks&#8217; share prices went up. Analysts are particularly keen on the state-controlled Banco do Brasil —&nbsp;which has seen profits soar in recent years, as well as having a conservative portfolio focused on payroll and agribusiness loans, and hefty provisions in case delinquency rates go up.</p> <p class="has-text-align-center"><strong><em>Natália Scalzaretto</em></strong></p> <hr class="wp-block-separator"/> <h2>Road transportation still massive bottleneck for Brazil</h2> <p>A <a href="https://www.gov.br/infraestrutura/pt-br/imagens/2020/09/RelatrioCorredoresLogsticosEstratgicosPetrleoeCombustveis.pdf">new study</a> by the Infrastructure Ministry shows that most of the ethanol, biodiesel, and jet fuel produced in Brazil is still transported by road. That&#8217;s why, in 2018, an 11-day truckers&#8217; strike nearly halted the country and caused a fuel shortage in several states. Since 2016, the federal government has tried to map cargo transportation bottlenecks and opportunities, in order to structure the sector through popular cargo routes, identifying where investments are needed —&nbsp;and how to avoid exposure.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/3861485" data-url="https://flo.uri.sh/visualisation/3861485/embed" aria-label=""><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>Looking ahead</h2> <ul><li><strong>Unemployment.</strong> On Tuesday, the Economy Ministry will publish August&#8217;s formal employment data; on Wednesday, the Brazilian Institute of Geography and Statistics releases the official unemployment rate until July. Government data showed a positive balance between formal hirings and firings in July, but analysts are cautious to treat the data as a sign of a recovery. Unemployment rates are going up as Brazilians begin to leave social isolation — and millions are now falling into another category: discouraged workers, i.e., when people stop looking for jobs in the belief they won&#8217;t find one.</li><li><strong>2020 election.</strong> Even though voting is mandatory in Brazil, voters may ignore their duty if they justify their absence at the polls — or pay a fine worth less than USD 1. Since the return of democracy in 1985, abstention rates have climbed election after election, and a recent poll suggests that voter turnout could be <a href="https://brazilian.report/newsletters/brazil-daily/2020/09/15/two-months-until-brazil-2020-election-day-what-is-at-stake/">historically low in 2020</a>, as a result of the pandemic. Pollster Datafolha <a href="https://www1.folha.uol.com.br/poder/2020/09/1-em-5-moradores-de-sp-admite-nao-votar-por-medo-do-coronavirus-mostra-datafolha.shtml">says</a> 34 percent of São Paulo voters <a href="https://brazilian.report/newsletters/brazil-weekly/2020/03/30/coronavirus-brazil-municipal-election-2020-bolsonaro/">don&#8217;t feel safe to go out</a> and vote on November 15. Furthermore, Brazil doesn&#8217;t have a mail-in ballot system like the U.S., or a vote-by-proxy system, like France.</li><li><strong>Coronavirus. </strong>Three weeks after the September 7 Independence Day holiday, Rio de Janeiro saw a spike in ICU occupancy rates, which now stand at 87 percent —&nbsp;nearly 10 percentage points above July levels. Experts say the uptake in admittance of patients with severe Covid-19 cases might be linked to the loosening of social distancing observed during the holiday, with thousands flocking to beaches, bars, and restaurants.</li></ul> <hr class="wp-block-separator"/> <h2>In case you missed it</h2> <ul><li><strong>Bolsonaro. </strong>A new poll by Ibope shows that <a href="https://brazilian.report/newsletters/brazil-daily/2020/09/25/bolsonaro-approval-numbers-poll-to-temporary-benefit/">40 percent of Brazilians</a> believe Jair Bolsonaro is doing a &#8216;good or great&#8217; job as president. Mr. Bolsonaro gained ground among poorer and less-educated voters, suggesting that the BRL 600 (USD 107) emergency coronavirus salary has made him more popular. However, interviews were made <em>before</em> the benefit was halved to BRL 300.</li><li><strong>Economy. </strong>Many industrial sectors have regained their optimism toward the Brazilian economy, according to a preliminary study by the Brazilian Institute of Economics at Fundação Getulio Vargas (IBRE-FGV). “This optimism signals that productive sectors may ramp up production,” writes economist Renata Mello Franco.</li><li><strong>Borders. </strong>The Brazilian government has lifted restrictions on the entry of foreign nationals at every airport in the country — revoking a March rule that barred the influx of tourists in six states. A 30-day restriction remains for the entry of foreigners by land and sea. Venezuelan citizens, however, are granted an exception due to humanitarian reasons.</li><li><strong>UN.</strong> Jair Bolsonaro&#8217;s address to the United Nations General Assembly <a href="https://brazilian.report/newsletters/brazil-daily/2020/09/16/what-bolsonaro-plans-to-say-to-the-united-nations-next-week/">tried to deflect responsibility</a> for Brazil’s environmental crisis and the coronavirus pandemic. The president lashed out at indigenous communities, &#8220;spurious&#8221; international interests, and &#8220;unpatriotic&#8221; organizations for leading a &#8220;<a href="https://brazilian.report/podcast/2020/09/23/un-general-assembly-jair-bolsonaro-gives-brazil-a-bad-name/">brutal smear campaign</a>&#8221; against Brazil — denying official data that shows a massive surge of fires and deforestation since he took office.</li><li><strong>Rio.</strong> On Wednesday, the State Congress in Rio de Janeiro moved forward with its <a href="https://brazilian.report/podcast/2020/09/09/explaining-brazil-podcast-rio-de-janeiros-descent-into-hell/">impeachment process</a> against Governor Wilson Witzel, who is accused of embezzling funds earmarked for the state&#8217;s anti-coronavirus effort. One day later, an electoral court declared Rio&#8217;s Mayor Marcelo Crivella ineligible for office for committing electoral crimes. However, Mr. Crivella may still be able to run for re-election in November, thanks to the possibility of dragging the case through multiple appeals.