The major political issues to be solved in 2021

</p> <ul><li><strong>Budget.</strong> The year will end before the approval of the 2021 federal budget. On Wednesday, lawmakers <a href="https://brazilian.report/newsletters/brazil-daily/2020/10/30/squabbles-over-2021-budget-could-throw-brazil-into-shutdown/">are expected to vote</a> on the Budgetary Directives Law (LDO) during a joint congressional session. If the LDO is approved — but not the budget itself — the government will be allowed to muddle along at the beginning of 2021, having the right to spend one-twelfth of the 2020 budget every month. This has happened four times already, in 2006, 2008, 2013, and 2015. If the LDO does not pass, there would be a significant chance of a government shutdown in 2021.</li><li><strong>5G auction.</strong> Opposing factions within the government have argued over the rules of Brazil&#8217;s 5G auction — set to happen in April or May. President Bolsonaro&#8217;s more ideologically fervent advisors want him to <a href="https://brazilian.report/power/2020/12/02/shunned-by-bolsonaro-huawei-has-friends-in-brazils-congress/">ban Chinese behemoth Huawei</a> from the dispute, while the military wing defends a more <a href="https://brazilian.report/tech/2020/12/08/huawei-continues-to-expand-in-brazil-despite-fears-of-5g-ban/">pragmatic approach</a> to avoid sanctions from China. Meanwhile, telecoms regulator Anatel hinted that it could postpone the auction (initially set for early 2019) yet again.</li><li><strong>Who will run Congress?</strong> On February 1, 2021, both houses of Congress will <a href="https://brazilian.report/newsletters/brazil-daily/2020/12/10/forces-align-ahead-of-crucial-speaker-vote-in-february/">choose new directive boards</a> for the 2021-2022 legislature. Unlike past disputes, we are set to head into an end-of-year parliamentary recess without a good idea of who will win the races for House Speaker and Senate President, after the Supreme Court upheld the Constitution and prevented incumbent candidates from running for re-election. Major negotiations will take place during the recess. A split within the center-right in the lower house has given the center-left Workers&#8217; Party some newfound importance, as it could tilt the race in favor of whoever it chooses to support.</li><li><strong>Cabinet reshuffle.</strong> Looking to guarantee some job stability for the next two years, Mr. Bolsonaro is working to elect an ally as House Speaker, as he or she is the only official in Brazilian politics who can initiate impeachment proceedings against a sitting president. Looking to <a href="https://brazilian.report/power/2020/12/09/bolsonaro-tries-to-cement-coalition-with-cabinet-reshuffling/">cement his coalition</a> with conservative renk-seeking parties, Mr. Bolsonaro is willing to give them control over bigger chunks of his administration. There is a chance of existing cabinet ministries being dismembered in order to offer more high-ranking jobs to allies. Moreover, Citizenship Minister Onyx Lorenzoni (who runs the government&#8217;s welfare policies) and Foreign Minister Ernesto Araújo could be jettisoned. Embattled <a href="https://brazilian.report/environment/2020/12/13/brazil-fudges-the-numbers-in-its-latest-climate-pledge/">Environment Minister Ricardo Salles</a>, however, is safe.</li><li><strong>Supreme Court.</strong> Mr. Bolsonaro is under investigation for allegedly meddling with the Federal Police to <a href="https://brazilian.report/power/2020/08/12/corruption-case-against-jair-bolsonaro-son-fabricio-queiroz/">benefit his family</a> and the president says he does not intend to give testimony. Supreme Court Justice Alexandre de Moraes issued an opinion saying Mr. Bolsonaro does not have that right and must comply — even if it is to exercise his right to remain silent. The rest of the court will vote on whether the president will be forced to appear and give testimony, an issue that will certainly raise tensions in 2021.</li><li><strong>Biden and the U.S.</strong> After openly <a href="https://brazilian.report/newsletters/brazil-weekly/2020/11/03/biden-or-trump-the-effects-us-election-on-brazil/">cheering for Donald Trump</a> and claiming Joe Biden won thanks to voter fraud, Jair Bolsonaro will have to mend fences with the U.S. president-elect. The Brazilian ambassador to Washington and former President Michel Temer — who served as vice-president while Mr. Biden was vice-president to Barack Obama — were brought in to initiate a dialogue between the two administrations. Mr. Biden&#8217;s pledges to <a href="https://brazilian.report/power/2020/10/19/what-a-biden-administration-plans-for-brazil-and-latin-america/">tackle climate change</a>, however, suggest Brazil&#8217;s relationship with its second-largest trading partner could become more adversarial than ever.</li></ul> <hr class="wp-block-separator"/> <h2>Brazil&#8217;s controversial vaccination plan</h2> <p>After much delay, the federal government presented a nationwide Covid-19 vaccination plan this weekend. True to form with anything concerning the Bolsonaro administration, it came surrounded by controversy.</p> <ul><li>The plan does not include the possibility of using the Chinese-made CoronaVac, which was tested (and is now being produced) by the São Paulo state government. Earlier this month, Governor João Doria announced his state&#8217;s own vaccination plan, as part of his tit-for-tat political war with President Jair Bolsonaro.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/4636237"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>No dates. </strong>The plan mentions distributing 108.3 million doses to 51 million people (less than one-quarter of the population). Health workers, senior citizens, and indigenous populations would be given priority. The plan, however, fails to establish clear dates on when distribution will start. In the government&#8217;s defense, one senior Health Ministry official said it would be &#8220;irresponsible&#8221; to zero in on a date before any vaccine has been cleared for use. As of Sunday, not one single lab had requested permission for emergency approval.</p> <ul><li>Supreme Court Justice Ricardo Lewandowski has given the government 48 hours to provide specific dates for immunization.</li></ul> <p><strong>React. </strong>Moreover, the plan caused controversy after a group of 36 researchers —&nbsp;who appear as signatories of the document —&nbsp;said they did not read the final version of the plan before it was published. The government claimed they were brought in as consultants without decision-making powers.</p> <ul><li>In a scathing <a href="https://www1.folha.uol.com.br/opiniao/2020/12/vacinacao-ja.shtml?utm_source=meio&amp;utm_medium=email">editorial</a> on Saturday, Brazil&#8217;s biggest newspaper Folha de S.Paulo said that &#8220;President Jair Bolsonaro&#8217;s murderous stupidity has crossed all boundaries.&#8221; It adds: &#8220;With the help of a foolish puppet at the Health Ministry, Bolsonaro has caused a short-circuit in a machine used to plan and execute some of the world&#8217;s biggest vaccination programs.&#8221;</li></ul> <p><strong>No science.</strong> Since taking office, Jair Bolsonaro and his acolytes have given a series of examples of their disregard for science. And Brazil&#8217;s failed response to the coronavirus is testament to that — as the government itself has been a major source of disinformation ever since the pandemic came to the country.&nbsp;</p> <ul><li>While economic inequality explains a lot of the coronavirus&#8217; progression in Brazil and Latin America, it is impossible not to see this administration&#8217;s fingerprints on the country&#8217;s superlative numbers of infections (6.9 million) and deaths (181,402). Brazil is used to successfully beating epidemics, from HIV-Aids to the massive vaccination structure created in 1973 that eradicated diseases such as polio, measles, rubella, and neonatal tetanus. Falling vaccination rates are seeing some of these diseases make comebacks.</li></ul> <hr class="wp-block-separator"/> <h2>Markets</h2> <p>Analysts appear bullish on Vale, Brazil&#8217;s largest mining firm. They mention skyrocketing iron ore prices, coupled with progress in settlement negotiations with the victims of the <a href="https://brazilian.report/society/2019/01/27/brumadinho-collapse-desperate-situation/">Brumadinho dam disaster</a> (which killed 270 people in January 2019), and a divestments plan. Morgan Stanley believes Vale will have to pay victims something around USD 4 billion in Q1 2021 to settle the case.</p> <hr class="wp-block-separator"/> <h2>Brazilians adopt wait-and-see move on Bolsonaro</h2> <p>President Jair Bolsonaro reaches the halfway point of his administration with the highest approval rating he has ever received, according to pollster Datafolha. However, a few pieces of data within the survey are noteworthy. The president&#8217;s popularity remained stable, with the rate of people deeming his administration &#8220;O.K.&#8221; as opposed to either good or bad shows that Brazilians are still waiting for clearer signs on what will happen to the economy before making up their minds on Mr. Bolsonaro. </p> <p>While the results give the president some comfort, it is important to remember that nobody finished their second year as president more popular then Dilma Rousseff — but she would be impeached following what was then the <a href="https://brazilian.report/society/2019/05/03/brazilian-economy-crises-history/">worst recession</a> in Brazilian history. Economists expect Mr. Bolsonaro to face even greater odds.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/4659833"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <div class="flourish-embed flourish-scatter" data-src="visualisation/4660184"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>Looking ahead</h2> <ul><li><strong>Research. </strong>While posing as Jair Bolsonaro&#8217;s adversary in regards to the pandemic, Governor João Doria of São Paulo has backed away from a <a href="https://www1.folha.uol.com.br/cotidiano/2020/12/fapesp-perdera-r-4546-mi-se-assembleia-aprovar-projeto.shtml">proposal</a> ensuring that the state&#8217;s research foundation Fapesp receives the entirety of funds to which it is entitled. A State Congress vote could deprive one of Brazil&#8217;s leading scientific institutions of BRL 454.6 million (USD 89.7 million) in 2021.</li><li><strong>Budget. </strong>President Jair Bolsonaro has reportedly used parliamentary grants to force lawmakers into backing his allies for the February House Speaker election. The incumbent, Rodrigo Maia, said in a recent interview that such a move would be an <a href="https://valor.globo.com/politica/noticia/2020/12/14/governo-quer-criar-gatilhos-do-teto-de-gastos-por-projeto-de-lei-diz-maia.ghtml">impeachable offense</a>. The Speaker is the only political figure with the power to open impeachment proceedings against the president, and if Mr. Maia wants to set that into motion, he would have to move fast before stepping down in a month and a half.</li><li><strong>Revenue. </strong>Studies show that the end of the coronavirus emergency salary (set to expire after this month) could shrink Brazil&#8217;s total salaries paid by 5.3 percent in 2021. Despite the pandemic, Brazilian families saw their average income rise 3 percent thanks to handouts from the government. So far, the Bolsonaro administration has not presented a replacement program, but <a href="https://brazilian.report/society/2020/10/27/brazil-can-expand-social-protections-while-avoiding-budget-crisis/">one is being discussed</a> by the Senate.</li></ul> <hr class="wp-block-separator"/> <h2>In case you missed it</h2> <ul><li><strong>Infrastructure.</strong> China has signed a deal to invest USD 4.7 billion in railway projects in Argentina, which President Alberto Fernández expects will create 28,000 jobs. The two countries are Brazil&#8217;s first- and third-largest trading partners and have <a href="https://brazilian.report/latin-america/2020/06/10/blanked-brazil-argentina-turning-china-trade/">moved closer to each other</a> in recent months — while getting further away from Brazil&#8217;s Jair Bolsonaro.</li><li><strong>Economy. </strong>Retail sales <a href="https://brazilian.report/newsletters/brazil-daily/2020/12/11/brazil-retail-recovery-loses-steam-ahead-of-holidays/">grew</a> by 0.9 percent between September and October. The result obliterated expectations of just 0.1 percent growth — according to Bloomberg — and official data shows the sector is at a level 8 percent higher than in February, just before the pandemic hit. However, results could have been even better had it not been for rising inflation rates scaring off lower-income consumers, who have focused their spending on essential products.</li><li><strong>Interests. </strong>The Brazilian Central Bank kept the country’s <a href="https://brazilian.report/newsletters/brazil-daily/2020/12/10/forces-align-ahead-of-crucial-speaker-vote-in-february/">benchmark interest rate</a> 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’s Monetary Policy Committee paved the way for future rises if inflation continues to increase. While there was no indication as to when this rise could happen, it is clear that it will come gradually — and perhaps only by mid-2021.</li><li><strong>Defense. </strong>Navy officials launched the country’s new Humaitá submarine on Friday, the second unit of a massive <a href="https://brazilian.report/podcast/2019/10/23/explaining-brazil-nuclear-green-yellow-submarine/">defense program</a> budgeted at BRL 37.1 billion (USD 7.4 billion). Created in 2008, the ProSub program will produce four conventional diesel-electric submarines and one nuclear submarine — and has already taken up BRL 20.8 billion in investment.</li><li><strong>Agriculture.</strong> With one of the worst starts to a growing season on record, Brazil’s early planted crops are <a href="https://brazilian.report/newsletters/brazil-daily/2020/12/09/droughts-put-south-american-farmers-on-alert-mode/">under immense stress</a>. Some regions endured the driest September-December stretch in decades, leaving crops behind schedule. In the state of Mato Grosso, a Brazilian agricultural powerhouse, high soil temperatures forced many farmers to replant, causing massive losses. Northern Uruguay and Argentina are also seeing reduced yields caused by dry weather.