Photo: N. Antoine

Good morning! This week, we’re talking about Brazil’s reliable electronic voting system. How swine flu outbreaks in China are making meat a luxury product in Brazil. Has Donald Trump threatened Brazil on Twitter? How Brazilian markets performed. Also, what you should be looking out for this week—and the most important facts of the previous seven days. (This newsletter is for platinum and gold subscribers only. Become one now!)


How reliable is Brazil’s electronic voting system?

Last week, Brazil’s Electoral Justice system

submitted the country&#8217;s electronic voting machines to the scrutiny of 25 IT experts, among them Federal Police marshals, professors, students, and coders. They ran 13 planned hacking attacks and, despite two &#8220;superficial vulnerabilities&#8221;—which weren&#8217;t enough to compromise the secrecy of the vote, nor defraud the count—the machines passed the test.</p> <p>This was the fifth time IT experts have been asked to try to hack the machines. So far, no severe vulnerability has been found—with minor glitches having been corrected prior to previous elections. Next year, a new round of tests will be carried out, to check if the flaws have been corrected.</p> <p><strong>You shall not pass.</strong> The hackers were divided into seven groups, each trying to break the system in a different way. They were unable to:</p> <ul><li>Change the ballots;</li><li>Use artificial intelligence to access the system;</li><li>Find vulnerabilities with the machines&#8217; encryption program;</li><li>Break the secrecy of the ballots or tamper with any information;</li><li>Use electric pulses to capture keystrokes from the ballot box, and thus identify the vote.</li></ul> <p><strong>Why it matters.</strong> Many political groups—especially the president&#8217;s followers—have cast doubt over the <a href="https://harvardpolitics.com/united-states/electronic-voting-reliably-unreliable/">reliability of electronic voting machines</a>. And faith in the fairness of a country&#8217;s voting system is paramount to any democracy.</p> <p><strong>History.</strong> The electronic voting system was introduced in Brazil in 1996. In 23 years, the machines have gotten lighter, safer—and more easily auditable. In 2015, Congress tried to pass a bill, presented by then-congressman Jair Bolsonaro, saying that voters would receive printed ballot receipts in addition to using the electronic voting machine.</p> <p>But one <a href="https://brazilian.report/opinion/2018/10/06/brazil-electronic-voting-system/">underused technological tool</a> could help to earn the trust of more suspicious parties, voters, and social movements. This is the possibility of printing a QR Code on the paper ballot receipts, which would allow quick access to the results for anyone with a smartphone. By way of an app, users could see a centralized, unofficial, real-time count. A parallel vote count, if you will.</p> <hr class="wp-block-separator"/> <h2>How China is making Brazilian beef more expensive</h2> <figure class="wp-block-image"><img src="https://brazilian.report/wp-content/uploads/2019/12/shutterstock_199827137.jpg" alt="China is making Brazilian beef more expensive" class="wp-image-28401" srcset="https://brazilian.report/wp-content/uploads/2019/12/shutterstock_199827137.jpg 1000w, https://brazilian.report/wp-content/uploads/2019/12/shutterstock_199827137-300x200.jpg 300w, https://brazilian.report/wp-content/uploads/2019/12/shutterstock_199827137-768x512.jpg 768w, https://brazilian.report/wp-content/uploads/2019/12/shutterstock_199827137-610x407.jpg 610w" sizes="(max-width: 1000px) 100vw, 1000px" /><figcaption>China is making Brazilian beef more expensive. Photo: Alf Ribeiro</figcaption></figure> <p>Hit by an outbreak of swine flu, China has lost many hog herds and has dramatically increased its protein imports. In 2017, before the outbreak, China accounted for 10 percent of the world&#8217;s meat imports. In 2020, the Asian behemoth is expected to account for 21 percent of the total volume traded internationally.</p> <p><strong>Why it matters.</strong> With the <a href="https://brazilian.report/power/2019/10/27/china-brazilian-beef-demand-linked-amazon-deforestation-risk/">growing appetite of China</a>, meat prices are going way up (17 percent in late November), making beef almost a &#8220;luxury&#8221; product—even in Brazil, one of the biggest meat producers in the world. It has reached the point where the Brazilian association of supermarkets has even suggested consumers to &#8220;seek alternatives to beef.&#8221;</p> <p><strong>Diseases.</strong> Swine flu is advancing in Africa, Asia, and Europe—with Poland having recently registered cases only 50 kilometers from the border with Germany, the continent&#8217;s main pork producer. The number of cases has gone from 1,701 in 2013 to 424,000 this year. In China, the impact is significant—meat production should drop from 55 million tons of pork in 2017 to 25 million in 2020.&nbsp;</p> <p>Brazil has yet to be affected, but due to the advances of the pest in several continents, producers are mobilizing to find ways to protect themselves—including training farmers and importing sniffer dogs to monitor meat imports.</p> <p><strong>Brazil. </strong>China was the destination of 15 percent of Brazilian beef exports in 2017. That rate reached 41 percent in October 2019. According to the U.S. Department of Agriculture, Brazil&#8217;s beef production in 2019 should be 13 percent larger than two years ago. Exports, however, will grow by 40 percent.</p> <div class="flourish-embed" data-src="visualisation/1027733"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <hr class="wp-block-separator"/> <h2>Is Trump threatening Brazil?</h2> <p>Early this morning, U.S. President Donald Trump tweeted that he will restore tariffs on steel and aluminum brought into the country via Brazil and Argentina, claiming that the two countries &#8220;have been presiding over a massive devaluation of their currencies.&#8221; Despite the Brazilian government bending over backward to <a href="https://brazilian.report/podcast/2019/03/20/jair-bolsonaro-donald-trump/">please Mr. Trump at every opportunity</a>, this move comes as a severe blow to Brazil&#8217;s Economy Ministry, which has overseen a strong devaluation of the Brazilian Real in November. </p> <figure class="wp-block-embed-twitter wp-block-embed is-type-rich is-provider-twitter"><div class="wp-block-embed__wrapper"> <blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel &amp; Aluminum that is shipped into the U.S. from those countries. The Federal&#8230;.</p>&mdash; Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/1201455858636472320?ref_src=twsrc%5Etfw">December 2, 2019</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> </div></figure> <hr class="wp-block-separator"/> <h2>Markets</h2> <p>Black Friday results will likely drive the behavior of Brazilian retailers&#8217; stocks this week. Preliminary data points to a 69-percent bump in e-commerce sales during Black Friday&#8217;s first seven hours—and a report by Ebit Nielsen states a 24-percent rise in overall revenue. In the aftermath of the shopping frenzy, investors will look closely at each retailer&#8217;s performance in turn. Giant Magazine Luiza, for example, suffered with website glitches and saw its stock fall by 1.25 percent on Friday. Via Varejo, which runs Casas Bahia and Ponto Frio and is promoting several changes to improve its website performance, went up by 3.61 percent.</p> <p><strong><em>— Natália Scalzaretto</em></strong></p> <hr class="wp-block-separator"/> <h2>Is Brazil <em>that</em> protectionist?</h2> <p>Brazil is often (and fairly) accused of being a very insular economy. Over many decades, the country has created market reserves for local players by way of tax breaks or sky-high tariffs. But over the past decade, Brazil passed much fewer trade restrictions than the U.S.—the country considered by many as a textbook example of how market regulation should work. In a recent <a href="https://www.eulerhermes.com/content/dam/onemarketing/euh/eulerhermes_com/erd/publications/pdf/Trade-report-nov19.pdf">report</a>, Euler Hermes Economic Research sees this as a result of economic policy being increasingly used as a tool for other political ends, which we can see with the U.S.-China trade war and the Japan-South Korea trade tensions.</p> <div class="flourish-embed" data-src="visualisation/1011338"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <hr class="wp-block-separator"/> <h2>Looking ahead</h2> <p><strong>Economic indicators.</strong> Brazil&#8217;s official statistics agency will publish the country&#8217;s third-quarter GDP results on Tuesday. Economists have projected a timid growth of 0.2 to 0.4 percent. Recent economic indicators have been positive and some analysts believe the Brazilian economy could spring a positive surprise over the final stretch of 2019. On Friday, we will know the inflation rate for November—which should be higher than in previous months due to the hike in meat prices.</p> <p><strong>Bolsonaro v. the press.</strong> Last week, President Bolsonaro announced that newspaper <em>Folha de S.Paulo</em> would be excluded from a bidding process for press subscriptions for government agencies. He added that he would boycott products from any company that advertised in the country&#8217;s biggest newspaper. Prosecutors of the Federal Accounts Court called the move illegal—which is set to spark a legal battle.</p> <p><strong>COP25. </strong>The UN Climate Conference COP25 opens in Madrid today amid a growing sense of crisis, with UN Secretary-General António Guterres saying &#8220;the point of no return is no longer over the horizon.&#8221; The conference was supposed to take place in Brazil, but the Bolsonaro administration passed on its hosting duties. Then, Chile canceled the event amid a wave of protests. The Bolsonaro government wants to ask the international community for funding for anti-deforestation efforts. This is set to be a tough sell, however, as the government has repeatedly sided with loggers and has been accused of dismantling its environment agencies.</p> <p><strong>2020 elections.</strong> On Tuesday, the Superior Electoral Court is expected to resume its trial on whether Jair Bolsonaro&#8217;s new party, the Alliance for Brazil, will be allowed to collect e-signatures as part of its registration process. For a party to be legally recognized, it needs roughly 500,000 physical signatures from voters in at least nine states. The case&#8217;s rapporteur voted against allowing e-signatures. The trial will be pivotal for Mr. Bolsonaro and his hopes of getting his party up and running in time for the 2020 municipal elections.</p> <hr class="wp-block-separator"/> <h2>In case you missed it</h2> <p><strong>Amazon.</strong> Last week, police in the state of Pará <a href="https://brazilian.report/society/2019/11/30/numbers-amazon-arrests-hiv-deaths-lula-football/">arrested four volunteer firefighters</a> under suspicion of having purposefully burned down an area of the Amazon rainforest. Just two days later, they were freed—as no evidence has been submitted. The episode led President Bolsonaro to, once again, blame NGOs for the rise in Amazon fires this year—and even accused Hollywood actor Leonardo DiCaprio of being responsible. Mr. Bolsonaro said Mr. DiCaprio donated USD 500,000 to the NGO under probe—which the actor denied.</p> <p><strong>AIDS.</strong> Between 2014 and 2018, Brazil managed to <a href="https://brazilian.report/society/2019/12/01/brazil-new-challenge-against-hiv-aids-2020/">reduce AIDS-related deaths by an impressive 22.8 percent</a>—translating into 2,500 lives spared thanks to treatment. The figure was released as part of the Ministry of Health’s 2019 Epidemiologic Bulletin, containing a wide range of statistics on Brazil’s fight against HIV/AIDS. The report comes in advance of awareness campaigns to mark World AIDS Day on December 1.</p> <p><strong>Supreme Court.</strong> By a 9 v. 2 majority, the Supreme Court decided to allow tax authorities to flag suspicious behavior by citizens to law enforcement without the need for prior court orders. Over 900 investigations had been put to a halt until a decision was reached; on Tuesday, the court will decide if the cases will be resumed automatically, or whether each must be decided individually. Last week&#8217;s ruling is expected to jump-start the investigation into Senator Flávio Bolsonaro, who is suspected of having run a money-laundering ring during his time as a state lawmaker in Rio de Janeiro.</p> <p><strong>UN.</strong> Once obsessed with having a permanent seat at the United Nations&#8217; Security Council, Brazil is reportedly <a href="https://brazilian.report/newsletters/daily-briefing/2019/11/29/brazil-could-lose-voting-seat-united-nations/">one month away from losing its voting seat at the UN General Assembly</a>, due to being a bad debtor. Between 2016 and 2019, the country amassed debts of USD 416 million—which, in today’s exchange rates, amounts to approximately BRL 1.7 billion. Brazil’s diplomatic body requested emergency funds but it is unclear whether the government will move to pay its debt—as President Jair Bolsonaro has a certain aversion to the UN, which he once called a “communist meeting place.”</p> <p><strong>Interests.</strong> Starting January 6, 2020, Brazilian banks will not be allowed to charge more than 8 percent a month for overdraft fees. That should slash interest rates in half to 151 percent a year. The Central Bank says the move will help correct a major distortion in Brazil’s financial system, as this form of credit is used by people with less financial education and income. Analysts expect <a href="https://brazilian.report/power/2019/11/28/credit-smaller-overdraft-fees-brazilian-banks-hard/">banks&#8217; bottom lines to be affected by the move</a>.

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Weekly ReportDec 02, 2019

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BY Gustavo Ribeiro

Gustavo is the founder of The Brazilian Report, and is an award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.