What's up with Brazil?

I've been a little quiet lately, but that doesn't mean things are quiet Brazil. 

President Dilma was impeached, a new old president has taken her place, and now the country is facing again municipal elections.

What we read in today's newspapers is a mixture of organize crime fighting and killing candidates, the fall of PT, and the struggle of the new president to pass essential reforms for the country.

While there are some who still think the country has suffered a coup d'état, The majority of the public opinion, and press, seem to be waiting for something to happen. 

I personally think the solution will not come easily. But it will come eventually, probably by the end of 2017. The PT loses the election in Sao Paulo this weekend it will probably mean the end of the party as we know it. One of its last domains is Minas Gerais, the state in which the PT governor assistant was arrested during the election with undeclared money. That's why it is so important to win Sao Paulo city elections for the party, as another PT politician may be impeached so soon.

Protests, protests, protests!!!

Brazil is being shaken by protests since Dilma Rousseff's inauguration in January. 

Soon I intend to start writting here again. Sufice to say that things are not as easy as they look. I believe social media can mist the analysis.

I hope to post here more political analysis in the light of the new communication technologies (precisely), always with the subject of Brazil. With this I put together all topic I consider important. 

Stay tuned.

For now, an interesting analysis is on FT: http://www.ft.com/intl/cms/s/0/2e2a58fe-de18-11e4-8d14-00144feab7de.html?siteedition=uk#axzz3XP0FJVFT

Brazil media calls for unity on World Cup

Fuleco, the World Cup's official mascot has not yet
 conquered the national fans, producers of toys said
they are targeting international tourists

It's finally happening. The World Cup starts today after 7 years of (not very good) planning, discussions and protests. In the past year, particularly, the World Cup helped Brazil show its true face to the world. The "football nation" is now an angry emerging middle class nation, that claims for more quality in the public services. It's also a stable democracy nation, which went through massive protests without a single change in its institutions. It is still a struggling nation, that suffers to put investments in due course, but it is learning.

No, we are not the skyrocketing Christ statue The Economist showed back in 2009. In fact in today's Folha de S. Paulo edition, Vinicius Torres Freire, an economics columnist, calls attention to the possibility of a technical recession (two quarters of decrease in the economic activity) in the first half of this year.

But we are not that bad. The fact the country managed to go through the protests maintaining its institutions should not pass unseen. Unlike any other emerging country with recent upheavals (Turkey, Thailand or Egypt, just to name a few) Brazil's democracy has not been questioned by the protests.

The truth (or at least the close we can get to it) lies as usually in the middle. Brazil is a country which is just learning how to invest -- as states another Folha's article, signed by Marceo Miterhof. After decades of crisis and after addressing the more pressing issues of inflation, economic stability and income distribution, the country has just started to focus its attention on the infrastructure problems. Differently than the last big investment decade of the 1970's this time the investments came under the democratic regime with all its checks and balances. It's been a tough learning.

This is why today the Folha's balance of the World Cup infrastructure legacy showed that little over 50% of the 167 planned improvements were completed in time for the games. The rest was either abandoned or postponed to after the games.

As Folha's editorial states today, it's time to bring attention to the event itself and to support the national team. This does not mean forgetting all the criticism, it means remembering the positive aspects that the event also has. I don't think anybody in Brazil believed the World Cup would bring an end to all of the country's problems. It actually contributed to expose the naked reality of a country that has improved recently but still has a long way to go.

As I already mentioned here, I believe the games will occur without any major problem. The main strikes of metro workers and homeless in São Paulo were controlled in the last minute, just in time for the event. It's the Brazilian way, always finding a solution at the last moment.

I'm also curious on what will be the political result of the games. So far, it seems the World Cup has backfired for the Worker's Party. But who knows what can happen after the World Cup nationalist marketing flood. The latest presidential poll published last wednesday showed that for the first time Dilma lost the upper hand when compared to the sum of her two main adversaries. A second round in the elections is now more likely than ever.

The World Cup is around the corner, and the elections too

Brazil is living a huge strike wave days before the World Cup. This week São Paulo came to a halt when bus drivers stopped working. And this friday president Dilma almost couldn't finish her speech in Brasilia due to the protest of public servants in strike. 

Protests during Dilma's speech this friday

It's no surprise that strikes occur at this time of the year, as each union has its own calendar of negotiations. But now organized workers are taking advantage of the World Cup to leverage their negotiation position, as the world's eyes are turned to Brazil. And that's been picked up by the Brazilian press. 

In this saturday's edition, Folha de S. Paulo calls attention to the fact that Dilma is even considering buying a terrain near the Itaquerão stadium in São Paulo to halt homeless protests in the region. The land would be designated to housing projects.

Both Folha and O Globo gave a fairly big space to former football player (now a member of the World Cup committee in Brazil) Ronaldo's quote about being ashamed of the country's lack of organization  -- it was the cover of Folha. Also on the World Cup, O Estado de S. Paulo revealed that the already very ambitious Brazilian project of receiving the World Cup in 12 cities was even more gigantic: it involved 17 cities, according to Fifa.

Elections

This week another survey for the presidential election was released. From Ibope/Nielsen, the results point out to a small recovery from Dilma Rousseff, from 37% to 40% of the vote intentions, but also a greater chance for a second round of elections, as her adversaries grew more. 

To wrap this post up, I just liked to call attention to Aloizio Mercadante's interview to Folha de S, Paulo two weeks ago. There, the current minister of the Civil House admitted the government's price control policy (a very unusual, not to say inefficient, way of halting inflation). He was later unauthorized by the Finance minister Guido Mantega, but my personal opinion is that mr. Mercadante's ideas resonate deeply in the Brazilian government, and are the first honest acknowledgment of the true Brazilian economic policy. (See Mercadante's interview).

Populist spree on the way to the campaign

As correctly predicted by the Brazilian media, the International Worker's Day changed the tone of president's Dilma Rousseff speech. She was more aggressive, stating that her government has done a lot in terms of raising the minimum salary and reducing unemployment (which is true -- the problem is that this policy is not sustainable). The president promised the continuity of the raises in salaries together with the state paid pensions, the correction of the income tax table (which, roughly put, means less people will pay taxes) and a 10% increase in the benefits paid by Bolsa Família, the main federal income distribution program.

Analysts heard by Folha de S. Paulo and O Globo saw this speech as a sign of weakness from the president. She had to put a monetary incentive for the voter because she was running short on allies they said. In fact, on the week before the announcement Dilma declared she was going to dispute the reelection with or without the political allies.

Eduardo Campos and Aécio Neves also promised
to raise salaries and expand income distribution

The media also calculated the cost the new measures would have for the next government. O Globo stated the total cost would amount to 9 billion reais, while Valor Econômico stated the government would have to find another 1.3 billion reais to make ends meet. The main point is that the populist announcement put further pressure on the government spending reducing the likelihood of any improvement of the country's rating and debt status for the next government, if Dilma is reelected.

Repercussion

On the following day of the speech, the Workers' Party officially chose Dilma as its candidate, thus putting an end to the rumors of former presidente Lula's return. Both candidates from the opposition parties, Eduardo Campos and Aécio Neves also promised, on their own way, to increase the minimum wage and to keep expanding and increasing the income distribution programs of the government. They also joined forces to file a lawsuit against Dilma, accusing the president of using the public time on the television to anticipate the political campaign.

The movements so far reveal the true intention from all candidates is to assure the sympathy from the core voters (the emerging middle class and the lower income workers) while remaining still to vague to discuss an actual plan for the country. This comes as no surprise to anyone that knows how the Brazilian elections work, but it is still somewhat disappointing as mr. Steinbruch (counselor to the presidency and CEO of the steel industry CSN) well put in his column today in Folha de S. Paulo.

International Worker's Day may change Dilma's tone in pre-campaign

Dilma will address the nation in the
International Worker's Day

It seems the recent bad numbers in the electoral surveys have finally hit the pre-campaign of president Dilma Rousseff.  Yesterday the president already changed the strategy and started attacking her opponents. She said during a speech that she does not believe the country will make a step back (meaning she believes she will be reelected). The tone is expected to be even more direct on her TV speech tomorrow on account of the International Worker's Day. She may address her main opponents Aécio Neves from the social democrat PSDB party and Eduardo Campos from the socialist party PSB stating clearly what her government has conquered to the working class in Brazil.

Today O Estado de S. Paulo published pieces of Dilma's government program draft. The text basically makes a direct reference on the benefits that the Workers' Party (PT) made for the country and tries to frame adversaries proposals as threats for the average Brazilian worker. One example is the adversaries defense of the Central Bank's independency. The text asks: "Independence from whom?", implying that without control the Central Bank would damage the workers income gains. It also refers to the past government of PSDB as a privatist government.

Both strategies proved to work well on the last two campaigns of PT (for Lula's reelection and Dilma's election). The question is if this is going to work again, specially when the government proved to be such a bad manager in the energy sector, and when the gains from the policy of increasing salaries and maintaining jobs are being eroded by an inflationary bubble that threats to damage the purchasing power of the country's lower classes for the years to come.

The attempt to frame adversaries as members of "evil market forces" is also a fallacy easy to deconstruct, because her government poured buckets of money to huge transnational companies using subsidized loans from the national development bank, BNDES.

The change of tone reflects the loss of 6,7 percentual points in Dilma's vote intention, from 43,7% to 37%. The president would be still reelected if the elections were held today, but if the trend keeps going, Dilma may loose.

Brazil approves new internet legislation

Brazilian senators vote on Internet Law

The Brazilian Senate has just approved the Civil Landmark of the Internet (Marco Civil da Internet), a subject that will for sure be on the cover of this wednesday Brazilian newspapers. The text of the law ensures net neutrality, even though it also opens the door for content discrimination in specific cases to be determined by presidential decree. The net neutrality -- the legal prohibition of discriminate data flow according to the type of content, such as slowing down Skype connections on mobile internet -- was the most sensitive subject of the law, a subject that now will be probably on the hands of the next Brazilian president to resolve.

The law also ensures the privacy of users and limits the liability of Internet Services Providers in cases of judicial process regarding third party's prejudicial content published online. There is an interesting mention that internet application providers (such as Facebook or Google) should not abuse in the use of private information of users (even if authorized by them). I would not be surprised to see in the future a civil lawsuit against one of the big internet companies in the country.

I'm curious to see how will be the coverage of the main newspapers tomorrow. The first time the text was approved on the Chamber of Deputies I noticed few of the criticism about the limited net neutrality (this I saw later on specialized publications). In fact, both O Globo and Folha were rather optimistic about it. In fact just now (as the subject is only on the online versions of the media, the attentions are focused to the victory of the government in surpassing the opposition maneuvers against the project.

-- update --

I just had a brief discussion with a friend  which was on the government during the public consultations of the internet law project. Basically the reason why they let the details of net neutrality to be determined by presidential decree was in order not to pass a rigid law that would have to be changed in the future due to technological developments. So net neutrality is still there as a principle and a set of rules which will have specific subsets of parameters and exceptions (Many thanks to Guilherme Almeida de Almeida).

As for the media coverage it was pretty modest, compared to the first approval. Since the text was not passed with many changes, newspapers sticked to describing the law and its concepts. Folha published an article from PSDB (opposition) senator Aloysio Nunes Ferreira arguing the law could be improved had the Senate more time to work on it. He said the privacy issue could be better defined, granting more protection to users.

-- end of update --

Catching-up

The Easter week I skipped publishing here was dominated by the Petrobras scandal (the refinery purchase that brought a billionaire loss to the company) and the presidential election forecasts, that again are dimming for Dilma. They both seem to be related, but in fact I hardly believe the average voter will put much weight on what is being done with the biggest company in the country.

On the Petrobras' front the most interesting development is a sort of discrepancy between the declarations of José Sérgio Gabrielli, Petrobras' former CEO and president Dilma Rousseff. Dilma said the Pasadena purchase was a bad business. This Sunday, in an interview to O Estado de S. Paulo, Gabrielli replied saying that Dilma was one of the board members and shared the same responsibility in the purchase. This was at least what O Estado de S. Paulo put in the headlines. I read the whole interview and could see Gabrielli saying the purchase was totally in acceptance with the 2006's context. But the contradiction surely was enough to be replicated by Folha de S. Paulo and O Globo on their monday editions.