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.

Dilma vote intentions keep falling as rumors of Lula's return arise

Ricardo Noblat, columnist for O Globo wrote this monday that Lula and Dilma are waging a secret battle for the right to be the Workers' Party (PT) next candidate to the elections this year. According to Noblat, Lula has always envisioned coming back to the presidential seat (no matter how many times he declared he was done with it)  and that was why he chose Dilma to be his successor, a political nobody until 2011 when she started appearing next to Lula in big cerimonies.

But now that Dilma has become used with power, Lula would have a hard time dissuading her from her rightful reelection, unless she keeps going down the vote intention polls, which is precisely what we are seeing in this year. Last saturday Datafolha (the research institute from Folha de S. Paulo) showed the vote intentions for Dilma went down to 38% from 44% on the previous poll, in a scenario where Aecio Neves (PSDB senator) and Eduardo Campos (PSB, and currently governor of the state of Pernambuco) would be the president's main challengers.

André Vargas asked for a removal from the vice-presidency
of the Chamber of Deputies after complaints

Truth or not, it seems the situation is getting worse to Dilma every week. Last week Globo Television showed PT deputy André Vargas (that until this monday occupied the vice-presidency of the Camber of Deputies) in what it seemed to be a  lobbying negotiation with a convicted money dealer, Alberto Youssef. The investigation started after Vargas was getting a ride on Youssef private jet. This monday, Vargas asked for a 60 removal from his position as vice-president.

In the World Cup front, the news are not positive also. In Rio, an union from the workers of the constructing business started a strike and stopped the already delayed work for the World Cup and the Olympic Games this monday. In São Paulo the work in the World Cup stadium were stopped last month after the third death of a construction worker on the site. The stadium may be inaugurated in the end of this month.

Bad news for Dilma were again good news for the market. This monday, following the wave of popularity decrease the dolar hit a five month low against the real. Economists heard by O Estado de S. Paulo interpreted this as a sign that investors see a chance of change for better in the Brazilian government -- in a similar reaction to what happened when the president suffer a popularity decrease. Of course the market may be also responding to the 25 basis points increase on the country's interest rates decided by the Brazilian Central Bank on april 3rd.

Dilma faces turmoils as election agenda gains the media

President Dilma inducted six ministers this Monday,
two of them were nominated to make amends with PMDB

From now on no news on the politics section is unrelated with the election for presidents, governors, deputies and senators on october. Every announcement, every quote from a political personality has now a direct reference to the dispute between Dilma and so far the two other possible candidates (Eduardo Campos from PSB and Aécio Neves from PSDB).

The electoral tone was all over two stories that represented a downturn to Dilma on the last couple of weeks: the mess in the energy sector and the dispute with PMDB, the major allied party of Dilma. In the first case, Rui Falcão, president of PT (Worker's Party, the PT of Dilma) declared that PMDB was only interested in positions in the government and not as much in reaching the greater good for the country. Eduardo Cunha, the leading deputy of PMDB in the Congress started a rebellion and threatened to go against some of the most important projects of the government such as the Marco Civil da Internet (the Civil Landmark of the Internet -- a set of rules for the internet business in the country), due to be voted this week.

Initially Dilma tried to ignore the opposition inside her own allied base. But after realizing the power of the unpleased allies she decided to nominate two of PMDB approved names for the ministrers of Agriculture and Tourism. Ironically the crisis that started with a critic of the PMDB greediness for positions inside the government is being solved by providing PMDB with positions in the government.

Another setback for Dilma was in the energy area. Briefly put, the government decided to anticipate the end of some of the energy contracts last year (this way provoking a cut in the energy prices for the end consumer, that would represent a discount of 28% for residential users). The project backfired as it stimulated energy consumption in a time of the year where the hydroelectric dams were not getting as much rain as in the previous years. This forced the electric system to turn on the thermoelectric plants that are more expensive. In order to keep its promise of a cheaper energy, the government decided to subsidize the energy bill by putting billions to pay the extra cost of thermoelectric energy. After denying for several weeks that that was a crisis in the sector, the government decided to acknowledge the problem and promised to not interfere in future contracts at the same time it waved with a tax increase to cover the future costs of the more expensive energy. It was one perfect example of how not to manage a country, given by a president that sold an image of a great manager in the energy department.

Both situations show how bad the current government, and I would dare to say the current president, deal with this sort of conflicts. When faced with a situation where there is a need for negotiation the government usually try to impose itself first and end up being obliged to step back and offer a much more costly and inefficient solution in the end.

World Cup: 100 days to go

This tuesday marked the 100 day countdown to the 2014 World Cup. It is really an interesting coincidence that this event that fueled the protests of last year reaches this symbolic milestone now, as millions of people are occupying the streets of Brazil -- just this time for a different reason: to celebrate the Carnival. 

[If the tranquility of the Carnival mass celebration, in clear opposition to the violence of the protests, may strike you as a contradiction bear in mind two things. First  the Carnival is a people's party, so it may be seen as opposed to the opulent stadiums built for the benefit of a few. Another hypothesis is that the Carnival is the moment when the "silent majority" that actually disapproves violence in the protests (as seen through the Data Folha survey) actually comes to the street. These are at least two reasons I could think of.]

In Rio, millions celebrated the Carnival,
that had no reports of protests

Both O Globo and Folha de S. Paulo dedicated different stories to the landmark towards the World Cup. Just O Globo put with all the letters that the event is dividing the country. In a beautifully written article published on the sports section, the newspaper interviews two former players from the Brazil football (I'll always mean soccer by that) team with distinct visions of the World Cup and its meanings. The text start by saying that so far the sole legacy from the event are the protests and calls this 100 days journey as a journey to self discovery. 

Folha decided to approach the event with a different strategy. In the Economics section, the newspaper talked about the inflated prices in hotel rooms and how they are driving an increase in temporary rents from people that own houses near the stadiums that will host the event -- an american tourist paid US$ 1,640 for renting a three bedroom apartment near the stadium of Porto Alegre, more than what could be earned in a whole month in the area. In another related article it also says that the hotels in the cities that are just serving as training sites for the football teams are not receiving much reservation from tourists. 

The controversial part of the tournament was raised by the OpEd section in an article signed by Ronaldo Nazario (Ronaldinho), a member of the committee in charge of organizing the World Cup. The former Brazil forward plays defense on the text, saying the US$ 3.4 billion investment on the stadiums since 2007 were not much compared to the  US$ 323 billion spent on health care in the same period. "Brazil is progressing a lot, in social and economical terms, and has been correcting the inequalities in the recent years. We need to keep pursuing a better country. This final is played every two years in october and not in july", says Ronaldo calling protesters to express their dissatisfaction in the ballots and not inside or outside the stadiums.