Brazil

Brazil: Up for Sale

May 18, 2015

by Stephen Kurczy

Brazil is up for sale, and bargain-hunters from Sam Zell to Stephen Schwarzman are looking for deals.

If the country’s economy could be spread onto a monopoly board, distressed domestic utilities like Companhia Energética de Minas Gerais S.A. (Cemig) would be selling for a bargain, while infrastructure like airports and railroads would be begging for investment. Meanwhile, any of the dozens of companies implicated in a massive corruption scandal at state-run oil company Petróleo Brasileiro S.A. (Petrobras) might seem impossible to give away amid the ongoing risk of legal liability and financial fallout.

In that context, foreign investors are rolling the dice that Brazil will stage a turnaround. C’mon snake eyes!

It takes a certain type of investor to be drawn to the country right now. The economy is expected to contract more than 1 percent this year. The government is in a state of political paralysis amid calls for President Dilma Rousseff’s resignation and Congress’ refusal to sign off on belt-tightening measures meant to avert a sovereign credit downgrade. Rich Brazilians are fleeing for Miami.

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Tags: Brazil, Foreign Investment, Brazilian Economy

Unpopular Austerity Measures May Be Brazil’s Best Path to Growth

May 8, 2015

by Flora Charner

A proposed government austerity package may keep Brazil from a credit rating downgrade, but could cost President Dilma Rousseff some of her biggest supporters: the country’s labor unions.

Lawmakers in Brazil’s lower house passed a proposed bill this week that would limit thousands of workers’ access to social security benefits. The MP 665 bill was approved by a narrow 252-227 vote during a heated debate late Wednesday. 

Finance Minister Joaquim Levy called the legislative decision a “victory” and said it could potentially lower government spending by 18 billion reais ($5.9 billion) this year.

“It’s a victory for all of society,” Levy told journalists in Brasília on Thursday. “We will meet our objectives so that we can start an agenda that goes beyond the fiscal adjustment.”

Earlier this week, representatives from the Central Única dos Trabalhadores (Unified Workers’ Central—CUT) met with the ruling Partido dos Trabalhadores (Workers’ Party—PT) congressional leadership and said they were against the bill.

CUT is considered one of the largest unions in the country and one of the PT’s founding groups, and has been a strong supporter of Rousseff and former President Luiz Inácio Lula da Silva’s governments.

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Tags: Brazil, Dilma Rousseff, Joaquim Levy, Brazilian Economy

Brazilian Protesters Demand Rousseff’s Impeachment—But What Next?

April 13, 2015

by Flora Charner

Anti-government protesters once again took to the streets across Brazil on Sunday, this time in smaller numbers, but with the same demands for President Dilma Rousseff to leave office.

This is the second march in less than a month in which Brazilians have spoken out against Rousseff and the ruling Partido dos Trabalhadores (Workers’ Party—PT). At least 500,000 people gathered in 24 cities throughout the country, chanting slogans like “Out with Dilma” and “Impeachment Now.”

On March 15, nearly two million people participated in one of the largest protests in Brazil’s recent history. Discontent over unpopular austerity measures and a kickback scandal involving state-run oil giant Petrobras and the PT were major catalysts.

“The Workers Party failed Brazil,” Cristiano Jacobs, a Rio de Janeiro businessman, said during the march. “They have left Brazil broke.”

Rousseff is facing historically low approval ratings. In a recent Datafolha poll, 60 percent of Brazilians said they believe she is doing a "bad" or “terrible” job. 2,834 people were interviewed April 9 and 10, with a margin of sampling error of 2 percentage points. The same poll showed that 63 percent of those interviewed support opening the impeachment process against Rousseff.

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Tags: Brazil, corruption, Dilma Rousseff

Dozens of Companies Investigated in Brazil's Latest Corruption Scandal

March 31, 2015

by AQ Online

In an article published on Saturday, the Brazilian daily O Estado de S. Paulo released the names of 29 of the 70 companies under investigation for bribery in Brazil’s latest corruption scandal.

The companies being investigated by Brazil's Federal Public Ministry include large banks such as Santander, as well some of Brazil’s largest public and private enterprises, among them Embraer and the country’s embattled state-run oil giant, Petrobras. The companies are suspected of paying bribes to members of Brazil’s Conselho Administrativo de Recursos Fiscais (Administrative Council of Tax Appeals—CARF), a body within the Finance Ministry that deals with tax disputes, in order to reduce or avoid fines for tax evasion.

The federal investigation, called Operação Zelotes (Operation Zealots), began in 2013 but exploded into the public consciousness last Thursday, when federal police raided CARF headquarters and the offices of several of the companies and individuals believed to be involved in the scheme. While no arrests were made, authorities seized 1.3 million reais in cash (about $400,000), as well as reams of documents. Investigators have shown that the scheme has cost government coffers $1.8 billion, but believe that the real number could be as high as $5.9 billion.

Several companies, including Brasil Foods (BRF) and Marcopolo, have released statements denying any wrongdoing.  In a press release, BRF stated that it will “take all measures necessary to protect its interests.” Others have taken a different tack. Federico Paiva, one of the prosecutors leading the investigation, indicated yesterday that several of the companies under investigation have signaled their willingness to enter into a plea bargain. The Federal Public Ministry has reportedly begun to analyze those proposals today.

Tags: Brazil, corruption, Operação Zelotes

Brazil's March Madness

March 20, 2015

by Flora Charner

March has been a tough month for the Brazilian government. In the past few weeks, millions of people have taken to the streets to protest against President Dilma Rousseff and demand her impeachment, the country’s local currency devalued to its lowest exchange rate in 12 years and state oil giant Petrobras continued to be engulfed in one of the biggest corruption scandals in the country’s history.

To top it off, national unemployment went up and Rousseff’s popularity hit an all-time low. Pollster Datafolha released figures this week showing the president’s approval rating reached 13 percent, the lowest presidential approval level since 1992.

In an effort to rebound from these negative numbers, Rousseff is schedule to announce some changes to her government roster. This comes after Minister of Education Cid Gomes resigned earlier this week.

She also presented an anti-corruption government package before Congress on Wednesday that introduced reforms such as  requiring government officials to have no criminal records (known as “Ficha Limpa” or clean slate), making it illegal for unregulated slush funds to be used in the financing of electoral campaigns, and granting the judicial ministry the power to seize goods and properties of those convicted of corruption.

“Prevent and battle,” Rousseff said as she introduced her latest defensive strategy. “This is what we see as the essential strategy in order to deepen Brazil’s commitment with democracy.”

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Tags: Brazil, Petrobras Scandal, Dilma Rousseff

Brazil, Ecuador, and the Inter-American Human Rights System

March 6, 2015

by Daniel Cerqueira

The Inter-American Commission on Human Rights (IACHR), the independent human rights body of the Organization of American States (OAS), experienced a period of intense political turmoil from 2011 to 2013. Criticism of the Commission by members of the OAS—most notably Ecuador, Nicaragua and Venezuela—was echoed by Colombia, Peru and others in their vocal disapproval of concrete IACHR decisions.

The increasingly antagonistic diplomatic environment came to a head in April 2011, when the IACHR requested that Brazil halt its construction of the $17 billion Belo Monte hydroelectric dam. Brazilian President Dilma Rousseff responded by withholding its dues payment, withdrawing Ruy Casaes, the Brazilian ambassador to the OAS, and temporarily withdrawing Paulo Vannuchi, Brazil’s candidate for a position on the Commission (although he was later elected to the Commission).

Two months after Rousseff’s sharp reaction to the Belo Monte matter, the OAS Permanent Council created a Working Group charged with preparing a set of recommendations on how to strengthen the Inter-American Human Rights System (IAHRS). On December 13, 2011, the Working Group approved a report containing 53 recommendations to the IACHR. The recommendations largely referred to operations, rules of procedure and institutional practices, but some attempted to limit the capacity of the Commission and weaken its mechanisms. In short, this process was a collective catharsis for critics of IACHR decisions, combined with a chance to air broader disdain for the OAS and any institution deemed to be spoiled by U.S. influence.

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Tags: IACHR, Human Rights, Brazil, Ecuador, Organization of American States (OAS)

Chasing Unicorns in Brazil

January 23, 2015

by Stephen Kurczy

On the border of Brazil and Paraguay, David Rodrigues Krug is chasing a unicorn.

That’s how he describes his work at the massive Itaipu Dam on the Paraná River, which forms a natural border between the South American neighbors. In three decades of operation, the five-mile-wide, 65-story dam has come close to generating 100 billion kilowatt hours (KWh) in a single year—but has never quite reached that goal.

“This is like our unicorn,” says Krug, chief of staff for Itaipu Binacional, the quasi-private company that owns and operates the hydropower plant. “We want to do it, but it has to be the perfect year in terms of water, in terms of the system. It would be our exceptional year.”

But the unicorn is getting more elusive amid a major drought that is depleting hydropower reservoirs across Brazil and tipping the nation into an energy crisis—underscoring its over-dependence on hydropower and the urgency to shift to other alternative energy sources, such as wind and solar. Brazil relies on hydropower for about three-fourths of its electricity, but across the southeastern and midwestern regions, dam levels are at one-fifth capacity, leading to electricity rationing and rolling blackouts across Brazil, including in the most populous state of São Paulo. This month, Brazil had to import electricity for the first time in five years.

The blackouts are due in part to Itaipu, which opened in 1984 and is now the second-largest hydropower plant in the world. Itaipu’s electricity generation fell 11 percent last year to 87.8 billion KWh— down from 98.6 billion KWh in 2013—causing it to lose its title of world’s largest hydropower generator to the Three Gorges Dam in China, which generated 98.8 billion KWh in 2014. (The Hoover Dam, by comparison, generates 4 billion KWh per year).

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Tags: Brazil, Paraguay, Itaipu Dam, Brazil Drought

I’m No Scientist, But It's Sure Hot in Rio

January 21, 2015

by Flora Charner

In last night's State of the Union address, U.S. President Barack Obama spoke about climate change (among many other things) and challengd climate change skeptics who "try to dodge the evidence by saying they're not scientists."

"Well, I’m not a scientist, either,” Obama said. “But you know what? I know a lot of really good scientists at NASA, and NOAA, and at our major universities. The best scientists in the world are all telling us that our activities are changing the climate, and if we do not act forcefully, we’ll continue to see rising oceans, longer, hotter heat waves, dangerous droughts and floods, and massive disruptions that can trigger greater migration, conflict, and hunger around the globe."

The comments come after NOAA's National Climatic Data Center released its annual State of the Climate report last week, showing 2014 was the hottest on record.

According to the report: "The December 2014 globally-averaged temperature across land and ocean surfaces was 0.77°C (1.39°F) above the 20th century average of 12.2°C (54.0°F), the highest on record for December since records began in 1880, surpassing the previous record set in 2006 by 0.02°C (0.04°F). This is the 10th consecutive month (since March 2014) with a global monthly temperature ranking among the seven highest for its respective month. December also marks the sixth month of 2014 to set a new monthly high temperature record."

Anyone who has been in southeastern Brazil for the past month can confirm that January will most likely surpass these records.

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Tags: Brazil, Climate change, heat wave

Dilma Redux?

October 29, 2014

by Johanna Mendelson Forman

The re-election of President Dilma Rousseff as president of Brazil was not a foregone conclusion as little as a week ago. While the campaign could not have been dirtier, with charges of corruption, womanizing and wife-beating flying around, Rousseff’s Partido dos Trabalhadores (Workers' Party—PT) now seems set for another four years in office.

The PT is on the verge of having the longest-running rule of one party in Brazil since the end of military rule in 1985.

Watching the Brazilian presidential campaign in Rio in its final days provided a useful window to talk to voters.

If this election reveals anything about the Brazilian electorate, it is that they are not yet ready to give up the socioeconomic gains of the years under the PT’s stewardship of the country.

The 12 years of PT government so far have created expectations for many millions of Brazilians to become part of the middle class. Even though the right-of-center candidate, former Minas Gerais governor Aécio Neves, promised to keep the social programs going, the majority of voters opted for the status quo.

The electorate was closely divided, though. With the final votes counted, Rousseff, with 51.6 percent of the vote to Neves' 48.5 percent, had only a 3 percent—or 3.5 million vote—difference.

That foreshadows a polarization of what some have characterized as two irreconcilable halves—much as is the case now in the United States.

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Tags: Brazil, Dilma Rousseff, Social inclusion

Hostages Released in Paraná Prison Standoff

October 16, 2014

by AQ Online

After a 48-hour uprising, inmates at Guarapuava prison in the Brazilian state of Paraná yielded to authorities yesterday and released the 13 hostages that were being held in protest of poor prison conditions. Authorities reached an agreement with the prisoners, complying with at least one of their requests to move 29 inmates to a different penitentiary in Santa Catarina. Other demands included improving facility conditions, such as better food and treatment by guards.

The rebellion began on Monday morning when over 30 prisoners overpowered guards and took other inmates and prison guards hostage, transporting them to the roof where many were hooded and beaten. Only one wing of the penitentiary was overtaken, but close to 80 inmates participated in the uprising over the two days, burning mattresses, among other things.

While the rebellion was the first major uprising at Guarapuava in 15 years, prison rebellions are becoming more common in Brazil, with this being the twenty-first penitentiary rebellion in the state of Paraná this year. According to the International Centre of Penitentiary Studies, 247 out of every 100,000 Brazilian residents are serving time in prison, and Brazil currently has the world’s fourth-largest incarcerated population with 550,000 total inmates—coming in behind the U.S., China and Russia.

Tags: Brazil, Guarapuava, Prison Rebellion

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