Brazil’s economy is expected to contract by 0.83 percent this year and inflation to climb to 8.12 percent, according to the Brazilian Central Bank’s weekly survey of financial experts, which was released yesterday. The growth forecast for 2016 was also lowered from 1.3 percent last week to 1.2 percent this week. According to Bruno Rovai, an analyst at Barclays, “[…] incoming data supported our view that Brazil will face a recession this year, and that any strong recovery will be hard to achieve next year.”
Yesterday’s survey marks the 12th consecutive week of worsening forecasts on the Brazilian economy, and come at a tense time for Brazilian President Dilma Rousseff, who is dealing with an escalating corruption scandal involving the state-run oil company, Petrobras. Rousseff has also received criticism, including from traditional allies, for austerity measures that her government has introduced to manage Brazil’s deficit and inflation woes.
“We do not discard the possibility that political risks could increase in the next few weeks, given Petrobras’ audit result deadline or corruption investigations escalating further,” said Rovai. Petrobras is due to publish its audited fourth quarter results at the end of the month.
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.”
Brazil’s annual Carnaval had a new entrant this year: Brooklyn Brewery.
Days before the February festivities, Brooklyn Lager was the best-selling beer amid a selection of Brazilian and international craft beers at B33R CLUB in the southern capital of Curitiba. In one day, the specialty shop sold three boxes (72 bottles) of Brooklyn Lager to Brazilians stocking up for Carnaval—three times the store’s average monthly sales of the brew.
“It’s more and more popular; you can find Brooklyn Beer everywhere now,” said Marcio Mathias, the 31-year-old owner of B33R CLUB. “And Brazilians think everything imported is better than local products.”
Brooklyn Brewery has taken notice, and is increasing its presence in Latin America’s most populous nation. Since first entering Brazil in 2011, selling about 25,000 liters a month, sales have multiplied 12 times to an average of 300,000 liters a month last year, according to export manager Claire Moyle. She expects to see another 30 percent jump in sales this year, making Brooklyn Brewery one of the larger craft brewers in all Brazil.
“Brazil kind of surprised us with our success down there,” Moyle said in a telephone interview from the company’s Brooklyn headquarters. “This is real volume with a lot of potential.”
The success of Brooklyn Brewery highlights the growth of Brazil’s craft beer market and the opportunity for niche multinational companies, even at a time of economic hardship.
This week’s likely top stories: Opposition alarmed by President Maduro’s power of decree; U.S. and Cuba continue talks; Brazilian citizens protest corruption; Bolivia and Brazil to sign energy agreement; Cuba allows first public wi-fi center.
President Maduro Given Power to Rule by Decree: Venezuelan President Nicolás Maduro was given the power to rule by decree on issues of defense and public security after new legislation was passed by the National Assembly on Sunday. Maduro asserted that the Enabling Law gives him the power “to defend peace and sovereignty” in the country. The legislation was passed in response to new U.S. sanctions last week on Venezuelan officials. Maduro claimed that the decree, which lasts through December 31, 2015, will help him fight the threat posed by U.S. imperialism. The measure spurred new fears among the opposition about government abuses. On Saturday, UNASUR nations called on the U.S. to retract its recent measures against Venezuela.
U.S. and Cuba to Continue Negotiations: United States Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson traveled to Havana on Sunday to begin the third round of talks between Cuba and the U.S. to discuss the re-opening of embassies in the context of renewed diplomatic relations. Jacobson will meet with Josefina Vidal, Cuba’s lead negotiator on U.S. issues. Talks began on Monday and may continue through Wednesday. The U.S. hopes to come to an agreement before the upcoming Summit of the Americas in Panama on April 10-11. Despite progress, there are still difficult issues to work through, such as Cuba’s desire to be removed from the U.S. list of state sponsors of terrorism and the U.S. request for unrestricted travel for diplomats on the island.
Mass Protests against President Rousseff in Brazil: Protests against President Dilma Rousseff erupted across Brazil on Sunday. In Rio de Janeiro, thousands of citizens participated in the demonstrations against Rousseff and the governing Partido dos Trabalhadores (Workers’ Party—PT). Many protesters called for the president’s impeachment, claiming that she must have been aware of the corruption in the state oil company, Petrobras. Rousseff’s popularity has plunged recently, though she denies any involvement in the scandal. The largest demonstration took place in São Paulo, with over 200,000 participants, according to polling agency Datafolha. On Monday, the government sent a package of anti-corruption laws to Congress for consideration.
Bolivia and Brazil to Sign Memorandum on Hydroelectric Project: Bolivian Hydrocarbons and Energy Minister Luis Alberto Sánchez announced on Sunday that Brazil and Bolivia will soon sign a memorandum of understanding on two hydroelectric power projects, with the goal of increasing electricity generation as well as promoting energy exchanges between the two countries. Sánchez visited Brazil last week and held discussions with Eletrobras officials and Brazilian Mines and Energy Minister Eduardo Braga. The executives are expected to finish up negotiations in Bolivia this week. The planned agreement aims to strengthen the capabilities of the Rio Madera and Cachuela Esperanza hydroelectric projects.
Cuba Allows First Public Wi-fi Center in Havana: Etecsa, Cuba’s state telecommunications agency, has authorized Cuban sculptor Kcho to provide the island’s first public wireless Internet access at his cultural center in Havana. Kcho has strong connections to the Cuban government. Kcho is paying out of his own pocket to run the public Internet service, which is expected to cost him roughly $900 a month. Approximately 5 percent of Cubans currently have Internet access due to prohibitively high costs.
Brazilian President Dilma Rousseff signed a new law on Monday that sets harsher penalties for gender-based killings of women and girls. The new legislation gives a legal definition for femicide under Brazil’s criminal code as any murder that involves domestic violence, contempt or discrimination against women. Convicted offenders will now face jail sentences of 12 to 30 years, with even longer jail terms for crimes committed against pregnant women, girls under 14, women over 60, and people with disabilities.
The new legislation expands on a previous domestic violence law known as the Maria da Penha Law, enacted in 2006 by Rousseff’s predecessor, President Luiz Inácio Lula da Silva. Maria da Penha is a women’s rights activist who became paraplegic after her ex-husband beat her for 14 years and attempted to murder her twice. The 2006 legislation had three main components: it prevented aggressors from being punished with alternative sentences, increased the maximum sentence for domestic violence to three years, and mandated that abusers distance themselves from the women they had attacked.
After Rousseff signed the most recent law, she enumerated statistics about the violence women face in her country—15 women are killed daily in Brazil, many through domestic violence, and an estimated 500,000 Brazilian women and girls are raped annually, but only 10 percent of survivors report the crimes.
On the BBC radio show “World Have Your Say” on Tuesday, women’s rights activists lauded the new law as a victory for women’s rights, but also cautioned the audience not to overestimate the law’s potential to eradicate gender-based violence, due to the difficulty of convicting criminals in the first place. Julia Pá, a filmmaker based in Brasília and a guest on the program, remarked that misogyny “is so ingrained in Brazilian society, and even in the judicial system itself, that you’re going to need to instruct judges and[…] people working with this on women’s issues and the importance of protecting women.”
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.
This week’s likely top stories:U.S.-Cuba talks promising; New delegation for FARC peace talks; Dollar strengthens against Latin American currencies; Tabaré Vázquez takes office; Peruvian businesses to learn from Costa Rican ecotourism.
U.S.-Cuba Normalization Talks Promising: After two rounds of talks—one in Havana last month and the second in Washington DC on Friday—the U.S. and Cuba announced that the re-opening of a U.S. embassy in Havana before the April 10-11 Summit of the Americas is not out of the question. While U.S. Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson and her counterpart—Joséfina Vidal Ferreiro, the director for United States Affairs at the Ministry of Foreign Affairs of Cuba—agreed that the talks were productive, Cuba remains on the State Departments Sponsors of Terrorism list and the Cuban Interests Section in Washington DC remains unbanked. While not a precondition for further normalization, Vidal emphasized that the removal of Cuba from the terrorism list was a top priority. U.S. Secretary of State John Kerry emphasized that the terrorism list was an issue separate from the negotiations, and that the review of Cuba’s position on the list would go through Congress. In simultaneous addresses on December 17, U.S. President Barack Obama and Cuban President Raúl Castro announced the re-establishment of relations after Cuba released 65-year-old former U.S. Agency for International Development (USAID) contractor Alan Gross on humanitarian grounds and the U.S. released the three remaining “Cuban Five.”
Colombian President Announces New Delegation for FARC Peace Talks: Colombian President Juan Manuel Santos announced on Monday that a new delegation of negotiators will be sent to Havana, Cuba on Tuesday to join the ongoing peace talks with the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia—FARC). The emissaries—five active generals and one admiral of the Colombian Armed Forces—are joining the peace talks with the purpose of discussing a bilateral ceasefire. Santos also commented on the possibility of reaching a solution with the United States to not extradite FARC leaders, should an agreement ending the conflict be reached. Last week, former UN Secretary-General Kofi Annan attended the talks, declaring that any agreement must be just and meet international standards. “Transitional justice is an issue of concern and controversy,” he said. “However, I would like to emphasize that justice must fit the Colombian context—while respecting international minimum standards. No one shoe fits all.”
Dollar Strengthens Against Latin American Currencies: Several currencies in Latin America are at their lowest levels in years, due to the decline in commodity prices and the expansion of the U.S. economy. Higher U.S. interest rates are expected to drive funds out of riskier emerging markets, contributing to currency weakness in the region. This week, however, several currencies may make profits, with operators seeking to exchange them for dollars to avoid the risk of a currency relapse later in the year, in which the dollar may weaken. In Brazil, the real may decline to 3 reais per dollar this week, causing a further devaluation of the Brazilian currency as market players turn to the dollar. The Colombian peso may move from 2,480 to 2,600 pesos per dollar in the next few weeks. In Peru, the dollar is expected to continue strengthening against the Peruvian Nuevo Sol from 2.96 to between 3.090 and 3.105 Nuevos Soles per dollar. The Argentine peso will likely continue its slight decline to an official 8.77 pesos per dollar, but the informal market levels continue to stay at 13 pesos per dollar. Increased purchasing of dollars may continue the Latin American currency devaluation trend seen in the past five years.
Uruguayan President Tabaré Vázquez Takes Office: Uruguayan President Tabaré Vázquez was inaugurated on Sunday, taking over from 79-year old President José Mujica. Vázquez, a 75-year old oncologist who served as president from 2005-2010, represents the Frente Amplio (Broad Front—FA), a leftist coalition party. In his inauguration speech, Vázquez called for national unity, particularly regarding public education, health and housing. Vázquez will inherit a growing economy and historically low unemployment rates. This transfer of power marks 30 years of uninterrupted democracy in Uruguay since President Julio María Sanguinetti‘s 1985 election ended the country’s 12-year dictatorship. “I would like to earnestly greet the 30 years of uninterrupted democracy we enjoy in Uruguay,” said Vázquez.
Peruvian Businesses to Learn from Costa Rican Ecotourism Best Practices: Sixteen Peruvian businesses are attending the Seminario Internacional de Desarrollo y Gestión de Productos y Servicios Turístico Sostenible (International Seminar for Development and Management of Sustainable Tourism Products and Services) in Costa Rica from March 1-8 to learn best practices regarding ecotourism. Participants in the week-long seminar, organized by La Asociación Costarricense de Profesionales en Turismo (Costa Rican Association of Tourism Professionals—Acoprot), will visit Costa Rican businesses that have successfully created sustainable products and business models. The Peruvian entrepreneurs will learn from tourist guides, sustainable companies and hotels, and will participate in site visits to parts of Costa Rica that have applied sustainable tourism methodologies—the Monteverde Cloud Forest and La Fortuna volcano. The seminar offers technical round tables, keynote speeches and workshops.
Thousands of performers and eight elaborate floats from the Beija-Flor samba school paraded through Rio de Janeiro’s Sambadrome arena last Monday. The 80-minute spectacle, meant to take spectators on a tour of the African country of Equatorial Guinea, was chosen as this year’s winner after receiving a nearly perfect score in every category from the judges.
But underneath the peacock feathers and gyrating dancers, lurked the dark shadow of allegations that a large chunk of the parade was funded by one of Africa’s most oppressive dictators.
Teodoro Obiang Nguema Mbasogo, Equatorial Guinea’s 72 year-old leader, reportedly funneled $10 million Brazilian reals (roughly $3.5 million dollars) into sponsoring Beija-Flor’s carnival parade theme. A big fan of Rio’s carnival, the dictator has attended the pre-lenten festivities for more than 10 years.
Considered to be one of the world’s wealthiest and most corrupt leaders, Obiang is accused of squandering Equatorial Guinea’s oil wealth and keeping the majority of its 700,000 citizens living in poverty. He has been in power for more than 35 years after leading a bloody coup against his uncle and former dictator Francisco Macias, whom he had executed by firing squad.
Although it is common for samba schools to accept money from companies or countries sponsoring parade themes—past parades have been accused of laundering drug money and being funded by an illegal gambling scheme called the jogo do bixo—no school has ever received such a large sum. While many are shocked by the decision to crown Beija-Flor, others believe politics should not taint their performance.
The Unión de Naciones Suramericanas (The Union of South American Nations—UNASUR) and the Banco de Desarrollo de América Latina (Latin American Development Bank—CAF) announced plans on Tuesday to develop the first fiber optic cable exclusively financed by Latin American institutions.
The creation of the proposed Red de Conectividad Suramericana para la Integración (South American Connectivity Network for Integration) could reduce South America’s reliance on foreign businesses for the infrastructure needed to connect to the Internet, subsequently lowering costs of access as well as increasing connectivity speeds.
UNASUR Secretary-General Ernesto Samper explained in a press conference in Montevideo, Uruguay, that Internet speed in South America is significantly slower than in other countries because of the challenges of broadband connectivity in the region, causing prices to surge up to 20 times higher than in developed countries.
There are an estimated 22.3 million Internet users in Latin America, accounting for 54.7 percent of the region’s population. Samper expressed concern about the digital divide in South America, stating that “one who is not connected is lost” and that Latin America “needs to generate value added processes and create autonomous communications highways to strengthen its independence and cyber defenses.”
CAF has pledged an initial investment of 1.5 million dollars for the first phase of the project, which will involve an in-depth analysis of the current Internet technologies in each South American country to determine how they will incorporate existing cables into the future fiber optic grid. The vice president of CAF, Antonio Sosa, stated that the study would focus on demographics, technical issues and institutional framework in each country.
On Thursday morning, Brazilian police questioned the treasurer of Brazil’s governing Partido dos Trabalhadores (Workers’ Party—PT), João Vaccari Neto, in connection with the deepening corruption scandal that has engulfed the state-run oil company Petroleos Brasileiros SA (Brazilian Petroleum SA—Petrobras). Vaccari’s questioning came just a day after the oil giant’s chief executive, Maria das Graças Foster, and five other executives resigned in connection to the scandal. After the interrogation, Vaccari released a statement on the PT website. “All the questions asked by the police chief were clarified,” Vaccari declared. “I answered everything transparently, and with total candor and tranquility.”
Vaccari has been under suspicion for months, since a former Petrobras director, Paulo Roberto Costa—detained last March and now cooperating with authorities—alleged that Vaccari was the intermediary between corrupt elements of Petrobras and the PT. Another informer in the case, Pedro Barusco, has alleged that Vaccari had collected 200 million Brazilian reals (about $72 million) for the PT. “[Vaccari] never received cash payments as treasurer of the PT,” Vaccari’s lawyer is reported to have said. The PT has reportedly released a statement declaring that the party has only received legal donations, and that all donations have been registered with the country’s electoral authorities.
While formal charges have not been lodged against Vaccari, his questioning represents a further challenge for Brazilian President Dilma Rousseff, as opposition parties prepare to launch a congressional probe into the scandal. This morning, her government moved quickly to stanch the fallout from Wednesday’s crisis, naming Aldemir Bendine, the current president of the Banco do Brasil (Bank of Brazil), as the new chief executive of Petrobras.