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The State of Play in Brasília
A breakdown of exactly what has been going on in Brazil, and what it means for the country’s political and economic future.
The first half of 2021 has been full of twists and turns in Brazil, from President Jair Bolsonaro’s cabinet shakeup earlier this spring to former president Luiz Inacio Lula da Silva’s return to the political arena. The Brazilian National Congress is holding hearings into the administration’s handling of the COVID-19 pandemic, even as it negotiates with the government to revive the pre-pandemic agenda of tax reform and civil service reform—in a rush to pass legislation before the start of the 2022 election cycle consumes lawmakers’ attention. And through it all, the death toll from the COVID-19 pandemic continues to rise.
On June 9th, the Brazil Institute hosted a discussion to analyze exactly what has been going on in Brasilia, and what it means for the country’s political and economic future.
“The pandemic deepened the gap of social inequality in Brazil, which was already large to begin with. COVID has been hitting the country hard, it ranks second only to the United States in number of deaths and is third in number of cases globally.”
“Markets and the federal government are excited about short-term perspectives for public revenues and economic activity as a whole. Most confidence indexes are surging, the stock market has been breaking positive records, and GDP figures for the first quarter had over 1% growth compared to the previous quarter. On the other hand, Brazil has a tight budget to carry out actions in response to the economic and health crisis.”
“The imminent water crisis is expected to last until November, which affects power generation, water supply, and agribusiness.”
“Brazil faces dire social figures with the unemployment rate hitting 15% while the number of Brazilians in extreme poverty has reached the historic record of 14 million people. For the first time in seventeen years, more than half of the population, which means more than 100 million people, face food insecurity.”
“The administration still has room to take action regarding vaccination and other issues, such as the extension of the cash transfer program, and with that see positive effects on its public approval ratings [...]. Bolsonaro's lack of action with regards to the pandemic has left a void that has been filled by Congress, the Supreme Court, and other political leaders and the state and municipal levels.”
“I believe that in terms of the election first, next year’s election, Lula has been working very much close to the states in order to try to fill this void that exists because of the way Bolsonaro was conducting the government with the states and municipalities in general.”
“Financial markets have reacted very nervously to potential signs of fiscal mismanagement. And you look at Brazil in comparison to many other emerging markets and I would say it’s probably one of the countries that has taken the greatest credibility hits vis-a-vis its peers.”
“Any look at Brazil has to be nestled within the broader context where the entire region is feeling the political and economic repercussions of COVID-19 and a context where governments have less room to spend heading into the second year of the pandemic. If you look at Brazil by that metric, I wouldn't say that Brazil is worse than the region. In fact, I would make the opposite case: on a relative basis, it may be even better."
“Yes, Brazil has the second highest death county on a nominal basis. But if you look at the death count on a population basis, on a per capita basis, by the end of 2020, Brazil’s death count was equivalent, very close to the average of the entire South America. It wasn’t that much higher than the rest of their peers.”
“When we look at the presidential election next year, we are headed towards a highly polarized environment, much like the rest of the region. I don’t see much room for a centrist candidate to emerge, to be competitive between Lula and Bolsonaro. I think both candidates are going to be very strong. People are underappreciating Bolsonaro's political capital, I think it's going to be a very tight election.”
“I think this congressional investigation [into the government's management of the COVID-19 response] is rehashing elements that have already been socialized in public opinion. I don’t think that it’s really bringing anything new from a public opinion point of view. So I don’t think that this is actually damaging the president’s approval ratings [...]. The president's approval ratings are going to follow the epidemiological facts on the ground."
41:00: At the worst moment of COVID, 25% of the population evaluated the president being excellent and good and 35% of the population approved the president (...) A president with 35% approval ratings isn't a weak president"
"Lula wants Bolsonaro in the second round and Bolsonaro wants Lula in the second round, because each of them have large vulnerabilities. So against a centrist candidate, each of them would probably lose."
“We have perhaps two different types of policies that are being implemented right now: one economic policy has much more to do with the privatization of important sectors of the government, or public concessions. We have a more specific track, that can be filled with measures [that do not require as much negotiation] as tax reform, or even fiscal reform. I don't think we have enough space for that […]. And besides that, we have another point right now, we have an inflationary perspective. We have now the highest level of inflation […] we are much over the limit of the inflation target.”
“[Brazil's military police and (to a lesser extent) civil police] are very politicized, they are supportive of Bolsonaro’s agenda and Bolsonaro’s perspectives of politics. And we have a political climate now in Brazil that reinforces the decision of the population to go to the streets and the decision of the polices at the state level to repress those demonstrations […] and we have signs that it may continue over the next months. This is a very important source of uncertainty.”
“The parliamentary inquiry [on the government's handling of COVID-19], they are providing an alternative narrative about the facts. Not exactly the same alternative narrative as the big media was capable of providing but a more official one, a more politicized one, in which you have a political element […]. It changes the political climate in the country.”
“When Lula came back to the political center, it changed completely. First of all, because we didn’t have until then a political competitor on the left wing of the political spectrum in Brazil that would be really competitive, that would really occupy the whole space. And Lula occupies the whole space with regards to the left.”
The Brazil Institute—the only country-specific policy institution focused on Brazil in Washington—works to foster understanding of Brazil’s complex reality and to support more consequential relations between Brazilian and U.S. institutions in all sectors. The Brazil Institute plays this role by producing independent research and programs that bridge the gap between scholarship and policy, and by serving as a crossroads for leading policymakers, scholars and private sector representatives who are committed to addressing Brazil’s challenges and opportunities. Read more
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