The agricultural lobby has a plan for Bolsonaro’s Brazil

Hello! In this week’s issue: The most important facts of the week. The president and Twitter. The agricultural lobby has plans for Bolsonaro’s Brazil

The week in review

• Bolsonaro. It was a rough week for President Jair Bolsonaro, who dealt with a number of self-inflicted image crises. On Tuesday, he tweeted a lewd video of two men performing sexual acts in public as a critique of Carnival. The tweet made headlines, sparking criticism that his ‘moral crusade’ could cost political support for his pension reform. Then, he said during a speech that “democracy and freedom only exist when the Armed Forces want them to.” In both cases, Mr. Bolsonaro was forced to give half-hearted apologies—which did little to improve his image.

• Internal war.The Ministry of Education fired—or demoted—four former students of Olavo de Carvalho, the “ideological guru” of Bolsonarism. That led Mr. Carvalho, a self-proclaimed philosopher, to turn his social media machine gun against the government, which “is being run by enemies.” This is yet another internal clash between the more fervently ideological backers of the president and the military wing—which is pragmatic and focused on the administration’s economic agenda.

• Diplomacy.The White House said on Friday that U.S. President Donald Trump will meet with Jair Bolsonaro on March 19 in Washington. The Venezuelan crisis will be at the top of the agenda. Also on Friday, Mr. Bolsonaro hosted a ceremony to deliver diplomatic credentials to foreign ambassadors and announced he plans to visit China this year. Mr. Bolsonaro has a track record of aggressive stands against Brazil’s top trading partner, describing the Asian giant as a predator looking to dominate key sectors of the Brazilian economy.

• Growth.The Organization for Economic Co-operation and Development (OECD) believes the global economy will continue to decelerate amid trade hostilities and political uncertainties. The institution lowered its forecast for global GDP growth in 2019 from 3.5% to 3.3%. For Brazil, growth expectations went from 2.1% down to 1.9%.

• Economy.São Paulo Governor João Doria announced cuts of up to 25% in state taxes for automakers that invest at least BRL 1bn in his state—and generate at least 400 jobs. Despite presenting himself as a libertarian, Mr. Doria seems to have taken some lessons from the Dilma Rousseff playbook on economics, handing hefty subsidies to a specific sector which has a strong lobby. This kind of policy by the federal government under Ms. Rousseff is considered to be among the top reasons for Brazil’s worse recession on record.

The President and Twitter

In just over two months in office, President Jair Bolsonaro has transformed Twitter into an official communication channel. Though the microblogging social network, the president has announced government policies, has sparked feuds that led to a cabinet firing … and has tried to inform himself about “golden showers.” During the 2018 campaign, Mr. Bolsonaro turned Twitter into a powerful weapon the likes of which no other Brazilian politician has ever managed, and the fact that his @jairbolsonaro account has become a sort of federal register platform only added to the outrage stirred by the president’s pornographic tweet.

The agricultural lobby has a plan for Bolsonaro’s Brazil

The Jair Bolsonaro administration is a patchwork of power circles—which are not necessarily compatible, as recent internal struggles have shown. But one sector seems to be controversy-free, at least within the administration: agribusiness. Two weeks ago, the congressional rural caucus held a ceremony to inaugurate its new leadership—and the event was an unmistaken example of the sector’s prestige. President Bolsonaro, VP Hamilton Mourão, Economy Minister Paulo Guedes, and Environment Minister Ricardo Salles were in attendance, while Agriculture Minister Tereza Cristina passed along the leader position to Congressman Alceu Moreira.

While agricultural producers have always had a strong lobby in Brasília, they seem to have grown stronger than ever. The rural caucus has even matched forces with Mr. Guedes, seem by financial markets as the administration’s surety.

Agricultural producers imposed a series of small defeats to the libertarian economist: they have managed to receive a raise in importing fees on powdered milk, after the Ministry of the Economy chose not to renew anti-dumping taxes on the product; they avoided the end of subsidies for energy bills in farms; they forced the government to pledge that rural pensions won’t be as altered as Mr. Guedes wants—and they got control over the demarcation of indigenous lands, a long-time wish of the sector.

The true struggle, however, is yet to come. Ruralists want heftier subsidies for crops over the next two years. In 2018, the government allocated BRL 221bn to the so-called Harvest Plan. This year, producers want nothing less than BRL 300bn.

However, the cash-strapped government is limited by the federal spending cap, which forbids an increase of expenses without more revenue flowing in. So, rural lobbyists came up with a plan: getting the BRL 1bn from the government for rural insurance policies (doubling last year’s amount). With better insurance, farmers would get credit at cheaper interest rates.

The sector’s demands clash with Mr. Guedes’ vision of austerity. The winner of this battle could determine the direction of the government. One sign of who has more prestige with the president shouldn’t be overlooked: during the powdered milk episode, Mr. Bolsonaro told the Economy Minister to settle the issue with Ms. Cristina. And he was the one who drove to her ministry. It may seem petty, but this, in Brasília language, means that she has the upper hand.

There is another demand on the deck. Producers demand “legal security” for the agricultural sector—a dog whistle term for an overhaul of regulations to fit the needs of large producers, to the detriment of indigenous communities, workers, and small farmers.

For the first time ever, ruralists have a president who is completely aligned with them. And now they want to cash in.

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