Are economic elites abandoning Jair Bolsonaro?

Author

Gustavo Ribeiro
March 25, 2019 • Reading Time: 5 minutes

In today’s issue: Are economic elites abandoning Jair Bolsonaro? Even Bolsonaro’s party is disgruntled. 

Are economic elites abandoning Jair Bolsonaro?

Midway through the 2018 election campaign, Jair Bolsonaro was able to attract the blind support of economic elites, thanks largely to his economic guru—the ultra-libertarian Paulo Guedes—and the fact that he was running to beat the Workers’ Party. But the alliance is under threat, according to recent signs. If the president is not already worried about his job security, perhaps he should be.

House Speaker Rodrigo Maia spent the weekend trading barbs with the government. He reportedly said the pension reform “is above [Bolsonaro’s] administration,” and that it would pass in spite of the president (who told supporters he is, in principle, against the reform). Another sign that should be worrying Mr. Bolsonaro is the statement made by São Paulo Governor João Doria, that Economy Minister Paulo Guedes “must be shielded” from the political crisis.

Mr. Doria is deeply connected to big business, and his change of tone suggests that, should the business class be forced to choose between defending the president or backing Mr. Guedes’ liberal agenda, it would go for the latter. Meanwhile, Vice President Hamilton Mourão will attend an event of the Federation of Industries of São Paulo (FIESP) tomorrow. The group was one of the main forces behind the impeachment of Dilma Rousseff.

Even Bolsonaro’s party is disgruntled

Lower house members of Jair Bolsonaro’s Social Liberal Party (PSL) will meet on Wednesday to decide how to position themselves regarding the government. The general feeling is that they defend the administration, but are not getting anything in return. They want to send a message that either the president changes his demeanor, or they will jump ship.

This latest threat comes after congressional evangelicals—which offered crucial support during the campaign—declared their “independence” from the administration—and they were not the only ones. Disgruntled party leaders plan to deliver the government a defeat by repealing the decree which lifts visa requirement to tourists from the U.S., Canada, Australia, and Japan. Speaker Rodrigo Maia denies this, but the vote will be a measure of how damaged Congress’ relationship with the government already is.

On Twitter, former President Fernando Henrique Cardoso wrote that “a president who doesn’t understand Congress’ strength could be ousted.” It is perhaps too soon to be having this kind of conversation, but no president has survived after losing support in Congress and among business elites.

China clears Brazil’s pork subproducts

An African swine fever outbreak has hit 28 Chinese provinces, and could generate a supply deficit of up to 2m tons of processed pork by the end of this year. The Asian country has now decided to authorize a 2-year long demand from Brazilian hog producers to also export pork subproducts—such as edible fat, which has superior market value, according to Brazilian producers.

Recently, though, China refused to give the green light to 70 new pork-export plants. At the moment, 9 factories are cleared to send pork—they will be able to ship non-refined, frozen fat with no additional sanitary inspection to their product. According to Rabobank, Brazil could end up providing up to 10% of China’s pork demand due to the fever outbreak.

What else you should know

  • Financial aid. Starting next year, the federal government will transfer BRL 17bn from a fund financed with money from the exploration of pre-salt deepwater oil reserves to assist states and municipalities with their financial woes. The move aims at reducing social security deficits. 

  • Petrobras.In 2016, Petrobras sold its household gas distribution subsidiary for BRL 2.8bn to the Ultragaz group—but the deal was rejected by Brazil’s antitrust authority, as Ultragaz would then control over 60% of the market in several states. Now, Petrobras has hired Santander in the hope of a new deal, hopefully with foreign investors, to avoid similar problems.

  • Education.The Ministry of Education has decided not to assess the level of literacy among Brazilian children. In recent years, the government has found that over half of the country’s 8-year-old students can’t read or write properly. A national literacy program was listed as one of the government’s goals for its first 100 days.

  • Press.Investment bank BTG Pactual will take over Exame, Brazil’s top economic magazine. The publication was sold by bankrupt publishing house Abril, and is expected to be merged with the bank’s platform of investment services. Using editorial publications to generate leads has become widespread in Brazil, thanks to investment bank XP, which uses the website Infomoney for that same purpose.

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