Government candidate wins turbulent Senate President election

Good morning! The election for Senate president provided moments of tension.  

Government candidate wins turbulent Senate President election

This weekend, attention in Brazil was drawn squarely on the Senate, with one of the messiest and most controversial sessions in recent memory ending up in a victory for the Jair Bolsonaro government. Davi Alcolumbre, the 41-year-old Senator from the right-wing Democratas party, came out triumphant in the crucial election for Senate President—one of the most powerful positions in Brazilian politics.

With the power to control what goes on the Senate docket and when, the office was seen as a priority to the government, which is hell-bent on approving a number of large-scale reforms in Congress over the next two years.

Mr. Alcolumbre’s win, backed by Chief of Staff Onyx Lorenzoni, spelled defeat for previous favorite Renan Calheiros and the Brazilian Democratic Movement (MDB) party, the largest bench in the chamber. While the election was an undoubted success for the government, who claimed it would not interfere in the dispute, it has also pushed some very powerful figures to the opposition, not least Mr. Calheiros himself.

Furthermore, Mr. Alcolumbre’s victory was the result of an epic push in corridor negotiations and exertion of government influence. At this very early stage in the game, the government has spent much of its political capital in return for a dangerously slim majority in the Senate.

Mr. Alcolumbre won with 42 votes, a majority of only two in a chamber of 81 Senators. Furthermore, the victory was only made possible with the acquiescence of the Rede Sustentabilidade party, a slightly left-leaning centrist group which will almost certainly not back the government from here on out.

The Senate will now go to work mired in internal conflict, which the government must seek to patch up as soon as possible. Very little progress is made in such bellicose situations, and the potential for the administration’s new enemies to cause damage cannot be underestimated.

POWER

Justice Ministry to announce new “anti-crime” bill

Minister of Justice Sergio Moro is set to submit his first bill to Congress today: a packet of measures involving changes to at least 14 laws, toughening up the country’s stance on crime.

Superfluously known as the “anti-crime law,” this is Mr. Moro’s grand plan for his first 100 days in the government. Changes are proposed to legislation in the criminal, procedural, and electoral spheres, while one of the main targets will be organized crime gangs.

The proposal will cite the examples of the notorious Primeiro Comando do Capital (PCC) and Comando Vermelho (CV) crime gangs, foreseeing measures to be taken in pursuing said organizations.

The other two focal points of the bill are corruption and violent crime, which Mr. Moro stated are all intricately connected. “Organized crime feeds corruption, which feeds violent crime,” he said. “Most murders are related to drug trafficking disputes or drug debts. Meanwhile, corruption empties the public resources which are needed to implement effective public security policies.”

Illegal campaign financing will now become a crime, as opposed to an electoral infraction. The government’s Chief of Staff, Onyx Lorenzoni, admitted to having received illegal donations from meatpacking group JBS in the past. Under the new proposals, he would have been put under criminal investigation.

Mr. Moro’s proposal also includes increased prison sentences for crimes related to the use of firearms.

MONEY

Import tax cuts to be put on hold in push to pass pension reform

With the election of the House Speaker and Senate President, the Jair Bolsonaro government can now bring its attention back to its number one goal: approving a reform to the pensions system. In a bit to get domestic business owners onside, the Ministry of the Economy plans to reduce the plan of opening up Brazil’s economy, implemented by the previous government.

During Michel Temer’s administration, the plan was to reduce import taxes on machinery and equipment from 14% to 10%, before making additional cuts until reaching 4% within three years. The measure would, in practice, open up Brazil’s economy and increase foreign competition in the machinery sector. In return for support in promoting the pension reform and convincing members of Congress, the current administration is considering toning down this import tax decrease, delaying cuts until the reform is passed.

Meanwhile, the government is planning a roadshow to present its pension reform proposal to various economic sectors and the press. While this strategy was also used by Mr. Temer’s government, which failed to approve its reform, the current administration is confident that public opinion is working in their favor to approve the bill in 2019. The Ministry of the Economy will organize a series of events around the country with important financial agents, representatives of civil society, and trade unions, in the hope that they can be convinced their proposal is the way forward.

As well as feeding a positive environment regarding the public opinion of the pension reform, the government is hoping this promotional campaign will help put pressure on members of Congress. As the bill concerns changes to the Constitution, the government requires three-fifths of both the Senate and lower house to vote in its favor.

Discouraged workers increasing; climbing the social pyramid

Amid figures of gradually improving unemployment, Brazil is facing another problem regarding jobs, that of the exponential growth of so-called “discouraged workers”—those who have given up looking for work due to believing they will not find employment. Recent figures have shown that an increasing number of Brazilians with a higher level of education are falling into this category of unemployment.

In the third quarter of 2018, 1.66m Brazilians with 10 years or more of education were classed as discouraged workers, according to figures from statistics agency IBGE. This figure stood at 394,000 in the third quarter of 2014.

This significant rise of over 300% can be explained by the fact that even though jobs are being created in Brazil since the end of the recession, many of them are of low quality. The informal jobs sector has been responsible for the country’s recent improvements in unemployment, and these low-paying opportunities are generally less attractive to those with higher education degrees. Of the total number of discouraged workers in Brazil—roughly 4.74m—35% have completed ten or more years of study.

NOTHEWORTHY

• Jair Bolsonaro. After operating to remove the colostomy bag he has been using since being stabbed on the campaign trail in September 2018, President Jair Bolsonaro is recovering in a São Paulo hospital. Despite reporting his condition worsening slightly over the weekend, doctors say he is free from any post-surgical complications or infections. He is in no pain and is expected to be released on Wednesday or Thursday. 

• Vale.Labor prosecutors are seeking to strike a deal with mining company Vale, the owner of the iron ore tailings dam which collapsed in Minas Gerais 10 days ago, to pay advance compensation to all families affected by the catastrophe. Unions which represent Vale workers argue that every family should receive an immediate BRL 500,000 in redress. At least 121 people died in the tragedy, and 205 are still regarded as missing.

• Plastics.After a difficult year in 2018, Brazil’s plastics industry is on course for a solid 2019, with a projected growth rate of 2.5%. This bump is dependant on a successful pensions reform and no increase to the tax burden, however. Production was expected to increase 2.2% last year, but ended up at a stagnant 0.8%.

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