Government proposes pension reform amid tensions with Congress

Author

Gustavo Ribeiro
February 20, 2019 • Reading Time: 7 minutes

In today’s issue: Government proposes pension reform amid tensions with Congress. Supreme Court resumes trial that could deepen institutional crisis. 

Government proposes pension reform amid tensions with Congress

President Jair Bolsonaro is heading to Congress this morning to present his pension reform bill—many of the details of which are still unknown. But the atmosphere is tense, as the House imposed the government’s first political defeat yesterday, striking down a presidential decree that gave senior officials the power to classify public documents as confidential. It is a bad omen for the administration, one day before the president presents his top priority for the economy.

Meanwhile, the political crisis generated by the president’s feud with his former secretary-general continued to have unpleasant developments. Gustavo Bebianno, the disgraced former cabinet member, leaked audio clips of conversations between him and the president, suggesting he has ammo against the Bolsonaro clan. While Mr. Bebianno denies he will go after the administration, the truth is he will remain as a ghost over the president’s office.

Due to the government’s political ineptitude, the Democratas party—which controls both the House and the Senate

—offered to handle negotiations between Congress and the administration. That could be effective, but it could concentrate too much power in the hands of a party which is unbeholden to the president.

Tough negotiations ahead

By voting down the presidential decree, the lower house is signaling it won’t just accept the government’s pension reform without negotiation. A poll released yesterday shows that while 71% percent of lawmakers are against a minimum retirement age of 65 (30% think there shouldn’t be a minimum age at all, and only length of service should be considered). Politicians also want the military to be included in the austerity package.

Supreme Court resumes trial that could deepen institutional crisis

Today, the Brazilian Supreme Court will continue its trial to decide whether or not homophobia and transphobia should be criminalized. While Brazil is one of the world’s deadliest countries for LGBTQ people, the chances of this issue being approved are not as high as one might think. Depending on the verdict, the Justices could be actively putting the judicial branch of government above Congress—which is responsible for legislating. That could deepen a crisis between the two branches of power.

Last week, Justice Celso de Mello called out the “inactivity” and “omission” of Congress for failing to legislate on LGBTQ-related issues. At the same time, he said that it is not up to the Supreme Court to create laws—especially in criminal matters. Justice Mello, who has yet to finish his arguments, has not indicated where he will go in his opinion. After him, the remaining 10 Justices are still to vote.

In order to delay the outcome of the trial and avoid further straining the relationship between Brazil’s three branches of power, it is likely that one of the Justices will request to take the case under advisement—a fascinating quirk of Brazil’s Supreme Court which allows any court member to stall the trial indefinitely.

In 2015, Justice Luís Roberto Barroso said the Supreme Court should promote certain “civil advances.” Some legal experts diverge—saying that one branch of government shouldn’t impose itself over the others. “If the justices choose to criminalize homophobia, they will have to carefully base their ruling, so it doesn’t seem as if they are stepping out of bounds,” says legal scholar Ligia Fabris, a professor at Fundação Getulio Vargas.

Ford to shut down plant, threatening 24,000 jobs

Two months after celebrating its 100th anniversary in Brazil, Ford announced it is abandoning the truck market in South America and shutting down its plant in São Bernardo do Campo, (Greater São Paulo), as part of a global restructuration plan. Lyle Watters, the company’s top official in the region, said his division recorded losses of USD 678m last year.

The truck segment in Brazil was benefited by federal subsidies in recent years, but now faces a dire situation: 70% of idle capacity in the industry, after tax breaks were cut. But Ford experienced an overall drop in sales: only 16,700 units of the New Fiesta are expected to be purchased—roughly 15% of the company’s production back in 2013. While 3,000 people are employed in Ford’s factory, its closing would threaten the jobs of some 24,000 workers, considering the production chain as a whole.

Brazil to send aid to Venezuela

Brazil will deliver humanitarian aid to the Venezuelan border by February 23, along with the United States. The decision follows a request by Juan Guaidó, leader of the opposition against President Nicolás Maduro. A spokesperson for the Brazilian government confirmed that food and medicine from Boa Vista—the capital of the bordering state of Roraima—will be transported by Venezuelan trucks (and driven by Venezuelan citizens) sent by Mr. Guaidó.

The opposition is trying to get humanitarian aid from Curaçao, Colombia, and Brazil—but President Maduro has repeatedly denied any shortages and has ordered the military to block the aid. He contends that food shipments are a plot to meddle in Venezuela’s internal affairs – a Trojan horse from Uncle Sam to undermine the sitting government.

Brazil has recognized Mr. Guaidó as the legitimate Venezuelan leader and has called for Nicolás Maduro to be removed from power. He has overseen the worst humanitarian crisis in the Western Hemisphere, with the country haunted by 1,370,000% inflation and food shortages. The UN estimates there will be 5.3m Venezuelan refugees and migrants by the end of 2019.

What else you should know

  • Corruption 1. An Operation Car Wash-related investigation targeted former Senator Aloysio Nunes—and arrested Paulo Souza, a money-laundering operator for his Brazilian Social Democracy Party (PSDB). Mr. Souza had a “bunker” with a stash of BRL 100m—which he regularly had to leave out in the sun in order to prevent mold, say the Feds. In the past, Mr. Souza has threatened to spill the beans on corruption in the state of São Paulo.

  • Corruption 2. Another police operation arrested Robson Andrade, the head of CNI—the mighty National Confederation of Industry. Agents are investigating a scheme to siphon BRL 400m through the Sistema S, a group of non-profit institutions created by the private sector, promoting culture, social welfare, employment, and training.

  • Anti-crime. Yesterday, Justice Minister Sergio Moro presented his anti-crime bill—a series of law changes to crack down on organized crime. The bill was divided into three, so Congress can vote on tougher measures against criminal organizations, without necessarily having to vote on laws to curb political corruption and illegal campaign financing.

  • Rio. State prosecutors in Rio de Janeiro are investigating an accusation that a group of police snipers would be using residents of the Manguinhos favela, in northern Rio, as target practice. Since September, five people were shot down without police records showing confrontations in the area. Residents say the shots always come from the same place: a nearby police tower.

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