Brazil’s political week starts with question marks

Author

Gustavo Ribeiro
June 17, 2019 • Reading Time: 6 minutes

Firing is a dish best served fried

Another man down in the Jair Bolsonaro administration. Joaquim Levy, the former World Bank director who was leading the National Development Bank (BNDES), resigned on Sunday morning. The move came after the president publicly said Mr. Levy was hanging onto his job by a thread, after naming a high-ranking officer during the Workers’ Party era to a director’s position.

Economists and businessmen were unanimous in defending Mr. Levy.

For having served for less than a year as Dilma Rousseff’s Finance Minister, Mr. Levy was always treated with mistrust by the president. But the real reason for his firing is less ideological than it seems. Within the administration, many in the Economy Ministry complained about his reluctance to pay back the bank’s debts with the Department of Treasury, and to sell off stock in the bank’s portfolio.

The episode consolidates a modus operandi for firings within the Bolsonaro administration: before leaving their jobs, officials are tossed into the frying pan so their reputations will suffer. It happened to the three cabinet members fired by Jair Bolsonaro, and the same fate awaited Mr. Levy—who, unlike the others, decided to quit himself before the attacks got worse.

A new boss at BNDES

A few names have emerged as frontrunners for the job as BNDES president. They are: Solange Vieira, president of Susep (Brazil’s insurance market watchdog), Carlos da Costa, secretary of Productivity and Employment, Salim Mattar, secretary of Privatizations, and former Central Bank President Gustavo Franco (who is currently a member of the BNDES board). Economy Minister Paulo Guedes has already started talks with the latter two, but no formal invitation has made as of yet.

A busy week ahead in Congress

This will be an eventful week for the Brazilian Congress. Tomorrow, the Special House Committee analyzing the pension reform will start debating the latest version of the proposal. Unless the opposition manages to stall proceedings, the bill could be voted on by the committee on June 25. The date is key—as congressmen (especially those from the North and Northeast) usually skip work in the last week of June to attend the super popular São João festivities—a must for politicians in order to keep their connection with their electorates.

So far, 23 of the 49 committee members have expressed their support for the bill—very close to the 25 votes needed. But Economy Minister Paulo Guedes’ recent criticism of the changes promoted by Congress (details here) creates unnecessary rifts between the branches of government, especially as a group of congressmen wants to water the bill down even further.

Moro in the Senate

On Wednesday, Justice Minister Sergio Moro will talk before the Senate’s Constitution and Justice Committee about the leaked messages between him and Operation Car Wash prosecutors. Government allies believe that, unless new compromising evidence surfaces until then, Mr. Moro will be able to keep his job security.

Jair Bolsonaro defended his current Justice minister. But he made sure to say that only his family has his complete trust, and that anyone within the administration can be fired, if necessary.

Brazilians unfazed by scandal

A poll sponsored by investment bank XP showed that, for 47% of Brazilians, the scandal won’t change popular perception around Operation Car Wash. Meanwhile, 44% believe investigators didn’t commit any excesses (two-thirds of them think some decisions should be reviewed, while one-third believes excesses were committed, but that they were “worth it”)

Petrobras major gas discovery

Brazil’s state-owned oil and gas company Petrobras made its biggest discovery since 2006—when the deepwater pre-salt oil fields were found. Six natural gas fields in the northeastern states of Sergipe and Alagoas are set to generate around BRL 7bn each year for the company, according to consultancy Gas Energy. Petrobras expects to extract 20m cubic-meters of gas every day—which is one-third of Brazil’s current production.

The Ministry of Mines and Energy estimates BRL 2bn in investments for building pipelines in the region. The government expects the discovery to consolidate Economy Minister Paulo Guedes’ promise to lower gas prices by 50% and incentivize Brazil’s industrialization. The area should be explored not only by Petrobras, but also by foreign companies—which are also set to fight for transportation infrastructure contracts.

Besides the six gas fields recently discovered, the National Petrol Agency says there are other areas in the region of Sergipe and Alagoas with signs of having oil and gas, which could result in new discoveries in the future. Natural gas is considered an important fuel that could ease the transition into a low-carbon economy.

Also noteworthy

Senate v. Car Wash. Luiz Fernando Bandeira de Mello is a public servant acting as Secretary-General for the Senate’s directing board. He also holds a seat on the National Council of Prosecution Services (a watchdog on prosecutors). Mr. Mello filed a motion to investigate Operation Car Wash investigators—after being encouraged by former Senate President Renan Calheiros (a target of the probe), and incumbent Davi Alcolumbre.

Blackout. Roughly 48m people in Uruguay and Argentina had their power supply cut off for over 7 hours on Sunday. The two countries’ power networks are interconnected, and a problem on the Argentine coast had ripple effects throughout the system. Even Paraguayan cities were affected. According to Brazil’s power company, no cities within the national territory suffered from problems with its power supply.

Strike. Last Friday’s general strike—the first under Jair Bolsonaro—was underwhelming, to say the least. The left-wing’s problems to act united in opposition to Jair Bolsonaro is certainly a reason for it, but unions also believe the fear of being fired in a moment when the economy struggles to create new jobs was a major deterrent for workers.

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