The city waiting for a disaster to happen

Author

Gustavo Ribeiro
May 28, 2019 • Reading Time: 8 minutes

The story of Barão de Cocais, a city waiting for disaster. How will Congress react to Sunday’s pro-Bolsonaro protests? Bolsonaro losing support among investors. Former business mogul convicted of insider trading

The city waiting for a disaster to happen

Unlike most Sundays, the church in Barão de Cocais was packed this week—with people asking for divine intervention. The town lies only 145km from Brumadinho, where a tailings dam collapsed on January 25, killing 243 and leaving 27 missing. For the past two weeks, the local people of Barão de Cocais have been living in fear that their local mine will have the same fate. Since May 19, part of the mine’s structure is moving—and could collapse. There’s a reported 15% chance this collapse would compromise the reservoir, causing a Brumadinho-like spill.

“Who can really sleep, thinking that the mine next door could collapse at any minute?,” Antonio Gomes, a local housekeeper, told The Brazilian Report via WhatsApp. Many residents say they would prefer the whole thing to collapse now, to end this state of expecting the worse. On the other hand, Vale—the giant mining company which owns the dam—says authorities have exaggerated and that the risk of a spill is smaller. But, having seen two of its mines collapsing in 2 and a half years, Vale is not the most credible source on the matter.

In February, Vale informed the 6,054 local residents that the structure of the dam is “precarious” and marked on a map the area which will be engulfed by mud, should the reservoir collapse. If that were the case, the commercial zone of the city will disappear—only sparing the neighborhoods of the town located on higher ground. “We aren’t prepared for a tragedy. Or for waiting for one, actually,” said Mr. Gomes.

How will Congress react to Sunday’s pro-Bolsonaro protests?

After Sunday’s protests in favor of President Jair Bolsonaro—and against Congress—party leaders are skeptical of the government’s “peace offers.” Leaders of the so-called “Big Center” (a group of center-right parties which hold a majority in the House) believe the president wants to dismantle the group—and didn’t like the fact that Speaker Rodrigo Maia was targeted by the protests, despite his support for the government’s reforms.

Many parties leaders have said that, by retweeting videos of demonstrators attacking Congress, Mr. Bolsonaro chose to siding with his most radical supporters—thus opting for political isolation. “Will the president negotiate alone to approve his administration’s agenda?,” questioned Congressman Marcelo Ramos, chairman of the special House committee analyzing the pension reform.

For now, Mr. Bolsonaro should get a pass, as Congress seems committed to helping the Economy Ministry get public finances in order—including voting on laws that would allow public servants to be fired as a cost-cutting strategy. The move is a must for the administration, as failing to comply with budgetary guidelines is an impeachable offense for the president.

Bolsonaro losing support among investors

President Bolsonaro’s approval rating among investors has taken a nosedive, according to a poll from investment bank XP. Those who consider the administration is doing a ‘good or great’ job went from 86% in January to just 14% now. ‘Bad and terrible’ jumped from 1% in January to 43%. For the future, 51% expect the administration to fail—while only 27% still believe Mr. Bolsonaro will end his term having performed a ‘good or great’ job.

Supreme Court suspends privatization of Petrobras subsidiary

Supreme Court Justice Edson Fachin issued an injunction suspending the privatization of a Petrobras subsidiary. The decision concerns a 4,500-km-long pipeline network that had already been sold for USD 8.6bn to a consortium formed by France’s Engie and Canada’s Caisse de dépôt et placement du Québec (CDPQ). The deal had already been approved by antitrust authority Cade.

The ruling was based on a technicality. Justice Fachin believes that the selling process of the pipeline unit should have been held by way of a classic bidding process, instead of a direct deal between Petrobras and the buying consortium. The case was opened after three labor unions filed a lawsuit questioning the legitimacy of the deal.

The pipeline unit was Petrobras’ biggest divestment deal—and if the injunction is confirmed, the setback should have major negative implications for Petrobras’ Q2 2019 earnings.

Former business mogul convicted of insider trading

After more than 5 years, Brazil’s Securities and Exchange Commission (CVM) slapped a BRL 536m fine on Eike Batista—formerly Brazil’s richest man—for insider trading. He sold shares of his oil company OGX—and used Twitter to stimulate investors not to sell them—despite knowing that its oil reserves were far lower than it publicly reported. Mr. Batista, who is battling several corruption charges in Operation Car Wash-related cases, is also barred from running a company listed on the stock market for 7 years. He may appeal his fine.

In more than a few ways, the trajectory of Mr. Batista also reflects the trajectory of Brazil. In 2011, he was a rising billionaire, the owner of the world’s 7th-largest fortune. He seemed to have the Midas touch, and when he said that he would become the world’s richest man, few doubted his assumption. He was just like Brazil, which at that time boasted a 7% growth rate while the rest of the world was reeling from the bitter effects of the 2008 economic crisis. Eike and Brazil were sexy, competitive, and bold. Today, though, it’s safe to say that both have blown it.

Also noteworthy

Massacre. Deadly prison riots have broken out in Amazonas. In two days, 55 inmates were found dead in separate prisons, due to disputes within a drug gang. Almost three years ago, a Justice Ministry report warned about precarious conditions in the state’s prisons and the rising tensions between criminal factions—even before January 2017, when 56 inmates were murdered after two rival gangs clashed.

The Vatican. Pope Francis hosted indigenous leader Chief Raoni in the Vatican on Monday. Since May 12, Raoni has been on a 3-week tour in Europe to meet with world leaders and ask for their support for indigenous struggles in Brazil. The Church’s efforts to protect the Amazon and indigenous people led Brazil’s intelligence agency to spy on Catholic priests. Listen to our podcast about this topic.

2020 elections. Despite being in prison for the past year, former President Lula has begun talks with left-wing parties to form a “leftist front of opposition” to President Bolsonaro. His Workers’ Party should present proposals to curb unemployment rates, increase consumption, and raise revenue from taxes—a strategy to block Mr. Bolsonaro’s agendas with other propositions for the economy.

Environment. For years, Brazil’s environmental agency Ibama carried out secret operations to bust companies and individuals disrespecting anti-deforestation laws—to prevent criminals from escaping controls. Not anymore. The agency has published a memo advertising future operations in south-western Pará, in Brazil’s North. Neither Ibama nor the Environment Ministry wished to comment.

Census. The new survey director at the Brazilian Institute of Geography and Statistics proposed cutting 37% of the 112-question survey in the 2020 Census. While most houses have to respond to a quick questionnaire, the more complete one is taken from a small sample of the population, around 8-10%. By cutting questions, the cash-strapped government wants to make the Census a cheaper endeavor. Experts disagree on the effects of the move.

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