Brumadinho: death toll reaches 99

Good morning! We continue our coverage of the Brumadinho dam collapse. Brazil defends WTO changes opposed by China. MDB to decide today on its nomination for Senate President. And more.

Brumadinho: death toll reaches 99 in 7th day of rescue ops

As search and rescue teams return to their seventh day of operations, the number of confirmed deaths as a result of the Brumadinho dam failure continues to climb. Yesterday, officials reported that 99 people have been killed in the catastrophe, and there are still 259 missing. Rescue teams have not found any survivors since Sunday. On Friday afternoon, an iron ore tailings dam collapsed near the town of Brumadinho, Minas Gerais, devastating the surrounding area.

Brazil’s Institute of the Environment and Renewable Natural Resources (Ibama) has confirmed that at least 270 hectares of land have been destroyed by the disaster—equivalent to 377 football pitches. Geologists have observed that the toxic sludge released from the dam has already traveled 98 km from its source, polluting large parts of the Paraopeba river.

Makeshift dams are being put in place to try and curb the spread of the mud, which could yet reach the São Francisco river—the most important waterway for Brazil’s needy Northeast region. Mining company Vale, responsible for the collapsed Brumadinho dam and the co-owner of the damn which failed in nearby Mariana in 2015, has announced it will recommission all of its dams built using the same technique—building dikes on top of each other in a staircase effect. The method is considered to be the least safe and most cost-effective option.

After a historic crash on Monday (when the company lost BRL 71 billion in market value and saw its shares fall 24%) Vale has seen its stocks rise once again. With promising external conditions, such as a rise in iron ore prices, Vale ended the day up 9.03% yesterday, while its major shareholder Bradespar jumped 7.89%. The pair were Wednesday’s best-performing stocks in Brazil.

Brazil defends WTO changes opposed by China  

During the World Economic Forum, Brazil’s Foreign Affairs Minister Ernesto Araújo argued for changes to the World Trade Organization in line with what the U.S. defends in terms of trade. Mr. Araújo echoed a concern — shared by both the Americans and the European Union — that Chinese groups are enjoying unfair advances on the global scene. His speech has just been made public by the government.

According to an understanding by the U.S. and the EU, Beijing is forcing technology transfers by obligating companies that wish to export to China to set up local factories. They also claim that the high level of government intervention and help over Chinese companies create unfair competition. These actors defend measures to curb China’s evergrowing importance in world trade.

While Mr. Araújo has argued for total alignment with the U.S., the points he made during his WEF speech were based on positions that the Brazilian diplomacy has defended for years — albeit in a more reserved way. Mr. Araújo has also said that Brazil “will take part in discussions about the WTO’s reform agenda” — and that the country accepts any kind of negotiation, whether bi, pluri, or multilateral.

MDB to decide today on its nomination for Senate President  

With the new legislature set to be sworn in tomorrow in Brazil’s Congress, the first order of business is among the most crucial: the elections for House Speaker and Senate President. With regards to the latter, the Brazilian Democratic Movement (MDB) party has the prerogative to elect the head of the Senate, due to having the largest bench. However, the party is split between two names, a dispute which has the potential to divide the party.

MDB leaders will meet today to decide whether they will support veteran Renan Calheiros (who has served as Senate President in the past), or Simone Tebet. Mr. Calheiros holds the advantage within the party, but his “aggressive” maneuvers against the young Senator could lead her to maintain her bid as an independent—frustrating Mr. Calheiros’ hopes of winning the election in the 1st round.

While most parties in the Senate will establish a firm party line for the presidential election, the vote is held in secret, meaning betrayals are always possible. Renan Calheiros, a skilled political operator with many favors to call in, is the clear favorite in a secret ballot. Publicly, he is connected to numerous corruption scandals, meaning Senators would be reluctant to campaign for him out in the open, but in the secrecy of the Senate floor he is expected to win a majority.

The Senate president is anything but a decorative position, as they are responsible for setting the voting agenda, deciding which bills go to the floor and when.

Pension reform will include military careers, says government  

The Jair Bolsonaro administration’s pension reform bill will include the military, according to the Secretary of Pensions and Welfare, Rogério Marinho, and vice-president Hamilton Mourão. Paulo Guedes, Minister of the Economy, reinforced this stance during a speech to mayors. There is one caveat, though. Mr. Marinho informed that the president will decide the timeframe of the reform for military careers — without getting into specifics about when members of the Armed Forces will be included.

Unlike regular pensions — which can only be changed through constitutional amendments, requiring two-thirds of Congress votes — military pensions can be changed through a simple majority. But the problem is not so much political. The military has always resisted any rules which curb their privilege, which in this case is the receipt of longer and larger stipends. With Latin America’s track record of undemocratic military uprisings, governments tend to leave them alone. With Mr. Bolsonaro and the VP being themselves former military officers, that pill becomes easier to swallow.

Paulo Guedes defended stricter pension rules for civil servants at the state and municipal level, too. The government, however, should only present its reform bill later in February — after the heads of both congressional houses are chosen (the election for both the House and the Senate is scheduled for tomorrow). The mere announcement of the reform measure being slated for next month encouraged investors in New York, with positive results in after-hours trading.

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.

Noteworthy

• Oil & gas. Petrobras announced it will sell its oil refinery plant in Pasadena, Texas, to Chevron for USD 562m — the plant, however, has cost Petrobras over USD 1.2bn since 2006. It was arguably the company’s worst deal ever and is a prime example of how corruption and poor administration have resulted in the near ruin of Brazil’s giant state-owned oil and gas company.

• Drug lords. An investigation found evidence that Rêmulo Diniz, Acre’s State Police Chief, has links to Rio’s Red Command drug gang. Since the probe was revealed, Mr. Diniz was temporarily removed from his position — but denied any knowledge about an investigation. Bordering Peru and Bolivia, Acre is one of the main gateways for drugs into Brazil.

• Lula. Former President Lula, who is in jail since April for corruption and money laundering, had requested furlough to attend his brother’s funeral yesterday — which is allowed by Brazil’s Penal Code. Federal judges said no, leading Lula to appeal to the Supreme Court. His appeal was successful, but the go-ahead came just minutes before Lula’s brother’s body was buried. In 1980, while arrested by the military dictatorship, Lula was allowed to attend his mother’s funeral.

• Mining after Brumadinho. The Federal Accounts Court — a sort of audit tribunal that monitors public spending — has decided to scrutinize how the National Mining Agency operates. After the Brumadinho dam collapse (which killed 99 and has left 259 others missing, read above), the court concluded that the agency — created just two months ago to oversee the mining sector — must not be properly working. A significant part of the blame for not preventing incidents like Brumadinho lies on its lack of funding.

• Child abduction. Prominent magazine Época has accused current Minister of Human Rights Damares Alves of abducting a child from an indigenous village 15 years ago. Lulu Kamayurá, who is today treated as Ms. Alves’ adopted daughter, was reportedly taken from her family at around 6 years of age. The adoption process of Lulu Kamayurá was never formalized. Speaking to indigenous people from the village in question, Época reporters heard that the child was taken by one of Ms. Alves’ colleagues for “dental treatment” and was never returned. The human rights minister claims she saved the child from being sacrificed.

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