The political crisis within the Bolsonaro administration, explained

In this week’s issue: Income: 64% of Brazilian families earn less than USD 809 per month. The political crisis within the Bolsonaro administration, explained.

The week in review

• Pensions.As part of the government’s will to approve a pension reform, President Jair Bolsonaro has settled on minimum retirement ages for men (65) and women (62)—with a 12-year transition period. Few other details have been disclosed, and the reform bill should be presented to Congress by Thursday.

• Trade.Beijing has slapped anti-dumping duties on Brazilian poultry. Tariffs will vary between 17.8% and 32.4% from February 17 on—and will last for five years. Fourteen companies, however, have struck a deal with Chinese authorities and will be exempt, as long as they respect a minimum price tag set by the Asian country.

• Crime.São Paulo was put on alert for possible criminal attacks after 22 leaders of the PCC—Brazil’s most powerful drug gang—were transferred from a São Paulo state prison to federal facilities spread across the country. In 2006, a similar move by authorities sparked a spree of violence that killed 59 police officers—who then killed at least 505 civilians in retaliation, including many people with no association with the PCC.

• Commodities 1.High temperatures in several soybean-producing regions, coupled with irregular rainfall, have led consultancy firms to reduce their predictions for the next soybean harvest—down from 121m to 112m tons. Moreover, soybean prices are set to fall, due to China’s lowering demand and the U.S. surplus.

• Commodities 2.Six leading commodity traders—including Cargill and Bunge—have come to terms over a common mechanism to monitor soybean supply chains for deforestation in Brazil’s savannah-like Cerrado biome. Covering about 22% of the country’s territory, the Cerrado forms a carbon sink that helps in the fight against global warming.

• Vale.Eight Vale employees were arrested for their role in the January 25 Brumadinho dam collapse (which killed at least 166 people). They were connected to the site’s administration or to risk management. The list includes an executive accused of pressuring a consultancy firm to sign a fraudulent report attesting to the dam’s safety, just one month before it collapsed.

• Homophobia.The Supreme Court suspended until Wednesday a trial on a pair of cases that could determine whether homophobia and transphobia should be considered criminal offenses. Only Justice Celso de Mello, the longest-tenured member, has voted so far—in favor of criminalization. Brazil is one of the most dangerous countries for LGBTQI people—NGOs claim that 320 gay or trans people were killed last year in the country.

Income: 64% of Brazilian families earn less than USD 809 per month

Economy Minister Paulo Guedes believes the biggest battle to approve a pension reform will come in the field of communication. He wants to show voters that his reform plan would cut down the privileges enjoyed by upper-income families. While it remains early to assess that statement by Mr. Guedes, the strategy is certainly intelligent—over 40% of the pensions paid in Brazil go to the 20% richest. Below, we see a pyramid with Brazil’s family income brackets. Almost two-thirds of the country’s families live on less than USD 809/month (BRL 2,994)—and only 1% earns more than USD 5,380.

The political crisis within the Bolsonaro administration, explained

Less than two months into office, President Jair Bolsonaro is already having to deal with a major political crisis. His Secretary-General, Gustavo Bebianno, is accused of operating a dummy candidate scheme to siphon money from the publicly-financed electoral fund, of which every political party has a cut. Mr. Bebianno traded barbs with the Bolsonaro clan on Twitter and in the press—and is not expected to remain in the administration. We break the scandal—and the crisis—down for you:

How it began: Newspaper Folha de S.Paulo published a report that Mr. Bolsonaro’s Social Liberal Party (PSL) allocated vast sums of campaign money to uncompetitive candidates, simply as a way to funnel this money into companies connected to party leaders. If proven, that would constitute fraud. During the 2018 election, Gustavo Bebianno acted as chairman of PSL and Jair Bolsonaro’s shadow (read our profile on him).

Common practice: Later reports showed that 14 political parties could have done the same. It’s a common way to escape Brazil’s electoral rules.

Investigation: On Feb. 12, the Federal Police began to investigate the case. One of the supposed dummy candidates told the Feds she was coerced into using her campaign money to pay specific companies chosen by the party’s leadership.

Gustavo Bebianno v. Carlos Bolsonaro: When accusations started to mount against Mr. Bebianno, the cabinet member tried to pass an image of normality within the government—saying he had even “talked to the president in three occasions” on that day. Rio’s City Councilor Carlos Bolsonaro, one of the president’s sons, then called Mr. Bebianno a liar on Twitter, posting an audio clip in which his father would be refusing to talk to Mr. Bebianno. Hours later, the president retweeted his son’s attack on the member of his cabinet—and told the press Mr. Bebianno would have to go if any wrongdoing was proven.

Threats: Within the government, Carlos Bolsonaro accused Mr. Bebianno of trying to get money from companies in exchange for access to the president. When rumors of his firing began circulating, Mr. Bebianno issued a warning to the government: he would spill the beans on any misconduct concerning the president. A PSL House member said the Secretary-General of the Presidency is a “human ticking time bomb, who knows personal and campaign-related stuff” that could rock the administration. U-turns: Early on Friday, President Bolsonaro had been convinced to keep Mr. Bebianno around—at least until after Carnival (which happens in the first week of March). Then, he would be named to a lower-profile position, out of the spotlight. But when the president reportedly found out that Mr. Bebianno had arranged a meeting with Globo—Brazil’s powerful media group which Mr. Bolsonaro calls “the enemy”—things got sour. The president met with his secretary-general—and the tone of the conversation was far from friendly, per reports. According to both the president’s and Mr. Bebianno’s camp, the latter will be fired on Monday.

Lose-lose situation

Gustavo Bebianno’s public and humiliating downfall was orchestrated by the president’s clan—in particular Carlos Bolsonaro, also known as Jair Bolsonaro’s “pitbull.” That could pose a major problem for the administration, as members of Congress could hesitate in supporting a president so dismissive of an ally like Mr. Bebianno. The government’s economic team fears that could be an obstacle to the pension reform bill.

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