The Brazilian electoral countdown

(Published at the Eurasia Review)

Formerly praised by international analysts as a paradise for investors that would like to flee the European crisis, Brazil seems to be having some troubles in sustaining its market beauty as mainstream media portals such as the Financial Times and The Economist have been dedicating big headlines to expose the presidential struggle in order to secure positive economic indexes.

Among the most alarming numbers, it is possible to highlight the negative result of a subtraction involving the inflation rate of 2012 and the respective economic growth – what means that, by the end of the year, the country’s development was not only below the government expectation but also negative, if relative data is taken into consideration.

Besides the risk of getting back to the years when economic instability haunted the country, the main concern that must be arisen accrue from the political scenario as Dilma Rousseff has just announced her intention to run for re-election right after Aécio Neves and Eduardo Campos, both popular and charismatic leaders, confirmed their intention of being the future Brazilian president.

Understanding it better, while Aécio Neves is the opposition leader, grandson of the first post-dictatorship civilian president and former Governor of Minas Gerais (Southeast region) with approval rates above 80%, the socialist Eduardo Campos dwells Dilma’s political ground, also being the grandson of a well-known politician and enjoying high approval ratings as the Governor of Pernambuco (Northeast region).

Wasn’t it hard enough, Mrs. Rousseff – even relishing great popularity rates – has been facing not only bad economic results but also several corruption crises inherited from Luiz Inácio da Silva, former president and her political sponsor.

As the elections are not far away, it means that the next 19 months are going to be replete – from both sides – with government overspending, populist proposals and protectionism (as it is how politicians manage to stimulate donations from large entrepreneurs).

Actually, the first step was already given: a new law is being proposed in order to loosen the restriction knots that regulate public budgeting and spending, allowing executive branches to increase their debts, among other issues related to fiscal responsibility.

The second one, personally announced by the president on all the open TV channels, calls for a reduction in energy expenses in the range of 20%. The problem lies on the fact that it aims to increase consumption in the exact moment when hydroelectric reservoirs are not being enough to provide energy to the country.

In the end, if the future follows historical trends, the country economy will not only be far from being the apple of big investors’ eyes, but it may also get back to the times when its people used to strive to calculate how much a bag of rice or a package of meat would be costing on the next day.

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Vladmir Putin, Pussy Riot e a nova União Soviética

(Publicado pelo Jornal do Brasil e Jornal do Commercio)

Costumo frisar, em boa parte de meus artigos sobre as relações internacionais, que um dos pontos mais importantes de se entender o comportamento externo das nações é que, tão logo as oportunidades surjam, tais medidas serão reproduzidas em gênero, número e força, no âmbito interno. A Rússia, infelizmente, vem sendo um dos maiores exemplos práticos a confirmar esta teoria. Sua firme defesa a regimes como o do líbio Muammar al-Kaddafi e, mais recentemente, ao sírio Bashar al-Assad dava uma amostra de que, ao concordar com ditaduras externas, um futuro antidemocrático poderia estar reservado para a superpotência do Oriente caso Vladmir Putin e Dmitry Medvedev permanecessem em seu comando.

Dito e feito. Não bastasse a costumeira truculência da Politsia russa ao enfrentar as manifestações que se tornaram comuns no país face à recente e duvidosa recondução de Putin ao poder, a justiça agora também parece estar sendo guiada pela nostálgica saudade do modo soviético de controlar a opinião pública. Além do caso clássico do magnata Mikhail Khodorkovsky, preso em 2004 ao se opor radicalmente ao regime vigente, chegou a vez de o absurdo totalitarista atingir o meio musical ao impor pena de dois anos de reclusão para as três artistas da banda punk Pussy Riot.

O caso, que chocou o meio artístico rendendo cartas de manifestação de ídolos como Madonna e Paul McCartney, foi motivado por um videoclipe gravado pela banda russa em uma igreja ortodoxa, sem a permissão do clero, onde a banda cantava versos, em tom de oração, como “Virgem Maria, Mãe de Deus, nos ajude e coloque Putin pra fora”. O ato fazia parte de uma campanha na qual a banda pretendia realizar uma série de performances públicas e pacíficas para fortalecer a participação feminina na política russa. O problema, no entanto, foi ter iniciado sua trajetória não só na maré contrária ao proto-ditador Vladmir Putin mas também invadindo espaço religioso e ofendendo quem pouco tinha a ver com a história.

Como Mark Adomanis relata em matéria para a revista Forbes, não foi difícil para que o Kremlin utilizasse seu controle sobre os meios de comunicação para jogar boa parte da população contra o grupo musical. Segundo pesquisa realizada logo após o início do processo, apenas 5% da população acreditavam que nenhuma punição deveria ser dada ao grupo, enquanto 29% sugeriam trabalhos comunitários, 20% uma alta multa e 19% uma pena de reclusão superior a dois anos.

O caso é que, com o apoio de uma boa parte da opinião pública, não foi difícil para que a Justiça russa utilizasse mecanismos soviéticos para dar um recado àqueles que pretendessem realizar manifestações similares. Entre os métodos, constaram a inclusão de acusações que foram mantidas em sigilo até mesmo para as próprias acusadas, uma prisão prematura sem o prévio direito a defesa e a recusa dos juízes em aceitar boa parte das evidências apresentadas em favor das roqueiras.

No final das contas, o fato é que Putin e seu partido estão cada vez mais acostumados ao poder e, apesar de não serem consenso, boa parcela da população parece não se importar com seu crescente autoritarismo. O perigo, para nós, é a forma com que isto será reproduzido na política externa, onde russos buscarão legitimar-se ao garantir um trampolim para ditadores como Ahmadinejad, Hugo Chávez e tantos outros que, na contramão da democracia, tendem a criar ainda mais problemas para o avanço da paz e da qualidade de vida global.

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Why Long Term Investors Should Avoid The BRICS

(Also published on Eurasia Review)

A few days ago I have written an article on how bizarre Brazilian politics are. Well, it didn’t take long so that the president could confirm my theory. This weekend, as the official government newspaper informed, she vetoed 25 items of the Budgetary Guidelines Law (in Portuguese,Lei de Diretrizes Orçamentárias) – which is supposed to define the general lines to be followed by the Executive branch when drafting the annual budget.

This news, by it owns, would not be that strange as it is quite common to see Presidents, Governors and Mayors vetoing unpleasant proposals. Unfortunately, it comes with some external factors that evidence how bizarre our politicians are.

The first one is that Dilma Roussef counts with the majority on both Legislative houses – what would let her and her party influence the project enough to avoid any kind of unpopular veto. Considering this, we shall assume that her coalition is not as strong as it looks.

The second point shows that the problem doesn’t lie generally on her allied groups but in her own garden. The fact is that the Budgetary Committee is chaired by an MP of her party – who was the first one to discredit the president’s explanations for the veto.

As those 25 vetoes also include minor proposals that would probably not make a difference in the country’s future, I would like to focus specifically on the two that caught my attention most: (1) a project to boost government’s transparency, and (2) a conservative approach to the fiscal policy.

To understand the first one, we should get to know a little about its background before. There it goes:

As a result of an intense lobby both from the United Nations and several local NGOs, the Brazilian government adopted the Public Information Access Act on May 16, 2012, when it joined 90 other nations that, following the Universal Declaration of Human Rights, accepted to give publicity to numbers such as the general expenses and the payroll of public bodies.

The problem is that, differently than what was expected, the law had some gaps which allowed public enterprises inserted into competitive markets (such as educational institutions) to keep hiding their finances.

If the Budgetary Guidelines Law was approved, this gap would not exist anymore – at least for the year of 2013 when the congress would have the opportunity to deal about new amendments to solve it for the long run. However, it was vetoed by Mrs. Roussef under the excuse that “it would make it harder to fulfill the Public Information Access Act”.

In other words, the idea of making public information accessible was not a matter of ethics but just a way of looking better through the international community’s eyes.

Bizarre enough? Totally not! Going further, the second proposal have aimed to force the Government to maintain the restrictive fiscal policy so that a liquid reduction of the public debt could be achieved.

Again, let’s understand the background: during Luíz Inácio da Silva’s first term, about 8 years ago, his popularity was boosted after the announcement that the government managed to pay the public debt.

As you can imagine, different than what the population’s majority understood, it was referred to the interest and not to the whole public debt. Anyway, even if it was not the most ethical procedure, the merit should be given both to Silva and Roussef’s fiscal team as the same result was achieved in every year since then.

The point is that, as the economy is doing well and the Government is presenting record levels of tax collection, the Legislative decided to include a new line to the Budgetary Guidelines proposing a step forward on the fiscal policy which would be extremely favorable to the country on the long term.

The presidency, unfortunately, disagrees. As a short explanation to the veto, Dilma affirmed that the current strategy was enough to maintain a solid economy.

Even if a bit far from the Russian unwillingness to adhere to democratic standards and the Chinese lack of fiscal discipline, the Brazilian government is showing that the economic growth is not the only spot in common with its BRICS partners and, once again, I must underline that international investors have to keep an eye on the developing world’s politics before planning long term investments.

As the numbers show, they may get great returns in the short term, but our economies still quite far from the former Group of Seven’s – excluding Russia – political stability.

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