Brazil Daily

EU Parliament slams Mercosur trade deal “as it stands”

?? The EU goes against Bolsonaro. ✈️ A new airline to open in Brazil. ⛔ The end of Car Wash Operation? ? And 5 million coronavirus cases

Today, we talk about the EU Parliament’s decision to counter Jair Bolsonaro. A new airline is about to open in Brazil, despite a dramatic outlook for the aviation sector. The president says the Car Wash Operation is over. And Brazil reaches 5 million coronavirus cases.

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EU-Mercosur deal not dead yet, but on life support

In a 345-295 vote, the European Parliament has passed[restricted] an amendment to the common EU commercial policy which has been described as a rejection of the EU-Mercosur free trade agreement signed just last year. The amendment highlights the need for ensuring fair competition and compliance with European production standards — adding that, due to environmental concerns, “the EU-Mercosur agreement cannot be ratified as it stands.”

  • The vote doesn’t mean the trade deal has been rejected, but it paves the way for that. Especially as the deal lost its biggest backer on the other side of the Atlantic, after Ireland’s Phil Hogan resigned as European Union trade commissioner.

Why it matters. The original amendment proposal mentioned President Jair Bolsonaro by name, singling him out as the reason why the EU has cold feet about the deal. 

  • “[The EU] is extremely concerned about Jair Bolsonaro’s environmental policy, which goes against the commitments made in the Paris Agreement, particularly with regard to combating global warming and protecting biodiversity,” wrote a group of EU lawmakers headed by Marie-Pierre Vedrenne, from France.

Beneath the surface. The deal between the EU and Mercosur has always been met with fierce opposition from European agricultural lobbies — who now rejoice at the hard stance against Mercosur. These lobbies fear that highly competitive South American agricultural products may disrupt their revenue — and Brazil’s nonchalance towards recent environmental calamities hands them, on a silver platter, the perfect argument to oppose the deal.

  • In the wake of a particularly destructive 2019 fire season, year-to-date fire alerts for 2020 have already surpassed those of last year by 14 percent in the Amazon and over 200 percent in the Pantanal as of September 30, according to think tank Chain Reaction Research.

What they are saying. Representatives of European agro celebrated the amendment, while the Brazilian government remains in denial.

  • “It would be deeply hypocritical of the EU Commission to pursue a trade deal that so clearly conflicts with its own policy,” said Brendan Golden, livestock chair of the Irish Farmers’ Association.
  • “Jair Bolsonaro is the dream Brazilian president for EU agro lobbyists who oppose the deal. He is playing into their hands,” said Rubens Ricupero, a former Brazilian ambassador to the U.S.
  • “There is a lot of noise in all this, it’s all part of a diplomatic effort that must be done, let’s take it easy,” said Brazilian Vice President Hamilton Mourão — who believes the decision can be “reverted” in the future.

Opening an airline during a pandemic

Giant coach group Itapemirim will launch a selection process tomorrow to hire 600 people for their soon-to-be-launched airline, Ita. The company will recruit pilots, technicians, and flight attendants in a push to begin operations as soon as March 2021. According to CEO Rodrigo Vilaça, Itapemirim wagers that the coronavirus crisis will be over by then, if vaccine promises for the end of this year are fulfilled.

Why it matters. Ita is coming to life in one of the direst moments the airline industry has ever faced.

  • Multiple Latin American carriers — such as Latam, Avianca, and AeroMexico — have filed for Chapter 11 bankruptcy protection in the U.S., and a stimulus package from the Brazilian National Development Bank (BNDES) has never materialized.
  • On October 6, the International Air Transport Association (IATA) warned reporters that carriers were on course to burn through another USD 77 billion in cash in H2 2020 — calling on governments to renew expiring support programs.
  • Moreover, airport administrators in Brazil fear a total collapse of their businesses. The aviation sector’s supply chain could eliminate as many as 299,700 jobs before this crisis is over.

I believe I can fly. Ita has leased ten Airbus 320 planes, three of which will be delivered in 2020 — each of them will require 67 professionals. “As more jets arrive, we will hire more people, in a gradual process,” said Mr. Vilaça.

  • The Espírito Santo-based company plans to operate in 16 airports, with the bulk of its flights in São Paulo, Rio, Brasília, and an undetermined city in the Northeast. But Ita hasn’t yet received clearance to fly from the National Civil Aviation Agency (Anac).

An old dream. Since Itapemirim’s bus firm was placed under court-supervised financial recovery in 2016, the group has tried to migrate from asphalt to the sky. In 2017, they attempted to buy medium-range airline Passaredo, but the deal fell through after Itapemirim didn’t meet the conditions established in the contract.

— with Renato Alves

Bolsonaro ditches anti-corruption operation

President Jair Bolsonaro seems determined to break with the coalition he championed during the 2018 election — and embrace what he once disparaged as “old politics.” On Wednesday, he dismissed Operation Car Wash, the biggest anti-corruption effort in Brazilian history. “I’m proud to say that I don’t want to end the Car Wash Operation. I have already ended Car Wash, because there is no more corruption in the government.”

Why it matters. As Renato Alves wrote on The Brazilian Report, breaking with his core supporters is a savvy move by Mr. Bolsonaro to consolidate himself in power.

  • “His defense of far-right causes still makes him the best — and perhaps the only — option for the extreme right in 2022. Meanwhile, his recent implementation of welfare policies and alliance with moderately conservative forces may help him attract a voter base that seemed unreachable just months ago.”

Bolsonaro and Car Wash. No other politician benefited more from the Car Wash Operation than Mr. Bolsonaro. A backbencher for his entire political career, he could never get close to the upper-echelon politicians who were caught with their hands in the cookie jar by prosecutors. And, as droves of elected officials were tainted by the investigations, an anti-establishment sentiment paved the way for his election.

  • In office, Jair Bolsonaro never fully supported the operation — nor proposed correcting its (many) excesses and prosecutorial mistakes. Instead, the president and his clan only tried to attach themselves to the operation when it suited them.

5 million coronavirus cases

Brazil became only the third country in the world to top the mark of 5 million confirmed coronavirus infections — while simultaneously approaching the unwelcome milestone of 150,000 deaths. Data suggests that the outbreak might be slowing down in Brazil — but caution is advised, for a few reasons:

  • Testing in Brazil remains very limited, and epidemiologists say that the total tallies are much bigger than what has been confirmed.
  • According to the Imperial College London, the country has been able to sustain coronavirus transmission rates of below 1 for two full weeks. But the rate jumped from 0.95 to 0.99 over the past seven days — suggesting that going back to normal too soon could spark a second peak in case and death curves.
  • The pandemic has not progressed evenly across Brazil. While most of the country has seen new daily deaths decrease over the past two weeks, some Amazonian regions (the first to collapse back in March) are witnessing an uptick in casualties.  

What else you need to know today

  • Supreme Court. The Brazilian Supreme Court will decide whether President Jair Bolsonaro will be allowed to provide written testimony to investigators who are looking into his alleged illegal interference with the Federal Police. Justice Celso de Mello (who retires next week) says the president should give an in-person statement — like any other Brazilian citizen “under investigation.” But other justices argue that the benefit of written testimony was given to other sitting presidents in the past, and should be extended to Mr. Bolsonaro in fairness. 
  • Welfare. For the past few weeks, political observers have waited for the government to present its proposal for a new welfare program to boost cash-transfer initiative Bolsa Família, once the coronavirus emergency salary ends in December. But, off the record, officials within the Economy Ministry say nothing concrete will come before the end of the 2020 municipal elections (November 15 and 29).
  • Accountability. The Federal Accounts Court — a sort of audit tribunal that monitors public spending — will have a vacancy opening up on January 1 with the retirement of judge José Múcio Monteiro. President Jair Bolsonaro has already indicated that he plans on nominating his Secretary-General Jorge Oliveira for the seat. The Bolsonaro family has a personal bond with Mr. Oliveira, who has worked with them for two decades. 
  • You learned it here first. A new study by the Federal Council of Medicine shows that healthcare spending by Brazil’s states and municipalities reaches a combined daily amount of BRL 3.83 (USD 0.68) per citizen. The Brazilian Report had already shown on July 1 that health spending in some states is as small as USD 0.20 a day.
  • IDB. After endorsing the U.S. decision to break with tradition and appoint an American to the Inter-American Development Bank, Brazil was granted the right to name a head to IDB Invest, the bank’s private-sector branch. Carlos da Costa, a senior official at the Economy Minister, will be chosen for the position.
  • To debate or not to debate. CNN Brasil is the latest major network to choose not to hold mayoral debates in the country’s biggest cities, citing fears of coronavirus infections. São Paulo has 14 candidates for mayor, and parties have been unable to agree on a debate format that only includes frontrunners — making the logistics of a debate more challenging. Besides CNN, the three biggest free-to-air TV channels Globo, Record, and SBT have declared they won’t hold debates before the runoff stage.[/restricted]

By Gustavo Ribeiro

An award-winning journalist, Gustavo has extensive experience covering Brazilian politics and international affairs. He has been featured across Brazilian and French media outlets and founded The Brazilian Report in 2017. He holds a master’s degree in Political Science and Latin American studies from Panthéon-Sorbonne University in Paris.