In the 5G era, 4G still dominates in Latin America

Postponed until H1 2021, Brazil’s 5G auction — tipped to be the largest in the world — will be decisive for the provision of the technology across Latin America. However, according to data from GSMA Intelligence, even with the experimental launch of the 5G network by some commercial carriers and several trials throughout the region, it is 4G technology that is set to pave the way for connectivity in Latin America for the coming years.

“We expect 4G to be the dominant technology for many years, coexisting with the growing number of 5G connections,” estimates Alejandro Adamowicz, director of Technology and Strategic Engagement for Latin America at GSMA. [restricted]“By 2025, the share of 4G will rise to 67 percent of total connections, driven by the growing number of smartphones — the adoption of which will rise from 69 to 79 percent between 2019 and 2025.”

According to the expert, Latin America is one of the top regions in terms of traffic growth, boosted largely by video and social networking applications. “The mobile network traffic is growing at an average of 50 percent per year, and in some countries it is doubling every 12 months,” he adds.

With GSMA estimating that USD 90 billion will be injected into the region’s GDP in 10 years through productivity gains, new products and services, and technology-based exports, the 5G network promises to update the Latin American digital landscape. The technology promises to provide increased internet speeds for end users, and increase adoption by business and government sectors, developing what are called “vertical applications” such as Digital Manufacturing, Oil & Gas, Smart Grid, Mining, Health, Transport, and Smart Cities. 

“The real innovative and transformational impact of 5G on the lives of end users will come from a variety of applications that 5G will unlock and that will be delivered through a B2B2C business model: operators selling services to companies that will transform them into tangible benefits for the people.” 

Looking forward to 5G auction day

In Brazil, though the auction of 5G frequencies has yet to take place, the country’s leading telecom carriers have already announced their plans for commercial networks involving the new technology. The idea is to use dynamic spectrum sharing (DSS), which would allow 5G connections on frequency bands that are already used by 4G, 3G, and 2G networks, eliminating the need to increase the spectrum. 

TIM Brazil — a Brazilian subsidiary of Telecom Italia — postponed its launch until this month, despite having announced the new service for three cities in September. Competitor Oi, on the other hand, launched its first 5G mobile internet commercial operation in capital city Brasília last week. Claro and Vivo began activating the technology in São Paulo, Rio de Janeiro, and other state capitals back in July. 

In addition to the carriers, tech behemoth Apple also intends to surf the wave of consumer excitement around 5G. Announced on Tuesday, all models of the new iPhone 12 in the U.S. will — according to the company — support millimeter-wave 5G, the fastest variant of the technology, as well as lower-frequency bands.

Outside the country, however, the new devices will not be compatible with millimeter waves. In Brazil, as well as in other countries, iPhone 12 models will only support lower-frequency versions of 5G.

After successive postponements, the 5G auction still has no defined rules and it will be up to President Jair Bolsonaro to give the final say on whether or not Chinese giant Huawei will participate in the process

Mr. Bolsonaro is reportedly considering banning the Chinese firm from providing components for the future network in Brazil, as he “sees China as a global threat to data privacy,” according to a senior government official anonymously quoted by Bloomberg.

This article on remote work was originally published on LABS – Latin America Business Stories, a news platform covering business, technology, and society in the region for an English-speaking audience.



Tech Roundup: Telecom regulator to incorporate postal services

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the revamp of the Brazilian Telecom watchdog, Google trends for 2020 Black Friday, and the costs to mitigate interference with satellite TV ahead of the crucial 5G auction. 

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Telecom regulator set for name change, incorporating postal services

The recently recreated Communications Ministry presented its first big change this week: [restricted]rebranding the National Telecommunications Agency (Anatel) as the National Communications Agency (Anacom), which would be responsible for supervising both telecoms providers and the national postal service. 

Why it matters. The move has been framed as key in speeding up the privatization of Correios, the federally-owned postal company. The move has been planned since the Michel Temer administration and was included in President Jair Bolsonaro’s privatization plan. The cash-strapped government hopes to raise BRL 15 billion (USD 2.7 billion) from its sale.

  • However, the project never actually took off, due in part to intense backlash from civil servants.

Why the change? Communications Minister Fábio Faria said the proposal is “more about principles than rules,” as Congress will be responsible for defining Anacom’s role, as well as for deciding on the privatization of Correios.

  • If it moves forward, the bill would alter Brazil’s General Telecom Law, which deals with Anatel’s powers and responsibilities.
  • Mr. Faria added that the Brazilian Development Bank (BNDES) has hired consultancy firm Accenture to carry out studies on the privatization of Correios. Its findings shall be available within four months.

Benchmark. The structure of the new agency would be similar to Portugal’s Anacom, a communications watchdog that also handles postal services. The Portuguese institution had already been cited as a positive benchmark by Anatel chairman Leonardo Euler de Moraes.

Timetable. As the proposal has yet to be analyzed by the president’s Chief of Staff — before being put to Congress — there is no concrete expectation on when the change would be carried out.   

Pandemic trends to boost Brazil’s Black Friday

Black Friday has already established itself as one of the main retail events in Brazil. According to Google, things will get even bigger in 2020, as consumers transition to making their purchases online — a process fueled by the pandemic. Google searches for deals have already surpassed 2019 figures, weeks before the event on November 27.

  • Searches for some segments obliterated records to the point that normal search parameters have been altered. Current searches for “decor,” for example, are 51 percent above previous highs. “Food” and “drinks” — which are not the most sought-after products during Black Friday — saw jumps of 40 percent and 23 percent, respectively.

Looking for deals. Searches for sales grew 38 percent between April and July against the same period in 2019, reversing a trend seen in Q1. Google says the data shows Brazilians consumers have become more price-sensitive after the pandemic.

Cashback and coupons. Another major feature for consumers is the possibility of getting discounts or cashback on their online purchases. Searches for coupons are 35 times more frequent than cashback searches, but the interest for terms related to cashback is growing by 74 percent yearly — twice the rate of the interest for coupons.

Free shipping. In July, searches for free shipping were 118 percent higher than what was seen for last year’s Black Friday. Other postage solutions, such as express shipping and click-and-collect, are likely to become more relevant in the pandemic scenario. 

Why it matters. E-commerce has been retail’s silver lining during the pandemic, as the population’s consumer habits have become more digital while brick-and-mortar stores face restrictions. Other major selling events, Children’s Day and Father’s Day underperformed by 8.8 percent and 10.6 percent, respectively, which makes the retail season kickstarted by Black Friday even more crucial to the sector. 

Migrating satellite TV signal to reduce 5G interference is too costly, say companies

The possibility of interference with satellite TV dishes has been among the main roadblocks for Brazil’s impending auction of 5G frequencies. However, while Anatel has yet to reach a consensus on the matter, telecom companies are already presenting their own solutions. 

  • In a new study, Conexis Brasil Digital — an association gathering the main telecom providers and industry players in Brazil — found evidence to support the use of LNBF filters to mitigate 5G interference on satellite TV signals, at a cost of BRL 224 million (USD 40 million) for companies. Anatel, meanwhile, has demonstrated its support for migrating satellite signals to the Ku frequency band, a process which could be up to eight times more expensive. 

Understanding the issue. Using the 3.5 GHz frequency band for 5G runs the risk of causing interference with the reception of satellite antennas, affecting some 1.37 million homes in Brazil, according to Conexis. The problem is similar to the interference of 4G interference with analog TV signals, solved by installing devices on analog TVs, paid for by companies.

  • Earlier this year, the Science and Technology Ministry ordered Anatel to carry out studies to find out the best way to mitigate the interference, but tests were delayed amid the pandemic. 
  • Among the options, there is the adoption of filters or the migration of signals from the C band to the Ku band. The agency’s president, Leonardo Euler de Moraes, said in August that tests were still ongoing, but they were leaning toward migration. 

Costs. Conexis says that migrating signals would affect over 4.8 million homes — far more than those who may experience interference — and cost as much as BRL 1.8 billion. The association says that if the companies awarded 5G contracts are forced to pay for this, it would “harm the quick expansion and massification of the new technology.”

Take note

  • Phone loans. Telecom provider Vivo will launch a new credit service, VivoMoney. Customers of monthly phone plans may take out loans of up to BRL 30,000, with interest of 1.99 percent per month. The service will be fully digital and is Vivo’s latest attempt to become a digital hub beyond telecom services. 
  • System crash. Services of digital bank Nubank experienced instability on October 15, and many users reported glitches on the platform on social media. We at The Brazilian Report noticed instabilities on the bank’s Nuconta current account platform, but credit card services appeared to be working normal. In a statement to newspaper O Estado de S.Paulo, Nubank said the disruption was related to their internal services but provided no further detail.  
  • Partnerships. French ride-hailing app Blablacar will begin selling bus tickets in Brazil, after seeing usage drop by up to 60 percent in April. The app has partnered with 40 bus companies to offer tickets on its marketplace and hopes to reach 100 partnerships by 2021.  
  • Climate change. Brazil and the United Kingdom signed a cooperation agreement on sharing climate data and preventing natural disasters. The project Climate Science for Service Partnership Brazil (CSSP) will be carried out by three leading research institutes in Brazil (INPE, INPA, and Cemaden), alongside the UK Met Office. The project will have three main areas: carbon cycle modeling to inform mitigation policy, development of climate models, and climate impact and disaster risk reduction. The UK will provide GBP 4 million (USD 5.17 million) in funding, while each Brazilian institute will redirect funds of their budgets to the initiative, and the Science and Technology Ministry will contribute an additional BRL 500,000 (USD 89,000).
  • PIX. The Brazilian Central bank informed that over 33 million PIX “keys” have been registered in Brazil. Digital bank Nubank leads the way with roughly 8 million keys, followed by Mercado Pago — Mercado Livre’s digital wallet service — with 4.7 million keys. However, a report by website 6Minutos shows that users are accusing both services of registering keys without their consent, a practice they deny. The issue may also have been caused by scammers, as at least 60 fraudulent websites were found to be targeting PIX on the first days of registration. 
  • Marketplace. Digital bank Banco Inter opened up its marketplace platform to people that are not currently bank customers. New clients will have access to 100 stores registered on the platform and benefits such as cashback.[/restricted]
Brazil Daily

Brazil’s controversial foreign minister to face chop if Biden wins

Today, how a Biden win in the U.S. could cost Brazil’s Foreign Minister his job.. The plans to vaccinate Brazilians against Covid-19 in January. And what you need to know about Brazil’s municipal races.

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Biden win could lead to cabinet reshuffle in Brazil

The U.S. presidential election will take place in 18 days — but more than 15 million Americans have already voted early. [restricted]And the odds suggest that former Vice President Joe Biden will unseat Donald Trump (per FiveThirtyEight’s model, Mr. Biden has an 87-percent chance to win the electoral college). And while a Biden win shouldn’t substantially alter the nature of Brazil-U.S.’ never-too-hot-never-too-cold relations, it could lead to changes in the Jair Bolsonaro cabinet.

  • According to Brasília correspondent Débora Álvares, the Brazilian president’s newfound allies — a group of ideology-free parties known as the “Big Center” — want to use the U.S. election as a pretext to bin Foreign Minister Ernesto Araújo, which they have reportedly been looking forward to for some time.
  • Mr. Araújo is known for his anti-globalist, Sinophobic views. He also wrote once that Donald Trump is the West’s hope for salvation against “Stalin’s or Mao’s or Pol Pot’s henchmen.” He has become a nuisance for the Brazilian political establishment, in particular those defending the interests of agribusiness — who see China as their best client, not an existential threat.
  • His latest controversy involved hosting U.S. Secretary of State Mike Pompeo on a visit to the Venezuelan border, just weeks before the U.S. election. The Foreign Minister was accused of jeopardizing future relations with a potential future Biden administration

Scapegoat. Mr. Araújo is accused by career diplomats of undermining centuries of diplomatic tradition in less than two years. But while he has become a lightning rod for criticism, the minister is following the tone set by the president himself — who has made countless displays of sycophancy towards Donald Trump and hostility towards China.

Why it matters. Ernesto Araújo is arguably the cabinet member who is the most loyal to the Bolsonaro family — and champions the president’s positions unapologetically.

  • Getting rid of Mr. Araújo would be yet another example of Mr. Bolsonaro breaking with Bolsonarism — in a movement towards moderation (at least in tone) to ensure stability to the administration. Those are calculated moves by a president who has proved to be much savvier than given credit for: while remaining firmly on the right wing, he is attempting to gain ground among less radical supporters, while knowing he remains the best (perhaps only) option for hardcore far-right voters.

You should listen: Explaining Brazil #117: Biden or Trump, what changes for Brazil?

Government announces Covid-19 vaccine plan for January

The Brazilian Health Ministry presented its 2021 National Immunizations Program on Thursday, which forecasts distributing a coronavirus vaccine as early as January 2021. The first phase of the plan is to make 15 million doses available, to be used on 7 percent of the population.

  • While four potential vaccines are being tested in Brazil, only one — being developed by the University of Oxford and British-Swedish pharmaceutical company AstraZeneca — made it onto the national vaccine calendar. The government believes trials of that vaccine will be complete by November.
  • The ministry’s decision not to include the potential vaccine being developed by Chinese company Sinovac Biotech in partnership with the São Paulo state government came across as puzzling. A council of state health officials asked, in a letter, for the government to reconsider.

Why it matters. The Health Ministry’s move reignites fears that President Jair Bolsonaro will turn the coronavirus vaccine into a new political war — as he aims to score points on São Paulo Governor João Doria, one of his fiercest political rivals.

Anti-vaxxer? Polls show Brazilians are eager to get a vaccine — and many want immunization to be mandatory. However, Mr. Bolsonaro has leaned in the opposite direction, even voicing some arguments used by anti-vaxxer movements, such as individual freedoms. In August, he said “nobody can force anybody to take a vaccine.” 

  • Moreover, experts fear the president’s supporters could become overly skeptical of what they call “the Chinese vaccine” and refuse immunization. A new poll conducted by Brazilian and Canadian universities show that only 54 percent of government supporters want to take a vaccine — versus 79 percent among detractors.

Election 2020 snapshot

Brazil’s municipal elections will take place in exactly 30 days’ time. This is what you need to know:

  • Ads. This week marked the beginning of political ads on television and radio — which, with millions of people still staying home, gained renewed importance in 2020. Candidates have the right to free airtime, but it is distributed between all political parties, in proportion with the number of seats the party holds in their respective state legislatures.
  • São Paulo. Incumbent Bruno Covas — who leads a six-party coalition — monopolizes 40 percent of airtime in São Paulo, and it has worked to his advantage. The latest poll showed him virtually tied with the frontrunner, Congressman Celso Russomano (22 and 25 percent of votes, respectively). More importantly, Mr. Covas lowered his rejection rates by 8 points — to 23 percent.
  • Leftist debacle. The Workers’ Party has won the race for São Paulo City Hall three times since Brazil’s return to democracy — no small feat, given the city’s more conservative leaning. However, the party continues its downfall, which started in 2016. Candidate Jilmar Tatto, a Lula loyalist, is unknown to most voters and polls at just 1 percent. Many in the party’s top brass have said he should drop out and endorse far-left candidate Guilherme Boulos, who is polling third with 10 percent.
  • Xenophobia as a platform. Two mayoral candidates in the Roraima state capital of Boa Vista, in Brazil’s North, are facing charges of inciting racism. Federal prosecutors acted after the candidates made discrimination against Venezuelan migrants the cornerstone of their campaigns. One used the slogan: “Venezuelans will not have privileges,” while the other promises to “limit Venezuelans’ access to healthcare and education.” Roraima has received an inflow of Venezuelan migrants in recent years, as they flee their country’s full-scale socioeconomic collapse.

What else you need to know today

  • Cabinet. Communications Minister Fábio Faria has tested positive for Covid-19, but has only shown mild symptoms and will continue to work remotely. Mr. Faria took office in June following a cabinet reshuffle, and has quickly become one of the president’s most influential advisors, helping to tame his demeanor and abandon the constant attacks against Congress and the Supreme Court.
  • Bounceback. The São Paulo state government is set to announce its economic recovery plan today, expected to rely heavily on privatizations — something Governor João Doria supported long before the pandemic. Another pillar of the plan will be an austerity package approved by the state legislature, which cuts back on tax breaks and creates a voluntary redundancy program to axe 5,000 civil servant positions.  
  • Top 5 worldwide. After confirming over 15,000 new coronavirus infections and 350 deaths, Argentina became the country with the fifth-highest number of cases in the world, while its death tally is 12th-largest. Argentina was one of the first Latin American countries to respond to the coronavirus pandemic, with the government placing the country under lockdown by March 20 — even before European countries such as Germany. Massive inequality and the prevalence of informal labor, however, made it impossible to fully enforce restrictive measures. 
  • Butt-gate. Senator Chico Rodrigues — caught stashing BRL 30,000 “between his buttocks,” according to the Federal Police — was relieved from his duties as the government’s deputy whip. Moreover, the Supreme Court ordered his 90-day suspension from the Senate, a decision that must be approved by his peers before being enforced. But Mr. Rodrigues seems to be safe from impeachment, at least for now, as the Senate’s Ethics Committee (of which the senator is a member, ironically) is not currently holding in-person sittings.
  • Spread. Only eight of Brazil’s 5,570 municipalities have not recorded a single Covid-19 case — and none of them have more than 7,000 inhabitants. So far, Brazil has registered 5.17 million infections and 152,460 deaths. There are at least 93 potential cases of reinfection being analyzed in the country.[/restricted]
Latin America

Brazil-Paraguay border reopens after seven months

Connecting the Brazilian city of Foz do Iguaçu to Paraguay’s bargain shopping paradise Ciudad del Este, the Friendship Bridge is one of the most-used bridges in South America — and the busiest of Brazil’s border crossings. Before the pandemic hit, some 100,000 pedestrians and 40,000 vehicles would cross on an average day.

A notable free-trade zone, Ciudad del Este welcomes droves of Brazilian tourists looking for tax-free goods such as perfumes, electronics, and clothing. Thousands of informal salespeople also join the throngs of shoppers, in search of cheap products they can resell in Brazil for higher prices.

But that bustling tradition of commerce ground to a halt in March, when Paraguay closed its borders to protect itself from imported coronavirus cases, blocking off the Friendship Bridge in the process. [restricted]At the time, Asunción called Brazil’s Covid-19 response “chaotic,” and Guillermo Sequera, head of the Paraguayan Health Surveillance Board, said the border would remain closed “until the wave in Brazil was over.”

Indeed, closing the border made sense, as 40 percent of all cases in Paraguay were recorded in Ciudad del Este.

Now, the Friendship Bridge is open for the first time in seven months, with Brazil showing progressively lower daily Covid-19 death numbers. For the time being, only private vehicles and cargo trucks will be able to cross between the two countries, and only between 5 am and 2 pm. On November 1, pedestrians will be allowed to use the bridge once again.

Reopening the Brazil-Paraguay border

Bridge Paraguay Brazil border
Federal Road Patrol car blocks Friendship Bridge. Photo: Arquivo/PRF

Closing the border came as a hefty blow to the Ciudad del Este economy. Revenue from commerce in the city dropped from around USD 400 million per month to just 5 percent of that. Sixty-four thousand people were left unemployed, accounting for almost half of the city’s population of working age.

“The bulk of sales depends on people coming over from Brazil,” said Juan Vicente Ramirez, chairman of the local chamber of commerce. “For many store owners, there was no point in opening just for local shoppers — and about 80 percent of them remained closed for the past few months.”

Strained by their economic needs, local business owners launched an intense campaign to reopen the border — a struggle that culminated in violent protests in July.

After falling out over Covid-19, Brazil and Paraguay have begun to mend fences, signing a bilateral agreement to allow the partial resumption of commerce. 

Six trade centers in border towns were created — where citizens can go to buy goods from the neighboring country.

In a second stage, which has yet no date to be enforced, other border crossing points will be reopened. That is the case for the border between Pedro Juan Caballero (Paraguay) and Ponta Porã (Brazil), two cities 400 kilometers north of the Friendship Bridge, and separated by nothing more than a street.

In preparation for the reopening, the city of Foz do Iguaçu has requested federal funds to expand its healthcare network — increasing its number of intensive care units in anticipation of Paraguayan patients flocking to hospitals on the Brazilian side of the border.

Drug smuggling boomed despite closed borders

Paraguay is a massive gateway for drugs coming into Brazil, in what is called the “hillbilly route” of South American narcotics trafficking. Drugs from Bolivia and Peru pour into the Brazilian state of Mato Grosso do Sul, via Paraguay, before being transported to the Port of Santos — and shipped to Europe.

In recent years, Brazil has invested big bucks to secure its border with Paraguay. The country is implementing the first phase of the Integrated Border Monitoring System (Sisfron) — a sophisticated surveillance network to patrol a stretch of 650 kilometers of the border.

But not even the increased surveillance — coupled with Covid-19 border closures — has slowed down drug smugglers, who seem to be busier than ever. Between January and August, the Federal Highway Police apprehended almost 45 tons of cocaine, 136,000 amphetamine pills, and over 1 million cannabis plants — enough to fill the equivalent of 28 football pitches.

The numbers give the impression that the drug problem is a bottomless pit. In trying to deal with the issue, Paraguayan lawmakers are taking steps to change the laws on legal cultivation of cannabis — going in the direction of Uruguay, where recreational marijuana is legal.

But the conservative Brazilian Congress resists even entertaining discussions on medicinal cannabis — let alone debating relaxed rules on recreational drugs.[/restricted]


Explaining Brazil #129: Bolsonaro steering away from Bolsonarism

President Jair Bolsonaro has pretty much broken with everything he stood for in the 2018 election. He has not catered to Evangelicals in Congress; he has declared the end of Operation Car Wash; and his family is battling multiple corruption accusations. But Mr. Bolsonaro has never been stronger among politicians in Brasília — nor has he been more popular with voters.

Still, it is possible to see cracks in the Bolsonarism bloc, with some far-right activists calling for protests against the president — who they call a “closeted left-winger,” something the president — and anyone on the left — would strongly deny.

This week, we discuss the political repercussions of the president’s political shift.

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On this episode:

  • Pablo Ortellado is a philosopher, researcher, and public policy professor at the University of São Paulo. His research interests include copyright policies, access to information, cultural policies, and social movements.

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Brazil trade with U.S. sees worst result in 11 years

The most notable change in Brazilian foreign policy since the election of President Jair Bolsonaro in 2018 has been the country’s full alignment with the U.S. However, this shift in allegiances has yet to result in any concrete gains for Brazil — in fact, bilateral trade with the U.S. has just seen its worst result in 11 years. Between January and September of this year, accumulated trade between the two countries hit USD 33.4 billion, a 25 percent drop from the same period in 2019. 

Regardless, the U.S. remains Brazil’s second-largest trading partner, accounting for 9.7 percent of Brazilian exports and 12.3 percent of revenue. Only China detains a larger slice, buying up over one-third of Brazil’s exports.[restricted]

According to data from the American Chamber of Commerce in Brazil (AmCham Brasil), 2020 is shaping up to end with a Brazil-U.S. trade deficit of between USD 2.4 and 2.8 billion — the worst result in five or six years. The findings are presented in AmCham Brasil’s latest Brazil-U.S. Trade Monitor, published this week.

Sluggish trade: pandemic to blame?

The AmCham Brasil report singles out three leading factors to explain the sharp downturn in bilateral trade. “The combination of the severe effects of the economic crisis caused by the [Covid-19] pandemic, the fall in global oil prices, and trade restrictions in specific sectors – such as the steel industry, account for a large part of the contraction in bilateral trade,” explained AmCham Brasil’s executive vice president, Abrão Neto.

Mr. Neto went on to say that the delayed effect of the pandemic on imports was due to the customs clearance of orders made and shipped before the crisis continuing to be carried out in the early stages of the pandemic. Furthermore, a large part of Brazil’s trade with the U.S. is made up of intra-company exchanges, which may have taken some time to reflect the drop in demand.

“It was a severe blow for bilateral commerce, but our assessment is that the worst is behind us,” said Mr. Neto. AmCham Brasil is confident in the recovery of international goods and services trade, and of the demand this will bring to Brazilian and U.S. exporters.

Amid the unforeseen Covid-19 crisis, another factor set to reclaim importance is the trade war between the U.S. and China. “This will continue for some time and the entire world is factoring it into the equation as a variable,” said Mr. Neto. However, it is stressed that tensions between the two countries are unlikely to be specifically crucial in Brazil-U.S. relations, but it will have an effect on global trade as a whole.

In September of last year, the International Monetary Fund (FMI) predicted growth of just 0.8 percent for the global economy in 2020, as a result of the China-U.S. trade war. This, of course, was before the Covid-19 pandemic came to decimate all forecasts for this year.

Difference between the U.S. and China

Brazil’s export portfolio to the U.S. — with 87.2 percent comprising products with higher added value — goes some way to explaining the fall in trade seen in 2020. For instance, the trend is drastically different in Brazil-China trade, which saw an uptick due to agricultural commodities.

The one commodity that did have an influence on Brazil’s trade balance with the U.S. was oil, prices of which have yet to return to pre-pandemic levels after collapsing in March. In total, oil and fuel make up for 8.9 percent of all Brazilian exports to the U.S.[/restricted]

Brazil Daily

Moody’s threatens to downgrade Brazil

Today, we talk about how Jair Bolsonaro struggles to fit social policies within the federal budget — and Brazil could have its debt rating downgraded. Meat kings JBS add to their list of scandals. Bolsonaro ally caught short during Federal Police corruption operation.

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Bolsonaro torn between fiscal cap and need for social policies

Samar Maziad, a vice president and senior analyst for Brazil at ratings agency Moody’s, [restricted]said on Wednesday that Brazil’s sovereign debt could be downgraded further into junk territory unless the government managed to advance its agenda of reforms this year or, at the latest, early in 2021. “If the support for reforms dwindle, it will have a negative impact on our outlook [for the country],” said Ms. Maziad during an event.

  • Moody’s currently gives Brazil a Ba2 rating, two tiers below investment grade, with a “stable” outlook.

Why it matters. The path of austerity is by no means an obvious choice. With record-high unemployment rates and an uncertain recovery from the pandemic crisis — which no one knows how long will last — the government has been faced with the challenge of creating a new cash-transfer program that is bigger than Bolsa Família.

  • There is also the political element: the coronavirus emergency salary has pushed President Jair Bolsonaro’s approval ratings to their highest levels since his inauguration. Data published just hours ago by pollster PoderData shows the government’s approval ratings at 52 percent. 
  • “If Mr. Bolsonaro is able to combine his socially conservative agenda with a broad social protection network, his re-election bid shall become unbeatable in 2022,” said Pablo Ortellado, a public policy professor at the University of São Paulo, speaking to The Brazilian Report.

What is the plan? It is hard to know what the government has in store for taming the debt and preventing millions of people from dropping below the poverty line once the coronavirus aid ends in December. The latest plan being discussed within the Economy Minister would reduce the number of families benefited by the federal cash-transfer program to around 20 million. But with a divided cabinet, the administration has struggled to settle on a single plan.

  • Interestingly, it’s not only the federal government that is discussing cash transfers. In São Paulo, the two leading mayoral candidates — incumbent Bruno Covas and the Bolsonaro-backed Congressman Celso Russomano — have proposed emergency aid or basic income programs for São Paulo residents. 

State of the debt. According to the latest forecasts by the International Monetary Fund, Brazil’s debt-to-GDP ratio could top the 100-percent mark this year. Among emerging economies, only Angola would have a bigger deficit. The IMF also believes that Brazil is unlikely to record a primary surplus before 2025.

Bright-ish spot. The services sector — the backbone of the Brazilian economy — grew 2.9 percent in August when compared to July, recording a third consecutive month of growth. Even bars and restaurants are performing better than expected, with revenue at around 60 percent of pre-pandemic levels.

Meat kingpins under fire

On Wednesday, federal prosecutors indicted Mato Grosso do Sul Governor Reinaldo Azambuja and businessmen Joesley and Wesley Batista for corruption, money laundering, and criminal association. The Batista brothers — who control the world’s largest meatpacking company, JBS — are accused of paying BRL 67 million (USD 12 million) in kickbacks to the governor and his allies, in exchange for not paying state-level taxes. JBS allegedly gained BRL 209 million with the scheme.

  • On the same day, the Pilgrim’s Pride Corporation — a U.S.-based subsidiary of JBS — agreed to pay USD 110.5 million to settle federal charges that it fixed chicken prices for years, passing on higher costs to consumers, restaurants, and supermarkets.
  • Also on Wednesday, JBS’ parent company, holding firm J&F, pleaded guilty to U.S. foreign bribery charges, agreeing to pay USD 128 million in fines. The settlement refers to the company’s role in corruption scandals that nearly brought down the Michel Temer administration in 2017.

Rap sheet. Top executives of the J&F group admitted having bribed more than 1,900 politicians to advance their business interests — particularly regarding the expansion of JBS from a regional player to an international behemoth.

Stocks, stakes … Shares of JBS closed the day up 9.2 percent, following the news of the settlements — which investors hope will help turn a new leaf on JBS’ laundry list of scandals. The indictment, however, became known after market hours. 

A new meaning for the term “dirty money”

Just days after President Jair Bolsonaro stated that he had ended Operation Car Wash due to there being “no more corruption within the government,” his administration was rattled by an awkward — and frankly disgusting — scandal. Senator Chico Rodrigues of Roraima, the government’s deputy whip in the Senate, was targeted by a Federal Police investigation into the embezzlement of BRL 15 million earmarked for the fight against Covid-19 by members of Congress.

  • The Feds found around BRL 30,000 in cash in the senator’s home, with part of the money being stashed — we kid you not — “between his buttocks,” as reported by online magazine Crusoé, and confirmed by newspaper Folha de S.Paulo. As many of our subscribers read this newsletter during breakfast, we will spare you the gory details.
corruption federal police
Illustration by Jika

Why it matters. Few times have Brazilians been faced with such a ridiculous and graphic scandal — which can certainly do no good for the government’s image, especially as Jair Bolsonaro clashes with his core supporters, who oppose his pandering to establishment politicians.

  • The case also continues to shed light on how corrupt officials are using the emergency situation created by Covid-19 to fill their pockets — and underwear, apparently — with public money.

What they are saying. “I am relaxed about what happened in my home. I trust the justice system and know I will be able to prove my innocence,” said Mr. Rodrigues, in a statement.

  • “Ah, Car Wash is over, folks? The Feds are in Roraima today,” said Mr. Bolsonaro, on Twitter.
  • “Money laundering will be key in this case,” joked Federal Prosecutor Vladimir Aras, brother of Prosecutor General Augusto Aras.

Off you go. Government officials agree that either Mr. Rodrigues resigns as deputy whip, or he will be demoted.

What else you need to know today

  • Deceleration. The Central Bank publishes the latest update to its Economic Activity Index (IBC-Br) today, considered to be a predictor of the official GDP rate. Analysts expect the index to show a 1.6-percent expansion of the Brazilian economy in August — which would mean a deceleration of the economic rebound after months of stricter social distancing. In June, the index was at +5.32 percent, and reached +2.15 percent in July.
  • Crisis. Ricardo Eletro, one of Brazil’s biggest retail groups, has filed for bankruptcy protection. In what will be the biggest court-supervised recovery plan in Brazilian history, the group is set to split its assets into multiple companies in order to divest and be able to pay its BRL 4-billion debt to 20,000 creditors. 
  • Environment. A federal court denied a request to suspend Environment Minister Ricardo Salles from office. In their lawsuit, federal prosecutors say Mr. Salles is deliberately depleting Brazil’s environmental controls — which could allow Amazon deforestation to reach a point of no return (after which the rainforest could, according to scientists, become a savannah-like biome) and bring “tragic effects on environmental protection frameworks.” A panel of judges will trial the case on October 27.
  • Supreme Court. Allegations of plagiarism might have tarnished Federal Judge Kássio Nunes Marques’ academic résumé, but they have not dented his chances to be confirmed as Brazil’s next Supreme Court justice. Senator Eduardo Braga, the rapporteur of his confirmation proceedings, has recommended that the Senate’s Constitution and Justice Committee approves the nomination, saying the inconsistencies on Mr. Nunes Marques’ CV do not qualify as “relevant facts” against the judge.
  • This time’s the charm? The government intends on presenting its plan to privatize Correios — the state-owned postal company — “at the beginning of next year,” according to the Communications Ministry. Privatizing Correios has been listed as a priority since President Jair Bolsonaro took office in January 2019 — but no progress has been made since.
  • Drug boss. The Supreme Court is set to end a trial today on whether or not to jail a leader of the São Paulo-based First Command of the Capital (PCC), arguably Brazil’s most powerful criminal organization. He was set loose by Justice Marco Aurélio Mello last weekend due to a technicality — and a majority of justices (6 out of 6) have voted to overturn his decision. But the outcome of the trial should matter little: the drug boss, called André do Rap, is already at large.
  • Science. The Health Ministry has launched a BRL 600-million (USD 107-million) program to create a national database with mapped genomes of 100,000 Brazilians. The initiative could help anticipate disease diagnostics. [/restricted]

Pandemic to worsen Brazil’s troubling school dropout rates

Over 38 billion dollars: that is the estimated cost of school dropouts in Brazil in the year 2020 alone. Researchers from business and economics school Insper, in conjunction with the Roberto Marinho Foundation, concluded that some 575,000 young Brazilians will end this year having not completed basic education — a number that exceeds the total population of some of the country’s state capitals. 

In their study, entitled “Consequences of the Violation of the Right to Education,” the researchers estimated a lifetime loss of BRL 372,000 (USD 66,700) per student, accounting for factors such as lower employment prospects, decreased wage expectations, losses due to a reduced contribution to economic activity, decreased quality of life, and a higher probability of being involved in crime.[restricted]

Furthermore, the study did not even account for the knock-on effects of the Covid-19 pandemic, meaning the number of dropouts and future losses could be even higher. 

Another study, carried out by the National Youth Council (Conjuve), found that 28 percent of students aged between 15 and 29 are considering not returning to school once pandemic-related restrictions are fully lifted. Half said they are unlikely to apply for next year’s National University Entrance Exam (Enem).

The Insper study assessed young people born in 2002 who would now be expected to complete high school education. According to their research, an average teenager who completes basic schooling should be expected to accumulate an income of BRL 427,600 throughout their lifetime — for those who do not complete high school, this average drops to just BRL 268,500.

Indeed, wealth was not the only factor assessed, with Insper researcher Laura Müller Machado pointing out that those who do not complete high school are expected to have a lower quality of life and poorer health conditions. Society as a whole also stands to lose.

“Young people who complete basic education tend to encourage more constructive environments wherever they go, they have a greater capacity to generate innovation, inspire, and transmit knowledge. Besides, young people who don’t finish basic education are more likely to be involved in episodes of violence, whether as victims or perpetrators, as they usually live in more vulnerable places and are more exposed to conflict. This has a considerable cost for society”, she explains.

School dropouts: a neglected population

According to the National Household Sample Survey (Pnad), carried out by the Brazilian Institute of Geography and Statistics (IBGE), 20.2 percent of the 50 million Brazilians aged between 14 and 29 have not finished a single stage of basic education. Among the reasons cited for this are disinterest in studying and a pressing need to leave school in order to work.

According to Roberto Rafael Dias da Silva, a Ph.D. in Education and professor at the School of Humanities at the University of Vale do Rio dos Sinos (Unisinos), the data reflects a lack of investment — both in Brazil and Latin America as a whole — in diagnostic research and proposing viable alternatives for keeping kids in school.

“Cultural issues, the need to enter the labor market prematurely, and changes in the economy, for example, can explain the high rates of school dropouts. Most of the time, dropping out of school is not a matter of choice”, he says, adding that education systems, publishers, professional associations, and educational institutions themselves need to create permanent study centers on child and teenage education in Brazil.

Mr. da Silva also asserts that the outlook demands action from the government, such as a collective re-examination of educational purposes, programs for monitoring learning, and long-term policies. Meanwhile, Ms. Machado suggests that the government should be examining the good educational practices being deployed in Brazil — as the issue of school dropouts is not universal around the country. 

Congresswoman Tabata Amaral, a leading voice in the public discourse on education, claims that Brazil’s Education Ministry has been “adrift” for almost two years. “What do we as a society expect from Education Ministers? That they would take their place as the coordinators of national educational efforts, as supporters of the most vulnerable education networks. But the Ministry decided to fold its arms instead. Of course, there are good examples from some states and municipalities, many inspiring teachers, but we know it takes more than that”, she says.

Civil society’s role in change

While it has become clear that the government holds significant responsibility in solving the problem of school dropouts in Brazil, that does not mean that civil society initiatives are not welcome. One example of a successful program is the NGO Instituto Futebol de Rua (Street Football Institute), which since 2006 has used sport, education, and culture as tools for social development in the southern city of Curitiba and other urban centers.

Jurema Christen, one of the organization’s teachers, says one of the goals of the initiative is to dissuade its young participants from leaving school,

“We believe in transformative, effective, and integral education. This is only possible if we have a strong partnership with the families and schools where our youths study. In such a delicate moment as the Covid-19 pandemic, we must take a closer look at our students. We are in constant communication with families, to encourage these young people to continue studying, even in remote settings”, she says.

The institute also developed a completely free program for monitoring studies. Each week, families enrolled in the initiative receive phone calls from the NGO’s education professionals to assist students with any issues they may be having with schoolwork. “Our goal is to reduce school dropouts as much as possible,” says Ms. Christen.[/restricted]


Brazil captured a notorious drug boss — then let him go

In September 2019, Brazilian police arrested 43-year-old André Oliveira Macedo — a drug kingpin best known as André do Rap — after being on the run for six years. As one of the top brass of the First Command of the Capital (PCC) — Brazil’s largest organized crime gang — André do Rap was hiding out in a luxury mansion in the Rio de Janeiro beach town of Angra dos Reis.

The investigation that led to his arrest was long and painstaking, involving the collaboration of law enforcement agents from Italy and the U.S., as a result of André do Rap’s involvement with transnational drug trafficking. When he was taken in, several of his luxury possessions were seized, including a helicopter, yacht, and a 4×4 Hyundai Tucson.

However, after just one year in custody, André do Rap was set free on a legal technicality. And before the Supreme Court could rectify this mistake, he was already at large, with authorities believing the drug boss has now fled the country.[restricted]

Slipped through their fingers

André do Rap was a key figure within the international expansion of the PCC and its consolidation as South America’s widest reaching drug cartel. His role was to oversee the trafficking of immense quantities of cocaine from the Port of Santos, in São Paulo state, over to Calabria in southwest Italy. From there, the product was picked up by the PCC’s notorious Italian allies ‘Ndrangheta and distributed Europe-wide. 

But despite a sentence of over 25 years in jail for international drug trafficking, André do Rap walked out of jail last Saturday, thanks to a court order by Supreme Court Justice Marco Aurélio Mello. His lawyers claimed that their client’s preventive detention had not been renewed within the legally stipulated time frame of 90 days — a new rule introduced by the so-called Anti-Crime Bill, ratified by President Jair Bolsonaro in January. Finding this to be true, Justice Marco Aurélio ordered his immediate release.

Indeed, the Supreme Court justice acted according to the law, later affirming in an interview to TV Globo that he made the decision as a member of the Supreme Court, “not as the citizen Marco Aurélio Mello.” “The law is there to be complied with and followed,” he added.

Unsurprisingly, the decision divided opinion among the Supreme Court, legal scholars, and politicians, once more exposing the complexity of Brazil’s penal system.

Shutting the barn door after the drug dealer has bolted

Justice Marco Aurélio Mello’s decision caused such an immediate stir that Chief Justice Luiz Fux moved to suspend his colleague’s decision the very same day, ordering André do Rap to return to preventive detention immediately. He also put the case on the Supreme Court’s docket for Wednesday afternoon, where a majority of justices are expected to vote against Justice Marco Aurélio Mello’s decision.

However, in the interim between the release order and Chief Justice Fux’s suspension, André do Rap had already walked out the front door of a São Paulo penitentiary, where he was driven off by a luxury car after informing authorities he would be staying at a house in the coastal São Paulo town of Guarujá. Once his re-arrest was ordered, police could not locate him in Guarujá, nor at the homes of his family and friends. The Federal Police believes he has fled to Paraguay or Bolivia, where the PCC has established operations.

Political backlash after drug

In Congress, a group of supporters of President Bolsonaro are maneuvering to submit bills to remove the mandatory review of preventive detentions from Brazil’s penal code. Figures close to the president say that Justice Marco Aurélio Mello made an error in his decision, claiming he should have assessed the case at hand and ruled that release was not an option, due to the significant danger posed by the prisoner.

Former Justice Minister Sergio Moro, by way of his press office, declared that he was against the inclusion of the mandatory 90-day review of preventive detentions in January’s new penal legislation. “The article was not in the original draft of the Anti-Crime Bill and I, as Justice Minister, was opposed to its insertion for fear of automatic releases of dangerous prisoners as a result of the mere passing of time.”

Domino effect

At least two individuals in prison for international drug trafficking have already made similar requests for release to the Supreme Court. One, arrested in 2016, is serving a 33-year sentence, while the other is facing 35 years.

As added intrigue to the existing fiasco, online magazine Crusoé revealed that the law firm providing André do Rap’s defense has a former aide to Justice Marco Aurélio Mello among its partners. Asked about this during a telephone interview to CNN Brasil on Tuesday, the justice criticized the question and hung up the phone. “That is defamation. This interview is over,” he said.

So far this year, Justice Marco Aurélio Mello has granted at least 79 release requests based on the provision of mandatory renewal of preventive detentions. The number could be even higher, as a single habeas corpus plea may benefit more than one individual.[/restricted]

Brazil Daily

Lifting the lid on lobbying in Brazil

Today, we show you how lobbying works in Brazil. How banks’ woes in the stock market raise red flags about the economy. And coronavirus deaths at lowest since May.

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How lobbying operates in Brazil

The Brazilian Association of Institutional and Government Relations (Abrig) has published[restricted] a document offering a glimpse into the country’s lobbying sector. The activity is yet to be regulated in Brazil — and remains highly stigmatized in a nation so accustomed to corruption scandals.

  • Perhaps that’s why two-thirds of companies who use such services — whether by having its own lobbying sector or hiring outside counsel — are foreign.

Company profile. The top sectors for which lobbying professionals work are not surprising: health and pharma, food and beverages, as well as agro and tech. These are sectors with constantly shifting regulations — and firms want to have a grasp on the changes to come and influence them when possible. 

Startups. Between 2019 and 2020, however, the sector saw a big surge in startups who use such services — this type of company represented 6 percent of the lobbying sector’s clients last year, and has now risen to 9.4 percent. “They are acting preventively to avoid excessive regulation or to try and block new rules that are harmful to their activities,” said Carolina Venuto, chairperson at Abrig.

  • The sector is particularly sensitive to how the new general data protection law will be enforced in Brazil. So far, the government has yet to create a regulatory body to monitor the implementation of new rules on handling citizens’ personal information. Business associations warn that the lack of regulation will lead to unnecessary litigation and insecurity about how the new law will be interpreted.

Dirty word. Since the 1970s, the term “lobbying” has been used to qualify any attempt (usually illicit) to influence public officials, according to Andréa Cristina Oliveira Gozetto, a social scientist specializing in government relations and public policies at think tank Fundação Getulio Vargas. That’s why the sector prefers to call its work “government relations” instead.

Regulation, pero no mucho. Most lobbying professionals are in favor of their work being regulated, but with varying degrees of support. While 80 percent of consultancies and in-company government relations professionals support regulations, only 44 percent of law firms who work in the sector agree — perhaps out of fear that their field of operations may be narrowed.

  • Within the sector, there is also immense opposition to proposals in Congress that would establish a national database of lobbyists. Abrig claims it would limit the sector — saying that, “in a democracy, any citizen should be able to engage in government relations.”

Benchmark. Ms. Gozetto, the social scientist, argues that Brazil should use the Chilean model to regulate lobbying. Chile was the first Latin American country to adopt a regulation on the matter, back in 2014. Now, an online system logs meetings, donations, or any kind of contact between elected officials and lobbyists. Requesting a meeting with a senator or representative goes through this online public platform, shedding light on how interest groups operate.

Pandemic, competition slash banks’ share of stock market index

Between December 2019 and today, Brazil’s major banks have lost one-third of their weight on Ibovespa — the country’s benchmark stock index — according to 6minutos, the content division of C6 Bank. Late in 2019, banks made up 26.6 percent of the Ibovespa portfolio. Now, that share has fallen to just 19 percent.

  • The main reason for this change is that big banks lost a lot of market value during the pandemic. The index for financial companies (IFNC) is the second-worst performing in Brazil, down over 26 percent since the beginning of the year.

Why it matters. Investors’ skepticism about banks has raised some red flags around the Brazilian economy.

  • With the coronavirus crisis and a record-high unemployment rate, investors worry that banks will face massive default rates. The most recent data, from July, actually shows that fewer Brazilians are in default — but the numbers could be misleading, as many of these people were benefited by the coronavirus emergency salary. The impact is expected to be felt from December onward, once the benefit is over.
  • There is a similar concern when it comes to corporate debtors. The government put in place a series of measures to postpone debt payments — which investors fear might only delay the problem, in many cases.

Competition. There is also one positive reason for banks’ struggles in the stock market: increasing competition from fintechs and investment platforms. With lower (or zero) tariffs, these new players are rattling traditional banks and helping the inclusion of millions in the banking system — which could lower market concentration for financial services. This might be bad for shareholders but is certainly positive for the Brazilian economy.

Coronavirus daily deaths lowest since May

For the first time since May 7, Brazil’s 7-day rolling average of new daily Covid-19 deaths has fallen below 500 — showing a 28-percent decrease from two weeks ago. After 28 days of stability, the Brazilian death curve has seen a downturn over the past two days.

Why it matters. The data appears to indicate that the coronavirus spread — which has infected over 5.1 million Brazilians, killing 151,000 of them — could finally be slowing down.

Yes, but … Data collection has been sketchy in Brazil, and death reports tend to go down during the weekends and holidays (October 12 was a national holiday). So it’s hard to know if the reduction in deaths is an accurate depiction of how the virus is spreading. Back in September, Brazil observed a momentary decrease in deaths around the time of the September 7 Independence Day holiday. After that, the curve showed stability for nearly a month.

Vaccine. Mariângela Simão, the World Health Organization’s Assistant Director-General for Drug Access, Vaccines and Pharmaceuticals, said she is “positively sure” Brazil will not have enough vaccine doses in 2021 for a massive vaccination campaign. “The WHO advises Brazil to prioritize health workers and people over 65,” she told CNN Brasil.

What else you need to know today

  • Trade deal. In a push to show that the EU-Mercosur trade deal has support in Europe, the Agriculture Ministry released a statement saying Portugal backs the agreement. Last week, the European Parliament passed an amendment to the common EU commercial policy stating that the deal “cannot be ratified as it stands,” citing environmental concerns.
  • Military. Newspaper O Globo revealed today that, after the Brazilian government decided to make all Venezuelan diplomats personae non gratae in the country, the Army ran military tests in the Amazon, simulating war against a hypothetical “red country.” The operation involved 3,600 troops and happened between September 8 and 22 — on September 18, U.S. Secretary of State Mike Pompeo visited the Brazilian-Venezuelan border, lashing out at the country’s president, Nicolás Maduro.
  • Aid 1. Brazil’s National Development Bank announced it will extend the temporary suspension of debt collection on companies — one of the first measures taken by the government to mitigate the economic effects of the pandemic. The program was set to end in September — but will continue for another six months for specific sectors, including automakers, clothing industries, and hotels.
  • Aid 2. President Jair Bolsonaro signed a decree extending the possibility of companies suspending or cutting workers’ hours and wages for another two months. Back in September, Economy Minister Paulo Guedes let slip that the measure would remain in place, but the extension has only been formalized now. The program is considered to be successful in avoiding millions of layoffs, but has created doubts around how workers’ Christmas bonuses — established by law in Brazil and known as the “13th salary — will be paid, as they are calculated based on monthly wages.
  • Payments. As Brazil gets ready to launch the Central Bank’s instant payment tool PIX, Visa is also beginning to shift its business model in the country. The company is selling fraud prevention and transaction authentication services to PIX participants, in a bid to expand its business beyond credit and debit cards. Only a few days after Brazilians were allowed to sign up for PIX, cybersecurity companies found at least 60 fraudulent websites offering fake registration forms — aiming at getting people’s financial information.
  • Rio de Janeiro. A justice of the Superior Electoral Court issued an injunction suspending the ineligibility of Rio de Janeiro Mayor Marcelo Crivella — who has been convicted of electoral crimes. Wildly unpopular, Mr. Crivella is polling at 12 percent, 15 points below former Mayor Eduardo Paes, who tries to win a third stint in office, after serving as mayor between 2009 and 2016.
  • Supreme Court. With the retirement of Justice Celso de Mello from the Supreme Court yesterday, lawyers representing former Justice Minister Sergio Moro wasted no time in asking Chief Justice Luiz Fux to reassign the case in which President Jair Bolsonaro is investigated for alleged illegal meddling with the Federal Police. If no party in the case had made such a request — Mr. Moro was the one who accused the president — the case would automatically fall into the hands of Justice Mello’s soon-to-be replacement, Federal Judge Kássio Nunes Marques, who was handpicked by Mr. Bolsonaro.[/restricted]

Who is Brazil’s new Supreme Court justice?

Brazil’s longest serving Supreme Court Justice Celso de Mello retires from the court this afternoon, 31 years after first occupying his seat. His vacancy has offered far-right President Jair Bolsonaro his very first shot at appointing a justice to the Supreme Court — a process that is often fraught with realpolitik and cynical self-preservation. However, Mr. Bolsonaro’s pick — 48-year-old federal judge Kassio Nunes Marques — came as something of a shock to political pundits in Brasília.

Despite having promised an ultra-conservative and “extremely Evangelical” appointment to the Supreme Court, Jair Bolsonaro selected a justice with long-term links to the well-heeled establishment of Brazilian politics — a group that the president himself railed against throughout his campaign and first year in office, much to the delight of his supporters.[restricted]

Indeed, the process of agreeing on Kassio Nunes Marques as Brazil’s newest Supreme Court justice was a team effort, involving President Bolsonaro sitting down with a number of political actors who his more ideological fans abhor. On September 29, Senate President Davi Alcolumbre met with Mr. Bolsonaro, with the former telephoning current Supreme Court Justice Gilmar Mendes to organize a sit-down with the head of state. Messrs. Alcolumbre and Mendes, it should be noted, have both been targeted and made into effigies by pro-Bolsonaro protesters during demonstrations as recently as May.

Soon after, Jair Bolsonaro arrived at Justice Mendes’s house in Brasília, accompanied by Kassio Nunes Marques. Fellow Supreme Court Justice Dias Toffoli — another bête noire of the president’s ideological base — was also in attendance. As it happened, Mr. Bolsonaro and Justice Toffoli were pictured hugging after the meeting, dividing the president’s supporters on social media.

Two days later, Mr. Bolsonaro declared the appointment of Kassio Nunes Marques, who will now have to pass a largely perfunctory confirmation hearing in the Senate.

A bolt from the blue

The choice of Kassio Nunes Marques — who intends to go by the title Justice Nunes Marques once sworn in — took almost everyone in Brasília by surprise. He did not feature on even the most exhaustive lists of favorites for a Supreme Court pick and he quickly angered President Bolsonaro’s ultra-conservative supporters, to which the head of state’s choices have largely been beholden so far.

First and foremost, Nunes Marques’s political affiliations were called into question. While on the one hand he was branded as a lackey of the so-called “Big Center” — the large establishment caucus within Congress, made up of small to medium-sized parties willing to buy and sell their support — some pointed to his alleged links to the center-left Workers’ Party, Jair Bolsonaro’s declared enemies, with whom fraternization is seen as a cardinal sin within Bolsonarism.

Indeed, in 2011, Marques Nunes entered the Federal Regional Appellate Court of the 1st Region, in Brasília, after being appointed by former President Dilma Rousseff, of the Workers’ Party.

He was also involved in an emblematic case in 2019, when he overturned a trial court decision to suspend the purchase of wine and lobsters for a Supreme Court function. The case was capitalized upon by supporters of President Bolsonaro — including his politician sons — as an example of the excessive privileges enjoyed by the country’s highest court, which they intended to have shut down.

In another high-profile trial dating back to 2015, he voted in favor of suspending the deportation of Cesare Battisti, the former communist activist who was sentenced to life in prison for quadruple homicide in his home country of Italy, before fleeing to Brazil to receive political asylum from former President Luiz Inácio Lula da Silva.

Under Jair Bolsonaro’s government, Mr. Battisti was eventually arrested and extradited to Italy.

The Cesare Battisti case held particular importance for the ideological platform of the then-nascent Jair Bolsonaro government. As a former member of a far-left terrorist group in Italy, and having been given shelter by Lula, arresting and deporting Mr. Battisti was a message to the Brazilian left, as well as being a way to further the government’s foreign policy goals.

The man in the middle

Despite allegations of links to the center-left Workers’ Party, Nunes Marques’s most credible alliances do indeed lie with the Big Center. Indeed, his wife Maria do Socorro has worked under four senators from the couple’s home state of Piauí, all of them from traditional Big Center parties. Indeed, she was set to double her salary just as her husband got his own big break, when the Progressistas party lined her up for a commissioned post in the Senate but backed down once the news had been published by Rio de Janeiro paper O Globo.

The Progressistas party is presided over by Ciro Nogueira, who is now a close ally of President Bolsonaro and one of Mr. Nunes Marques’s biggest backers. Last year, Mr. Nogueira praised the soon-to-be Supreme Court justice during a trial session. “Our Kassio [Nunes Marques] is a highly respected figure in the legal world of today, I am certain that he will reach the high courts, either the [Superior Court of Justice] or the Supreme Court. He is a much liked and respected individual.”[/restricted]

Latin America

The history of Nobel Prize winners across Latin America

The 2020 Nobel Prize season came to a close on Monday, as the Royal Swedish Academy of Sciences announced American economists Paul Milgrom and Robert Wilson as the laureats for Economic Science.

No Latin Americans made the cut this year — though only two had outside chances: Mexican poet Homero Aridjis (33-1 odds), for the Literature Prize, and indigenous leader Raoni, for the Peace Prize. They were pipped by American poet Louise Glück and the United Nations World Food Program, respectively.

To date, just 17 Latin Americans have won a Nobel Prize. Today, we look back on their achievements:[restricted]


  • Carlos Saavedra Lamas (Argentina, 1936). The former Foreign Minister was Latin America’s first laureate, being recognized for his work mediating peace negotiations between Paraguay and Bolivia after the so-called “Chaco War,” which killed at least 90,000 people between 1932 and 1935. Mr. Saavedra Lamas was also pivotal in Argentina’s admission to the League of Nations in 1932, the first worldwide intergovernmental body whose principal mission was to maintain world peace.
  • Adolfo Pérez Esquivel (Argentina, 1980). Born in Buenos Aires in 1931, Mr. Esquivel was one of the leading human rights defenders in Latin America during the 1970s — a time in which nearly all of the region’s countries succumbed to far-right military dictatorships. He headed human rights organization SERPAJ and built pro-democracy networks across the region. In 1977, Mr. Esquivel was arrested and tortured by the Argentinian military regime — only to be released 14 months later.
  • Alfonso García Robles (Mexico, 1982). Born in the city of Zamora in 1911, the lawyer and diplomat played a crucial role in making Latin America a nuclear-free zone, following the 1962 Cuban missile crisis. Mr. García Robles’ efforts led to a 1967 treaty signed by 14 countries in Mexico City — an effort that earned him the nickname “Mr. Disarmament.”
  • Óscar Arias Sánchez (Costa Rica, 1987). During his stint as president of Costa Rica, Mr. Sánchez championed a peace plan to end the devastating civil wars being fought in Central America. The plan was signed in August 1987 by Costa Rica and four neighboring countries (Guatemala, El Salvador, Honduras, and Nicaragua), and aimed at free elections, human rights protections, and plans to diminish foreign interference in the region.
  • Rigoberta Menchú (Guatemala, 1992). The first direct descendant of native Latin American groups to win a Nobel prize, Ms. Menchú was recognized for her work in social justice and ethno-cultural reconciliation based on respect for indigenous rights — amid a period of large-scale repression against native communities in Guatemala. Her work came at great personal cost, as Ms. Menchú’s father was murdered during a peaceful protest in Guatemala City, in 1980. Not long after, the Army tortured and killed her brother and mother, forcing her into exile. 
  • Juan Manuel Santos (Colombia, 2016). The former Colombian president is the last Latin American person to receive a Nobel Prize — and his win is surrounded by controversy. The Royal Swedish Academy bestowed the honor upon Mr. Santos for his work in negotiating peace with the Revolutionary Armed Forces of Colombia (FARC), an armed guerilla group in Colombia known for deploying terrorist tactics. Though the deal officially ended more than half a century of civil conflict, it was more a comma than a full stop: violence continues in Colombia, and Mr. Santos’ peace deal was voted down by Colombians in a referendum.


Latin America’s political turmoil during the Cold War — which culminated in dozens of military dictatorships across the region — also fueled a literary boom. New, emerging voices redefined literature in the region, and became powerful and influential authors worldwide.

  • Gabriela Mistral (Chile, 1945). Born Lucila Godoy Alcayaga in 1889 in Vicuña, the educator, poet, and diplomat made history as the first female South American laureate. Besides her poetry, Ms. Mistral is praised for her work regarding education and the improvement of literary knowledge. By the time she won the award, she was living in Brazil, in the city of Petrópolis, in Rio de Janeiro state. 
  • Miguel Ángel Asturias (Guatemala, 1967). With his famous and unique work centered on the Central American imagination and cultural peculiarities, especially seen in his 1949 work “Men of Maize,” Mr. Asturias won the Nobel Prize in 1967 for his “vivid literary achievement,” in the words of the Academy, especially for bringing light to the indigenous roots and struggle in Central America. A year before his win, he had also received the Lenin Peace Prize from the Soviet Union. 
  • Pablo Neruda (Chile, 1971). One of the most famous writers in Latin America, Mr. Neruda was awarded “for poetry that with the action of an elemental force brings a continent’s destiny and dreams alive.” He died just 12 days after Augusto Pinochet deposed Chile’s democratically elected President Salvador Allende, in 1973. The official cause of death was prostate cancer, though a team of international scientists said in 2017 they were “100-percent convinced” that “a third party” was responsible for his death, following lab analysis of his remains.
  • Gabriel García Márquez (Colombia, 1982). “Gabo” was one of the creators of magical realism, a literary style born in Latin America that intertwines realistic depictions of the world and elements of fantasy. Despite being a supporter of the Cuban regime — and a personal friend of the late dictator Fidel Castro — Mr. Márquez was able to forge a friendship with former U.S. President Bill Clinton, who regarded the Colombian as his favorite fiction writer
  • Octavio Paz (Mexico, 1990). A poet and a diplomat, the Mexico City-born Mr. Paz was awarded in 1990 “for impassioned writing with broad horizons, characterized by sensuous intelligence and humanistic integrity.”
  • Mario Vargas Llosa (Peru, 2010). Through his books, which often contain biographical elements, Mr. Vargas Llosa offered a deep examination of how power and corruption play out in Latin America. The author’s political work, however, was not limited to his writing — he ran a failed, quixotic presidential campaign in 1990, eventually losing to Alberto Fujimori. He said the win was an important element in changing international perception around the region. “Latin America seemed to be a land where there were only dictators, revolutionaries, catastrophes. Now we know that Latin America can also produce artists, musicians, painters, thinkers and novelists,” he said in 2010.

Physiology or Medicine

  • Bernardo Alberto Houssay (Argentina, 1947). During his life, Dr. Houssay worked in almost every field of physiology and published over 500 papers and several books. He was awarded the Nobel Prize for his discovery of the role of pituitary hormones in sugar metabolism. The achievement was, at the time, a source of embarrassment for the Argentinian government: then-President Juan Perón had dismissed Dr. Houssay from the University of Buenos Aires School of Medicine for opposition to his education policy.
  • Baruj Benacerraf (Venezuela, 1980). The first and only Venezuelan to be awarded a Nobel Prize, Mr. Benacerraf was celebrated for discovering and improving studies in topics related to the immune system, especially in a research of the histocompatibility complex (MHC). He is often described as being Venezuelan-American, due to later obtaining U.S. citizenship.
  • César Milstein (Argentina, 1980). Considered one of the fathers of modern immunology, he went to the United Kingdom to study antibodies and how they can be used for the prevention, diagnosis, and treatment of several diseases. He shared the prize with Germany’s Georges J. F. Köhler. 


  • Luis Federico Leloir (Argentina, 1970). Born in Paris of Argentinian parents, he was raised in Buenos Aires from the age of two. Despite dealing with a lack of financial support and second-rate equipment throughout his career, Mr. Leloir developed a world-renowned study into sugar nucleotides, carbohydrate metabolism, and renal hypertension — which led to significant progress in understanding, diagnosing and treating congenital disease galactosemia.
  • Mario J. Molina (Mexico, 1995). Mr. Molina’s work on climate change was crucial toward enacting the Montreal Protocol on Substances that Deplete the Ozone Layer in 1987, and it made him one of the most important scientists of the past 50 years. He died just last week — and was hailed by Science Magazine as the “Nobel laureate who helped save the ozone layer.”[/restricted]

Robinho rape conviction clouds return to Santos

Welcome back to another edition of the Brazil Sports newsletter. This week, Robinho returns to Santos — and sparks fierce debate in Brazil, after the forward’s rape conviction in 2017. And Cruzeiro, one of Brazil’s biggest clubs, are beginning to sink without a trace. Enjoy your read!

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Talent always gets another chance

Under normal circumstances, it would be a reason for celebration. Robinho, who got his start at Santos before taking on European football and breaking into the Brazil national team, has now returned once again to his boyhood club. He will surrender the large salary he was earning at Turkish side Istanbul Başakşehir FK, taking a minimum wage at Santos until the end of the year. However, the public discourse is not about a prodigal son’s return, focusing instead on events that occurred in Milan in 2013.

  • In October 2014, Italian newspaper Corriere dello Sport published revelations of Robinho’s involvement in the alleged gang rape of a 22-year-old Albanian woman at a Milanese nightclub, during his spell playing for AC Milan.

The case. Three years later, while Robinho was back in Brazil playing for Atlético-MG, the player was tried in absentia and was found guilty, with Italian courts sentencing him to nine years in prison. Due to Italy’s lengthy appeals process — not too dissimilar to what is seen in Brazil — the sentence is pending and the player is not a fugitive from justice.

The debate. Pundits and fans have rushed to condemn Santos for resigning Robinho, questioning the message transmitted by employing an individual convicted of rape, and lauding him as a hero. By and large, however, Santos supporters and the club itself have defended Robinho’s reputation, claiming his innocence and celebrating the return of a fans’ favorite.

Quandary. In previous editions of this Brazil Sports newsletter, we have assessed the ethical questions behind football clubs employing players who had been convicted of crimes. The example of the time was Bruno Fernandes, once the most talented goalkeeper in Brazil and national champion with Flamengo, who was sentenced to 22 years in jail for ordering the kidnapping, torture, and murder of his ex-girlfriend Eliza Samúdio. After six years behind bars, he was granted release due to the delays in his appeal process, and he has bounced around a number of small Brazilian football teams, in a series of controversial signings.

  • The Robinho situation is different, in that he has yet to serve any punishment for the crime, and the legal case is technically still ongoing. However, while playing for Istanbul Başakşehir, Robinho refused to travel with the team for continental matches away from home, reportedly for fear of being arrested.

No moral judgment. Indeed, by the letter of the law, Robinho remains at liberty until proven guilty by a final and unappealable decision. However, as with Bruno being repeatedly resigned by small-time Brazilian clubs, the problem here is that the ethical ramifications of signing Robinho have never been taken into account by Santos. As opposed to offering an opportunity to someone they believe to be innocent and is awaiting appeal, Robinho has been signed for purely business and footballing reasons.

Under the carpet. Speaking to newspaper Folha de S. Paulo, Santos president Orlando Rollo said criticism of Robinho’s signing came from “jealous” fans of other clubs, and played down the player’s conviction. “Who are we to throw stones at Robinho? Let he who is without sin cast the first stone,” he said.

Talent gets a second chance. Brazilian football — along with many professional sports leagues around the world — is full of cases of players continuing lucrative careers despite criminal convictions. Indeed, if we go back to 1987, Santos’ current manager Cuca — then a player for Porto Alegre side Grêmio — was convicted of the rape of a 13-year-old girl during a pre-season tour of Switzerland. He never served time and went on to have an illustrious career in playing and management. Where there is talent, there will always be a club willing to give a second chance.

Cruzeiro hit an iceberg

In previous editions of this Brazil Sports newsletter, we have covered the plight of Belo Horizonte football club Cruzeiro, mired in corruption investigations, Fifa punishments, and eventually relegation at the end of 2019 — the first time the club has dropped below Brazil’s first division. But just when it seemed that Cruzeiro had sunk as far as they could go, the giants plumbed new depths.

Double relegation? Approaching the halfway point of the season in Brazil’s second division, Cruzeiro are currently 19th in the table, seeing their hopes of a quick bounce-back to the top flight slip away — and staring the terrifying threat of dropping down to the third division in the face. The club, with an estimated 8.4 million fans, has won only two of their last 11 matches, and they are now looking for their seventh manager in the space of 14 months after binning latest coach Ney Franco.

Fall from grace. Beyond being one of the Big Two clubs in Brazil’s second most-populous state of Minas Gerais, Cruzeiro are in this mess despite being one of the most victorious clubs of the 2010s. They were national champions in 2013 and 2014, and grabbed the Copa do Brasil trophy in 2017 and 2018.

Reap what you sow. The desperation of the situation was perhaps best summed up by Cruzeiro’s long-serving goalkeeper and captain Fábio, in a post-match interview off the back of another embarrassing home defeat. “We are reaping what we have sown. (…) There has been terrible administration [of the club] for a long time, the titles hide that. And now it’s blowing up on the people who are here at Cruzeiro. The others who made a lot of errors have all jumped ship and the responsibility was left to us. (…) We’re here, but everyone who made bad decisions in the past is watching at home.”

Relegation: a chance for rebirth? Unlike major European leagues, big teams in Brazil are no strangers to the dreadful fate of relegation. Of the current top flight, only Flamengo, Santos, and São Paulo have never once dropped below the top division, with the rest all having their spells in the second tier. 

  • With this, comes an often overlooked silver lining: big sides are put under less pressure in the second division, playing against weaker opponents and with less of a media spotlight. As such, they can go about rebuilding their squads, restructuring wage bills, and coming back stronger than before. 
  • However, with constant chopping and changing and no real stability at the top, Cruzeiro are not benefitting from the extra breathing room allowed by second-division football. The giant club is now facing another year outside of the top flight, which would extend even further if they are relegated for a second time.

What else you should know

  • Internationals. Brazil kicked off their World Cup qualifying campaign with an easy 5-0 home win over Bolivia on Friday. The team are likely to face sterner competition tonight against Peru in Lima, but Tite’s men are fully expected to come away with two wins in two.
  • Corinthians. The women’s side of São Paulo giants Corinthians gained increased attention last week, after footage of a spectacular team goal they scored in mid-September went viral worldwide on social media. Maiara’s finish after a wonderfully flowing passing move was called “the best goal we’ve ever seen” by popular football Twitter account FootballJOE.
  • The Robson Case. In March 2019, Brazilian citizen Robson Oliveira was arrested in Russia for entering the country while in possession of controlled substances, reportedly requested by the family of Spartak Moscow footballer Fernando, who employed Mr. Oliveira at the time. The substance in question was methadone chlorhydrate — commonly used for the treatment of heroin addiction but also found in chronic pain medication. It is a banned substance in Russia and Mr. Oliveira has been in jail ever since. However, the case took on a new twist last week, when Brazil’s President Jair Bolsonaro pledged to speak with his Russian counterpart Vladimir Putin, in order to negotiate Mr. Oliveira’s return to Brazil. The case will be dealt with in full in future editions of the Brazil Sports newsletter.
Brazil Weekly

Forget mayors, the House Speaker election is the race that counts

This week, we take a look at the behind-the-scenes moves leading up to February’s election for House Speaker. And the crisis sparked by a divided Supreme Court.

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The election that matters

Brazilians head to the polls on November 15 and 29 to select their new mayors and city councilors, [restricted]but President Jair Bolsonaro has his eyes on another election, which he sees as being much more consequential. In February 2021, members of Congress will vote to pick the new House Speaker and Senate President, and incumbents Rodrigo Maia (House) and Davi Alcolumbre (Senate) cannot run for another term — barring an amendment to the Constitution. Therefore, this clears the path for the government to put forward its own candidates.

The key election. Mr. Bolsonaro’s main interest lies in the House Speaker election, as the leader of the lower house holds all the power to initiate (or block) impeachment proceedings against the president.

  • While the president will officially remain neutral during the election process, he is backing Congressman Arthur Lira, a high-ranking figure from the so-called “Big Center,” a loose coalition of conservative, for-rent parties that now makes up Mr. Bolsonaro’s congressional support base.

Yes, but … Brasília correspondent Débora Álvares reports that, despite enjoying a good relationship with the Big Center as of late, Mr. Bolsonaro still doesn’t trust the congressional establishment — and may pull a curveball in the Speaker’s race. He is considering endorsing Tereza Cristina, the current Agriculture Minister, for the position.

  • Senior government officials told The Brazilian Report that Mr. Bolsonaro believes (rightly so, we may add) that the Big Center’s support is only circumstantial — and a shift in the political mood could see him held hostage to this self-serving group. That’s why he wants one of “his own” in the Speaker’s chair.
  • A congresswoman, Ms. Cristina is the former leader of the Rural Caucus, one of Brasília’s most powerful lobbies. She claims she does not want to leave the cabinet and enter the Speaker election — but she would, if the president asked her to. 
  • Government sources say Ms. Cristina is frustrated with her cabinet colleagues Ernesto Araújo (Foreign Affairs) and Ricardo Salles (Environment), who have helped cause an image crisis for Brazil’s agribusiness — due to attacks on China and recent environmental disasters.

Why it matters. The move, if confirmed, could be seen as a betrayal of the Big Center, a group that has ensured some stability to the Bolsonaro administration. Our sources say that Jair Bolsonaro could compensate Big Center officials by offering them key cabinet positions.

A split Supreme Court

This afternoon, Brazil’s Supreme Court will lose one of its pillars: Justice Celso de Mello, who retires after 31 years on the most prestigious bench of the country. Furthermore, this change will take place as the court undergoes a moment of deep internal division. Two recent events have widened this split between justices:

  • Operation Car Wash. After President Jair Bolsonaro said he had “ended” the task force because “there is no more corruption in the government,” Chief Justice Luiz Fux moved to transfer all trials related to the operation from a five-justice panel — a mechanism to reduce the court’s backlog — to full-court decisions. One of the two panels in the Supreme Court has become known as the “Garden of Eden,” due to its propensity for ruling in favor of defendants, while the chief justice himself is a known supporter of Operation Car Wash. Members of the “garden” reacted badly to the decision, calling it “nonsensical.”
  • PCC gang leader. Over the long weekend, the Supreme Court granted a habeas corpus request to a high-ranking leader of the First Command of the Capital (PCC), the most powerful and widespread organized crime faction in Brazil. The decision, made by Justice Marco Aurélio Mello, was issued after prosecutors failed to renew the prisoner’s preventive detention request. The chief justice overturned the decision within less than 24 hours, by which time the gang leader was already at large. Justice Mello was left disgruntled by the turnaround, saying that “the chief justice is not [his] superior.”

Why it matters. A split Supreme Court can aggravate some of the body’s biggest flaws, notably its lack of consistency and respect for precedent.

  • There is a running joke in Brasília, according to which Brazil has not one Supreme Court, but rather 11 — as each justice plays by their own rules. Never has this seemed so apt. 

Dangers. Meanwhile, the court has been the victim of several attacks — including from radical far-right groups operating under the auspices of the First Family (who ask for the shutdown of the court altogether). With their erratic behavior, justices spare these groups from having to discredit them.


October will be a month for tech IPOs in Brazil. Suno Research recommends investors to take part in broadband provider Triple Play’s offering if prices are up to BRL 14 per share. Triple Play has 75 percent of its network in flagship fiber-to-the-home technology and a strong presence in small- and medium-sized cities, a segment where internet penetration is growing and competitors still rely on outdated network infrastructure.

Natália Scalzaretto

New study ties informal labor to Covid-19 deaths

On multiple occasions, we at The Brazilian Report have explained how Brazil’s (and Latin America’s) highly informal economy contributed to its harrowing coronavirus epidemic. Without minimizing the responsibility of government authorities and their failed response to the pandemic, the truth is that millions of people simply could not afford to socially isolate.

A new study by the Federal University of Rio de Janeiro took five Brazilian cities with different proportions of informal labor and compared their Covid-19 death rates, with the results corroborating the hypothesis that unregistered workers could not stay home. For every additional 10 points in cities’ informality rates, contagion rates rise 29 percent and death rates, 38 percent.

Looking ahead

  • War budget. The government still has no solution for its plan to roll out a new welfare program while simultaneously adhering to the federal spending cap, which prevents the administration from raising public spending without extra revenue. The government is considering extending the so-called “War Budget” until 2021, which was a solution pushed through by Congress to create a parallel budget for coronavirus-related spending, as a way to bypass the cap. Analysts, however, say that using that mechanism for current expenses would create a confidence crisis among markets.
  • Priority list. The November municipal election gives the government practically no time to push through broad reforms in 2020. Instead, the administration will focus on three priorities for Congress: passing the new regulatory framework for the gas sector, opening up the cabotage navigation market, and breaking the monopoly state-owned company Correios has over postal services, thus clearing a path for the firm’s privatization.
  • Infrastructure. Tarcísio de Freitas, Brazil’s Infrastructure Minister, has begun a tour in Congress to gather sponsors for selected projects the administration hopes to push through to completion in 2021. One-third of his ministry’s budget will come from parliamentary grants, by which individual officials request a share of the federal budget to go toward projects in their constituencies. 
  • Vaccine. President Jair Bolsonaro has said on multiple occasions that “nobody can force anybody” to take a Covid-19 vaccine, but Brazilians don’t seem to agree. Over 70 percent of people in four major urban centers (São Paulo, Rio, Belo Horizonte, and Recife) want a vaccine against the coronavirus to be mandatory, once it is available. However, enthusiasm for the vaccine is lower among wealthier classes.

In case you missed it

  • Supreme Court. Celso de Mello, the longest-tenured Supreme Court justice, retires today after 31 years in Brazil’s highest court. He distinguished himself as the court’s most fervent defender of individual liberties and his peers say he will leave big shoes to fill. For his replacement, President Jair Bolsonaro went for Federal Judge Kássio Nunes, who has been endorsed by traditional political parties in Congress. A confirmation hearing is scheduled for next week, and Mr. Nunes already has a majority in the Senate’s Constitution and Justice Committee.
  • Economy. Once heralded Brazil’s economic tsar, Economy Minister Paulo Guedes now seems to be losing prestige by the day. After publicly scolding him on multiple occasions, President Jair Bolsonaro is now considering splitting up Mr. Guedes’ fiefdom into multiple ministries — recreating the Labor Ministry, and possibly the Trade Ministry, as well. That would give the president more horse-trading power with Congress. 
  • Trade deal. In a 345-295 vote, the European Parliament passed an amendment to the common EU commercial policy which was seen 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.”
  • Financial inclusion. PIX, an instant payment platform created by the Brazilian Central Bank, officially opened registrations last week. The number of individual ‘keys’ issued reached roughly 24 million. The new payment system, which will allow for instant cash transfers, begins its operation on November 16. Besides allowing near-instant transfers and payments outside of commercial working hours, the system is free to use for sending and receiving money.[/restricted]

Pillar of Brazil’s Supreme Court retires

Since Brazil’s return to democracy in the late 1980s, the country’s Supreme Court has faced many bumps and controversies along the way. The highest judicial body in the land has been the stage of earth-shattering trials, it sent a former president to jail, it had its chief justice presiding over two impeachment trials, it faced threats from radical groups, and it saw itself at war — sometimes veiled, sometimes not — with the other two branches of government.

One thing, however, has remained constant: the presence of Justice Celso de Mello, the court’s longest-tenured member, who now reaches the mandatory retirement age of 75 and steps down after 31 years. The story of the Supreme Court during democratic times is intertwined with Justice Mello’s own career.[restricted]

And on October 13, the Supreme Court will lose its staunchest defender of individual civil rights. Celso de Mello famously voided a police raid of a homeless man’s tent, considering that the tent was the man’s legal domicile and, therefore, no police action could take place there without a warrant, or before 6 am, as Brazilian law dictates. 

Furthermore, since 2019, Justice Mello has also distinguished himself as the court’s most-vocal opponent to President Jair Bolsonaro. He has used his decisions to counter what he sees as the head of state’s threats to democratic order — going as far as comparing the current moment to the crumbling of the Weimar Republic in Germany, which saw Adolf Hitler become chancellor. 

“With all necessary caveats, the ‘serpent’s egg’ seems to be ready to hatch, like what happened in the Weimar Republic,” he said, in a statement to his peers.

In his last trial, Justice Mello once again positioned himself in defiance of the president. He voted not to allow Mr. Bolsonaro to provide written testimony to investigators who are examining alleged illegal presidential interference in the Federal Police. “Nobody, not even the head of the Executive branch, is above the Constitution,” he declared, in what was the Brazilian judiciary’s answer to a mic drop.

Now, President Bolsonaro will select Celso de Mello’s replacement on the country’s highest court. The official nomination has gone to federal judge Kássio Nunes, who will undergo a Senate confirmation hearing on October 21 — early reports suggest a majority of senators will endorse his appointment.

Presumption of innocence above all else

A former prosecutor himself, Celso de Mello has proven himself to be an intransigent champion of individual freedoms, with little tolerance for prosecutors and judges who overstep the rules supposedly in the name of the “greater good.” Such creative interpretations of the law have been leveled at several anti-corruption investigations in Brazil, particularly the now-moribund Operation Car Wash. 

In a court in which justices feel comfortable changing their interpretation of the law depending on the political climate, Justice Mello has been a rare source of stability. Like his decisions or not, they have been coherent with the values he preaches.

And in a country where liberalism is a dog whistle for conservatives who champion austerity, Justice Mello proved to be “liberal” in all meanings of the word. In 2011, he voted in favor of same-sex marriage, claiming that Brazil’s secular state does not permit religious morals to limit people’s freedoms. Just last year, he also voted to equate homophobia to the crime of racism — stating that “it is indispensable that the state protect vulnerable populations.”

It is reported that, during his 1997-1999 stint as chief justice (in Brazil, that position is rotative, and members of the court alternate themselves in two-year stints), Justice Mello refused to meet with the Chinese prime minister, “so as not to send a message that the Brazilian Justice system condones Beijing’s regime.”

Champion of press freedoms in the Supreme Court

As a harsh critic of the military dictatorship during the 1970s and 1980s, Justice Celso de Mello carried this staunch defense of the freedom of speech and assembly throughout his 31 years on the Supreme Court. During practically every example of censorship or restriction of free expression that reached the court, Celso de Mello made sure to speak out.

Among the most emblematic examples came in the trial of the Press Law issued during the dictatorship, which the court ruled as being incompatible with the 1988 Constitution. With Celso de Mello in tow, the Supreme Court underlined that the freedom of speech is one of the pillars of states that abide by the rule of law.

In the departing justice’s view, freedom of expression allows members of the press “the right to express criticism, even if it is unfavorable and in a forceful tone, against any person or authority.”

“The public interest, which legitimizes the right to criticize, supersedes any susceptibilities that may expose public figures, regardless of whether they enjoy any degree of authority,” he declared.

Crucially, he also stressed that these freedoms also extend to humor and satire. “Laughter and humor are expressions of encouragement to the conscious practice of citizenship and the free exercise of political participation, while they themselves constitute manifestations of artistic creation,” he said, when voting on the provisions of the Election Law that would prevent the broadcast of satirical programs involving candidates in the pre-election period.

For he’s a jolly good fellow …

During his final session in the court, all of Celso de Mello’s colleagues took time out to pay homage to the long-serving justice.

Justice Cármen Lúcia praised his “ethical and moral integrity” and made a point of stressing Justice Mello’s generosity in sharing knowledge. Alexandre de Moraes said the departing judge “left us lessons in how to fight corruption,” while Edson Fachin declared that Celso de Mello “may be succeeded, but will never be substituted.”[/restricted]


Bolsonaro pushes for control in Rio de Janeiro

Though born in the state of São Paulo, it was in Rio de Janeiro that Jair Bolsonaro became a politician. Following his expulsion from the Army due to insubordination, Mr. Bolsonaro ran (and won) in eight consecutive races, one for Rio’s city council, and the rest for a seat in Congress, representing the southeastern state. It was also there that he ushered his ex-wife and three children into politics.

But Mr. Bolsonaro has never been a part of the Rio political establishment, which, in retrospect, worked to his advantage — Rio’s political elite has been ravaged by anti-corruption investigations, with every former state governor having been jailed at some point.[restricted]

Not even after winning the presidency with massive support in Rio de Janeiro did the president manage to wrestle control of the state. Instead, he saw Governor Wilson Witzel — who was elected on his coattails — break with the Bolsonaro family and present himself as a possible presidential challenger. At the municipal level, Rio Mayor Marcelo Crivella, an ally, is as unpopular as an incumbent can be. Moreover, his eldest son, Senator Flávio Bolsonaro, saw himself being investigated for running money-laundering while serving as a state lawmaker.

But, with the twists and turns Brazilian politics is known for, the Bolsonaros now seem in position to plant their family flag over Rio de Janeiro and control the state.

In August, the Superior Court of Justice suspended Mr. Witzel from office, following embezzlement and money laundering accusations. Since then, the president has made multiple public gestures to acting Governor Cláudio Castro, who is also under investigation, and has intensely worked behind-the-scenes deals to put allies in key positions in the Rio de Janeiro establishment.

After the Rio State Congress decided to open impeachment proceedings against Mr. Witzel in a 69-0 vote, his ousting seems all but certain. And Mr. Castro, who should soon become the governor full-time, will take over a state that is on the cusp of a full-scale financial collapse and in need of federal support — giving the president tremendous leverage to get the best out of his relationship with the state administration.

The beginning of a beautiful friendship

After being trusted with the state government in the most adverse of situations, Cláudio Castro spent six of his first 14 days as acting governor far away in federal capital Brasília, officially negotiating a renewal of Rio’s Fiscal Recovery Regime — a settlement with the federal government signed in 2017 to avoid Rio’s complete financial ruin. At one point, he posted on Twitter: “I’ve just gotten a call from Senator Flávio Bolsonaro, who put himself at our disposal to help the state of Rio.”

Days later, Mr. Castro flew on the presidential jet to attend the inauguration of the new Supreme Court Chief Justice, Luiz Fux.

“Alongside the [Rio] State Congress and our young governor, we will seek a way to bring Rio back from this dire situation. God willing, this way of doing politics will be left behind and a new era of politics will rise,” declared President Bolsonaro, two weeks ago.

If 21 months of Jair Bolsonaro as president have taught us anything, it is that his goodwill doesn’t come for free. The president demands unwavering loyalty from allies — and doesn’t take no for an answer when he wants to handpick names for public positions. And if Cláudio Castro wants to stay in Mr. Bolsonaro’s good graces, he better play ball.

Setting up the chessboard in Rio de Janeiro

The Bolsonaros have had their eyes on Rio’s law enforcement agencies ever since the family rose to national prominence. The president’s willingness to control the Federal Police state superintendency there led to a fallout with former Justice Minister Sérgio Moro. Late in March, Mr. Bolsonaro told Mr. Moro, via a text message: “You already have 27 superintendencies. I only need one [Rio].”

Now, the family has its sights set on the State Prosecution Office. Eduardo Gussem, the current head of the department — and responsible for presenting criminal charges against two of Jair Bolsonaro’s children — ends his current term in December. And it will be up to the acting governor to choose a replacement. 

The name of the Bolsonaros’ favorite for the job, ultra-conservative prosecutor Marcelo Monteiro, has made its way to Mr. Castro.

Indeed, one consequential change to cater to the First Family has already taken place. In mid-September, Allan Turnowski was named chief of the Rio de Janeiro Civil Police after Senator Flávio Bolsonaro personally endorsed him to the acting governor, as sources told The Brazilian Report.

Since taking office, Mr. Turnowski has already swapped out the heads of 70 police divisions and precincts. When asked, he claims none of these changes were politically motivated.

Since Claudio Castro was named Rio’s acting governor and got closer to the Bolsonaros, a series of personnel changes have been made in the state’s security apparatus, with all of the new faces linked to the Bolsonaro family.

Among aides, President Jair Bolsonaro is described as having a persecution complex, made worse by the stabbing he suffered during the 2018 presidential campaign — as well as reports (later debunked) tying him to the murder of City Councilor Marielle Franco.

Officials who are aware of the president’s maneuvers to take control of Rio de Janeiro’s politics mention another reason for his moves: a willingness to control and contain investigations into his two eldest sons, who are accused of running rudimentary money-laundering schemes within their public offices in the state.

For a family who was once made out of bottom-feeders in Rio de Janeiro’s shady political scene, the Bolsonaros are now the most popular political figures in the country. However, President Bolsonaro’s goals in power have always seemed provincial — targeting his home state and making life easier for his family and allies, thus his full-blown assault on the political structures in Rio de Janeiro.[/restricted]


A premature end to Brazil’s debate season

While casting a cursory glance over the U.S. presidential debates of recent weeks, Brazilians could be forgiven for feeling a little smug. The “shitshow” of constant interruptions and rule breaches in both the presidential and vice-presidential showdowns would be unthinkable in Brazil, despite its own penchant for off-the-wall and over-the-top political spats.

Indeed, were the September 29 debate in Cleveland, Ohio between Donald Trump and Joe Biden to have taken place in Brazil, Mr. Trump would have had his microphone cut on several occasions, both candidates would have been granted the right of reply, and they would be flanked by at least half a dozen other competitors representing a selection of Brazil’s 33 (!) political parties.[restricted]

Granted, Brazil’s pluralist approach to political debates is far from ideal, though it is marginally more intriguing than equivalents in the U.S. and the United Kingdom, featuring less than a handful of candidates from never-changing parties. And with municipal elections on the horizon, Brazil is going through its own debate season, which — as has been the case in the Trump v. Biden race — has been cut short due to Covid-19.

One and done

Major cities around Brazil held their first televised mayoral debates at the beginning of October, broadcast by major network Band. However, with a large number of candidates present and increased Covid-19 risks, four broadcasters have canceled their future debates in São Paulo, a decision repeated in several other cities.

Members of campaign teams are resigned to the fact that no more debates will take place — which, in Brazil’s biggest city São Paulo, is seen as favorable to the Bolsonaro-backed frontrunner Celso Russomano.

Candidates driven round the bend in Porto Alegre

One of the strangest solutions was tested in Porto Alegre, the largest city in Brazil’s South region. With a grand total of 13 candidates, local radio station Rádio Gaúcha gathered the whole baker’s dozen into what appeared to be the parking lot of a seedy motel. Each competitor remained inside their own cars — except for Júlio Flores, the candidate for the Trotskyist PSTU party, who was given a lift to the debate and sat in the passenger’s seat — while they fired questions at each other.

Arguably this wasn’t the most glamorous of settings for frontrunner Manoela D’Avila, going from being the would-be vice-president to 2018’s defeated presidential candidate Fernando Haddad to sitting behind the wheel of a Kia Sportage SUV asking for votes.

However, beyond the scripted automobile puns — one candidate was asked if he was prepared for “rough terrain” after turning up in a 4×4 — the debate largely went off without a hitch.

TV network Band went for a slightly more conventional approach in their debate the following week, though kept candidates waiting in a green room-cum-classroom, calling two at a time to ask questions.

The future of the political debate

With Covid-19 drastically changing how politicians are able to campaign, the cancellation of debates may see this long-held institution of pre-election politics be put to bed for good. In the U.S., amid the constant rule-breaking in Trump v. Biden and a fly stealing the show in Pence v. Harris, the electorate may well be wondering whether they are simply better off canceling debates for good.

Indeed, televised debates that are productive in any political sense are very few and even farther between. Platforms and proposals are rarely discussed in any depth or detail, with the content of the debate far more likely to descend into a slanging match or a mutual back-scratching session between allied candidates.

Politicians know that debates are one of the least effective ways to present their proposals and get their points across. Indeed, their main campaigning front has gone online. Candidates in the São Paulo mayoral debate illustrated this perfectly, constantly referring viewers to log onto their YouTube, Instagram, or Twitter feeds for more in-depth explanations.

Clearly, however, scrapping debates altogether is removing a level of accountability to which candidates should be held. In the 2018 presidential election, Jair Bolsonaro floundered during his only debate appearance — at which a television camera spotted crib notes written on his hand, reading “opinion poll, Lula, guns” — and then point-blank refused to attend any future discussions, using his health as an excuse.[/restricted]


Numbers of the week: Oct. 10, 2020

This is Brazil by the Numbers, a weekly digest of the most interesting figures tucked inside the latest news about Brazil. A selection of numbers that help explain what is going on in Brazil. This week: PIX, the Central Bank’s new payment system, tourism companies disappearing, high death rates in Peru, Brazil hits 5 million cases, and indigenous candidates in Brazil’s North.

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25 million sign ups for new payment tool PIX

PIX, an instant payment platform [restricted]created by the Brazilian Central Bank, officially opened registrations at the beginning of the week. Until Friday, the number of ‘keys’ issued to Brazilians reached roughly 24 million. The new payment system, which will allow for instant cash transfers, begins its operation on November 16. Besides allowing near-instant transfers and payments outside of commercial working hours, the system is free to use in sending and receiving money. PIX users will only have to provide their unique key — usually their individual tax ID — in order to receive payments, seen as a revolutionary measure within Brazil’s financial system

50,000 fewer tourism companies

Nearly 50,000 companies in Brazil’s tourism industry — accounting for 17 percent of the sector’s employers — went out of business between March and August 2020. The data comes from the National Confederation of Commerce and Tourism (CNC). The worst-affected businesses were bars and restaurants, with 39,500 closing their doors permanently. As in many other sectors, the majority of the firms which suffered the most were small businesses. As a result, the tourism industry lost 13.8 percent of its workforce and, between March and September, revenues amounted to only one-quarter of their potential. Meanwhile, losses reached BRL 207 billion in the past six months.

26 percent of Covid-19 victims under 60 in Brazil

Among countries with high coronavirus numbers, there is a clear pattern of the majority of patients who die from Covid-19 being 60-plus years old. While that is also the case in Brazil, the majority is much slimmer: some 26 percent of fatal victims in the country were under 60. As a comparison, in Italy, less than 5 percent of all deaths were in patients below the age of 60. This can partly be explained by Brazil having a younger population, as senior citizens comprise one-third of Italian residents. But the numbers also suggest other factors in play, such as poorer nutrition conditions, less access to healthcare, and inferior living conditions. The findings are further corroboration to the idea that Brazil’s massive inequality levels have contributed to the spread of the coronavirus in the country.

1,000 deaths per capita in Peru

Despite being one of the first Latin American countries to impose a lockdown (even before European countries such as the United Kingdom), Peru became the first country in the world to top the mark of 1,000 deaths per million people, surpassing 33,000 Covid-19 deaths this Friday, October 10. As a comparison, Brazil — the country with the highest absolute numbers of cases (4.9 million) and deaths (147,817) in the region — currently has a rate of 700 deaths per million. Only the tiny republic of San Marino, with its 732 confirmed cases and 42 deaths, has a comparable rate. 

There are many factors to explain Peru’s coronavirus collapse, such as inequality, lack of information among poor classes, people ignoring isolation measures, and, most importantly, an economy in which more than 71 percent of the population has an informal job. 

16 governors caught the coronavirus

Brazil is one of the few Latin American countries to have a president testing positive for Covid-19. Besides Jair Bolsonaro, Bolivia’s interim leader Jeanine Áñez, Honduras’ Juan Orlando Hernández, Guatemala’s Alejandro Giammattei, and the Dominican Republic’s Luis Abinader have also been infected. Brazil, however, sustains its position as the country with the most cases and deaths in the region.

And 16 out of its 27 state governors (some of them commanding states that are as large as countries) have also caught the virus. The 16th was Camilo Santana, governor of northeastern state Ceará, who announced the news on his Twitter account. So far, none of them have developed severe infections. 

5 million Covid-19 cases

And the state governors are not alone. More than 5 million Brazilians have also been infected by the coronavirus, with a total number of 148,957 deaths and 4.4 million recovered cases. Also, the country’s rolling average of new deaths from October 1 to October 7 remained at 631, 9 percent lower than the previous 14 days. 

148 indigenous candidates in Roraima

According to the Brazilian Superior Electoral Court, the northernmost state of Roraima has 148 self-declared indigenous people among its 1,858 candidates registered in the 2020 elections, the highest number of any electoral zones this year. However, the percentage of indigenous candidates represents only 7 percent of the total. The Roraima Indigenous Council reports that at least 50,000 indigenous people live in the state, spread out across 246 different communities. More than 250 indigenous candidates were elected in the 2016 regional elections, according to the National Indigenous School Education Forum (FNEEI).[/restricted]


Tech Roundup: Digital players thrive amid Brazil’s IPO boom

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: new tech players thrive in Brazil’s IPO spree, the growth of contactless payments in Brazil, and the federal government’s booming spending in IT. 

IPO boom brings Brazilian investors closer to digital players

2020 will be remembered by Brazilian capital markets as the year of the IPO boom. [restricted]As of October, at least 19 companies have held initial public offerings on São Paulo stock exchange B3. But unlike IPO sprees of the past, this one has a tech element that may give investors unprecedented opportunities.

Markets ready for an IPO boom. In its latest offer, digital second-hand marketplace Enjoei offered its shares within the BRL 10.25 to BRL 13.75 price range. If successful, the sale may raise BRL 1.1 billion. Another newcomer is broadband provider Triple Play, which aims to reach up to BRL 1.7 billion on its offer. In September, at least four other digital players announced plans for an IPO:

  • Cashback startup Méliuz, wine subscription service Wine, digital estate agent Housi and Mosaico, the owner of price comparison platforms Buscapé, Zoom, and Bondfaro, have all applied for IPOs at B3. 
  • The case for tech IPOs in Brazil has been supported by prior success stories. Since going public in February, website hosting company Locaweb’s shares have risen by over 200 percent.  

Tech retailers. In Brazil, the biggest tech players are often e-commerce companies and this IPO wave is no different. According to Diogo Lupinari, CEO at tech company Wevo, which works to integrate systems and data, retailers are becoming so focused on tech in Brazil that “it’s even unfair to say they are not tech players.” In his view, the new entrants will beef up an incipient sector, but which already has strong players such as software providers Totvs and Linx, as well as major retailers. 

Is Faria Lima the new Wall Street? The decision to go public in São Paulo is a new trend for domestic tech players. While unicorns such as Nubank and Gympass have resisted public offers, finding plenty of venture capital funding available, other tech players such as XP, Inc. and Arco Educação have chosen Nasdaq as their home. 

  • Luan Gabellini, managing partner at Betalabs, a company focused on tech for e-commerce, believes the increasing number of investors in the Brazilian market made it more attractive to companies, and the new “IPO batch” is an important step to make the sector stronger.
  • For Mr. Lupinari, more tech companies still need to go public in Brazil before we can say capital markets are as popular as venture capital as a source of funding for startups. 
  • A new deal announced this week shows that the VC market is still going strong. Private Equity fund Warburg Pincus just made the biggest investment in a Series A round in Brazil: a USD 100 million investment in Take, a digital platform that helps companies communicate with customers through WhatsApp.  

Pandemic spurs boom of contactless payments and mobile shopping

Social isolation and hygiene measures linked to the Covid-19 pandemic gave an extra boost to the adoption of contactless payments in Brazil, according to a new report by Mobile Time/Opinion Box.

  • From March to August, the share of Brazilians that carried payments through QR Codes jumped from 35 percent to 48 percent. 
  • The share of consumers who use contactless payments by their mobile devices jumped by 10 percentage points, to 33 percent. In comparison to August 2019, the share basically doubled. 

M-commerce. The share of Brazilians who have purchased goods and services through their phones reached 91 percent in August. The frequency has also grown and now 83 percent consider themselves monthly active users and 76 percent of Brazilians say they buy products on their phones more than they do on computers. 

  • The preference for mobile phones, however, may be a symptom of social inequality, as the preference is higher among low-income classes, which are less likely to own computers. 

New trends. The pandemic has also accelerated new trends. Of all the segments analyzed, food delivery had the best performance: as of August, 83 percent of Brazilians said they had ordered meals through an app — 11 percentage points above March levels. Another surprising boost came from beauty services: as of August, 22 percent of Brazilians had used an app to require such services — 6 percentage points above March levels. To do this, 42 percent of the users resorted to WhatsApp. 

Government IT purchases speed up during pandemic

Covid-19 highlighted the need for digital transformation across the board and it is not different in the Brazilian government. From January to August, IT purchases by the federal government increased 25 percent, reaching BRL 876 million, according to a study by Effecti, a platform specialized in technology for public procurement, seen by Convergência Digital website. 

Higher prices. The increase in spending came despite a reduction in the number of contracts, showing that the government is paying more for services. The median value per contract was BRL 43,000, or BRL 2,000 above 2019 levels.

Strategic areas. The government areas that spent the most on IT in the period are, in that order, the Air Force, Economy Ministry, Regional Development Ministry, Federal Service for Data Processing (Serpro), and Justice Ministry.

Pandemic impacts. That the Economy Ministry is second place on the list could be explained by the technological effort to implement the government’s BRL 600 coronavirus emergency aid program for the unemployed and informal workers. According to the report, several of the biggest contracts in the period were related to the pandemic, including a BRL 29 million agreement between the Economy Ministry and state-owned firm Dataprev.  

More to come. The full digitalization of federal services is one of the goals of the Jair Bolsonaro administration. Currently, the Economy Ministry estimates that 60 percent of the 3,800 services offered by the government have already been made digital. 

  • The government is also hiring 350 IT professionals temporarily and has just announced a new bidding process for 160,000 Microsoft Office 365 licenses, at an estimated total cost of BRL 48 million. 
  • Meanwhile, Brazilian development bank BNDES is moving forward with its plan to privatize Serpro and Dataprev. This week, the bank opened a selection process to hire due diligence services for the operation. 

Take note

  • Ransomware. Petrochemical company Braskem, the largest resin maker in the Americas, suffered a ransomware attack that interrupted its operations on Thursday. According to the company, its security system blocked the attack before data was lost, but operations were interrupted. According to newspaper Valor Econômico, the disruption led the company to declare force majeure to some clients, though it is working to reestablish operations. 
  • Unicorn. Used car dealership platform Kavak became Mexico’s first unicorn, with a USD 1.15 billion valuation after a new fundraising round led by the Japanese conglomerate SoftBank, as well as investment firms DST Global and Greenoaks. The company, which operates in Mexico and Argentina, already has 800 employees and aims to hire another 500 ahead of its debut in Brazil in early 2021.  
  • Science and Technology. Nestlé launched a new open innovation Science and Technology lab in the city of São José dos Campos, in São Paulo state. The main goal of the center’s fifteen researchers is to develop new technologies based on the Industry 4.0 model, which will be tested at Nestlé’s facilities in Caçapava and, if proven useful, expanded to its entire production chain.   
  • SMB. Microsoft launched its management platform Microsoft Dynamics 365 Business Central for small businesses in Brazil. The company aims to grow amid a segment that often lacks operational and financial management tools. The Business Central will work on Microsoft’s cloud, Azure, and has features to help users to comply with the country’s new general data protection law LGPD. 
  • Digital law. Brazil’s National Council of Justice allowed courts from all over the country to execute lawsuits in a fully digital and remote way. The Juízo 100% Digital project allows plaintiffs and defendants to opt for their hearings to take place via video conferences, while courts will be forced to provide the necessary infrastructure. Results will be analyzed within a year, when courts will decide whether to adopt the model permanently or not. 
  • Internet access. Colombia’s House of Representatives approved a bill that aims to make internet access an essential public service. The project has broad support from lawmakers and the federal government, according to the local press, and could be the first step toward policies that grant universal access, especially for lower-income populations. 
  • Labor laws. For the first time, a Chilean court recognized the existence of an employment relationship between a delivery app and a courier, granting the victory to a worker in a lawsuit against delivery app PedidosYa over his dismissal without cause. The ruling comes as Congress discusses a bill to grant social security protections to app workers. [/restricted]