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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  • 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 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]


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]

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]


The fall from grace of Sergio Moro

With the hubris that can only come from a president who sees his future secure at the head of the Brazilian government, Jair Bolsonaro emphatically declared the end of the country’s sweeping Operation Car Wash anti-corruption investigation on Wednesday, claiming his administration is now above suspicion. “I do not want to end [Operation] Car Wash. I’ve already ended Car Wash, because there is no longer any corruption in the government,” he exclaimed, during a press address.

Beyond overlooking the numerous corruption investigations targeting his inner circle — including his sons and wife Michelle — this pontifical claim symbolized Mr. Bolsonaro’s turn toward the politics of cronyism, which he promised to end during his election campaign. In broader terms, it also symbolizes the end of Brazil’s zealous anti-corruption drive, embodied by Operation Car Wash.[restricted]

Perhaps the best example of this fall from grace of the country’s anti-corruption crusader class is the ruination of Operation Car Wash’s poster boy, former judge Sergio Moro.

For large sections of Brazil’s media class and the population at large, Sergio Moro became a national hero through his role leading Operation Car Wash. While his methods and alleged bias were often criticized, he became the face of the one aspect of the Car Wash years that the vast majority of society conceded as being overwhelmingly positive: the sense of absolute impunity among the upper echelons of Brazilian politics and business was no more. At the height of Operation Car Wash, influential politicians and business owners were facing prison sentences, something that was almost unimaginable before.

However, over six years on from his first involvement in Operation Car Wash and after having his name dragged through the muck by all sides of the political spectrum, Sergio Moro is packing his bags, ready to leave Brazil.

As reported by newspaper Folha de S. Paulo on Tuesday — and confirmed by The Brazilian Report — Sergio Moro plans to trade in his political career for academia, intending to lecture at an unspecified U.S. university. While the former Car Wash judge has yet to speak in public on the story, people close to him have affirmed that the move was a request of Mr. Moro’s wife, lawyer Rosângela Moro, who has told those close to the family that her husband “has given all he can to the country” and that he is not cut out for party politics “and its savage confrontations.”

There is a suggestion that Sergio Moro will now completely abandon his plans to run for president in the 2022 election, though other sources close to the ex-Justice Minister say it will be a temporary move, before returning to Brazil in two years’ time, banking on President Bolsonaro’s stock being weakened by that time.

Security is another factor weighing on Mr. Moro’s mind. It will soon have been six months since his acrimonious split with Jair Bolsonaro and abandoned his spot in the cabinet, meaning he will now lose his BRL 31,000 (USD 5,540) salary and the right to a Federal Police escort. 

The bigger they come, the harder they fall

After 12 years as a judge in Curitiba — four and a half of them spent in charge of Operation Car Wash — Sergio Moro abandoned his career as a magistrate and joined the government of Jair Bolsonaro, who invited him to serve as Justice Minister. With promises of being given autonomy to implant an anti-corruption agenda in the administration, Mr. Moro’s long-term future seemed sewn up: a few years in the cabinet, and then a seat on Brazil’s Supreme Court

However, Sergio Moro only remained in office for little over a year, resigning in April of this year while accusing President Bolsonaro of meddling with the Federal Police to safeguard his son, Senator Flávio Bolsonaro, from corruption investigations.

The decision to leave the government was no doubt based on his belief that he was more popular than President Bolsonaro — a notion often repeated by the Brazilian press, who suspected the government would crumble once its anti-corruption totem jumped ship. This turned out to be a gross miscalculation, and the government’s supporters sided with the president, labeling their one-time hero as a traitor.

Indeed, despite gaining worldwide recognition for his role in Operation Car Wash, Sergio Moro was frequently criticized and undermined in the field of Brazilian politics and law. After The Intercept Brasil published a series of leaked messages from the Car Wash prosecution task force, showing Mr. Moro’s collaboration with — and often command over — prosecutors, he was accused of violating due legal process and currently faces cases in the Supreme Court that question his impartiality throughout Car Wash.

Furthermore, Sergio Moro has been repeatedly vilified by the Brazilian left, who accuse him of acting in a biased and potentially illegal manner to spur on the impeachment of former President Dilma Rousseff, jail another former President Luiz Inácio Lula da Silva, and help elect Jair Bolsonaro.

So, having left the government, Mr. Moro had lost the widespread support from the right-wing, was unable to make peace with the left, and was ostracised in political life, with no obvious source of support. 

Discord and backtracking

The appointment of judge Kassio Nunes Marques to a soon-to-be-vacant seat on the Supreme Court represents the latest defeat for the Operation Car Wash anti-corruption movement, isolating Mr. Moro further. While the Supreme Court has made several decisions to void Car Wash cases, Congress is debating on laws that are wholly against what Mr. Moro had planned to do as Justice Minister.

On Twitter, Sergio Moro criticized Mr. Nunes’ nomination. “If Jair Bolsonaro does not appoint someone to the Supreme Court who is committed to the fight against corruption […] we will all know his true nature (and many already know),” he wrote. 

One follower asked the former Justice Minister if he knew about Mr. Bolsonaro’s “nature” when he accepted his cabinet invitation, to which the former judge replied “no.” He later deleted his post.

Moro out: Left and right celebrate

The news of Sergio Moro’s potential exodus was celebrated on social media by both the right and left. The former laud what they see as a fitting end to a “traitor,” while the latter revel in the irony of Mr. Moro leaving the country due to the very government he took part in and helped elect.

“Defenestrated by the far-right, neglected by the country’s renowned judges, unmasked as biased and without the old partnership with the media that promoted him, [Mr.] Moro is the image of decadence common among false heroes,” wrote one left-wing Twitter user.

However, one of the few demonstrations of support for Mr. Moro came from São Paulo state lawmaker Janaina Paschoal, famous for co-authoring the request that led to the impeachment of President Dilma Rousseff. She expressed her solidarity with the former Justice Minister, but warned against his plan of leaving the country. 

“I perfectly understand his discouragement, Sergio Moro’s family has every right to want a bit of peace! But as a Brazilian who doesn’t say any other alternative, I ask that [Mr.] Moro and his wife think about facing another great challenge. They will have my support! Brazil needs a fourth way!” she wrote.

In Ms. Paschoal’s view, Sergio Moro would offer a voting alternative for the 2022 elections, beyond Jair Bolsonaro, a candidate from the left, or someone linked to the center.

Indeed, that the only political figure in his corner appears to be a fringe state lawmaker does not bode well for the future of a man who was once regarded as Brazil’s savior.[/restricted]


Bolsonaro goes mainstream

Late in the evening of May 30, 2020, a group of some 30 far-right activists carrying store-bought tiki torches — in a clumsy homage to white supremacist Ku Klux Klan protests — launched fireworks in the direction of the Brazilian Supreme Court building, demanding military intervention in the name of President Jair Bolsonaro and the arrest of all 11 justices of Brazil’s highest court. 

The protest raised tensions in Brasília to unprecedented levels, as the political establishment accused the government of not only failing to condemn such actions — but actively endorsing them on private social media channels.[restricted]

As authorities bumped heads on how to enforce social isolation measures as a way to control the coronavirus spread, the Bolsonaro administration engaged in a series of attacks against its fellow branches of government. At one point, the president even threatened to send military troops to shut down the Supreme Court, before being talked down by some of his closest aides.

As the pandemic raged in Brazil, the president and his allies defied democratic institutions on a weekly basis — and calls for impeachment erupted in many circles. 

Five months removed from that moment, the political climate could not be any more different. Jair Bolsonaro, the president elected on an anti-establishment message, is now going mainstream.

Last week, he chose to fill his first Supreme Court vacancy with Federal Judge Kássio Nunes, a candidate endorsed by two Supreme Court justices who, just months ago, Bolsonaro supporters wanted to see behind bars.

After nearly two years in office, Mr. Bolsonaro’s political strategy has seemingly made a U-turn. Instead of shattering the establishment, the president now seems more interested in co-opting it. After compromising with the so-called “Big Center” — a caste within Brazil’s Congress made up of veteran pork-barreling politicians — Mr. Bolsonaro is now looking to get the courts on his side.

The move makes a lot of sense for the president, as his close family are targeted by a series of criminal investigations. Senator Flávio Bolsonaro, his eldest son, has been charged with money-laundering, embezzlement, and criminal association. Meanwhile, his other two politician sons — Rio de Janeiro City Councilor Carlos Bolsonaro and Congressman Eduardo Bolsonaro — are suspected of operating an illegal underground misinformation network.

Push towards establishment infuriates core Bolsonaro supporters

Mr. Bolsonaro’s recent pandering to politicians he once described as members of “old politics” has certainly frustrated his core group of ultra-conservative supporters.

Sara Winter, the far-right influencer who organized the KKK-like demonstration in May, declared on social media that she was “tired” of supporting the administration, and even accused the president of “purging” his hardcore base from the government. Meanwhile, highly influential televangelist Silas Malafaia has called the president’s latest moves a “shameful outrage.”

Even his most loyal political commentators have started to bash his recent turn.

Still, those outbursts do not mean the pro-Bolsonaro train is falling off the tracks. Instead, frustrating his own supporters is a key part in the project to consolidate the president’s power. His defense of far-right causes still makes him the best — and perhaps the only — option for the extreme right in 2022. Meanwhile, his recent implementation of welfare policies and alliance with moderately conservative forces may help him attract a voter base that seemed unreachable just months ago.

Every poll shows Mr. Bolsonaro head and shoulders in the lead for the 2022 presidential election. And while it remains too early to predict how the race will end, not a single credible alternative has emerged.

If Mr. Bolsonaro’s recent moves allow him to approve a bold welfare-transfer program from 2021 and beyond, the 2022 election will be his to lose.[/restricted]

Brazil Daily

Brazil’s next Supreme Court Justice?

Jair Bolsonaro’s Supreme Court dark horse. Brazil’s job market situation is a Rorschach test. And Brazil picking a fight with Joe Biden.

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Bolsonaro zeroes in on Supreme Court pick

The government has leaked information that President Jair Bolsonaro intends to choose Federal Judge[restricted] Kássio Nunes, from the northeastern state of Piauí, for a spot on the Supreme Court. A seat will become vacant on October 13, when Justice Celso de Mello — the longest-tenured member in the court’s history — will retire. Mr. Nunes’ name was completely off the radar, with reports suggesting he was not even considering campaigning for the job. Regardless, the potential pick sends some important signals:

  • Mr. Bolsonaro reportedly zeroed in on Kássio Nunes after a meeting with Supreme Court Justices Dias Toffoli and Gilmar Mendes, brokered by Senate President Davi Alcolumbre. By choosing someone who is well regarded in the field of law — and has political connections — the president appears to be extending an olive branch to Congress and the court, which has not pulled many punches in decisions affecting the government.

What the president wants. There are two probes underway in the Supreme Court that could hurt the Bolsonaro family: an investigation into the organization of anti-democratic demonstrations, and the so-called Fake News probe. As Brasília correspondent Débora Álvares reports, the government has tried to negotiate some sort of deal with the court to spare members of the First Family from potential indictment.  

  • Figures close to the president have approached Supreme Court justices with a proposal to hand over the people responsible for coordinating the government’s so-called “Office of Hate” — consisting of a group of aides who firehose falsehoods on social media and incite protests against democratic institutions, in an orchestrated effort operating within the president’s office. In exchange, two of the president’s sons who may face heat (Eduardo and Carlos Bolsonaro) would be spared. The president is also keen on shielding his eldest son, Senator Flávio Bolsonaro, recently accused of money laundering, embezzlement, and criminal association.
  • Mr. Bolsonaro’s aides were told that there is no deal on the table. And the president is apparently trying a less barefaced move to lower tensions with the Supreme Court.

Yes, but … This administration has flip-flopped on multiple occasions, and senior officials left the door open for a U-turn, if necessary, saying the ink is not yet dry on Mr. Nunes’ nomination.

On the outs. Chief Justice Luiz Fux was not happy about being left out of the meeting with the president, and reportedly said that a Supreme Court nominee should have a “thicker résumé.”

Legacy. Kássio Nunes is 47 and thus could stay in the court until 2047, when he would turn 75 and hit the age of mandatory retirement.

Job market remains fragile in Brazil

The Economy Ministry announced on Wednesday that Brazil enjoyed an overall increase of 249,388 new formal jobs in August. This was the second straight month of positive results and the best result for August since 2010. More importantly, it was the first time since the pandemic started that services companies — the backbone of the Brazilian economy, accounting for 70 percent of Brazilian jobs — hired more people than they fired.

Yes, but … On the same day, the Brazilian Institute of Geography and Statistics showed a record-setting unemployment rate: 13.8 million people. As we previously reported, unemployment only accounts for those actively seeking work, meaning the rate is likely to rise as Brazilians leave self-confinement and start to look for jobs once more. 

  • The number of people of working age outside of the workforce has consistently grown since March — and reached an all-time record of 23-percent growth in July.

Recovery. Despite the fragility of the job market, the Brazilian economy is recovering faster than expected. S&P revised its GDP growth projection for the country, from -7 to -5.8 percent in the year. The ratings agency cites three main factors for the swift bounceback: strong financial stimuli, relaxed social isolation rules, and a solid demand for basic products from China.

  • A few points deserve monitoring, however. The coronavirus emergency salary is set to end after December (and the government is struggling to come up with a substitute welfare plan), and the Bolsonaro administration has adopted an aggressive stance against China.

“What a shame, Mr. Biden”

Polls suggest former U.S. Vice President Joe Biden is favored to win against Donald Trump in the U.S. presidential election. Still, Jair Bolsonaro seems determined not to waste an opportunity to get into a feud with the Democratic nominee. The latest such case came after Tuesday’s presidential debate, when Mr. Biden said the U.S. should put pressure on Brazil to take action against deforestation — suggesting to offer USD 20 billion as compensation and impose “severe economic consequences” if Brazil refused.

  • In response, Mr. Bolsonaro ranted on social media, in a message his team translated into English: “Today, [Brazil’s] president no longer takes bribes or baseless threats. OUR SOVEREIGNTY IS NOT NEGOTIABLE (…) What a shame, Mr. John [sic] Biden! What a shame!” 
  • Environment Minister Ricardo Salles issued a sarcastic retort to Mr. Biden’s idea to offer Brazil USD 20 billion to end deforestation. 

Why it matters. Under Mr. Bolsonaro, Brazil has been less of an ally of the U.S., and more strictly speaking an ally of President Donald Trump. If polls are correct and Mr. Trump is unseated, the Brazilian president’s demeanor could harm Brazil’s relations with its second-biggest trading partner — and most powerful nation in the world.

Remember this. Last year, our Explaining Brazil podcast interviewed Harvard professor Stephen M. Walt, who believes that it is only a matter of time until major powers try to stop Amazon deforestation “by any means necessary.” That could include, in a not-so-distant future, economic sanctions or even military operations.

What else you need to know today

  • Stock market. The Ibovespa stock market index slipped nearly 5 percent in September, due to international turmoil and uncertainties around President Jair Bolsonaro’s commitment to the federal spending cap. Real estate firms, financial institutions, and small caps posted the biggest losses during the month. Only two indexes rounded off September in the black: basic materials and real estate funds.
  • Coronavirus. Brazil posted more than 1,000 Covid-19 deaths in a single day for the first time in two weeks — bringing the total death toll up to 144,000. 
  • Human rights. According to a report by the Indigenous Missionary Council, violence against indigenous groups in Brazil more than doubled since Jair Bolsonaro rose to power. In 2019, there were 276 cases of violence against members of native communities — against 110 in the year before. The report claims “the violence is based on a government project that aims to make indigenous lands available for agriculture, mining, and logging.”
  • Banking. State-controlled bank Banco do Brasil has reached a deal with Swiss bank UBS to join forces and create a new investment bank and brokerage firm. This novel institution will be controlled by UBS — which will hold 50.01 percent of voting stock — and operate in Brazil, Argentina, Chile, Paraguay, Peru, and Uruguay, according to a financial statement issued to Brazil’s Securities Commission. UBS was one of the banks exposed by the recent FinCen Files scandal, a transnational journalistic investigation revealing the role of global banks in industrial-scale money laundering schemes.
  • Fintech. Nubank is launching operations in Colombia, after expanding to Argentina in 2019 and Mexico earlier this year. Initially, Nubank will only offer credit card services — which accounts for over 20 percent of all payments in Colombia — but it will eventually roll out its digital bank. With its no-fee model, Nubank hopes to gain popularity in a market where the top 5 banks control over 80 percent of total assets.
  • Business. Coca-Cola is moving its Latin American headquarters from Argentina to Brazil. The beverage company is the latest major corporation to leave the southern country, which has been in recession since 2018. According to new data, 11.6 million people in Argentina are below the poverty line — that is, 41 percent of the total population.[/restricted]
Brazil Weekly

Bolsonaro to make first Supreme Court pick

This week, the frontrunners for a Supreme Court vacancy. The government’s proposal for a new tax. Brazil’s over-reliance on trucks persists.

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Who will Jair Bolsonaro appoint to the Supreme Court?

On Friday, Supreme Court Justice Celso de Mello announced he will retire on October 13, [restricted]ending what is the longest tenure by anyone in Brazil’s highest court, after taking the seat in August 1989. Justice Mello was already set to retire on November 1 — when he reaches the mandatory retirement age of 75 — and his decision to bring his retirement forward 19 days was not trivial, as Brasília correspondent Débora Álvares reports.

  • Justice Mello presides over an investigation into President Jair Bolsonaro, and upon retirement, all his cases would normally be handed over to his replacement … who will be appointed by President Jair Bolsonaro. According to sources within the Supreme Court, Justice Mello’s early retirement put pressure on Chief Justice Luiz Fux to draw lots to determine who will take over the investigation.
  • Regardless, government officials have celebrated the retirement announcement, as Celso de Mello has been among the members of the Supreme Court who has most opposed the Bolsonaro administration. Earlier this year, Justice Mello compared Brazil’s current political situation to the crumbling of the Weimar Republic in Germany, as Adolf Hitler became chancellor.

Why it matters. Justice Mello’s retirement will hand Mr. Bolsonaro his first Supreme Court appointment.

Frontrunners. In May 2019, Mr. Bolsonaro announced he would appoint then-Justice Minister Sergio Moro to fill the first available vacancy in the court. That bridge has been burnt, after Mr. Moro left the government accusing the president of malfeasance. Débora Álvares goes through the leading candidates for the country’s highest court.

  • Ives Gandra Filho. A member of the Superior Labor Court, the uber-religious Mr. Gandra Filho is a favorite among Jair Bolsonaro’s military advisors. He is seen as an “incorruptible” man who donates half of his salary to charity and lives in a small room in a Brasília parish. His father recently said President Bolsonaro has a “legal” way to stage a military coup, as he mischaracterized an article of the Brazilian Constitution.
  • Jorge Oliveira. If the pick is made among Bolsonaro’s sons, it would go to the current Secretary-General — who Mr. Bolsonaro calls Jorginho (“little Jorge”). A lawyer and retired member of the Military Police, Mr. Oliveira has worked for the Bolsonaros for over 20 years, and has a personal bond with the president’s family.
  • André Mendonça. The current Justice Minister is a respected legal scholar, with over 20 years of experience in the Solicitor General’s Office. He would check the box of being “extremely evangelical,” which Mr. Bolsonaro has said will be a prerequisite for a Supreme Court appointment. Moreover, Mr. Mendonça’s actions as Justice Minister showed loyalty to the president — including actions widely disapproved by legal scholars, such as creating a secret dossier with information on almost 600 civil servants and law enforcement agents monitored for being self-declared “anti-fascists.”
  • Other potential picks. Prosecutor General Augusto Aras and João Otávio Noronha, a member of the Superior Court of Justice (Brazil’s second-highest judicial body), are also in contention — albeit in the outside track. They have distinguished themselves to the president by bending over backward to please Mr. Bolsonaro with their legal decisions, in what observers say is an attempt to audition for a Supreme Court seat.

Consequential. Besides Celso de Mello’s seat, Jair Bolsonaro will have at least one more Supreme Court nomination before the end of his term — as Justice Marco Aurélio Mello retires next year. If he wins re-election in 2022, Mr. Bolsonaro would have two more seats to fill, meaning he could have four appointments out of a total of 11 justices.

The government’s plan for tax reform

After weeks of negotiations, the Bolsonaro administration will present Congress with its second set of proposals to reform Brazil’s tax system — which are rumored to include the creation of a new levy. According to the Economy Ministry, a novel 0.2-percent tax on financial transactions is the only way the government can make ends meet in 2021. In exchange, the government proposes a cut in payroll taxes.

  • This need for increased revenue becomes all the more pressing as President Jair Bolsonaro leads the creation of a new welfare program to replace the coronavirus emergency salary, which is set to expire in December. 

Why it matters. The emergency aid has had a tremendously positive impact on Mr. Bolsonaro’s approval ratings (more below). But the cash-strapped government still struggles to structure a new program for 2021 and beyond.

  • The government’s new tax is a new version of the CPMF — a tax on financial transactions which was enforced between 1997 and 2007. Brazilians loath this levy — and the fact that 2020 is an electoral year makes it a tough sell to Congress.
  • President Jair Bolsonaro has reportedly signed off on the new tax — as long as the Economy Ministry finds a way to avoid it harming his public image.

Maia. The government hopes that House Speaker Rodrigo Maia’s vanity could work in its favor. After success in 2019’s pension overhaul, Mr. Maia wants to go down in history as the Speaker who managed to approve two major reforms in as many years. But Mr. Maia — who is weighing up running for governor in Rio de Janeiro in 2022 — might not be so keen on attaching his name to such a reviled tax.

  • According to sources in Congress, Mr. Maia is likely to lend his support to another tax reform bill being discussed in the House. This proposal merges several federal and state taxes into a single VAT charge.

Calendar. Don’t expect major reforms in 2020. Activity in the House will decrease, as members engage in local electoral races. And contentious reforms usually take several months to pass, even in a best-case scenario. 


Global banks saw their share prices plummet last week, after a journalistic investigation showed that major institutions had engaged for years in knowingly handling up to USD 2 trillion in dirty money. In Brazil, however, banks’ share prices went up. Analysts are particularly keen on the state-controlled Banco do Brasil — which has seen profits soar in recent years, as well as having a conservative portfolio focused on payroll and agribusiness loans, and hefty provisions in case delinquency rates go up.

Natália Scalzaretto

Road transportation still massive bottleneck for Brazil

A new study by the Infrastructure Ministry shows that most of the ethanol, biodiesel, and jet fuel produced in Brazil is still transported by road. That’s why, in 2018, an 11-day truckers’ strike nearly halted the country and caused a fuel shortage in several states. Since 2016, the federal government has tried to map cargo transportation bottlenecks and opportunities, in order to structure the sector through popular cargo routes, identifying where investments are needed — and how to avoid exposure.

Looking ahead

  • Unemployment. On Tuesday, the Economy Ministry will publish August’s formal employment data; on Wednesday, the Brazilian Institute of Geography and Statistics releases the official unemployment rate until July. Government data showed a positive balance between formal hirings and firings in July, but analysts are cautious to treat the data as a sign of a recovery. Unemployment rates are going up as Brazilians begin to leave social isolation — and millions are now falling into another category: discouraged workers, i.e., when people stop looking for jobs in the belief they won’t find one.
  • 2020 election. Even though voting is mandatory in Brazil, voters may ignore their duty if they justify their absence at the polls — or pay a fine worth less than USD 1. Since the return of democracy in 1985, abstention rates have climbed election after election, and a recent poll suggests that voter turnout could be historically low in 2020, as a result of the pandemic. Pollster Datafolha says 34 percent of São Paulo voters don’t feel safe to go out and vote on November 15. Furthermore, Brazil doesn’t have a mail-in ballot system like the U.S., or a vote-by-proxy system, like France.
  • Coronavirus. Three weeks after the September 7 Independence Day holiday, Rio de Janeiro saw a spike in ICU occupancy rates, which now stand at 87 percent — nearly 10 percentage points above July levels. Experts say the uptake in admittance of patients with severe Covid-19 cases might be linked to the loosening of social distancing observed during the holiday, with thousands flocking to beaches, bars, and restaurants.

In case you missed it

  • Bolsonaro. A new poll by Ibope shows that 40 percent of Brazilians believe Jair Bolsonaro is doing a ‘good or great’ job as president. Mr. Bolsonaro gained ground among poorer and less-educated voters, suggesting that the BRL 600 (USD 107) emergency coronavirus salary has made him more popular. However, interviews were made before the benefit was halved to BRL 300.
  • Economy. Many industrial sectors have regained their optimism toward the Brazilian economy, according to a preliminary study by the Brazilian Institute of Economics at Fundação Getulio Vargas (IBRE-FGV). “This optimism signals that productive sectors may ramp up production,” writes economist Renata Mello Franco.
  • Borders. The Brazilian government has lifted restrictions on the entry of foreign nationals at every airport in the country — revoking a March rule that barred the influx of tourists in six states. A 30-day restriction remains for the entry of foreigners by land and sea. Venezuelan citizens, however, are granted an exception due to humanitarian reasons.
  • UN. Jair Bolsonaro’s address to the United Nations General Assembly tried to deflect responsibility for Brazil’s environmental crisis and the coronavirus pandemic. The president lashed out at indigenous communities, “spurious” international interests, and “unpatriotic” organizations for leading a “brutal smear campaign” against Brazil — denying official data that shows a massive surge of fires and deforestation since he took office.
  • Rio. On Wednesday, the State Congress in Rio de Janeiro moved forward with its impeachment process against Governor Wilson Witzel, who is accused of embezzling funds earmarked for the state’s anti-coronavirus effort. One day later, an electoral court declared Rio’s Mayor Marcelo Crivella ineligible for office for committing electoral crimes. However, Mr. Crivella may still be able to run for re-election in November, thanks to the possibility of dragging the case through multiple appeals.[/restricted]

Second Supreme Court Justice catches Covid-19

Supreme Court Justice Cármen Lúcia has tested positive for Covid-19 — making her the ninth person who attended the September 10 inauguration of Chief Justice Luiz Fux to have contracted the coronavirus. A source close to the justice told The Braziliian Report that Ms. Lúcia is well, despite her diagnosis.

Several high-profile authorities in Brasília have recently been infected with the virus, including Prosecutor General Augusto Aras, Tourism Minister Marcelo Álvaro Antonio, and House Speaker Rodrigo Maia — along with several members of high courts.

But while the inauguration ceremony is being used as a timestamp for these infections, there were multiple occasions during which the spread might have occurred. One was a massive dinner party hosted by the House Speaker the day before. The September 9 event — gathering everyone who’s anyone in Brasília politics — was in celebration of the inauguration of Luiz Fux as the new Supreme Court Chief Justice. Members of Congress were in attendance, as well as members of high courts and prominent business owners.

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Supreme Court dodges responsibility for multiple infections

At least four high-profile authorities tested positive for the coronavirus after attending Supreme Court Chief Justice Luiz Fux’s inauguration ceremony — raising questions about whether all sanitary protocols were respected during the event. In response, the court issued a statement saying that “all safety measures recommended by the Health Ministry and by the World Health Organization were strictly followed during the ceremony. 

Still, it will “study new and safer procedures for the future,” says the statement.

The court did not inform the public about how many civil servants were working during Chief Justice Fux’s inauguration — or whether any of them showed Covid-19 symptoms and was put on leave.

Since last week, the Chief Justice himself tested positive for the coronavirus — alongside House Speaker Rodrigo Maia and two members of the Superior Court of Justice. All of them were in last week’s inauguration.

According to weekly magazine Veja, some members of the Supreme Court became irritated by insinuations that the court had become some sort of Covid-19 breeding ground, and anonymously poked at the House Speaker, who, according to one of the justices, “two a huge dinner party on the eve of the inauguration.” 

One justice says the party united most of Brasília’s political jet set — and many of the attendants also contracted the coronavirus.

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Explaining Brazil #125: Brazil’s Supreme Court at a crossroads

Luiz Fux takes office as Brazil’s new Supreme Court chief justice at a crucial moment: the country faces what is arguably the biggest political crisis since its return to democracy in 1985; the president who talks about sending troops to shut down the court is more popular than ever; and Brazil is hurtling towards what looks set to be the worst economic crisis in history. 

Oh, and then there is that pandemic which is still raging on.

So, what kind of court will Chief Justice Fux lead? That’s what we will try to unpack this week.

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On this episode:

  • Benjamin Fogel is a regular contributor to The Brazilian Report, he also writes for Jacobin magazine and Africa is a Country. He is working on a Ph.D. on the history of Brazilian corruption politics at New York University.

Background reading:

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Brazil’s Supreme Court Chief Justice tests positive for the coronavirus

Just days after being sworn in as Brazil’s new Chief Justice, Luiz Fux said he has tested positive for the coronavirus. 

According to the Supreme Court’s press service, Chief Justice Fux sought medical assistance after “noticing an increase of body temperature.” The statement adds that he suspects the infection happened during a family gathering on Saturday.

Last Thursday, the Supreme Court held an inauguration ceremony for the new Chief Justice — which multiple authorities were present including the leaders of Congress and President Jair Bolsonaro. Over 50 guests attended the event.

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Supreme Court v. Bolsonaro has a new chapter

Justice Celso de Mello, the longest-serving member on the Supreme Court, is set for mandatory retirement as he turns 75 in November. His last months in the court, however, promise to be explosive — as his war of attrition against President Jair Bolsonaro continues.

The justice is the rapporteur of an investigation into Mr. Bolsonaro’s suspected illegal interference with the Federal Police. The probe started after former Justice Minister Sérgio Moro resigned, after accusing the president of trying to shield his family and friends from investigations by picking a friendly police chief for the Feds’ Rio de Janeiro office.

Back in May, Justice Mello made public the footage of an April 22 cabinet meeting that presented Brazilians with an explicit display of Bolsonarism in action. The president appeared on tape defending Brazilians’ right to arm themselves and fight against quarantine rules that had recently been enforced by state governors. [restricted]At one point, the pandemic was even described as an opportunity by Environment Minister Ricardo Salles. He mentioned taking advantage of the media focus on Covid-19 to “run the cattle herd” through the Amazon, “changing all the rules and simplifying standards.”

Then, Justice Mello sent a message to his colleagues, comparing the current moment to the crumbling of the Weimar Republic in Germany, as Adolf Hitler became chancellor. “With all necessary caveats, the ‘serpent’s egg’ seems to be ready to hatch, similar to what happened in the Weimar Republic,” he said.

Now, Justice Mello has once again put the government on the spot. He refused the Solicitor General’s request to allow Mr. Bolsonaro to give a written testimony to defend himself from the allegations of tampering with the Federal Police. Instead, the justice said that as a man “under investigation,” the president must be treated as any other citizen and not enjoy the “prerogatives usually reserved to heads of state.”

It is worth noting that other members of the Supreme Court granted that benefit to former Presidents Michel Temer and Luiz Inácio Lula da Silva. Both found themselves facing corruption charges by Operation Car Wash. In his decision, Justice Mello said he respected his peers’ rulings, but didn’t agree with them.

Supreme Court Justice Celso de Mello
Supreme Court Justice Celso de Mello. Photo: STF

Fuel for an institutional crisis

“It remains to be seen how President Jair Bolsonaro will react to Justice Mello’s latest move — but we should expect a deepening institutional crisis on our way,” says political scientist Leonardo Barreto.

As The Brazilian Report revealed last month, Mr. Bolsonaro had discussed sending troops to “shut down” the Supreme Court on multiple occasions with close aides. While the president’s advisers were able to talk him out of such a move, Mr. Bolsonaro has consistently endorsed demonstrations against the Supreme Court.

And this clash comes at a time when the reputation of Brazil’s highest court has never been lower — after years of inconsistent judgements and perceived political overstepping. 

It also happens as the court has recently appointed a new Chief Justice, with Luiz Fux taking the court’s reins from Justice Dias Toffoli.

As our September 8 Weekly Report explained, Justice Toffoli’s stint as Chief Justice has been widely considered a total disaster — even by his peers — as he went out of his way to please the government. While Chief Justice Fux reportedly wants to restore the court’s image, he has a reputation of trying to appease all sides at the same time and has been a strong advocate of what he calls “institutional harmony.” 

While he insists this is not the same thing as appeasing the government, Mr. Bolsonaro has proven that he doesn’t accept disagreements harmoniously.

A divided court with a broken reputation faces an increasingly popular president who has been rather open that he would like to shut the Supreme Court down if he could get away with it. This seems like a perfect recipe for a prolonged institutional crisis. 

It remains to be seen who replaces Justice Mello, but Mr. Bolsonaro is likely to appoint a crony in his place if he can, perhaps a “terribly evangelical” judge, as he once suggested. The replacement would inherit Justice Mello’s case — meaning Jair Bolsonaro could be in the privileged position of choosing the person who will judge his alleged misdeeds.

We are confident to say that the president will be safe for the foreseeable future.[/restricted]


Brazilian Feds target big law firms accused of corruption

One of the most common legal strategies in Brazil is not taught in any law school and left out of the textbooks. It is known in Portuguese as “embargos auriculares,” something that could be translated as “close-to-ear appeal.” The expression is a derogatory way of describing a common practice in courts — when lawyers visit judges’ chambers and sweet-talk them into a favorable ruling. It implies that counselors use more than their words to get their way, offering some sort of under-the-table deal.

This week, Operation Car Wash launched a new set of charges against big law firms, suggesting that the hidden meaning of the expression “close-to-ear appeals” might be less of an urban legend and more of a common strategy. [restricted]

Investigators launched Operation S $cheme (yes, with a dollar sign), targeting 15 big law firms accused of embezzling funds from the so-called “Sistema S” — a group of non-profit organizations run by the private sector (yet financed with public money), which promote educational and cultural activities across the country. According to prosecutors, law firms have become fronts for money-laundering schemes or for paying kickbacks to judges.

The list of high-profile names targeted by the Feds includes the likes of Cristiano Zanin, Roberto Teixeira — both of whom represent former President Luiz Inácio Lula da Silva —, Frederick Wassef — a shady lawyer who runs errands for the Bolsonaro family —, and relatives of members of high courts and even the Federal Accounts Court (TCU) — a sort of audit tribunal that monitors public spending and is supposed to act as a deterrent to corruption.

Among the relatives of the judges being targeted is the son of Justice Humberto Martins, who presides over Brazil’s second-highest judicial body, the Superior Court of Justice (STJ).

Why the Feds are targeting big law firms

Part of the investigation was based on a plea bargain agreement made with Orlando Diniz, who for 20 years headed three branches of Sistema-S organizations in Rio de Janeiro. Mr. Diniz was arrested as part of the corruption ring run by former Rio Governor Sérgio Cabral — who has already racked up dozens of corruption convictions.

According to investigators, at least BRL 151 million (USD 28.5 million) of the BRL 355 million paid by Mr. Diniz’s organizations to law firms was siphoned off as part of the scheme. So far, prosecutors have presented charges against 25 people — 24 of whom are lawyers — for criminal association, embezzlement and influence peddling.

Prosecutors are claiming that Lula’s lawyers formed the “core” of the criminal ring, representing Mr. Diniz since 2012.

Cristiano Zanin denies any wrongdoing and says the accusations are a ruse to divert his attention from the former president’s case. Mr. Zanin represents the leftist leader at the Supreme Court, trying to overturn past convictions by claiming the case against Lula was biased against him.

The criminal group would also include Caio Rocha, son of former STJ Presiding Justice César Asfor Rocha, Tiago Cedraz, son of TCU member Aroldo Cedraz, and Eduardo Martins, son of incumbent STJ Presiding Justice Humberto Martins. The latter allegedly received BRL 77 million from Mr. Diniz’s organizations due to his political connections, in return for guarantees of favorable verdicts in cases of interest.

Prosecutors claim the amounts paid for council were unreasonably high — suggesting they were actually payments for influence peddling. However, investigators add that there is no evidence that any of the justices associated with those lawyers were ever bribed.

Questionable behind-the-scenes relations

Some of the most exclusive law firms in Brazil are headed by former members of higher courts — or by their relatives. More than expertise of the law, they offer access to the chambers of pretty much any judge in the country. While having private conversations with members of the bench isn’t, in itself, illegal, Operation S $cheme shows that this spirit of camaraderie among judges can easily cross the line into criminal territory.

Former Supreme Court Chief Justice Joaquim Barbosa was one of the few judges ever to criticize that practice. “There are many [judges] who should be tossed from the bench. The collusion between lawyers and judges is pernicious and damaging to the rule of law. We all know that many decisions are based on friendships and absolutely out of bounds,” he said during a 2013 trial that convicted a judge for ruling in favor of his friends.

Former Justice Eliana Calmon, who served as the ombudsman of the National Justice Council, went as far as talking about “criminals with gavels.” She said in an interview: “These are still boys — and all are millionaires! This is an old issue that has grown more problematic in recent years. This includes not only judges’ sons and daughters, but also their spouses.”

A couple of examples of this practice come from Rio. Disgraced former Governor Sérgio Cabral received kickbacks from government contractors and laundered money through his wife’s law firm — a scheme allegedly copied by current Governor Wilson Witzel (who has recently been suspended from office and faces impeachment proceedings).

This umbilical relationship between big firms and members of the bench are one of the most deleterious features of Brazil’s legal system — leading 60 percent of Brazilians to distrust judges

And we all know, the legitimacy of the courts depends on the people’s trust.[/restricted]


The challenges for Brazil’s new Chief Justice

Since the moment he entered the bench back in 1983, Luiz Fux dreamed of the day when he would become one of the 11 members of the Supreme Court. After almost a decade of intense behind-the-scenes lobbying (asking for support from both landless workers leaders and wealthy businessmen), he finally fulfilled his dream in 2011. And now, at 67, Justice Fux has reached the pinnacle of his career, beginning his two-year term as the court’s Chief Justice.

And the stakes are higher than ever. 

Brazil faces [restricted]what is arguably the biggest crisis since its return to democracy in 1985 — ruled by a president that has on multiple occasions mulled over sending troops to shut down the court, as our Brasília correspondent Débora Álvares has revealed. Moreover, the country faces what looks set to be the worst economic crisis in history and is still struggling to control the coronavirus spread.

If that wasn’t enough, Chief Justice Fux takes office in a moment when the reputation of the court has been severely damaged. Those who believe the court performs a bad or terrible job (29 percent) outnumber those who approve of its work (27 percent). 

The Supreme Court’s image crisis is fueled by the justices’ perceived adoption of an increasingly political role, as well as disregard for its own precedent — deepening the sense of political chaos and uncertainty in the country.

What the Fux Supreme Court will look like

Chief Justice Fux’s history might hint at what kind of court he will seek to lead for the next two years (unlike the U.S., the Chief Justice position in Brazil is rotative, with the leader of the court being changed every two years).

A judge since the early 1980s, Luiz Fux always tried to stay in the good graces of different — and seemingly antagonistic — political groups. He rose to the Supreme Court in 2011, thanks to an intense behind-the-scenes lobbying campaign in which he earned the support of an impressively diverse set of actors from then-Rio de Janeiro Governor Sérgio Cabral (a now-disgraced figure with dozens of corruption convictions on his résumé), to João Pedro Stedile, the leader of the Landless Workers’ Movement (MST).

In 2012, Mr. Fux was put on the spot by a report claiming that he hinted to government officials he would reward a Supreme Court nomination with verdicts in favor of the administration. The Workers’ Party government was facing what was at the time the biggest corruption trial in Brazilian political history — when 40 politicians and bankers were prosecuted for operating a vote-for-cash scheme in Congress known as the “Mensalão Scandal.” 

Many of his votes, however, were against the party he had allegedly promised to protect.

In recent years, he became one of the staunchest allies of Operation Car Wash in the Supreme Court — to the point where prosecutors declared in leaked message exchanges, revealed by The Intercept, that “in Fux we trust.”

Pandemic curbed the powers of the Chief Justice

Chief Justice Fux, however, takes the reigns of the court with many of his prerogatives as Chief Justice — the power to set the court’s agenda — diminished by the pandemic. The coronavirus has forced the Supreme Court to suspend all in-person activities, as most of its members fit the criteria of at-risk populations. Instead of regular trials, justices have worked through the so-called “digital court.”

The mechanism was put in place in 2007 as a plan to reduce caseloads. It works as a simple electronic voting system, where each member of the court can log on and issue their decision without the need for a physical session of one of the 4-justice panels or the full bench.

In regular times, only the Chief Justice had the powers to decide when the major cases would go to trial. But with the pandemic, the “digital court” has been expanded, and each justice can bring to the full bench cases in which they act as rapporteurs. Chief Justice Fux will only be able to control the agenda of the most important cases — reserved for in-person trials.

The Toffoli legacy

As our Brasília correspondent Débora Álvares reported in our September 8 Weekly Report, the outgoing Chief Justice, Dias Toffoli, leaves a legacy widely considered as “extremely negative” even by his peers.

One judge told The Brazilian Report that Justice Toffoli put the Supreme Court “in an unacceptable position of subservience” to the government. Mr. Toffoli went as far as describing the 1964 military coup as a “movement” just so he wouldn’t ruffle any feathers within the strongly pro-dictatorship administration. Given the fact that the Supreme Court is supposed to protect Brazil’s democratic post-dictatorship constitution, such obsequience committed by the Chief Justice is particularly disturbing.

Newly-inaugurated Chief Justice Fux, however, promises to bring a more respectable approach to the office. He aims to keep relations with the other branches of government “as formal as possible,” according to one associate justice. However, while his antics differ a lot from his predecessor’s, Chief Justice Fux believes the Supreme Court should work to guarantee institutional harmony.

If Chief Justice Fux will achieve such harmony to the detriment of the court’s reputation remains to be seen. But during Justice Toffoli’s farewell ceremony of , President Jair Bolsonaro (who showed up unannounced) committed an indiscretion: “You told me: ‘Whatever I need from the Supreme Court,’ just as I had from Justice Toffoli, I shall have from you.”

Justice Toffoli also leaves behind a highly-controversial investigation into the spread of disinformation for political purposes. It was launched in March 2019 as a way to shield the court from abuse on Twitter, but was quickly used as justification to censor a story by online magazine Crusoé, linking Justice Toffoli to construction firm Odebrecht.

“The very nature of his inquiry goes against the Supreme Court’s own precedents, according to which it is up to law enforcement and prosecutors to conduct investigations,” Roberto Livianu, a prosecutor and Ph.D. in criminal law, told The Brazilian Report.

Now more than ever, Brazil requires a strong Supreme Court defending its increasingly fragile democracy from abuses and threats. Chief Justice Fux’s history of trying to appease all sides at the same time gives little evidence for us to believe he will be the man to take on this historic responsibility.

He has two years to prove us wrong.[/restricted]

Brazil Daily

Brazil’s recovery flounders as food prices soar

Today, we cover the outlook of Brazil’s economic recovery. How soaring food prices are worrying the government. And the state of Covid-19 in the country.

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Brazil’s feeble recovery becomes even more uncertain

This week Geneva-based consultancy Horizon released its[restricted] Covid-19 Economic Recovery Index Ranking, analyzing how 122 countries are positioned for recovery. Brazil was ranked in a rather underwhelming 51st position.

BRICS. During last year’s BRICS Summit in Brasília, we argued that the BRICS alliance had become more like ‘China & Co.’ Horizon’s study corroborates this view: China was ranked as the best-performing emerging economy (32nd overall), ahead of Russia (36th), Brazil, India (63rd), and South Africa (77th, the worst among G20 nations).

Latin America’s recovery potential. Many of the region’s middle-income countries, such as Brazil, Mexico, Colombia, Ecuador, and the Dominican Republic have been rated as having a reduced capacity to absorb short-term shocks and lacking the capacity for quick recovery.

Brazil. The country’s “high dependence on vulnerable industries, immense income inequality, and less-than-optimal job market performance” are ranked as the main factors holding Brazil back.

Why it matters. The obstacles for a faster recovery listed by Horizon tend to increase in the short term. While the coronavirus emergency salary has been extended, monthly payments were halved to only BRL 300 (USD 56), which reduces families’ purchasing power. 

  • For Brazil’s poorest 10 percent, income is expected to decline 44 percent. When the grant ends — which is expected to happen after December — the drop will get to 77 percent.

Cash transfers. The emergency salary has a price tag of BRL 50 billion per month, which is beyond the government’s means. But the much-heralded Renda Brasil program, a beefed-up version of the worldly-renowned Bolsa Família, has yet to materialize. “If no compensatory measure is created by January 2021, Brazil’s lower-income population will experience a brutal reduction in income,” says Daniel Duque, an economist at think tank Fundação Getulio Vargas.

Effects. Episode #114 of our Explaining Brazil podcast discussed the social effects of a major economic crisis — including steep increases in crime rates.

Government tries to tame soaring food prices

During the 2018 campaign, Jair Bolsonaro and his economic guru, Paulo Guedes, talked about the need for less government intervention in the Brazilian economy. But as food prices dramatically increase, the administration is exchanging the proverbial invisible hand of the market for a hands-on approach. 

  • The Justice Ministry requested major food producers and vendors to provide explanations within five days for the recent price bumps in products such as rice, milk, and soy oil — which have already increased by 20 percent this year. For comparison’s sake, overall inflation since January sits at 0.7 percent.

Why it matters. Food prices weigh disproportionately on the poor and could spark mass anger among a significant proportion of the electorate.

Bolsonaro. Despite ordering private businesses to explain their pricing policies, President Jair Bolsonaro said he won’t intervene and freeze prices. “But I’m asking [vendors] to narrow their margins on essential products to close to zero,” he added, appealing to business owners’ “sense of patriotism.”

Why prices are going up. Multiple factors are at play here, such as a devalued Brazilian currency, enormous demand from China, and the agricultural off-season.

  • The government decided to remove import tariffs on several food products until the end of the year. However, the move will only have a limited effect on prices (if any) due to the fact that international prices are in U.S. Dollars — and the Brazilian Real has lost 32 percent of its value against the U.S. Dollar this year. 

Declining coronavirus curve should be approached with caution

The curves for both coronavirus infections and deaths have been trending downwards in recent days. Still, experts are calling for caution for caution. Firstly, because Brazil has just gone through a three-day weekend, after the September 7 Independence Day celebrations. And data collection has been severely hampered during weekends and holidays.

  • Moreover, in a country as big as Brazil, the spread evolves very differently by region. While many states in the South and Southeast have recorded fewer cases and casualties, others in the North have observed a recent uptick in curves.
  • Experts are still debating whether the pandemic in Brazil has already reached its peak. Rodrigo Corder, an infectious disease modeling researcher, told The Brazilian Report that certain parts of the country may be close to reaching herd immunity. But it remains too early to tell.

Vaccines. São Paulo Governor João Doria said on Wednesday that phase-3 clinical trials of a potential Covid-19 vaccine developed by Chinese pharmaceutical company Sinovac Biotech have shown “promising results” and may be available to Brazilians as early as December. Mr. Doria added that phase-2 trials showed an immunity response of 98 percent in the elderly.

  • A fifth potential vaccine will be tested in Brazil. Lab giant Dasa announced a partnership with Covaxx, a division of U.S. group United Biomedical. The research project is still in the phase-1 stage, being tested in Taiwan. Phases 2 and 3 will happen in Brazil, with at least 3,000 Brazilian volunteers participating in the scheduled trials. Patients will be recruited in November, after regulators greenlight the vaccine trials. 

What else you need to know today

  • Supreme Court. Luiz Fux will be appointed as Brazil’s Supreme Court Chief Justice today. His two-year stint at the helm of the country’s highest court begins amid a political crisis — combined with a health emergency and an economic depression in sight. Many controversial cases are set to be heard by the court over the next few months, including one that could reverse criminal convictions against former President Luiz Inácio Lula da Silva — which would make him eligible to run for office in the 2022 elections. Our September 8 Weekly Report explained who Mr. Fux is.
  • Rio. Supreme Court Justice Dias Toffoli has dismissed a request by Rio de Janeiro Governor Wilson Witzel to overturn his 180-day suspension from office. The Superior Court of Justice ruled that Mr. Witzel should be temporarily removed while facing a corruption investigation — he is suspected of running a crime ring that embezzled funds earmarked for the coronavirus fight. This week’s episode of the Explaining Brazil Podcast talks about Rio’s descent into political chaos.  
  • Trade. President Jair Bolsonaro has reportedly decided to grant a 90-day renewal of Brazil’s tax-free quota for foreign ethanol, benefiting U.S. producers — just days after Donald Trump’s White House imposed reduced import quotas on Brazilian semi-finished steel. The move, which is still to be officially announced, marks yet another break for Mr. Bolsonaro from the principle of reciprocity Brazil’s trade policy has traditionally followed.
  • Flop. During the Independence Day weekend, former President Luiz Inácio Lula da Silva addressed the nation on the Workers’ Party’s official YouTube channel. The 23-minute manifesto — which talked about fighting poverty and healing Brazilian democracy — served to all but launch Lula as a presidential candidate again for the 2022 elections (even if, for the moment, he remains ineligible for office). However, as of writing, the video has only been watched 695,000 times. And dislikes (116,000) outnumber likes (103,000), suggesting that many of these views come from detractors who clicked on the video just to show their disgust for the former president.
  • Currency. After two years without a single international contract, the Brazilian Mint has inked a USD 20.6-million deal with Argentina to produce 400 Argentine Peso banknotes. The new contract will help the Mint close 2020 in the black — after three years of losses. It will be the first time the company operates at capacity since 2018, when the Mint was exporting banknotes to Venezuela.[/restricted]
Brazil Weekly

Brazilian Supreme Court to get a new Chief Justice

This week, we cover a major change at the Supreme Court. Brazil’s most valuable brands. And Jair Bolsonaro re-election prospects.

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A big change at Brazil’s Supreme Court

On Thursday, the Brazilian Supreme Court will have a new chief justice in [restricted]Luiz Fux, who takes over the reins from Justice Dias Toffoli. Brasília correspondent Débora Álvares says Justice Fux is set to take on a less politicized approach to the position than his predecessor, who tried to act as a buffer between the federal government and Congress.

How it works. In Brazil, unlike the U.S., the Chief Justice position is rotative. The leader of the court serves a two-year term and steps down, being replaced by the Associate Justice who has served most time in the court without being Chief Justice.

Why it matters. The Chief Justice has agenda-setting powers, and can decide whether or not to bring to trial cases with major political repercussions. In recent months, the court has clashed with President Jair Bolsonaro on numerous occasions. 

Who is Luiz Fux? The first Jewish justice in the history of the Supreme Court, he was nominated by former President Dilma Rousseff and inaugurated in March 2011, after a stint as a prosecutor and serving a decade in the Superior Court of Justice (Brazil’s second-highest judicial body). Despite his reputation as a “good political interlocutor,” as sources describe him, Justice Fux won’t follow his predecessor in bending over backwards to try to nurture a good relationship with Brazil’s volatile president.

  • “Under Mr. Fux, the Supreme Court should have a strictly formal relationship with the Executive branch,” a fellow justice told The Brazilian Report.
  • Justice Fux is one of the main defenders of Operation Car Wash in the Supreme Court, and is only expected to bring cases related to the anti-corruption probe “when the climate is favorable,” sources told Débora Álvares. Infamously, Car Wash investigators declared in a leaked text conversation, revealed by The Intercept, that “in Fux we trust.”

Controversy. Justice Fux is a discrete judge and, unlike some of his peers, doesn’t use his votes on cases to score points against other justices. Still, his résumé includes some controversies. None was bigger than a 2012 report claiming that he hinted to government officials he would reward a Supreme Court nomination with verdicts in favor of the administration. 

  • The Workers’ Party government was facing what was at the time the biggest trial in Brazilian political history — when 40 politicians and bankers were on trial for operating a vote-for-cash scheme in Congress known as the “Mensalão Scandal.” Many of Mr. Fux’s votes, however, were against the people he had allegedly promised to protect.

Legacy. Justice Dias Toffoli ends his two-year term as the chief justice with a legacy widely considered as “extremely negative” even by his peers. One of them told Brasília correspondent Débora Álvares that he put the Supreme Court “in an unacceptable position of subservience” to the government — he went as far as describing the 1964 military coup as a “movement” just so he wouldn’t ruffle any feathers within the strongly pro-dictatorship administration.

  • Perhaps his lowest moment came on May 7, 2020, when the president marched from the presidential palace to the Supreme Court building, flanked by Economy Minister Paulo Guedes and several business owners. The group asked the court to revert a previous ruling that social isolation measures were under state jurisdiction. At the time, governors were attempting to enforce quarantines, while Mr. Bolsonaro was agitating people to go about their business as usual.
  • While justices generally agree that the president placed the chief justice in a terrible position, two of them told The Brazilian Report Mr. Toffoli “failed to assert the court’s authority” by hosting the group and giving it voice. Justice Fux is not expected to appease the government if faced with a similar situation.

Fake news probe. From a broader perspective, the most controversial part of Mr. Toffoli’s legacy might be a probe investigating the production and spread of false information online for political purposes. Many say the Supreme Court is overstepping its bounds and acting as judge, juror, and executioner — the court launched the investigation and is now conducting the probe, as well as being responsible for issuing the verdicts.

  • When the probe was launched, in March 2019, many from the left and right called it a move straight out of the dictatorial playbook. But as investigators began zeroing in on pro-Bolsonaro supporters, outrage waned within the left.

Brazil’s most valuable brands

Kantar and communications group WPP presented their most-recent Brandz Brasil ranking of the country’s top 25 most valuable companies. Despite the coronavirus crisis, these major Brazilian companies had a combined 4-percent growth in brand value.

Biggest growth. Beer and banks continue to dominate the rankings, but the retail sector also saw significant gains, with a 72-percent growth in brand value from last year. That put Magazine Luiza in the 4th position (the company alone increased its brand value by 124 percent). Supermarket chains Pão de Açúcar, Extra, and Assaí also saw triple-digit growth over the period: 187, 219 and 192 percent, respectively.

Main takeaways. “Brands which invested in increasing clients’ digital experience earlier managed to have a better performance,” says Silvia Quintanilha, a vice president at Kantar. 


Investors are paying close attention to Brazil’s cellulose sector. With state-owned bank BNDES wanting to sell its stake in sector giant Suzano, packaging producer Irani has become the new belle of the ball. Brokerage firm XP Investmentos gives Irani a “buy” recommendation, with a BRL 8.50 target price. Analyst Yuri Pereira says the company has good exposure for the food industry — which is still growing during the pandemic — and expects a surge in demand for packages.

Natália Scalzaretto

Pandemic doesn’t dent Bolsonaro’s electoral stock

A recent survey by renowned pollster Ibope shows that 33 percent of Brazilians hold President Jair Bolsonaro responsible for the coronavirus crisis in Brazil. The country has recorded the third-highest number of infections (4.1 million) and second-highest death count (127,000). However, a recent poll conducted by Ideia Big Data still suggests that Mr. Bolsonaro would win re-election against every other candidate, including former President Luiz Inácio Lula da Silva — who all but launched himself as a presidential candidate, putting himself “at the service of the country” in a speech delivered last night, despite being ineligible for office due to his conviction for passive corruption and money laundering.

One piece of data helps explain why: 65 percent of voters believe the president is the guy responsible for the coronavirus emergency salary, which has kept tens of millions from falling below the poverty line and even reduced extreme poverty rates in Brazil.

It remains far too early to predict the 2022 race, but the data shows just how important cash-transfer policies are in Brazil. Especially in a moment like this unprecedented crisis.

Looking ahead

  • Recovery. Two pieces of data will help assess how the Brazilian economy is recovering from the Q2 2020 9.7-percent GDP drop. On Thursday, the official inflation rate for August will be published — and analysts expect the IPCA index at 0.35 percent. However, increases in food prices could complicate matters. Also on Thursday we will have data on retail sales in July, which could influence share prices of Brazil’s sector giants (Magazine Luiza, Via Varejo, B2W).
  • Telecommunications. A shareholders’ meeting will vote today on Oi Telecom’s proposal to alter its court-supervised recovery plan. The proposal includes selling mobile networks, towers, data centers, and part of the company’s optic fiber network — to raise BRL 22 billion for debt repayments and investments. While major bondholders are in favor of the move, Oi’s main creditors — Brazil’s top banks — are attempting to block it.
  • Justice. Lawmakers will demand House Speaker Rodrigo Maia to reopen the works of a special committee to analyze the constitutional amendment proposal to legislate for the possibility of allowing defendants to go to jail after a single failed appeal. Congress has begun discussing that last year, shortly after a 6-5 Supreme Court majority decided that defendants can only be arrested after all appeals are exhausted. One of the results of the Supreme Court decision was the release of former president Lula da Silva.
  • Education. Starting today, schools in the state of São Paulo are allowed to provide tutoring services and sporting activities to students. The authorization applies to cities in an advanced reopening state, with flattening or descendant infection curves. A recent survey shows that 72 percent of Brazilians believe classes should only be resumed after a coronavirus vaccine is available.

In case you missed it

  • Budget 2021. Last week, the federal government presented its budget proposal for 2021. Among the highlights are the cuts to the Health Ministry’s funding to BRL 136.7 billion (USD 24.9 billion) — even less than the BRL 138.9 billion expected before Covid-19 arrived in Brazil. Meanwhile, the budget for investments in 2021 is slated to be BRL 28.6 billion — 56 percent more than what was expected for 2020.
  • Optimism 1. According to the Brazilian Institute of Geography and Statistics (IBGE), 37 percent of Brazil’s 3 million-plus companies still felt the negative effects of the pandemic by the end of July. Still, a major improvement has been recorded from June, when 62 percent of companies reported feeling the negative effects of the crisis.
  • Optimism 2. A survey by pollster PoderData shows that 45 percent of Brazilians expect the country’s general outlook to improve within the next six months — with only 20 percent saying things will get worse. Confidence levels seem to be linked to support for President Jair Bolsonaro, as the demographics that make up his base (males, elderly citizens, people from the South of Brazil) register the highest rates of optimism.
  • Window protests. Pot-banging protests — which took place on a nightly basis during the beginning of the pandemic, but then faded away — were once again heard in at least six state capitals as President Jair Bolsonaro addressed the nation in a televised speech. He talked about being committed to democracy, while praising the 1964 coup that inaugurated a 21-year military dictatorship in Brazil. Rather predictably, at no point did the president mention Covid-19.
  • Coronavirus. One pioneer study headed by the Federal University of Rio de Janeiro documented the case of a woman who remained infected with the virus for 152 days — the longest infection period recorded in the world. Identified as “Patient #3,” she presented mild symptoms for only three weeks, but the virus stayed in her body for five months, being able to multiply and contaminate others. The study could help researchers understand how asymptomatic patients spread of Covid-19.
  • Vaccination. For the first time in 20 years, Brazil hasn’t met immunization goals for any of the vaccines recommended for infants of up to one year old. Vaccination rates have been declining over the past few years, but the pandemic has worsened the trend. Experts warn about the risks of outbreaks of diseases which had been thought eradicated — such as polio or measles.[/restricted]

Bending the rules to counter rule-bending Bolsonaro

Jair Bolsonaro is an easy target for politicians and detractors. The Brazilian president is crass, uncultivated, and is usually seen defending the indefensible — such as supporting the rollback of environmental controls in the Amazon, shrugging at the deaths of over 100,000 people from the coronavirus, or threatening to launch a self-coup. Mr. Bolsonaro actively tries to undermine democratic institutions and his actions have given other political actors in Brazil something of carte blanche to bend the rules to their self-interest, providing the justification is to “counter Jair Bolsonaro.”

On the grounds of containing the president’s “penchant for authoritarianism,” the Supreme Court is about to allow House Speaker Rodrigo Maia and Senate President Davi Alcolumbre to circumvent the Constitution and pull off a highly controversial move to enable their own re-elections in 2021.[restricted]

In a letter sent to the court last week, Mr. Alcolumbre claimed that a 1997 constitutional amendment allowing presidents, governors, and mayors to serve a second consecutive term may also be applied to the heads of the Senate and House of Representatives. The law states that re-election rights are granted to the heads of federal, state, and municipal executive branches, and “those who have succeeded them.” In Mr. Alcolumbre’s view, the fact that the House Speaker and Senate President are number two and three in the presidential line of succession would allow them to extend their terms.

As The Brazilian Report has previously covered, the elections for the heads of each congressional house are highly consequential processes, as the Speaker and Senate President both have agenda-setting powers. Moreover, the Speaker is the sole person who can initiate impeachment proceedings against a sitting president. 

They can be a government’s best friend — or its worst enemy.

The rules of congressional elections

The rules for electing congressional leaders are complicated. Re-elections are not permitted — but there is a loophole. Lawmakers are elected to four-year terms — but each chamber’s directive board gets two-year terms. So, a Speaker could technically be re-elected if their two terms came in separate legislatures, i.e., after retaining their seat in a general election.

As the next general election is in 2022, that particular loophole will be sewn shut for 2021. But that isn’t stopping Messrs. Maia and Alcolumbre from angling for another two years in charge.

The former has excelled in his ‘creative interpretation’ of the congressional rulebook, cherry-picking which directives to follow, according to his political ambitions. 

He became Speaker in 2016, when disgraced former Congressman Eduardo Cunha — who occupied the chair at the time — was arrested for corruption and impeached. Rodrigo Maia was re-elected in 2017, claiming his first year didn’t really count due to the exceptional circumstances of his ascension. Then, in 2019, he was properly re-elected, using the aforementioned legislature loophole, and promising this term would be his last. Now, he appears to have changed his mind.

bolsonaro maia
Rodrigo Maia in 2017. Photo: Ag. Câmara

Bad practices with good (?) intentions

Aiming at preventing Messrs. Maia and Alcolumbre’s push for re-election, the right-wing Brazilian Labor Party (PTB) filed a lawsuit in the Supreme Court trying to reinforce the regulations that prevent mid-legislature re-elections for the heads of Congress. The move was aimed to please President Jair Bolsonaro — who has had his fair share of conflict with the duo — especially Rodrigo Maia.

But this could backfire and pave the way for a turning of the tables that could play in the favor of the Speaker and the Senate President, in which the Supreme Court could greenlight their re-election. In the words of one justice who spoke to The Brazilian Report, the court is leaning toward permitting re-election, due to “concerns about the president’s authoritarian impulses” and its willingness “to uphold democracy.”

Mr. Bolsonaro is already barely controlled by the existing democratic checks and balances, and insiders fear that having an ally in charge of the House and/or Senate could give him even more power. 

The problem with that reasoning is that political stakeholders are themselves engaging in the behavior they fear from President Bolsonaro. Last year, the Supreme Court launched a highly contested investigation into the spread of fake news against its members — a probe that evolved into something much broader — a case in which its justices are victims, judges, jurors, and executioners.

And in Congress, Messrs. Maia and Alcolumbre are tearing up the rulebook, under the excuse that they are acting as a “buffer” to Mr. Bolsonaro’s worst impulses.[/restricted]