June 2019 Brazil Risk is High by Mark Langevin

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The June 2019 Brazil Risk Score Is 4: Represents High Country Risk

·       Misery Index/Stable Performance

·       Formal Employment Index/Stable Performance

·       Economic Activity Index/Poor Performance

·       Homicide Rate/Stable Performance

·       Presidential Approval/Stable Performance

The June 2019 Brazil Risk Score of 4 represents a one-point increase from the May score due to low inflation’s contribution to the Misery Index, stable formal employment creation, stable homicide numbers, and stable presidential approval. The misery rate is stable behind very low inflation coupled to high but stable unemployment rates. After a modest adjustment of the March monthly homicide rate, the most recent measure reported, April 2019, is stable and continues below the high rates measured in 2018.  The Central Bank’s Economic Activity Index reports the most recent measure, again for April 2019, with a consecutive slight decline, further reflecting the possibility that the economy may have contracted in the first quarter of 2019.  Last, the June 27 CNI/Ibope presidential approval public opinion poll shows stable presidential approval even though it appears that the rejection rate is inching up over 30% and now registers 32%. Taken together, the excellent and regular ratings remain above 60% and register 64% in this recent poll. While some news outlets emphasize the gradual uptick in President Jair Bolsonaro’s rejection rate, the combined measure of excellent and regular provides a better benchmark for comparative historical purposes. While we expect the rejection rate to continue to show modest increases, the challenge for the president is to stay above 50% for the long run.

Overall, Brazil’s high-risk stems from high unemployment and contracting economic activity.

President Bolsonaro’s emphasis on fighting crime provides him with some reason to cheer the lower monthly homicide rates as compared with the 2018 average of 1.90 homicides per 100,000. Although it should be noted that the trend of falling homicides (although they remain very high in comparative perspective) began in the second half of 2018, well before the new government took office. Also, the president’s approval will likely vary in tandem with economic performance. At this point, it is likely that presidential approval will continue to fall in the second half of 2019 given the dismal performance of the economy and widespread unemployment.

The score of 4, HIGH, brings the BrazilWorks Brazil Risk score just below the average since the inauguration of President Jair Bolsonaro and his administration. The average for January to June 2019 is 4.6%.  

#vazajato and the Politics of Moral Panic in Brazil by Mark Langevin

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The Intercept’s recent revelations about the conduct of former Lava Jato corruption case judge and current Minister of Justice and Public Safety Sergio Moro and federal prosecutors strikes at the very heart of Brazil’s justice system. The #vazajato reinforces the politics of “moral panic” in Brazil but turns the table on those who have successfully employed “moral panic” to compete against the Workers Party (PT), undermine popular support for democratic governance, and elect President Jair Bolsonaro and his Partido Social Liberal (PSL) in 2018.

Richard Miskolci (2007) introduces the concept of moral panic to interpret the politics of gay marriage and social control from a comparative perspective.  For Miskolci, moral panic represents the “way the media, the public opinion and agents of social control react to certain disruptions of normative standards.” Richard Romancini (2018) employs Miskolci’s concept to explore the rise of conservative populism in Brazil during the past decade to create a compelling frame to understand the election of Jair Bolsonaro as well as more recent leaks that cast a shadow over the 2017 conviction of former president Lula on corruption charges. Romancini frames an analysis of the convergence of Brazil’s new conservative movement with evangelical Christian churches, both of which effectively harnessed media outlets to occupy the public sphere by creating moral panic with respect to civil society and government efforts to extend equality to the LGTBQ communities. He sums up the effort,

“Thus, the agents of moral panic do not claim to be opposed to homosexuals or homosexuality, but rather to ‘pedophilia;’ they do not claim to be against the discussion of sexuality and gender equality in schools or the organization and political mobilization of teachers and students, but rather indoctrination.”

Romancini provides a compelling argument that Jair Bolsonaro quickly seized the advantage of moral panic and the question of equality through the publication of his “Information on Gay Kit”  in late 2010. His publication launched a moral panic against the Ministry of Education of then president Dilma Rousseff to undermine governmental efforts to counter homosexual bullying in public schools throughout Brazil, degrade governmental legitimacy, and stir up conservative media populism. As Romancini notes, Bolsonaro’s Information on Gay Kit includes outright lies and misinformation. In 2018 Bolsonaro republished elements of his document and continued to fuel a moral panic as part of his electoral strategy. For Romancini, the politics of moral panic in Brazil has included:

  1. Promotion by conservative groups;

  2. Moral and/or religious element;

  3. Emergence of social changes or a “moral shock” such as the drive for LGBTQ equality;

  4. Use of media populism.

In some ways The Intercept’s damning revelations about the conduct of the Lava Jato taskforce and then judge Moro also fuel a moral panic. The #vazajato, as it is now come to be known, reveals a moral shock (the collusion between judge and prosecutor) and drives a moral panic that now threatens to turn the table on Minister Moro, the federal judiciary, and possibly the Bolsonaro government. The Intercept’s asymmetric strategy seeks to question the legitimacy of the Lava Jato prosecutions directly, and by consequence, the actions that led to the conviction, incarceration and eventual nullification of Lula’s 2018 presidential candidacy. While The Intercept qualifies as an “alternative” media out, it now works with more mainstream journalistic enterprises to publish leaked private conservations between prosecutors and Moro and interpret them in constitutional and ethical contexts. While different than the “gay kit” moral panic unleashed by Bolsonaro in 2010, #vazajato expresses moral outrage through intensive media dissemination across both alternative and mainstream outlets in Brazil.

#vazajato is different than the conservative-evangelical moral panic strategy to the degree that it is based on professional, whistleblower-based journalism that provides oversight of governance institutions and public official conduct. It is effective because the leaks are credible, increasingly perceived as truthful, and provide substance to a political narrative that questions the motives behind Moro’s conduct, especially as it impacted Lula and the 2018 elections. Bolsonaro’s moral panic strategies mostly lack(ed) factual substance and rely on misinformation and outright fabrications but have galvanized an electoral support base through media populism. It is doubtful whether the #vazajato rouses a new political movement or refreshes the Workers Party (PT). However, these credible revelations’ may neutralize the anti-Petismo fervor (opposition against the Workers Party) and degrade the legitimacy of the Bolsonaro government, especially if Minister Moro continues in his present role. Also, the #vazajato may eventually lead to successful efforts to overturn Lula’s conviction, but its accelerating reach goes well beyond the case of Lula. It calls into question the legitimacy of Brazilian courts, and more importantly, the use of extra-constitutional or outright illegal means to fight corruption. Therein lies the rub.

Supporters of the Lava Jato investigations and prosecutions are in a pickle. They are faced with a clear option; endorse any means necessary or embrace due process and the constitutional consequences of Moro’s bad judgement and questionable practices. At a minimum, the #vazajato has confirmed the appearance of misconduct on the part of prosecutors and the judge. This appearance should be enough to convince constitutionalists that something is rotten in the Republic of Curitiba.

Brazil Risk Remains High by Mark Langevin

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The May 2019 Brazil Risk Score Is 3: Represents High Country Risk

·       Misery Index/Stable Performance

·       Formal Employment Index/Stable Performance

·       Economic Activity Index/Poor Performance

·       Homicide Rate/Stable Performance

·       Presidential Approval/Poor Performance

The May 2019 Brazil Risk Score of 3 represents a one point decline from the April due to the slight dip in economic activity, the reported possibility of recession, and further dive in presidential approval. The misery rate is stable behind very low inflation coupled to high but stable unemployment rates. The monthly homicide rate increased but remains stable and below the high rates measured in 2018. The Central Bank’s Economic Activity Index reports the March measure with a slight decline and reports indicate that the economy may have contracted in the first quarter of 2019. Last, the presidential approval rating, as measured by XP Investimentos/Ipesp, has declined from 67 to 60 (combining both excellent and regular ratings) during the month of May. For now we score approval as poor with a continued negative outlook. Overall, the HIGH Brazil Risk score under the newly installed government of President Jair Bolsonaro reflects the continuation of high unemployment and a sagging economy. At this juncture, the slow economic recovery poses the most formidable challenge to the new government. However, it should be noted that the government’s recent efforts to obtain a “governing” agreement with Chamber of Deputies President Rodrigo Maia and Supreme Court President Dias Toffoli may accelerate congressional approval of President Jair Bolsonaro’s reform agenda in the coming weeks. The “pact for growth” could arrest the president’s falling popularity and raise the confidence of fickle investors.

The score of 3, HIGH, brings the BrazilWorks Brazil Risk score below the average since July 2018 and represents a downgrade from the April 2019 HIGH score of 4. The series mean average since July 2018 is 4.63.

Brazil Risk Score, July 2018 to May 2019

Brazil, Oil & Gas and the Open Acreage Permanent Auction by Mark Langevin

The Brazilian National Petroleum, Natural Gas, and Biofuels Agency (ANP) has adopted the open acreage permanent auction system to further diversify exploration and production activities, with an eye on small and mid sized operators. Over 600 onshore and offshore blocks are now tendered.

The permanent auction features 527 onshore blocks in the Espírito Santo, Potiguar, Recôncavo, Sergipe-Alagoas, Paraná, Parnaíba e Tucano basins and 73 offshore in the Campos, Ceará, Potiguar, Santos e Sergipe-Alagoas basins. See Gustavo Guardarde’s Permanent Auction map of blocks now available for bidding.

31 operators are now registered for bidding. They include:

BP Energy do Brasil Ltda.

Capricorn Brasil Petróleo e Gás Ltda.

Central Resources do Brasil Produção de Petróleo Ltda.

Construtora Kamilos Ltda.

DEA Deutsche Erdol AG

Dimensional Engenharia Ltda.

Eagle Exploração de Óleo e Gás Ltda.

Energizzi Energias do Brasil Ltda.

Eneva S.A.

Êxito Importadora e Exportadora S.A.

Geopark Brasil E&P de Petróleo e Gás Ltda.

Great Energy S.A.

Guindastes Brasil Locação de Equipamentos Ltda.

Guindastes Brasil Óleo e Gás Ltda.

Imetame Energia Ltda.

Karoon Petróleo e Gas Ltda.

Murphy Exploration & Production Company

NTF Óleo e Gás Ltda.

Oil Group Exploração e Produção S.A.

Partex Brasil Ltda.

Petroborn Óleo e Gás S.A.

Petroil Óleo e Gás Ltda.

Petrol Serviços de Sondagem Ltda. – EPP

Petrosynergy Ltda.

Petro-Victory Energia Ltda.

Phoenix Empreendimentos Ltda.

Repsol Exploração Brasil Ltda.

Tucano Serviços de Apoio a Óleo e Gás Eirelli

Ubuntu Engenhria e Serviços Ltda. – ME

Vipetro Petróleo S.A.

Wintershall do Brasil Exploração e Produção Ltda.

Source: epbr.com

Map of Available Blocks under the Permanent Auction

Brazil’s Persistent Unemployment Challenge by Mark Langevin

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Georgetown Journal of International Affairs

May 3, 2019

Mark S. Langevin, Ph.D.

High unemployment may become the greatest test for the new government of President Jair Bolsonaro and his Minister of the Economy, Paulo Guedes. Bolsonaro promised to fight corruption and crime during the 2018 campaign season, but a 12.4 percent unemployment rate now threatens to curtail his popularity. According to a September 2018 DataFolha survey, only 14 percent of voters considered unemployment the number one problem facing the new government. The survey showed that most voters were concerned with public healthcare, violence, and corruption. Bolsonaro won the presidency because he exclusively focused on violence and corruption, albeit without well-defined policy prescriptions. Bolsonaro and Guedes gave little attention to the unemployment challenge and asserted that future fiscal stability and deregulation would spark accelerating job creation. Read more here.