Brian Winter – Americas Quarterly, 06/27/2016
Like waves caused by a faraway hurricane, big global events eventually tend to wash up on Latin America’s shores. In the 2000s, the rise of China and its appetite for commodities gave rise to a new Latin American middle class and a “pink tide” of left-leaning leaders who handed out the spoils. In the 1990s, the collapse of the Berlin Wall resulted in the “Washington Consensus” of free-market dogma and the growth of me-too trading blocs such as Mercosur, NAFTA and the Andean Community. And in preceding decades, the Cold War helped foster any number of dictatorships, guerrilla uprisings and midnight coups.
So what will be the fallout from “Brexit,” the rise of Donald Trump, and other manifestations of the new nationalism sweeping Western Europe and the United States? Will Latin America once again serve as a peripheral theater to the convulsions of the rich world? Or has the general prosperity and democratic consolidation of recent years bolstered Latin America’s own center of gravity, giving it the ability to resist – or perhaps even push back against – developments thousands of miles away?
There’s a distinct irony to all of this: The rich world is turning inward at precisely the moment when Latin America feels more open to trade and integration than it has in 20 years. The election of more outward-looking presidents in Argentinaand Peru, and overtures to trade by Brazil’s new interim government, have signaled a shift away from the leftism of the past decade. In broad terms, the region’s Atlantic coast is more actively embracing the trade-friendly ethos that has served the Pacific, Asia-facing countries so well in recent years. The tragic implosion of Venezuela and the opening of Cuba have only accentuated the belief in capitals from Mexico City to Buenos Aires that the future lies with more globalization, rather than less.
Julia Leite & Paula Samba – Bloomberg, 06/27/2016
Brazil is winning over derivatives traders as Acting President Michel Temer seeks to repair the nation’s finances.
The cost to hedge against losses in Brazil’s bonds with credit-default swaps has tumbled by almost a third in the past six months, the biggest drop among the world’s major economies. Prices of the swaps are also now back to levels that prevailed before S&P Global Ratings cut the country’s rating to junk in September.
The turnaround is part of a rebound in Brazil’s financial assets this year fueled by the removal of President Dilma Rousseff from office while she faces an impeachment trial. Since taking the reins last month, Temer has proposed spending caps to help shrink a near-record budget deficit and struck a deal to ease a fiscal crisis roiling Brazilian states amid the longest recession in more than a century.
Brian Winter – Americas Quarterly, 06/22/2016
It’s been yet another rough week for Brazil’s international image, with an Olympic mascot shot dead in an absurd accident and another national political figure dragged into scandal. But the biggest blow of all came from Declan Ryan, co-founder of the Irish budget airline Ryanair, who told an Argentine newspaper that he was considering expansion into every South American country “except for Brazil, where there is lots of corruption.”
This is precisely the wrong lesson to draw from Brazil’s struggles – akin to believing that the house that gets the most exhaustive inspection must also be the most rotten one on the block. It’s telling that Ryan made his comments (which became huge news in Brazil) while announcing an expansion into Argentina, where the corruption under 12 years of Kirchner rule is only now coming to light. Just last week, a former Argentine secretary of public works was arrested while trying to hide $9 million in cash in a monastery. Ryan preferred tolaugh that story off.
As regular AQ readers know, the negative headlines about Brazil result from a positive process – the independent prosecutors who have uncovered evidence of systemic graft and fraud, and sent some of the country’s most powerful people to jail. This does not mean Brazil is South America’s most corrupt country – it may mean, instead, that it has its healthiest (or most active) legal system. But the mistake Ryan made is surprisingly common, and it provides a golden opportunity for investors who are savvy enough to see the truth.
Paul Kiernan and Paulo Trevisani – The Wall Street Journal, 06/22/2016
RIO DE JANEIRO—Acting Brazilian President Michel Temer authorized on Tuesday the transfer of 2.9 billion reais ($849.0 million) from the federal government to Rio de Janeiro state, which is struggling with a fiscal crisis less than two months before the Olympic Games.
Rio declared a “public calamity” last week as a result of its deteriorating finances, which have forced deep cuts to crucial services such as education, health care and policing in recent months.
According to a presidential decree published late Tuesday, the transfer is to be used for public security during the Olympics and Paralympics, set to be held in August and September, respectively. But according to a communications official in Brazil’s presidential palace, it should free up funds within Rio’s state budget to pay for other obligations.
Anne Vigna – Americas Quarterly, 06/16/2016
As Rio de Janeiro prepares to receive hundreds of thousands of tourists and athletes from over 200 countries for the Olympic Games, health authorities are working overtime to combat the spread of the Zika virus. But beyond Zika, the city hides shockingly high rates of tuberculosis, especially in its favelas.
The infectious lung disease, not common in Europe since the 18th and 19th centuries, killed a total of 840 people in Rio de Janeiro state in 2014, including 440 in the city itself.
That’s the highest number in any of the country’s 27 state capital cities, amounting to 6.9 deaths per 100,000 people in 2014.
Reed Johnson & Luciana Magalhaes (with Paulo Sotero contributing) – The Wall Street Journal, 06/16/2016
SÃO PAULO—Brazil’s interim President Michel Temer denounced as “irresponsible lies” allegations that he helped broker illegal campaign contributions as part of a bribes-for-contracts scheme centered on state oil company Petróleo Brasileiro SA, even as a third cabinet minister resigned over similar charges.
In a brief Thursday morning TV address, Mr. Temer denied the claims made in plea-bargain testimony by Sergio Machado, former head of Petrobras Transporte SA, or Transpetro, a fuel-transportation and logistics subsidiary.
Mr. Machado has testified that in 2012 he organized, at Mr. Temer’s request, a donation of 1.5 million reais (about $432,000) from a construction firm to Mr. Temer’s political party, in exchange for Transpetro contracts. Mr. Temer dismissed the accusations as “frivolousness.”