The Hijacked State

Murillo de Aragão – O Estado de S. Paulo, 6/20/2015  


Image courtesy of Arko Advice

For a long time now, the Brazilian state has been hijacked. Formerly, by the military regime. Today, after re-democratization, citizens lost control of the state to politicians, bureaucracy, and to the rigging of public posts through patronage by politicians and syndicates. Each of these hijackers operates in accordance with their own logic. While many politicians use the state to get reelected and perpetuate themselves in control, others use it for business. Some use it for both.
Evidence of this abuse lies in the succession of scandals that involve politicians, political parties, state institutions, and public work. Bureaucracy hijacked the state to get access to economic gains in forms of salaries and other benefits. Those who rigger the state are there to create business transactions and political power that favors those they sponsor.
In midst of a puddle of mud and billionaire financial losses, Petrobras gives us proof of the prevalence of minor interests. It will not pay dividends to its shareholders, but will instead, pay over R$ 1 billion to its employees per performance, although there has been no profit.
Another indication of the hijack lies in the fact that over half of the political parties registered in the country lives off public safes. They don’t raise even a cent off from their militants. Other parties, with representation at the Congress even, obtained 99% of their expenses funded by the Party Fund. Out of 32 registered parties, 17 had over 90% of their expenses paid for by the fund. Small parties, big transactions.
None of the hijackers operates with the well-being of citizenship in mind, despite their politically-correct speech, full of good intentions and in favor of the common good. They almost always operate around their own agendas. It’s a good coincidence when these interests accord with the civil agenda. But this is rare. For example, in 2014, Brazil occupied the embarrassing 112th position out of 200 nations in terms of sanitation! That same year, 45% of all the country’s municipalities dumped solid waste in untreated landfills. Dirt in politics and dirt in the environment are more than correlated.
The “mensalão” and the “petrolão” are evidences of how the scheme enslaved public safes to finance politicians and their parties. Both schemes tarnished the political system and weakened the electoral process in a way that it would favor some, in detriment to most. The abuse of economic power in the electoral system served to renew, periodically, the seizure of society. Many of the hijackers consider themselves leaders of masses, which do not know what they want. They gather around plan conducers that achieve nothing and who cover up the desire of maintaining the state hijacked, keeping it away from society. Divorced from citizen’s interests. They want to maintain a sponsor state that decides everything under an opacity mantle.
Citizens are usually treated as cattle, worthy only of the crumbs of a “spendy” government, expensive and inefficient. We have a European-level tax burden and precarious services, and at times, inexistent. A study carried out by the Instituto Brasileiro de Planejamento Tributario (Brazilian Institute on Tax Policy Planning) puts us as the worst country in the world in relation to tax burden/GDP/Human Development Index. We are the seventh largest economy of the planet but are 85th in the Human Development Index! We are, embarrassingly, the 120th best business environment in the planet!
Sanitation and business environment do not interest the political world. The brutal difference between the rankings is given by the hijack of the state to society. This is undesired and undesirable when politically expressed. It is only welcome during the elections period, to referendum the hijack, and to maintain everything like before. The agendas operate around a vector: the maintenance of power, at any cost.
The dynamic of the hijack is dictated by the electoral calendar. Every two years we hold elections. Thus, what matters is to attend to the electoral agenda. That is why expenses with publicity increase. It is an empire of short terms and of the immediate service to the whimpering obvious, in order to be kept in the game. Meanwhile, we throw away our future.
Long-term plans are postponed. The Guanabara Bay, for example, has entered a decade-long process to be depolluted, which thus far, hasn’t been finished. Not even hosting the Olympics in Rio de Janeiro was enough to solve this disgrace. The North-South Railroad started in 1988 and is not yet finished. The express connection between Belo Horizonte’s center and the Confins Airport took 25 years to be concluded! Rivers Pinheiro and Tiete, in Sao Paulo’s capital, were polluted 50 years ago and remain that way today. Are they to remain this way for decades yet to come? Most likely, yes.
To the hijackers, the future is not a concern, as long as citizens remains imprisoned and financing their perpetuation in power, with high taxes, low demands and control, and pacific in front of the corruption and incompetence ahead of them. A state operating with high levels of opacity, as indicated by the succession of scandals, shows that our taxes finance our slavery.
Brazil is a country of immense potential. With its agriculture, for example, it feeds over 800 million habitants around the planet. But even this could be improved. Labor and entrepreneurship in the country are punished. Our infrastructure and drainage logistics of crops are precarious. Our hijackers do not want a strong private sector, but rather, a private initiative co-opted by free-riders.
Shall we remain seized as citizens in our own country? Subject to an agenda of interests that usually does not coincide with those of society? Yes. For a while. We have advanced in the last 30 years, we are building a multipolar society in terms of power exercise, but there still is a lot to be done. The battle to affirm citizenship in order to build a democratic state is only beginning.

Murillo de Aragão is a lawyer consultant, and holds a Masters in political science and a PhD in sociology from the University of Brasilia. He is the author of the book “Reforma Política – O debate inadiável”

Translated from Portuguese by Júlia Cardoso, an undergraduate senior at the Elliott School of International Affairs, George Washington University and summer intern at the Brazil Institute, Woodrow Wilson International Center for Scholars.


In U.S.-Brazil statement on climate change, Rousseff misses opportunity for international leadership

Steve Schwartzman – EDF, 6/30/2015

Presidents Obama and Rousseff deserve credit for putting climate change at the top of their bilateral agenda today.

Public commitment to a strong Paris outcome from two major emitters that are already taking significant action on climate is more than welcome. Restoring 12 million hectares of degraded forest, as President Rousseff has pledged, is a positive contribution – albeit no more than Brazil’s current law mandates.

It is highly promising that the two major economies are creating a high-level working group to move the climate change agenda forward. Particularly interesting is the pledge to develop innovative public-private finance mechanisms both for clean energy and the forestry sector.

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Can Brazil follow through on its ambitious climate goals?

Editorial Board – The Washington Post, 7/03/2015

Many environmental advocates had their eyes focused this week on the Supreme Court, where the justices slammed an Environmental Protection Agency clean air rule. But, in part because the practical effects of the ruling don’t appear dire, the more consequential event may have taken place at the White House, where President Obama and Brazilian President Dilma Rousseff exchanged commitments on climate change.

There the news was good — but not good enough.

The outlines of the U.S. pledge, which will be codified at a United Nations conference later this year, have been known for months. Brazil’s intentions have been more mysterious, though it too has a big role to play in stemming climate change given its massive forest stocks and growing economy. At the White House, Ms. Rousseff previewed what her nation is likely to offer.

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Itaú, Bradesco, Santander seem likely to present bids for HSBC’s Brazil unit

Rogerio Jelmayer and Luciana Magalhaes – The Wall Street Journal, 7/03/2015

Brazil’s Itaú Unibanco Holding SA, Banco Bradesco SA and Banco Santander Brasil SA plan to present formal offers to buy the Brazilian unit of HSBC Holdings PLC by Monday, according to two people close to the talks.

HSBC will likely sign an agreement soon after to hold exclusive talks with the bank offering the best bid, said one of the people.

HSBC declined to comment Friday on the subject.

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Brazil antitrust agency investigating banks for suspected rate manipulation

Jeffrey T. Lewis and Rogerio Jelmayer – The Wall Street Journal, 7/02/2015

Brazil’s antitrust agency is investigating banking giants Citigroup Inc., HSBC Holdings PLC, Deutsche Bank AG and a long list of their peers on suspicion of forming a cartel to manipulate the exchange rate of the Brazilian currency, the real.

There are “strong indications” of the use of anticompetitive practices in the foreign-exchange market by the three big banks and 12 other U.S. and overseas lenders, the agency, known as CADE, said Thursday. The agency also named 30 individuals in the investigation.

CADE said there was evidence the banks and the individuals worked together to fix the exchange rate, coordinate the buying and selling of currencies, manipulate the Brazilian central bank’s PTAX reference exchange rate and impede the operations of other banks operating in Brazil’s foreign-exchange market, among other things.

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Brazil to ease Petrobras pressure with offshore oil bill

Joe Leahy – Financial Times, 7/05/2015

Brazil’s congress is likely to pass a landmark bill that could ease financial pressure on state-controlled oil company Petrobras by opening the country’s biggest offshore oil discoveries to greater foreign and private investment.

The changes would remove Petrobras’s obligation to be the sole operator of the fields, known as the pre-salt because they are covered by a layer of the compound, a rule that had overstretched the company, said José Serra, the senator who presented the bill to congress.

The bill, which now could pass as soon as September, is aimed at stimulating a flood of much-needed investment into one of the world`s most promising oil exploration areas. Oil majors, such as Royal Dutch Shell, which so far have been permitted to participate in the pre-salt only as financial partners to Petrobras, have already indicated their interest in becoming operators should the rule change.

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Alstom wins €100 million wind energy transmission contract in Brazil

Smiti Mittal – Clean Technica, 7/06/2015

A consortium led by Alstom has won a major order to expand transmission capability of the power network in Brazil as the South American country gets ready for expansion of its renewable energy infrastructure.

Alstom has been awarded the €100 million contract by Eletrosul Centrais Electricas S/A to integrate wind energy projects in Brazil with the transmission network. The projects are located in Rio Grande do Sul State.

Alstom will provide two new substations and expand six existing substations. The project is expected not only to integrate the upcoming wind energy projects but also other renewable energy projects to be announced and implemented in the future. Alstom will supply its products, software, and automation technologies with equipment produced locally at Canoas and Itajuba sites in Brazil.

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