Andrea Jube – Valor, 02/11/2016
President Dilma Rousseff bets on the fight against the Zika virus and the microcephaly epidemic as a vaccine to contain the progress of Operation Car Wash investigations on former president Luiz Inácio Lula da Silva. In the opinion of Rousseff aides, the affected image of her predecessor hits the president directly and makes her more vulnerable to the impeachment that although asleep, it has not been buried. She will command the mega-operation scheduled for next Saturday, when 220,000 military officials will take the streets to battle the Aedes aegypti mosquito.
Presidential aides heard by Valor recognize that the deconstruction of Mr. Lula’s image spills in Ms. Rousseff, although she has chosen not to make a public defense of her predecessor. “Lula is her political guarantor and of our government,” says an advisor close to President Rousseff. For him, with Mr. Lula weakened politically, the government is further weakened.
The Car Wash siege of Mr. Lula has narrowed down in recent days. On the eve of Carnival, Judge Sérgio Moro authorized the Federal Police to open a specific inquiry to investigate the connection of a ranch in Atibaia, São Paulo, visited by the former president, with construction company OAS, one of the targets of the operation. The property is registered in the name of two partners of Fábio Luís Lula da Silva, son of Mr. Lula: Fernando Bittar and Jonas Suassuna, partners at Gamecorp, which renders services to telco Oi. None of them have commented the allegations yet.
Christopher Sabatini – Foreign Policy, 02/10/2016
In late 2014, Brazil seemed on the verge of a meltdown. Its economy had grown a mere 0.1 percent that year, as its currency (the real) dropped like a stone and business confidence plummeted. In response, in November of that year Brazilian President Dilma Rousseff turned to a Chicago-trained technocrat — a common antidote among Latin American leaders. Domestic and international investors welcomed the appointment of Joaquim Levy, a former banker and fiscal hawk, to lead the finance ministry, but they acknowledged he would have his work cut out for him. If Levy hoped to enact the drastic fiscal cuts and structural reforms needed to fix the careening economy, he would have to first overcome the resistance of not only a fractious congress, but also many members of Rousseff’s leftist Partido dos Trabalhadores (PT) and her cabinet.
Success would ultimately elude Levy. In December 2015, he quit, handing the ministry over to Nelson Barbosa, another well-respected economist. But Barbosa lacks Levy’s credibility among investors. And the task before him has only become more unenviable. He will have to push through his predecessor’s stalled reforms, while turning around an economy that suffered a GDP contraction of 3.7 percent in 2015, staving off potential debt crisis, stabilizing the real, and avoiding what analysts predict could become Brazil’s worst crisis since 1901.
The first step to fixing Brazil’s crisis will have to involve recognizing that the rot goes much deeper than it might seem. Brazil’s troubles began with the downturn in the global commodity markets, which once bolstered the country. But the roots of the malaise trace much farther, to a historically autarkic economic model, a political system hobbled and corrupted by party factionalism and localism, and a constitutional carnaval of guarantees for social rights and payouts.
Arnaldo Galvao – Bloomberg Business, 02/01/2016
Embattled Brazilian President Dilma Rousseff may get a new lease on political life when legislators return to work Tuesday to discuss impeachment proceedings against her. Just don’t expect much help from them on the economy.
Following a six-week recess, much of the fervor surrounding the political crisis has died down, and with it the drive to oust Rousseff. Yet with consumers and businesses battered by a deepening recession, legislators have little appetite for the spending cuts and tax hikes administration officials say are needed to restore investor confidence. That’s especially true ahead of municipal elections in October, party leaders and political analysts said in interviews.
The mood could still sour against Rousseff and upset her chances to stay in office if discord increases within the ruling coalition, unemployment surges or the corruption probe that has rattled Congress expands further. But even the politician who stands to benefit the most from the president’s ouster, Vice President Michel Temer, says the mood in Congress has shifted away from ousting Rousseff, according to the G1 news site
Tatiana Bautzer, GuillermoParra-Bernal – Reuters, 01/28/2016
Debt restructuring firms are poised to pull in record amounts of business in Brazil this year as the country’s worst recession in decades and a corruption probe that has cast a shadow over dozens of companies leads to a surge in defaults.
While a slump in prices is squeezing commodities producers – from sugar mills to oil producers and miners – the “Operation Car Wash” investigation into political kickbacks at state oil firm Petroleo Brasileiro SA is also hitting many of its suppliers.
Soaring consumer delinquencies as Brazil’s interest rates hit their highest levels for nearly a decade are also putting some major retailers and homebuilders in line for painful reorganizations. Scenting an opportunity, U.S. restructuring shops including FTI Consulting Inc, Houlihan Lokey Inc, and Moelis & Co have set up shop in Brazil over the past three years to vie for mandates with local banks and independent advisors.
Brazil’s federal tax authority and prosecutors are investigating 13 foreign and local banks for possible financial crimes intermediating loans to Brazilian engineering conglomerate Grupo Schahin, newspaper O Estado de S. Paulo reported on Monday.
The banks under investigation include Itaú BBA – the investment-banking unit of Itau Unibanco Holding SA, – Banco Bradesco SA, Banco Santander SA, HSBC Holdings Plc, Deutsche Bank AG, Banco Votorantim SA and other smaller Brazilian institutions, Estado reported, citing a tax office document.
The authorities are investigating whether the banks could be accused of money laundering for being originators, underwriters or managers of loans to Schahin. Schahin is currently under investigation by Brazilian authorities for potential fraudulent operations that prosecutors allege benefited the ruling Workers’ Party through state-run oil firm Petroleo Brasileiro SA.
Paulo Sotero – The Huffington Post, 12/28/2015
A president fighting impeachment names a finance minister not trusted by markets as Brazilians, dismayed by the country’s politics, prepare for more hardship in 2016.
The debilitating political and economic crisis that engulfed Brazil in 2015 is bound to continue, regardless of the outcome of the opposition effort to impeach a discredited President Dilma Rousseff. The impeachment process started in early December is expected to drag on for months. Procedural wins by the president at the Supreme Court before Christmas dissipated a sense of inevitability of her removal from office, but did not improve her chances of regaining credibility to govern in the three years remaining in her second term. The political battle that paralyzed the congressional agenda in 2015 will deepen, undermining efforts to address the growing fiscal and structural problems that turned Brazil from a once promising emerging economy into an economic disaster in the first year of Rousseff’s second term.
The negative outlook was reinforced as the year ended by the departure of Finance minister Joaquim Levy, a fiscal conservative Rousseff named after her narrow reelection in October 2014 to rebalance the nation’s fiscal accounts and restore investors’ confidence. “It looks like the government is afraid of the reforms,” a frustrated Levy said in an exit interview.
A poll published Saturday in Brazil gave a mild boost to the political survival prospects for President Dilma Rousseff, as she saw a slight bounce in her approval ratings, halting what has been an almost continuous slide for most of the year.
The number of Brazilians who rated Rousseff’s administration “bad” or “very bad” fell to 65 percent, from 71 percent in August, according to a Datafolha poll conducted from Dec. 16 to 17 and published by newspaper Folha de S. Paulo.
Rousseff is under pressure as Brazil is undergoing its worst recession in at least 25 years and a corruption scandal at state-run oil company Petroleo Brasileiro SA which has led to the arrest of numerous high-profile executives and politicians.