GZERO Media logo

Quick Take: Bolsonaro lashes out, Brazil could suffer

Ian Bremmer's Quick Take:

Hi everybody, Ian Bremmer here, kicking off the week. I hope everyone's doing well. As well as can be expected, snowing yet again here in New York City, we'll get through it. March, I feel March is coming. It doesn't mean spring, but it means something. But anyway, thought we'd talk about Brazil. Haven't spoken about Brazil in some time here and making some news.

They were making news, significant news, of course, at the beginning of the pandemic, when President Bolsonaro was so badly mishandling the response in addition to some other leaders in this hemisphere, President Trump, President Lopez Obrador in Mexico. But most recently, the sudden sacking of the CEO of Petrobras, the state energy company in Brazil. Roberto Castello Branco is gone, replaced by a general, a former Minister of Defense Joaquim Silva e Luna and my God, the inbound I've seen over the past hours in terms of, does this mean that the state is taking over the economy in Brazil? What do we think about investors? What do we think about pricing? Are they in serious trouble? And the answer is, this is a real hit. This is a real hit.

And it is because the government is under more pressure. There was a potential for a major trucker's strike coming at a really bad time in Brazil, when prices were going up and they haven't yet put in place additional relief for the average Brazilian. There's concerns about fiscal stresses in the economy. And suddenly the CEO of Petrobras, who manages the company pretty well, but also is pretty strong headed, pretty arrogant, says, "Truckers and what the truckers do have nothing to do with my company." And you couldn't say that. It's incredibly impolitic. It put President Bolsonaro in a corner.

And so, he lashed out and removed this guy. And that was clearly not a smart thing to do. It would have been better to have negotiations and not undermine Paulo Guedes, who's in charge of the economy and is the one that's trying to keep sort of everything running in terms of Brazil, and instead now it looks like he's been sharply undermined. And again, I mean the market moves, the investor moves are going to be significant. It's definitely a hit to the credibility of the government in managing the economy and its state-owned enterprises more broadly. Not only because the CEO was himself doing a good job, but also because it sends a very strong message internationally that your company's fuel pricing policy is going to have political limits to it. And while the new CEO coming in was seen as doing a good job as minister of defense, number one, the fact that Bolsonaro is seen as a man of the military and as a consequence, that the generals are supportive of him, that undermines his perception in the markets.

And even though there's a plan to sell refineries, who's going to want to buy refineries if they don't think that they can get market prices for what they're going to be selling? So, this is a big hit to the government's credibility. Having said all of that, there's a difference between what you think about Petrobras and broader privatization. So Electrobras have a harder time getting it privatized than the rest and the reform trajectory for the country as a whole. Guedes is not going anywhere. He's been very quiet about this move and his relationship with the Brazilian president is still actually very strong. I think the real point is that the global economy is going to punish Brazil more as we get through this second phase of the global pandemic.

Brazil is now starting to produce vaccines domestically over the coming month. They are faster in terms of getting vaccines to the population than any country in South America. A lot of countries that did a really bad job responding initially to the healthcare part of the crisis, like the United States, like the UK, like Brazil, actually faster in terms of being able to get vaccines to the population. So, that feels pretty good. But the economic hit to Brazil in the coming year, as you have a president that is not particularly trusted in terms of the international marketplace, and as you have a tougher environment, much less flexibility to navigate for population that's demanding, improved social services, but not a good way to pay for it. All of that is going to be a serious problem as you move towards elections in 2022. And here, I think is the real question mark.

Bolsonaro's approval ratings are in the thirties right now. They're not great though, certainly more than high enough to forestall an impeachment, which some people continue to talk about. And you've got to be in the low twenties before Congress starts to move against you in Brazil. But that doesn't mean he's going to win election. And his reelection is looking challenging. And the alternative to Bolsonaro is not only going to be a return likely to the left, but easily as importantly, he's going to say it was stolen. He's going to say it was rigged. He's going to use social media to undermine support on the part of the average Brazilian of political institutions and processes. And unlike the United States, where the institutions are strong enough to have resilience, even when you have a leader that is doing everything possible to undermine trust in elections and institutions, in Brazil, that's not so clear. The Supreme Court, not quite so independent, the military, professional, but not quite so separate from the leadership. And the potential for this to go very badly in other words, not in the next few months, but in the coming year is growing. Something that I would spend more time watching.

As a consequence, I thought it was worth mentioning this. Not because we think that Brazil has suddenly hit a tipping point, but rather because this entire incident is an example of a Brazilian president that, when times are good, understands that he doesn't know anything about the economy and lets the experts run things. But when times are bad, he doesn't listen to anyone and he lashes out. And Warren Buffet said that when the tide suddenly comes out, you find out who's wearing bathing suits and who isn't. Well in Brazil when the tide starts to come out, President Bolsonaro was the first one to run towards you. And I'm not sure we all want to see that. So, the potential for this to get much worse in the coming year is real. And I think we're going to be talking a lot more about Brazil, not less as we go forward in 2022.

So that's it for me. I hope everyone's doing well. Be safe and avoid people. Talk to you soon.

Pop quiz: what percentage of plastic currently gets recycled worldwide? Watch this video in Eni's Energy Shot series to find out and learn what needs to be done to prevent plastic from ending up in our oceans. Plastic is a precious resource that should be valued, not wasted.

This Monday, March 8, is International Women's Day, a holiday with roots in a protest led by the Russian feminist Alexandra Kollontai that helped topple the Tsar of Russia in 1917. More than a hundred years later, amid a global pandemic that has affected women with particular fury, there are dozens of women-led protests and social movements reshaping politics around the globe. Here we take a look at a few key ones to watch this year.

More Show less

Jon Lieber, Managing Director of the United States for the Eurasia Group, shares his insights on US politics in Washington, DC:

Another stimulus bill is about to pass the Senate. Why won't the minimum wage be going up?

Well, the problem with the minimum wage is it didn't have the 50 votes it needed to overcome the procedural hurdles that prevent the minimum wage when traveling with the stimulus bill. Clearly support for $15 an hour minimum wage in the House of Representatives, but there's probably somewhere between 41 and 45 votes for it in the Senate. There may be a compromise level that emerges later in the year as some Republicans have indicated, they'd be willing to support a lower-level minimum wage increase. But typically, those proposals come along with policies that Democrats find unacceptable, such as an employment verification program for any new hire in the country. Labor unions have been really, really fixated on getting a $15 an hour minimum wage. They may not be up for a compromise. So, we'll see what happens.

More Show less

Russian opposition leader Alexei Navalny shocked the world last year when he recovered from an attempted assassination plot by poisoning — an attempt that bore all the fingerprints of Russian government. Then he shocked the world again by returning to Russia and timing that return with the release of an hours-long documentary that catalogued the Putin regime's extensive history of corruption. Virtually no one, therefore, was shocked when he was immediately sentenced to a lengthy prison term. Anne Applebaum, a Pulitzer Prize-winning journalist and expert on authoritarian regimes, believes there was a method to Navalny's madness. "His decision of '….I'm going to do something that harms me personally, but is going to be a lesson for Russians. I'm going teach a generation of Russians how to be brave.' I mean, not very many people would have the guts to do that."

Applebaum's conversation with Ian Bremmer is part of the latest episode of GZERO World, airing on public television stations nationwide starting Friday, March 5. Check local listings.

It's not like things are going well in Mexico.

COVID has killed more people there than in any country except the United States and Brazil. Just 2 percent of Mexicans have gotten a first vaccine jab, compared with nearly 24 in the US. The Biden administration made clear this week that it won't send vaccines to its southern neighbor until many more Americans have been vaccinated. Mexico's government has cut deals for doses from China, Russia, and India.

More Show less
The GZERO World Podcast with Ian Bremmer. Listen now.


Subscribe to GZERO Media's newsletter: Signal