Bolsonaro's Brazil is divided and in crisis

Ian's Quick Take:

Hi, everybody. Happy Monday. Good to see everyone and got a Quick Take for you as we kick off this week. Thought we would talk today about Brazil. It is the epicenter today for coronavirus. The healthcare system in the country is getting overwhelmed. Over 90% of ICU beds are filled in most of the states in the country. As a consequence, you are triaging healthcare. This is what you remember happened briefly in Northern Italy at the beginning of the pandemic a year ago. It's what we feared could happen in New York City, though never quite did. You've got nearing 4,000 deaths a day in Brazil right now, per capita that's worse than anything we've seen in the United States. And yeah, we blame the government. We blame President Bolsonaro.

And you know, in part, this is someone who like former President Trump said, don't worry about this. It's just a little flu, was telling the population that we don't need lockdowns. We don't need quarantines. He didn't want to wear a mask. He didn't like social distancing. And as a consequence, all of that became deeply politicized across the country in Brazil as well. Those governors that engaged in lockdowns were sharply criticized for it. And a lot of people weren't wearing masks. A lot of people didn't take it seriously. Bolsonaro, of course, got COVID himself. He said hydroxychloroquine was a miracle cure. He even questioned the vaccine at the beginning, said that it was dangerous, potentially you can't trust the health care companies. He sits tilted on that as his popularity has gone down significantly. And as a consequence, he's more worried about finishing out his term and being able to win a second term late next year with elections.

But all of this has gone very badly in the country. And indeed, as a consequence of all of that, Brazil today is feeling a lot like the United States at the end of last year, massively politically divided with the potential for impeachment efforts against Bolsonaro that would be incredibly divisive. And with a president who could easily lose reelection, but will not accept that outcome and will claim that he has indeed won. Now, last week was a watershed in that regard. You saw six members of the Brazilian cabinet suddenly removed, including the Minister of Defense replaced with a Bolsonaro loyalist and the three heads of the military services very unhappy about that. Threatening to resign, they're fired the next day.

Does this mean that Brazil is heading for a coup or revolution? The answer is no. It's actually similar to the United States in the sense that the senior military leadership in the country is independent and would not support loyalty to Bolsonaro, no matter what. And the judiciary in the country is still largely independent. These institutions are stronger than what you see in most developing countries around the world, but they're not as strong as the United States. And the fact is that if Bolsonaro were to go down the path of "burn it all down" and "these elections are no good," and "this impeachment is completely unacceptable," if that were to occur, you would get members of state police. You would get low-level members of the military that could come out in support, the former military member, Bolsonaro, himself with a lot of former military around him as senior advisors. So the potential for major social unrest and for a lot of violence is greater than what we saw in January 6th in the United States.

Although, the likelihood that Brazilian democracy is suddenly going to fall apart in my view is just as remote as it was in the United States. This is a deeply, deeply problematic leadership. There's an incredibly divided country. Next year's elections are going to be easily as ugly, maybe even worse than last November's in the United States, and are likely to be very severely contested. So, I mean, if Brazil was the largest economy in the US like the United States is, this would be our top risk out there. Because it's just the largest economy in South America, it's a big deal. It deserves to be talking about it, but it's not the top risk globally.

The funny thing is I have not been universally critical of Bolsonaro because on some counts I've been more sympathetic. For example, economically as much as he is a knee jerk, hardly expert reactionary on a bunch of things, he allows his economic team to take the lead on issues that he doesn't know anything about, whether it's pension reform or tax reform or micro economic reform. A lot has actually gotten done in Brazil over the course of the last couple of years. On climate, Bolsonaro is widely criticized for being one of the worst climate skeptics, climate deniers in the world.

And I obviously think that's a horrible thing, especially when you see all this clearcutting happening in the Amazon forest, but I'm sympathetic for a middle income economy, where the wealthy countries in the world suddenly say, why aren't you doing anything to save your environment? When for decades, we were paying no attention to it. We were, of course, emitting massive amounts of carbon into the atmosphere. We had no problem with exploiting global economies, including Brazil, for our own benefit. And Bolsonaro's basically saying, look, if you want us to pay attention to climate, pay us. Now that this matters to you, how about taking some of the equity here and giving it to the average Brazilian. Something that's very popular inside Brazil, that almost any Brazilian leader would be aligned towards.

But when it comes to responding to the worst crisis that we have seen in our lifetimes, Bolsonaro has been the worst leader of any major economy in the world. No, he's not the former Tanzanian president, Tanzanian President Magufuli, who's now dead of COVID. No, he's not Belarusian dictator, Lukashenka, who said, take a sauna, drink some vodka, and you'll be fine. But of the G20 economies, he's the worst. He's the worst by far and Brazil's suffering for it. And I feel really badly about that. And I hope, I hope, I hope vaccine rollout will happen quickly in Brazil, but so far not so fast, not the United States. They don't have the drug companies, they don't have the infrastructure. They aren't able to pay the money for the vaccines, the way the advanced countries have. And so, as a consequence, the Brazilian people are really suffering. So that's a little bit for me this week. Everyone be safe, avoid fewer people. I'll talk to you all real soon.

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