Brazil media calls for unity on World Cup

Fuleco, the World Cup's official mascot has not yet
 conquered the national fans, producers of toys said
they are targeting international tourists

It's finally happening. The World Cup starts today after 7 years of (not very good) planning, discussions and protests. In the past year, particularly, the World Cup helped Brazil show its true face to the world. The "football nation" is now an angry emerging middle class nation, that claims for more quality in the public services. It's also a stable democracy nation, which went through massive protests without a single change in its institutions. It is still a struggling nation, that suffers to put investments in due course, but it is learning.

No, we are not the skyrocketing Christ statue The Economist showed back in 2009. In fact in today's Folha de S. Paulo edition, Vinicius Torres Freire, an economics columnist, calls attention to the possibility of a technical recession (two quarters of decrease in the economic activity) in the first half of this year.

But we are not that bad. The fact the country managed to go through the protests maintaining its institutions should not pass unseen. Unlike any other emerging country with recent upheavals (Turkey, Thailand or Egypt, just to name a few) Brazil's democracy has not been questioned by the protests.

The truth (or at least the close we can get to it) lies as usually in the middle. Brazil is a country which is just learning how to invest -- as states another Folha's article, signed by Marceo Miterhof. After decades of crisis and after addressing the more pressing issues of inflation, economic stability and income distribution, the country has just started to focus its attention on the infrastructure problems. Differently than the last big investment decade of the 1970's this time the investments came under the democratic regime with all its checks and balances. It's been a tough learning.

This is why today the Folha's balance of the World Cup infrastructure legacy showed that little over 50% of the 167 planned improvements were completed in time for the games. The rest was either abandoned or postponed to after the games.

As Folha's editorial states today, it's time to bring attention to the event itself and to support the national team. This does not mean forgetting all the criticism, it means remembering the positive aspects that the event also has. I don't think anybody in Brazil believed the World Cup would bring an end to all of the country's problems. It actually contributed to expose the naked reality of a country that has improved recently but still has a long way to go.

As I already mentioned here, I believe the games will occur without any major problem. The main strikes of metro workers and homeless in São Paulo were controlled in the last minute, just in time for the event. It's the Brazilian way, always finding a solution at the last moment.

I'm also curious on what will be the political result of the games. So far, it seems the World Cup has backfired for the Worker's Party. But who knows what can happen after the World Cup nationalist marketing flood. The latest presidential poll published last wednesday showed that for the first time Dilma lost the upper hand when compared to the sum of her two main adversaries. A second round in the elections is now more likely than ever.

The World Cup is around the corner, and the elections too

Brazil is living a huge strike wave days before the World Cup. This week São Paulo came to a halt when bus drivers stopped working. And this friday president Dilma almost couldn't finish her speech in Brasilia due to the protest of public servants in strike. 

Protests during Dilma's speech this friday

It's no surprise that strikes occur at this time of the year, as each union has its own calendar of negotiations. But now organized workers are taking advantage of the World Cup to leverage their negotiation position, as the world's eyes are turned to Brazil. And that's been picked up by the Brazilian press. 

In this saturday's edition, Folha de S. Paulo calls attention to the fact that Dilma is even considering buying a terrain near the Itaquerão stadium in São Paulo to halt homeless protests in the region. The land would be designated to housing projects.

Both Folha and O Globo gave a fairly big space to former football player (now a member of the World Cup committee in Brazil) Ronaldo's quote about being ashamed of the country's lack of organization  -- it was the cover of Folha. Also on the World Cup, O Estado de S. Paulo revealed that the already very ambitious Brazilian project of receiving the World Cup in 12 cities was even more gigantic: it involved 17 cities, according to Fifa.

Elections

This week another survey for the presidential election was released. From Ibope/Nielsen, the results point out to a small recovery from Dilma Rousseff, from 37% to 40% of the vote intentions, but also a greater chance for a second round of elections, as her adversaries grew more. 

To wrap this post up, I just liked to call attention to Aloizio Mercadante's interview to Folha de S, Paulo two weeks ago. There, the current minister of the Civil House admitted the government's price control policy (a very unusual, not to say inefficient, way of halting inflation). He was later unauthorized by the Finance minister Guido Mantega, but my personal opinion is that mr. Mercadante's ideas resonate deeply in the Brazilian government, and are the first honest acknowledgment of the true Brazilian economic policy. (See Mercadante's interview).

Populist spree on the way to the campaign

As correctly predicted by the Brazilian media, the International Worker's Day changed the tone of president's Dilma Rousseff speech. She was more aggressive, stating that her government has done a lot in terms of raising the minimum salary and reducing unemployment (which is true -- the problem is that this policy is not sustainable). The president promised the continuity of the raises in salaries together with the state paid pensions, the correction of the income tax table (which, roughly put, means less people will pay taxes) and a 10% increase in the benefits paid by Bolsa Família, the main federal income distribution program.

Analysts heard by Folha de S. Paulo and O Globo saw this speech as a sign of weakness from the president. She had to put a monetary incentive for the voter because she was running short on allies they said. In fact, on the week before the announcement Dilma declared she was going to dispute the reelection with or without the political allies.

Eduardo Campos and Aécio Neves also promised
to raise salaries and expand income distribution

The media also calculated the cost the new measures would have for the next government. O Globo stated the total cost would amount to 9 billion reais, while Valor Econômico stated the government would have to find another 1.3 billion reais to make ends meet. The main point is that the populist announcement put further pressure on the government spending reducing the likelihood of any improvement of the country's rating and debt status for the next government, if Dilma is reelected.

Repercussion

On the following day of the speech, the Workers' Party officially chose Dilma as its candidate, thus putting an end to the rumors of former presidente Lula's return. Both candidates from the opposition parties, Eduardo Campos and Aécio Neves also promised, on their own way, to increase the minimum wage and to keep expanding and increasing the income distribution programs of the government. They also joined forces to file a lawsuit against Dilma, accusing the president of using the public time on the television to anticipate the political campaign.

The movements so far reveal the true intention from all candidates is to assure the sympathy from the core voters (the emerging middle class and the lower income workers) while remaining still to vague to discuss an actual plan for the country. This comes as no surprise to anyone that knows how the Brazilian elections work, but it is still somewhat disappointing as mr. Steinbruch (counselor to the presidency and CEO of the steel industry CSN) well put in his column today in Folha de S. Paulo.

International Worker's Day may change Dilma's tone in pre-campaign

Dilma will address the nation in the
International Worker's Day

It seems the recent bad numbers in the electoral surveys have finally hit the pre-campaign of president Dilma Rousseff.  Yesterday the president already changed the strategy and started attacking her opponents. She said during a speech that she does not believe the country will make a step back (meaning she believes she will be reelected). The tone is expected to be even more direct on her TV speech tomorrow on account of the International Worker's Day. She may address her main opponents Aécio Neves from the social democrat PSDB party and Eduardo Campos from the socialist party PSB stating clearly what her government has conquered to the working class in Brazil.

Today O Estado de S. Paulo published pieces of Dilma's government program draft. The text basically makes a direct reference on the benefits that the Workers' Party (PT) made for the country and tries to frame adversaries proposals as threats for the average Brazilian worker. One example is the adversaries defense of the Central Bank's independency. The text asks: "Independence from whom?", implying that without control the Central Bank would damage the workers income gains. It also refers to the past government of PSDB as a privatist government.

Both strategies proved to work well on the last two campaigns of PT (for Lula's reelection and Dilma's election). The question is if this is going to work again, specially when the government proved to be such a bad manager in the energy sector, and when the gains from the policy of increasing salaries and maintaining jobs are being eroded by an inflationary bubble that threats to damage the purchasing power of the country's lower classes for the years to come.

The attempt to frame adversaries as members of "evil market forces" is also a fallacy easy to deconstruct, because her government poured buckets of money to huge transnational companies using subsidized loans from the national development bank, BNDES.

The change of tone reflects the loss of 6,7 percentual points in Dilma's vote intention, from 43,7% to 37%. The president would be still reelected if the elections were held today, but if the trend keeps going, Dilma may loose.

Brazil approves new internet legislation

Brazilian senators vote on Internet Law

The Brazilian Senate has just approved the Civil Landmark of the Internet (Marco Civil da Internet), a subject that will for sure be on the cover of this wednesday Brazilian newspapers. The text of the law ensures net neutrality, even though it also opens the door for content discrimination in specific cases to be determined by presidential decree. The net neutrality -- the legal prohibition of discriminate data flow according to the type of content, such as slowing down Skype connections on mobile internet -- was the most sensitive subject of the law, a subject that now will be probably on the hands of the next Brazilian president to resolve.

The law also ensures the privacy of users and limits the liability of Internet Services Providers in cases of judicial process regarding third party's prejudicial content published online. There is an interesting mention that internet application providers (such as Facebook or Google) should not abuse in the use of private information of users (even if authorized by them). I would not be surprised to see in the future a civil lawsuit against one of the big internet companies in the country.

I'm curious to see how will be the coverage of the main newspapers tomorrow. The first time the text was approved on the Chamber of Deputies I noticed few of the criticism about the limited net neutrality (this I saw later on specialized publications). In fact, both O Globo and Folha were rather optimistic about it. In fact just now (as the subject is only on the online versions of the media, the attentions are focused to the victory of the government in surpassing the opposition maneuvers against the project.

-- update --

I just had a brief discussion with a friend  which was on the government during the public consultations of the internet law project. Basically the reason why they let the details of net neutrality to be determined by presidential decree was in order not to pass a rigid law that would have to be changed in the future due to technological developments. So net neutrality is still there as a principle and a set of rules which will have specific subsets of parameters and exceptions (Many thanks to Guilherme Almeida de Almeida).

As for the media coverage it was pretty modest, compared to the first approval. Since the text was not passed with many changes, newspapers sticked to describing the law and its concepts. Folha published an article from PSDB (opposition) senator Aloysio Nunes Ferreira arguing the law could be improved had the Senate more time to work on it. He said the privacy issue could be better defined, granting more protection to users.

-- end of update --

Catching-up

The Easter week I skipped publishing here was dominated by the Petrobras scandal (the refinery purchase that brought a billionaire loss to the company) and the presidential election forecasts, that again are dimming for Dilma. They both seem to be related, but in fact I hardly believe the average voter will put much weight on what is being done with the biggest company in the country.

On the Petrobras' front the most interesting development is a sort of discrepancy between the declarations of José Sérgio Gabrielli, Petrobras' former CEO and president Dilma Rousseff. Dilma said the Pasadena purchase was a bad business. This Sunday, in an interview to O Estado de S. Paulo, Gabrielli replied saying that Dilma was one of the board members and shared the same responsibility in the purchase. This was at least what O Estado de S. Paulo put in the headlines. I read the whole interview and could see Gabrielli saying the purchase was totally in acceptance with the 2006's context. But the contradiction surely was enough to be replicated by Folha de S. Paulo and O Globo on their monday editions.

Dilma vote intentions keep falling as rumors of Lula's return arise

Ricardo Noblat, columnist for O Globo wrote this monday that Lula and Dilma are waging a secret battle for the right to be the Workers' Party (PT) next candidate to the elections this year. According to Noblat, Lula has always envisioned coming back to the presidential seat (no matter how many times he declared he was done with it)  and that was why he chose Dilma to be his successor, a political nobody until 2011 when she started appearing next to Lula in big cerimonies.

But now that Dilma has become used with power, Lula would have a hard time dissuading her from her rightful reelection, unless she keeps going down the vote intention polls, which is precisely what we are seeing in this year. Last saturday Datafolha (the research institute from Folha de S. Paulo) showed the vote intentions for Dilma went down to 38% from 44% on the previous poll, in a scenario where Aecio Neves (PSDB senator) and Eduardo Campos (PSB, and currently governor of the state of Pernambuco) would be the president's main challengers.

André Vargas asked for a removal from the vice-presidency
of the Chamber of Deputies after complaints

Truth or not, it seems the situation is getting worse to Dilma every week. Last week Globo Television showed PT deputy André Vargas (that until this monday occupied the vice-presidency of the Camber of Deputies) in what it seemed to be a  lobbying negotiation with a convicted money dealer, Alberto Youssef. The investigation started after Vargas was getting a ride on Youssef private jet. This monday, Vargas asked for a 60 removal from his position as vice-president.

In the World Cup front, the news are not positive also. In Rio, an union from the workers of the constructing business started a strike and stopped the already delayed work for the World Cup and the Olympic Games this monday. In São Paulo the work in the World Cup stadium were stopped last month after the third death of a construction worker on the site. The stadium may be inaugurated in the end of this month.

Bad news for Dilma were again good news for the market. This monday, following the wave of popularity decrease the dolar hit a five month low against the real. Economists heard by O Estado de S. Paulo interpreted this as a sign that investors see a chance of change for better in the Brazilian government -- in a similar reaction to what happened when the president suffer a popularity decrease. Of course the market may be also responding to the 25 basis points increase on the country's interest rates decided by the Brazilian Central Bank on april 3rd.

Dilma's popularity falls, stock market goes up

Last week Dilma's popularity fell considerably. The percentage of people that evaluate positively her government dropped from 43% to 36% during the first quarter of the year. The survey news were picked up by the major newspapers in the country, namely O Globo and Folha de S. Paulo. Latter both newspapers said the slip in the president's approval (that means Dilma's reelection is under threat) was welcomed by the market, given the valuation of the national currency and the positive closure of the São Paulo stock exchange.

Stories about the 50 years of the military coup d'etat continued to be featured in the media. This monday, Dilma Rousseff, herself a victim of torture during the militar dictatorship period, defended the amnesty law (that basically prevented the conviction of military personnel involved in the dictatorship crimes, and was being questioned by the Bar in Brazil). Her past as a leftist militant is a trump she is likely to use again during the campaign. In her speech she addressed the two former presidents both also opponents from the dictatorship: Fernando Henrique Cardoso, whom she called an exiled, and Lula, whom she called a union leader. 

"I don't deserve to be raped", photos like
this were on social media to fight sexism

Dilma also used the internet on monday to address a victim of today's Brazil reminiscent conservatives, the journalist Nana Queiroz, that started last week a social media movement to raise awareness to a survey that showed 65% of Brazilian people believe a woman that has been raped deserved to be so either because she behaved or dressed inappropriately. Nana took a picture naked from the waste up, covering her breasts with a poster saying: I don't deserve to be raped. The campaign went viral, with several women adhering, and taking similar pictures. The problem was that Nana received several threats both from men and women, and decided to remove her page from Facebook. Using her Twitter, Dilma said Nana deserve respect and solidarity.

If in the dictatorship's speech and in the latter social media manifestations Dilma did good, the president's performance on the economic front continues to disappoint. The latest forecasts for inflation, featured in Folha de S. Paulo this Tuesday shows a 40% chance of the price index finishing the year above its 6,5% ceiling. It would be the first time this would happen since 2003, and a very bad sign for a government looking to win back the market. O Globo also featured another Achilles' heel of Dilma, the investigation over corruption in Petrobras, the big oil state company. The preliminary investigations from the company showed no sign of corruption in one of the two cases, the dutch platform supplier SBM bribe to Petrobras employees. 

Brazil ensures net neutrality

After years of discussion and six months being discussed as an urgent subject in the Brazilian Chamber of Deputies, the set of laws regulating the internet (known as the civil landmark of internet) was approved this Tuesday. The law still has to be approved by the senate, where the government has a more comfortable position. Its approval means the president was able to control the allies rebellion and also puts Brazil on the map of an international discussion over the issue of network neutrality (that has been opposing Internet Service Providers, as the Telecom companies, and Internet Companies, such as Google).

Activists celebrate the approval of the internet law
that ensures net neutrality in Brazil

Folha de S. Paulo front page today was about the law passing. The newspaper said it puts Brazil in the vanguard of the internet, calling the law a "constitution" of the internet. It mentions, though, that the text changed after the lobby of Google to remove the determination to nationalize data centers for all the business conducted in Brazil  -- which would impose that all virtual services had a local server in Brazil. This demand was not on the original project and was put in the text after the NSA scandal broke the news. It was supposed a political statement from Brazil, against the American surveillance.

O Globo said the law puts Brazil in the vanguard of the internet. The newspaper front page, though gave more space to the scandal on Petrobras, which just had one of its former directors, Paulo Roberto Costa, arrested because of a overpriced purchase of a refinery in Pasadena. The president of Petrobras, Maria das Graças Foster gave an exclusive interview for O Globo and stated it will investigate thoroughly the issue.

On the economic ground both newspapers also mentioned the reaction after Brazil had its national rating cut by Standard & Poor's. Contrarily to what might be expected the stock market and the currency reacted positively, because the market have already taken into account such measure from the rating agency.

Finally to complete the subjects covered in the media last week, the proximity of the 50 years of the military coup in Brazil motivated a series os special reports on the main media. Folha de S. Paulo again made a multimedia rich, Snowfall-like, special report on the military dictatorship, which is very interesting. The newspaper covers the whole process that led to the coup, trying also to put in context the role of the Brazilian left at that time, which was also fighting for its own revolution. The story also pointed out to the unsettled case of the amnesty to military torturers and brings the transcriptions of the US ambassador and presidents John Kennedy and Lyndon Johnson, both supporting the military coup. O Globo is publishing during this week a series of stories about the coup.

Dilma faces turmoils as election agenda gains the media

President Dilma inducted six ministers this Monday,
two of them were nominated to make amends with PMDB

From now on no news on the politics section is unrelated with the election for presidents, governors, deputies and senators on october. Every announcement, every quote from a political personality has now a direct reference to the dispute between Dilma and so far the two other possible candidates (Eduardo Campos from PSB and Aécio Neves from PSDB).

The electoral tone was all over two stories that represented a downturn to Dilma on the last couple of weeks: the mess in the energy sector and the dispute with PMDB, the major allied party of Dilma. In the first case, Rui Falcão, president of PT (Worker's Party, the PT of Dilma) declared that PMDB was only interested in positions in the government and not as much in reaching the greater good for the country. Eduardo Cunha, the leading deputy of PMDB in the Congress started a rebellion and threatened to go against some of the most important projects of the government such as the Marco Civil da Internet (the Civil Landmark of the Internet -- a set of rules for the internet business in the country), due to be voted this week.

Initially Dilma tried to ignore the opposition inside her own allied base. But after realizing the power of the unpleased allies she decided to nominate two of PMDB approved names for the ministrers of Agriculture and Tourism. Ironically the crisis that started with a critic of the PMDB greediness for positions inside the government is being solved by providing PMDB with positions in the government.

Another setback for Dilma was in the energy area. Briefly put, the government decided to anticipate the end of some of the energy contracts last year (this way provoking a cut in the energy prices for the end consumer, that would represent a discount of 28% for residential users). The project backfired as it stimulated energy consumption in a time of the year where the hydroelectric dams were not getting as much rain as in the previous years. This forced the electric system to turn on the thermoelectric plants that are more expensive. In order to keep its promise of a cheaper energy, the government decided to subsidize the energy bill by putting billions to pay the extra cost of thermoelectric energy. After denying for several weeks that that was a crisis in the sector, the government decided to acknowledge the problem and promised to not interfere in future contracts at the same time it waved with a tax increase to cover the future costs of the more expensive energy. It was one perfect example of how not to manage a country, given by a president that sold an image of a great manager in the energy department.

Both situations show how bad the current government, and I would dare to say the current president, deal with this sort of conflicts. When faced with a situation where there is a need for negotiation the government usually try to impose itself first and end up being obliged to step back and offer a much more costly and inefficient solution in the end.

Street-sweepers' strike and racism in Brazil

One of the most relevant news in this year's Carnival was the street-sweepers strike in Rio de Janeiro. Even after the union of street-sweepers reached a deal with the city hall in the middle of the celebration, part of the workers disagreed and refused to clean the streets, as millions danced samba and produced tons of garbage.

The dissident workers said the union leaders were not looking for their peers best interest and decided to continue with the strike. After eight days, they conquered a 37% increase in their salary on a meeting with the city government on saturday (March 8th), a much better result than the 9% the
union agreed on monday (March 3rd).

The episode shows two sides of the Brazil's social inequality. First, the vulnerable representation such workers have. The difference between the salary raise the union leaders agreed upon (9%) and the final result after the dissidents protests (37%) shows how union leaders and politicians worked in collusion against the street-sweepers best interest.

On top, doctors (mostly white) protest
against the government last yer.
Below: street-sweepers (mostly black)
on strike in Rio

The second aspect relates to the racial inequalities in the country. The street-sweepers strike showed clearly a vast majority of  black workers. This contrasts with the predominance of white doctors that protested last year against the government, against the program that import physicians from Cuba and other foreign countries. The striking difference of the images was shared this past week in social media, reminding one of the hidden faces of the Brazilian racism, that is usually hidden under social inequalities.

Next week I'll come back to the business, financial and political commentaries. For the time being, it worths saying in this matter that Dilma Rousseff is dealing with a rebellion from her allies. The biggest party that composes the situation coalition, PMDB, is threatening to retreat its support after the Rui Falcão, president of the Workers' Party (PT, Dilma's party), said during the Carnival that all that PMDB's members want are more ministries and government positions. The real reasons for PMDB moves are abundant and for sure are not related solely to Falcão's declaration -- hopefully I'll be able to address some of them here next week. For now, both parties are now trying to mend the alliance that will be crucial in this election year.

World Cup: 100 days to go

This tuesday marked the 100 day countdown to the 2014 World Cup. It is really an interesting coincidence that this event that fueled the protests of last year reaches this symbolic milestone now, as millions of people are occupying the streets of Brazil -- just this time for a different reason: to celebrate the Carnival. 

[If the tranquility of the Carnival mass celebration, in clear opposition to the violence of the protests, may strike you as a contradiction bear in mind two things. First  the Carnival is a people's party, so it may be seen as opposed to the opulent stadiums built for the benefit of a few. Another hypothesis is that the Carnival is the moment when the "silent majority" that actually disapproves violence in the protests (as seen through the Data Folha survey) actually comes to the street. These are at least two reasons I could think of.]

In Rio, millions celebrated the Carnival,
that had no reports of protests

Both O Globo and Folha de S. Paulo dedicated different stories to the landmark towards the World Cup. Just O Globo put with all the letters that the event is dividing the country. In a beautifully written article published on the sports section, the newspaper interviews two former players from the Brazil football (I'll always mean soccer by that) team with distinct visions of the World Cup and its meanings. The text start by saying that so far the sole legacy from the event are the protests and calls this 100 days journey as a journey to self discovery. 

Folha decided to approach the event with a different strategy. In the Economics section, the newspaper talked about the inflated prices in hotel rooms and how they are driving an increase in temporary rents from people that own houses near the stadiums that will host the event -- an american tourist paid US$ 1,640 for renting a three bedroom apartment near the stadium of Porto Alegre, more than what could be earned in a whole month in the area. In another related article it also says that the hotels in the cities that are just serving as training sites for the football teams are not receiving much reservation from tourists. 

The controversial part of the tournament was raised by the OpEd section in an article signed by Ronaldo Nazario (Ronaldinho), a member of the committee in charge of organizing the World Cup. The former Brazil forward plays defense on the text, saying the US$ 3.4 billion investment on the stadiums since 2007 were not much compared to the  US$ 323 billion spent on health care in the same period. "Brazil is progressing a lot, in social and economical terms, and has been correcting the inequalities in the recent years. We need to keep pursuing a better country. This final is played every two years in october and not in july", says Ronaldo calling protesters to express their dissatisfaction in the ballots and not inside or outside the stadiums.

Dilma is still ahead in election poll

Even with all the protests, president Dilma would be elected in the first round of the presidential elections this year, according to the latest survey from Datafolha published this sunday. Dilma ranks first with 43% to 47% of the votes in different scenarios with different competitors, making more than the sum of all the other candidates for president. The result points to a stable perspective from the last evaluation of Dilma electoral performance and according to Folha analysis means that it is Dilma that should run as a candidate for PT (the Worker's Party) and not former president Lula. This was received as good news to the government because it shows that president Dilma's popularity recovered from the past results on october lat year when her vote intention was in 42%.

Dilma will face the challenge of keeping the economy
growing while avoiding inflation

In spite of the good numbers, Dilma still has some challenges ahead. Her negative evaluation went up from the previous survey, showing that her current popularity might fall in the future. The risks with the economy downturn (with the current strategy from the Central Bank to reduce the economic growth in order to control inflation) and the possible negative impacts of protests in the World Cup may force a second round of the elections in the end of October.

Former president Fernando Henrique Cardoso, from the social democrat party (PSDB), the biggest rival of PT, bets against Dilma in an interview published this weekend in El País Brasil, given to my former  boss Carla Jimenez and to Luis Prados. Cardoso makes an interesting diagnosis of the current state of affairs in Brazil: PT has lost the momentum to carry on the reforms when the country faced a window of opportunity -- as a matter of fact, the government never saw it as a window of opportunity but rather as a permanent state that, as we all know, already passed. He says, though, that if it was not the case that the country was as good as international investors thought it was in the past, it is not as bad as they think now. He claims we need a better positioning in Latin American politics (which now has an all new economic bloc: the Pacific Alliance) and expects the current dissatisfaction now common in the middle class and businessmen will be also passed on to the greater part of the population as the campaign goes on.

Protests
Enough with politics. Now back to the protests. This weekend a new set of protests against the World Cup and now the new wave of hikes in the bus tariff (that should happen in all major capitals by the end of the year) has again ended in violence. This time the controversial attitudes came out of São Paulo police and its new "ninja force"(policemen that know their ways in martial arts, and carry no guns) when they started to arrest and remove protesters based only in suspicions -- this was criticized by some lawyers because it would go against Brazilian Constitution that only allows police to act based on facts. Five journalists were taken down by these same policemen, carried out of the protests and later let go when the Police chief found out they were working to cover the protests. Among them was my former O Globo colleague and friend, Sergio Roxo. Interesting enough, as Roxo wrote in O Globo, the the protest in São Paulo ended with 6 injured people, among them 4 cops, one of which broke his arm while trying to immobilize a protester.

Press versus Black Blocs

Since the protests started on june 2013, the press has been a target of some of the revolted young people. Last week, after the journalist from TV Bandeirantes, Santiago Andrade, died on consequence of a firework explosion detonated by one of the Black Bloc protesters, this confront was more than evident. On one side we had still some of the same voices (that supported the violence of Black Blocs from the beginning) trying to downsize the meaning of the death, at the same time we had somewhat an overreaction on part of the media.

Before going further on this issue it is necessary to clarify somethings. The press has always been in the radar of leftist movement's critic in Brazil. And it is not without any reason: part of Brazilian press supported the military cup of 1964 (namely through the work of a liberal journalist called Carlos Lacerda, that latter turned against the regime) and a greater part just omitted the critic to the regime in order to keep running. Globo Television is seeing as a member of the later, especially after they called a immense manifestation for the direct presidential election as a commemoration of the city of São Paulo's anniversary. 

This is on the roots of the anger against the media. At almost all the manifestations and protests I covered at some point I could hear protesters shouting: "Fora Rede Globo, o povo não é bobo"(something like "Go away Globo Network, people are not stupid"). Not surprisingly protesters attacked reporters from day one, but maybe because the violence coming from the police was bigger (with a photographer losing the vision of one of his eyes due to a rubber bullet), the press focused its attention to the violence from the police. Latter, namely in Rio, O Globo started covering more closely the actions of Black Blocks that managed to remove the multitudes of protesters from the streets through their violence (the phrase if from a musical producer from Rio, I just borrowed). 

This week main TV news shows devoted a lot of time to give a proper dimension of Santiago's death, and ask for Justice (16 minutes in Jornal Nacional, of Globo TV, and 15 minutes in the Jornal da Band, of the Bandeirantes television, where Santiago worked). The two young Black Blocs responsible for the death were quickly arrested, in Brasilia, deputies were quick in drafting laws against protests, from an intelligent one that typifies the crime of disorder (allowing the police to actually remove people with rocks and dangerous behaviors from the protests, something they couldn't do due to a gap in legislation) to extremely dangerous ones, such as the one that relates protests to terrorist activity. 

That's not part of the overreaction, yet. For me, the overreaction came with the attempt of putting the decentralized group of the Black Blocs as part of a leftist movement aimed to create chaos on the verge of the World Cup. Newspapers quickly assumed, basing on vague an unconfirmed declarations, that the Black Blocs were connected to PSOL (a leftist party, that is very active in the protests) and quickly connected them with a Rio deputy, Marcelo Freixo.

The press steps back
Today, on their sunday edition, both Folha de S. Paulo, and part of O Globo, acknowledge part of the overreaction, which is a good thing. Folha devotes a full page to understand the movements behind the protests, and differentiate leftist, anarchist and other independent social movements from the Black Blocs. Folha also ran a survey in Rio that shows that more than 70% of the people still supports the protests, event almost 100% (I believe 98% or so) are against any act of violence from protesters and the police. Stories about the need to train better the police also were published during the week, which is also aiming to the correct direction.

The impression I get, looking from a big distance, is that finally the Black Bloc has lost its momentum. The group seduced part of young people that don't see any chance of manifesting themselves in the country's democracy, as correctly pointed out Vladimir Safatle, on Globo News this week. It is not the case that the country has no means of participating, we actually have a lot of institutionalized ways of participating, but they are opaque to the vast majority of the population. In the roots of this problem is the traditional lack of political participation among the whole population and the huge disbelief in the political parties (a disbelief that is more or less occurring also in developed countries). 

Some ponderations

Ramona Rodriguez, cuban doctor asked for
political refuge in Brazil this week

There are two things that upset me about the media and social media coverage in Brazil. On the one hand, mainstream media often is too critical and lacks a bit of context on the government decision. This, on the other hand, leads people on social media to call the whole media conservatives and fuel protesters to physically harm journalist (as this week was seen with the TV Bandeirantes cameraman hit by a bomb).

Over the past two weeks I've seen examples on both sides of this sort of thing. Two weeks ago, TV show Manhattan Connection interviewed Luiza Trajano, owner of one of the biggest store chains in Brazil, Magazine Luiza. One of the journalists, Diogo Mainardi, speaking directly from Italy where he now lives, was saying Ms. Trajano that her sector was living a crisis. She repeatedly said that was not the case, but he insisted and then she showed him the actual numbers, that were showing an increase in sales at the end of last year. 

The stress of negative points on Business journalism is something the Brazilian press does more often than we think. This is why the Central Bank disregarded the press criticism when it first cut down the interest rates. At that time it was the right thing to do, and it worked. Maybe if the press weren't so over critic, the government would listen to it more often, and maybe it would avoid the current stagflation we are facing. 

The other example occurred this week. When a great set of bad news for the government rightfully gained the newspapers. Let’s start from the beginning. A blackout (I believe the third of its kind), reached most of the country on Tuesday followed by the request for political refugee from a Cuban doctor, part of the government program (one of the many inspired by Hugo Chávez, due to its political profits in terms of votes) Mais Médicos (more doctors), and the arrest of Henrique Pizzolato, former executive of Banco do Brazil and member of the Workers Party in Italy. Immediately, bloggers and government supporters went out to say that the blackout was an isolated event (it always is), that the cuban doctor is just one among 7,400 others who are doing their jobs and so on.  It's sad to see that the same flaws are repeating, and that apparently they are not seen as a problem to some supporters of the government. 

This pretty much resumes the events of the past two weeks, I wish I could have written in more depth of all of them, but time is short in this year. Hopefully from now on the weekly posting will continue. 

A youth longing for opportunities and an economy needing more qualified workers

Jefferson Luís, creator of one of the "rolezinhos" 

After reading some more about the "rolezinhos" phenomena I have to acknowledge an error in my previous post. As it seems and as some more protests in favor of the initial movements showed throughout this week, the initial events were not intentioned to raise some level of theft. They were instead just meetings from teenagers that long for more spaces of socialization, and that too like the safe and fresh environment of the country's biggest shopping centers.

It is true that Brazil's shoppings often stand out as an immense contradiction even when compared to their surroundings. Particularly on the one shopping in São Paulo (the Shopping Metro Tatuapé) that hosted one of the rolezinhos, there is a considerable contrast between the security inside and outside the building. It is one of the many contradictions that still persist in Brazil as I pointed out during this week. Today O Globo has a story about movements this time made to support the rolezinhos.

Newspapers were also not short of articles trying to understand the phenomena, listed by sociologists heard by O Globo as a protest of an apolitical youth that also want to be included in the consuming society. During the week one of the organizers from the movements, 20 year old Jefferson Luís, was interviewed by O Globo, O Estado de S. Paulo, TV Record, G1  and Vice websites. Working as a full time helper in a company on Guarulhos, on the metropolitan region of São Paulo, Jefferson is a funk singer that has 2.5 thousand Facebook followers and wanted just to have a good time with his friends in a shopping, but things got out of control.  El País Brazil also posted a nice article underlining the meaning of the rolezinhos and how poor young people in Brazil are constantly mistreated.

The three biggest Brazilian newspapers all came with different cover stories this Sunday. O Globo and O Estado de S. Paulo with more economic stories, the first bringing to attention the lack of intermediate qualified workers in Brazil which contradictory as it seems forces industries to hire more qualified technicians and graduated workers to execute simpler tasks and the second showing how the 23 billion tax benefits conceded by the Federal Government for automakers has undermined local governments to pay their expenses.

Folha de S. Paulo on the other hand explored the political side of the 2014 World Cup in yet another scandal: a 870 million reals bill that local governments payed for the event, that should, by contract, be paid by the Brazilian Fifa's subsidiary.

Country's economy will be highlighted this week
It will be the first time Dilma will attend Davos as a president. In another effort to reduce the malaise between the government and the rating agencies, the president is supposed to address markets to show the existing opportunities in investing in infrastructure in Brazil. All of this one week after Brazil's Central bank raised interest rates from 10% to 10,5% a year. It seems the government decided to be serious about the economy in the beginning of the electoral year.

"Rolezinho" and the Maranhão prison massacre

Warning in Iguatemi Shopping in a high class
neighborhood: protesters will bi fined 

The past week was a reminder of the immense inequalities existent still in Brazil -- despite the recent advances in income distribution and the low unemployment in the country. In São Paulo the "rolezinhos" -- Facebook events that started being created last december by periphery teenagers set to take place in big shopping centers intended to protest, create chaos and some level of theft -- aroused a reaction from the companies. After some discussion whether it would be legal to oppress the protesters, finally the main shopping centers were granted a justice injunction that allowed them to make a security check in every visitor and also the police to curb the events and fine in 10,000 Brazilian reals whoever is joining the movement. 

In the periphery slang "rolezinho" could be translated as a small hang out, which is ironic since one of the first rolezinhos gathered more than 6 thousand people in the Itaquera Shopping in the east zone of São Paulo. For me, this phenomenon is really interesting as it points out that social media is becoming a sort of political arm also for youngsters from the periphery, and not only the middle class. 

A worst reminder of how deep and critical is the current situation occurred on tuesdeay, when Folha de S. Paulo website published a video in which  three prisoners were decapitated (the scenes are extremely violent) int the Pedrinhas prison, located in the  Maranhão state, North of Brazil. Since december, 62 prisoners were killed in the institution, mainly in protests concerning the overpopulation of the prison. 

This instantly opened up a discussion about Brazil's prison system. The federal government immediately launched a plan to move prisoners and try to revert the crisis.  This also poses a doubts  about the future alliances for the election since Maranhão is basically a feud from the Sarney family (José Sarney, a former Brazil's president,  is a senator from the neighbor Amapá State and his daughter, Roseana Sarney is currently Maranhão's governor) and José Sarney is the main leader of the biggest situation party, PMDB.We are still about to see what will come out of this.  

2014 predictions and expectations

This year is definitely a big year for Brazil. The country will host the World Cup after 54 years, there is a presidential election coming and a lot of expectations on whether the last year protests are going to repeat or not. I wouldn't say there is a turmoil or volatile environment in the country right now. I'd put it more like a feeling that people are longing for change.

There is surely a notion now widespread that the country lost a lot of opportunities in attracting foreign investment when it was abundant and when Brazil was Latin America's darling. This feeling was long ago vented by more orthodox economists when president Dilma begun to fight the high interest rates. A fight which she has been defeated last year.

Now it seems that the pessimism is a consensus. We should not grow in 2014 more than the expected 2.3% that we should achieve in 2013. The government expenditures are likely to rise in an election year, bringing together the inflation rates. The reforms and changes long needed to attract investment and improve the education, judicial, political and health care systems will be once again delayed and we will be left with more and more demands for the next president or the next Dilma Rousseff's term in power.

The forecasts aren't necessarily gloom but neither they are exciting. It seems the country is running on auto pilot. I believe former president Fernando Henrique Cardoso, in an article for O Globo, captured the right needs for the country right now. It is mandatory that we increase productivity, that we establish new and strategic free trade treaties with countries that are recovering economically, such as the United States, and struggle to maintain Brazil's importance over South America. The Worker's Party ideology played a major role, says Cardoso, in delaying this pragmatic move towards market integration and foreign investment attraction.

I agree with that in general. Brazil is likely to be stuck in the current level of development and income if it doesn't invest in education and improve the tools for private investment. Ideology has been the worst enemy of our economic policy the last few years, this is true. There are somethings, though, that deserve consideration and contextualization.

Personally I believe that the Worker's Party experience through Lula's two consecutive terms as a president gave the impression that the government lost the chance to grow bigger, and to increase the national power of Brazilian companies. The main point at the time was the sense that during the crisis, the country bended once again to the financial markets (mostly responsible for the crisis itself) and increased the interest rates was the wrong move. I heard more than once from economists to politicians that the country, back in 2008, had lost a window of opportunity to slice interest rates to international levels.

This certainly changed with Dilma. The president aimed straight to the interest rates and had the feeling she won the battle. In 2011, the first year of decreases, inflation was kept down, and the financial system survived. There wasn't a huge increase in the families debt and the economy kept running. But when inflation eventually came, the government refused to take a step back and allow for a spike in interest rates. It rather took a different, non-conventional, path, decreasing taxes for specific sectors. This was the first "hubris" mistake I would say Dilma has learned the hardest way last year.

Another thing that changed during Dilma's office was the privatization. Since the privatization of state companies during the Fernando Henrique Cardoso term, there were a lot of opposition against the private initiative in Brazil. This is not at all unjustified. The first auctions of public goods privileged the price the companies would pay for the government instead of the price they would charge their customers for their services. This created a lot of aversion to this model of administration as winning companies charged higher fares for their services. Under the Lula's government some roads were auctioned following the exact opposite model (privileging customer's fares rather than the government prize) but this also had the inconvenience of making it difficult for companies to fulfill their investment commitments (specially under Brazilian bureaucracy) and was also rejected as a model.

Dilma had then the mission to change the model, offering the best of the two worlds: a fair price for the users of the conceded services and the guarantee that the investments were to be made. The word privatization was never again used, after Cardoso's term, and was substituted for concession, which should mean that the government would still have a regulating power and would be ultimately the owner of the public good. A lot of discussion was made on the return that the market required for the investments (considered in the beginning to high on the part of the government and too low on the part of the market). Another topic was the know-how requirement for the companies that would take part on the auctions. After first big airport concession in São Paulo, Brasília and Belo Horizonte, where some of the winners didn't have a lot of experience with busy and huge airports the rules of auctions were also changed.

Making a long story short, all of this contributed for the delays on the auctions. While there were some unpredictable things (considering that the government was also learning from the process), the ideology played also a major role here. If the government had been less tough in her first concern that private companies were demanding too much return for their investment, perhaps the auctions would have occurred during a time Brazil was still attracting foreign investment. The long discussion and the indefinition made the country fold when it had the best hand.

Both the notion that inflation should be a higher concern than low interest rates at all costs, and that there is a serious need to make the private concessions happen are in the speech of Ministry of the Presidential Chief of Staff, Minister Gleisi Hoffmann today on an interview to Folha de S. Paulo.

What to expect, then, from this very busy year? I believe there will be some building up of the Brazilian stock markets (though this is more a hope than a prediction) after the tragedy of 2013 and hopefully the World Cup will happen without major problems, but not without protests (there is a big one already scheduled for january 25th, called "No World Cup"). The doubt is over the presidential election and the next year. If the elections were today, Dilma would win. The big question in this case would be whether she would be committed more to an ideological administration than to the pragmatism that I believe is needed right now for the country.