Download Brazil News Digest – An Essential Recap

Brazil News Digest – An Essential Recap
February 27 - March 13, 2014
By Shawn Simpson
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Two Weeks in One Paragraph
The Government of Brazil reported a narrower budget surplus than markets
expected for January. The smaller surplus signals a weak start for the GoB’s efforts
to boost savings at a time when investors and credit agencies are closely monitoring
Brazil’s fiscal developments. Brazil also posted a $2.1 billion trade deficit – the
largest for the month of February in 20 years. On a positive note, Central Bank
President Tombini reported that portfolio and foreign direct investment inflows
remain strong – helping alleviate the growing trade deficit. Petrobras raised $8.5
billion earlier this week from the sale of overseas bonds as it continues to raise
capital to develop Brazil’s vast offshore oil reserves. However, it was also reported
that Petrobras has been fined $3.7 billion for tax irregularities. The GoB said that it
plans to partially cover extra energy costs - the result of a continued drought through payments to power distributors with the difference being made up through
an increase in rates to consumers. Brazilian Defense Minister Celso Amorim
announced plans for Brazil to build an aircraft carrier with a still undisclosed
foreign partner. Dilma said that The Union of South American Nations (UNASUT)
would send a mission to help support a restoration of political stability in Venezuela.
On the domestic front, a rift between Dilma and her coalition allies widened.
Economy and Finance
Brazil's narrower budget surplus raises doubts about 2014 goal
Feb. 28- Brazil's consolidated primary budget surplus narrowed in January from a
year ago, marking a weak start for the government's effort to boost savings and
regain credibility with investors this year. The primary budget surplus, which
represents the public sector's net revenues over expenditures before debt payments,
totaled 19.921 billion reais ($8.53 billion) in January, down from a surplus of 30.251
billion reais in the same month last year. The markets had expected a surplus of 21.2
billion reais in January. The Brazilian government's budget is undergoing close
scrutiny from investors after President Dilma Rousseff promised to rein in public
spending to avoid a downgrade by credit ratings agency Standard & Poor's. Earlier
on Friday, the central government posted a primary budget surplus of 12.954 billion
reais ($5.55 billion) in January, narrower than the December surplus of 14.5 billion
reais. The central government result includes federal ministries, the central bank
and the social security system. -- Full Article via Reuters
Brazil's Central Bank Says Inflation Pressures Remain
Mar. 6- Inflationary pressures continue to concern Brazil's central bank, despite
slower price increases in some areas, according to the minutes of its last monetarypolicy meeting, published Thursday. Since the start of 2013, the central bank has
raised the benchmark Selic rate at eight-consecutive meetings of the monetarypolicy committee, from 7.25% to the current level of 10.75%. Last week's increase
was a quarter point, and the previous six increases were a half point. Given the
current scenario, further adjustments to monetary policy could be appropriate,
according to the minutes, repeating language from previous minutes. The effects of
the eight rate increases on inflation are cumulative and uneven, the bank said in
language added to the minutes since the previous meeting. --Full Article via Wall
Street Journal
Brazil Swap Rates Rise After Central Bank Minutes as Real Gains
Mar. 6- Brazil’s swap rates climbed after the central bank signaled in minutes of its
last meeting that it would keep raising borrowing costs to curb inflation. Swap rates
on contracts due in January 2017 rose eight basis points, or 0.08 percentage point.
“The minutes show there will be a change of 0.25 percentage point in the next
meeting,” Solange Srour, the chief economist at ARX Investimentos in Rio de Janeiro,
said in a phone interview. “It showed that there still are concerns regarding
inflation.” The central bank said in minutes published today that it considers “the
continuation of the adjustment of monetary conditions under way” to be
appropriate. Policy makers lifted the target rate by 25 basis points last month after
six straight increases of a half-percentage point. -- Full Article via Bloomberg
S&P to meet high-ranking Brazil officials to analyze policies
Mar. 7- Standard & Poor's sovereign ratings director Lisa Schineller will meet highranking Brazilian government officials next week to evaluate the country's
macroeconomic policies. The meetings, which include visits with Finance Minister
Guido Mantega and central bank chief Alexandre Tombini, come as Brazil works to
allay concerns among S&P and other ratings agencies that its public finances have
taken a turn for the worse in recent years. S&P last year placed a negative outlook
on its rating for Brazil, raising fears among investors, local business people and
Brazilian officials that it and other ratings agencies could downgrade the country's
ratings. Schineller will meet with representatives of the private sector on Monday,
Tuesday and Wednesday, the sources said, before speaking with Mantega and
Tombini Thursday and Friday. Both officials are expected to stress the government's
commitment to fiscal discipline and inflation targets. The meetings are expected to
play a crucial role in whether S&P decides to lower Brazil's rating. --Full Article via
Reuters
Brazil Economists Lower Selic Forecast for Second Straight Week
Mar. 11- Brazil economists cut their 2014 key interest rate forecast for the second
straight week, as 350 basis points in borrowing cost increases since last year
threaten to undermine growth. Brazil’s central bank will lift the benchmark Selic to
11 percent this year, compared with analysts’ estimates of 11.13 percent last week
and 11.25 percent two weeks ago, according to the March 7 central bank survey of
about 100 economists published today. President Dilma Rousseff’s administration is
combating prospects of faster inflation and slower growth. While the economy
expanded more than analysts’ estimates in the fourth quarter, both consumer and
industrial confidence remain low. Economists in this week’s central bank survey cut
their 2014 growth projections to 1.68 percent. That’s down from 1.70 percent last
week and 1.90 percent a month ago. Brazil’s gross domestic product gained 2.3
percent in 2013. That compares with 1 percent growth in 2012 and 2.7 percent
expansion in 2011. Brazil’s central bank board considers “appropriate the
continuation of the adjustments of monetary conditions under way,” according to
the minutes to its Feb. 25-26 meeting released on March 6. Officials also reiterated
that monetary policy has a delayed effect on inflation. -- Full Article via Bloomberg
Brazil industrial output rises 2.9 pct in Jan from Dec
Mar. 11-Industrial production in Brazil rose 2.9 percent in January from December,
government statistics agency IBGE said. Production had been expected to rise 2.5
percent, according to the median estimate of 31 analysts in a Reuters survey.
Forecasts for the increase ranged from 1 percent to 3.2 percent. January's industrial
production shrank 2.4 percent from a year earlier, while the median estimate in the
Reuters survey pointed to a 3.4 percent drop. Estimates for the decline ranged from
1.5 percent to 5 percent. Full Article via Reuters
Brazil auto production jumps in February, sales lag
Mar. 11- Motor vehicle production in Brazil surged in February after auto workers
returned from vacations, though production so far this year remains below levels
seen in 2013 as growth in Latin America's largest economy lags. Auto production
rose 18.7 percent in February from January after having risen 2.9 percent in the
previous month, according to data released on Tuesday by Brazil's automakers'
association Anfavea. Accumulated production in the first two months of the year
was down 2.7 percent from the same period a year ago. Automobile sales dropped
17 percent in February from January after having fallen 11.7 percent in the previous
month, Anfavea said. --Full Article via MSN Money
Brazilian President Dilma Rousseff’s First Term Revisited: Economically,
Nothing To Be Proud Of
Mar. 11- (excerpt from a piece critical of Dilma’s economic policy)“Brazil’s President
Dilma Rousseff is facing tough times. With a presidential election later this year,
both the government and independent economists are taking a hard look at how her
term panned out for the country -- and it's not looking very good. Rousseff inherited
the country's leadership from her mentor, fellow leftist Luiz Inácio (Lula) da Silva of
the Workers Party. In his two terms (2003-2011), Lula pulled Brazil from
developing nation to all-around emerging market star. During his mandate, Brazil’s
GDP grew in spurts, including an 8 percent jump in 2010. South America's largest
economy managed to skirt the global financial crisis, and his administration rolled
out successful social programs, like the signature Bolsa Família which provided
income to poor families, making Lula one of the most popular leaders in Brazil's
history. While Rousseff has maintained popularity in line with her predecessor's,
figures show that during her tenure Brazil has entered an economic rut. Growth has
been slower, inflation higher, and, for the first time in decades, Brazilians rose in a
street upheaval that rocked the nation in 2013...” - Full Article via International
Business Times
Brazil’s Stimulus May Not Be Sustainable, Fraga Says
Mar. 12- The Brazilian government’s mix of economic-stimulus programs are
inflationary and probably can’t last, according to former central bank President
Arminio Fraga. “The policy mix now in place may not be sustainable,” said Fraga, the
founder of hedge fund and private-equity firm Gavea Investimentos Ltda., which
was bought by JPMorgan Chase & Co.’s Highbridge Capital Management unit in 2010.
Since the 2008 financial crisis, President Dilma Rousseff’s administration has tried
to boost demand by “pumping credit,” with state-owned banks playing “a very
important role,” Fraga said in an interview in Rio de Janeiro, adding that the central
bank aggressively lowered interest rates even without low or stable inflation. “That
came back with a vengeance,” said Fraga, who is advising Aecio Neves, the likely
opposition candidate facing Rousseff in the Oct. 5 presidential election. -- Full Article
via Bloomberg
Investment inflow in Brazil remain strong, says central banker Tombini
Mar. 13- Investment inflows into Brazil remain “strong” so far in March, central
bank president Alexandre Tombini said on Wednesday, adding that 9.2 billion
dollars entered the country in the form of portfolio and foreign direct investments
in February. Tombini told attendants at an event in São Paulo sponsored by
Goldman Sachs Group Inc that the pace of Brazil's economic expansion this year
should be similar to 2013's growth rate. He said that the impact of monetary policy
is “cumulative” and “comes with a lag time,” adding policies at the current moment
must stay “especially vigilant” of inflation. Steady foreign investment has helped
cover Brazil's growing current account deficit, alleviating pressure on the foreign
exchange market. Brazil's trade deficit has increased recently as the appetite for
imports, especially fuel, remains strong and overseas trips by Brazilian tourists
taking advantage of a still strong currency. Rising interests rates have made Brazil
more attractive to foreign investors by offering a higher return. The central bank is
widely expected to raise its benchmark interest for a ninth straight time in April to
11.00%, the highest since early 2012. The rate hikes started in April last year as
policymakers struggled to lower inflation expectations towards the midpoint of
their target range, or 4.5%. -- Full Article via Merco Press
Trade and Investment
Government of Brazil releases “Investment Guide to Brasil 2014”
March 2014- Read the Full Report
The digital lifestyle: The Internet and consumerism in the new Brazil
Feb. 2014- McKinsey has published a free report on Brazilian internet use and its
market implications. “Brazil represents one of the most interesting and attractive
markets for digital development. Home to about one-third of all Latin American
online consumers, it is a major force for the region and the developing world as the
world’s seventh largest economy in GDP terms and the sixth largest in terms of
Internet users. According to comScore, Brazil added the most new Internet users of
any country in the world from July 2012 to July 2013, with total users increasing 41
percent. The country is also gaining more of the world’s attention. Brazil will host
the FIFA World Cup in 2014 and the Summer Olympic Games in 2016. As these
events become increasingly digitally oriented – with online streaming, social media,
and digital fan engagement all playing decisive roles – Brazil’s digital infrastructure
will become more and more prominent to local and international observers alike.” –
Read the Full Report from McKinsey
Siemens Banned From Bidding in Brazil on Suspected Bribery
Feb. 28- Siemens, Europe’s biggest engineering company, was banned from bidding
on federal contracts in Brazil because of suspected kickback payments. A federal
court ruled that Germany’s Siemens is prohibited from participating in public
auctions and signing government contracts in Brazil for the next five years, company
spokesman Alexander Becker said today, confirming a report by the Estado de S.
Paulo newspaper. The ruling is from January, he said. Siemens, which in 2008
adopted a “zero tolerance” policy on bribery payments, said in a separate statement
that the sanction is tied to tender proceedings in 1999 and 2004 and internal
administrative processes by the Brazilian Post and Telegraph Corp. Siemens said it
started legal proceedings against the decision in 2010 and has further appealed it. -Full Article via Bloomberg
Argentine president calls for auto alliance with Brazil
Mar. 2- President Cristina Fernandez said in an address to Congress that Argentina
would benefit from the formation of a strategic alliance with Brazil in the
automotive industry. "The principal factor affecting the automotive industry is the
drop in exports and especially demand in Brazil," the president said. Fernandez
denied that the higher taxes imposed by her administration were to blame, but she
added that "if we have to correct something, we are going to correct it." The
automakers operating in both Brazil and Argentina are owned by multinationals
that import high-cost parts from their home countries, leaving the domestic
industry with "the assembly of the autos plus the manufacturing of lower-cost
parts," the president said. -- Full Article via Latino Fox News
Brazil posts another trade deficit in February
Mar. 6- Brazil posted a foreign trade deficit in February of $2.125 billion, the largest
for that month since 1994. The year-to-date deficit swelled to $6.183 billion,
widening versus the $5.319 billion deficit posted for the first two months of 2013.
Both imports and exports declined in February against the previous month. Deficits
are typical in the first quarter of every year, which marks the slack season for
commodities exports. Brazil managed a small $1.5 billion surplus for the entire 2013
calendar year. -- Full Article via Brazil - US Business Council
Brazil looks to boost revenue, ease rules in 4G auction –source
Mar. 6- Brazil is considering ways to push up the cost of wireless broadcast permits
in exchange for accepting worse coverage, a government source told Reuters on
Thursday, highlighting the tradeoffs that may be required to hit a tough fiscal target.
Treasury officials have pushed regulators to ease coverage requirements or offer
fewer permits in an August auction of next-generation (4G) cell spectrum, the source
said. New rules could boost the minimum price of permits to between 12 billion and
15 billion reais ($5.2 billion and $6.5 billion) from 6 billion reais. The possible
tradeoff underscored the lengths to which President Dilma Rousseff may need to go
in order to meet a strict budget target she has set as she prepares to seek re-election
in October. Brazil's looser fiscal policy and reliance on one-time revenues have
drawn fire from investors, who also complain about unpredictable rules for
concessions. For the country's big phone companies, missing out on the next round
of permits could hurt the value of 4G investments they have already made and
discourage future capital spending. -- Full Article via Reuters
One phone, many countries: Costly Brazil, dysfunctional Argentina,
bureaucratic Mexico. Our correspondents go shopping for the same Apple
product
Mar. 6- (excerpted section on Brazil) – “Despite sluggish economic growth, Apple
chose to plant its flag there for a reason. The country is among the top five markets
for smartphones in the world. Last year was the first when more smartphones were
sold in Brazil than traditional mobile phones, according to Abinee, an electronicsindustry association; it was also the year when tablet sales overtook those of
desktop computers. As many as 1,700 people queued up to be among the first on
Apple’s Rio premises. iPhones are beyond the reach of most people in all the
countries of Latin America, but the sticker shock is particularly striking in Brazil. A
16GB iPhone 5s costs 2,519 reais ($1,076), compared with an average monthly
income of just under 2,000 reais in the main metropolitan regions. That makes
Brazil the dearest, in dollar terms, of the countries where Apple has stores; the taxinclusive price of a 16GB iPhone 5s in the United States is around $700. The fault lies
with the infamous custo Brasil (Brazil cost), the exorbitant cost of doing business in
the country. The high price of the iPhone 5s is largely due to tariffs and state and
federal taxes on imports…Brazil’s government has introduced tax incentives for
companies ready to assemble gadgets in the country. But even then, the custo Brasil
hits home: iPads and older iPhones assembled locally still cost more than they do in
the United States, thanks to high labour costs and expensive commercial rents.” -Full Article via the Economist
UBS's Brazil unit to make quiet return to investment banking: sources
Mar. 7- UBS AG will restart investment banking operations in Brazil as early as next
week, sources said, almost five years after Switzerland's biggest bank sold its highly
profitable securities unit there following the global financial crisis. Two sources,
who are not authorized to speak publicly on the matter, said on Friday that UBS and
Brazil's central bank agreed on setting March 12 as the date to activate the
investment-banking license. Sought for comment, UBS said it would continue to
focus on wealth management, client solutions and its sales and trading business,
including equity research, in Brazil. UBS lost its investment banking license in 2009
after selling Banco UBS Pactual back to its original owners, a group led by billionaire
financier Andre Esteves. The sale price of$2.5 billion was about $600 million less
than what the Swiss lender paid for the unit in 2006. --Full Article via Chicago
Tribune
Ibovespa Futures Rise as Brazil Output Grows, Commodities Gain
Mar. 11- Ibovespa futures rose as a bigger-than-forecast increase in industrial
production and higher commodity prices boosted the outlook for Brazilian stocks.
Light SA, which generates and distributes electricity in the state of Rio de Janeiro,
may be active after quarterly revenue trailed estimates. Soybean producer
Vanguarda Agro SA (VAGR3) may move as it said it will post its first profit in 2014.
Ibovespa futures contracts expiring in April gained 0.8 percent. Commodity
producers account for 35 percent of the Ibovespa’s weighting, according to data
compiled by Bloomberg. -- Full Article via Bloomberg
Embraer Unveils New Model E-Jet
Mar. 12- Brazilian aircraft manufacturer Embraer rolled out a more fuel efficient
model of its E-Jets family of commercial aircraft and expects additional demand,
mainly from U.S. airline companies, in the coming years. "We expect more orders,
especially in the U.S. in 2015, 2016 and 2017," said Paulo Cesar Silva, chief executive
officer at Embraer's commercial aviation unit. The new jet uses 6.4% less fuel
compared to the original model, which is better than Embraer's initial expectation of
a 5.5% improvement in fuel efficiency, Mr. Silva said. He also said he expects more
U.S. demand and added there may also be several buyers in Eastern Europe. -- Full
Article via Wall Street Journal
Energy
Was Brazil's Belo Monte Dam A Bad Idea?
Mar. 7- “The world’s third largest hydroelectric dam is currently being built in the
Amazon of Brazil. For the government, the Belo Monte dam is a necessity. For
roughly 20,000 people living in the Altamira region of Para where the dam is being
constructed in the jungles of northern Brazil, it is the end of life as they knew it.
This is not a new story. Every time a major hydroelectric dam gets built, it gets a
healthy dose of criticism. Belo Monte is currently the “monster” dam every one loves
to hate…the Brazilian government is not interested in money. It’s interested in
electricity. According to Brazil’s Energy Research Company, the country needs 6,350
megawatts of new electricity generation per year between now and 2022. The
country now has around 121,000 megawatts, of which at least 70% is from
hydroelectric power plants.”
“Belo Monte is the country’s second biggest, behind Itaipu and its maximum
generation capacity of 14,000 megawatts. The problem with Belo Monte, and there
are many, is that it will never generate 11,200 megawatts unless the Xingu River
that feeds it is overflowing. And even then, the rainy season in the Amazon is
maximum four months long — between February and May. The rest of the time, the
world’s second largest hydroelectric dam will operate like a mid-sized dam,
generating 4,571 megawatts of electricity, or roughly 40% less than its potential.” --- Full Article via Forbes
Brazil to Pay as Much as BRL1.2B to Aid Distribution Utilities
Mar. 7- Brazil will give 1.2 billion reais ($512 million) to help power distributors
affected by rising prices in the nation’s drought, the Finance and Energy ministries
said today in an e-mailed statement. The distributors have 3.5 gigawatts less than
needed, forcing them to buy energy at spot market prices to meet their
responsibilities and then resell it at government-set price caps. Power prices are at a
record of 822 reais a megawatt-hour, according to Brazil’s energy trading board.
The government will use the CDE energy fund to enable utilities such as Eletropaulo
Metropolitana de Energia de Sao Paulo SA and Light SA to meet a March 11 deadline
to pay their spot market commitments. Brazil has provided 9 billion reais for the
CDE fund for this year, according to the statement, which said the government is
considering more measures to aid the utilities. -- Full Article via Bloomberg
Petrobras Raises $8.5 Billion From Bond Sale
Mar. 10- Petrobras raised $8.5 billion from the sale of overseas bonds on Monday as
the oil company continues to borrow cash for its massive investment plan, but it is
paying an increasingly onerous price, according to people familiar with the
transaction. The sale was the third-largest bond issue in the world so far this year
according to Dealogic, just behind Spain, which sold $13.5 billion in January, and the
European Financial Stability Facility, which sold $10.9 billion, also in January. Total
demand for the bonds came in at $22 billion, according to a banker familiar with the
transaction.The investment-grade company sold six sets of dollar-denominated
bonds, including fixed-rate bonds and floating-rate debt, according to the banker
familiar with the deal. A term sheet provided by a fund manager said the fixed-rate
bonds will mature in three, six, 10 and 30 years, while the floating-rate notes mature
in three and six years. Petrobras declined to comment. The firm has become one of
the largest corporate borrowers in the world as it seeks to fund an investment
program worth some $221 billion over the next five years, much of which is to
develop huge oil fields that lie deep below Atlantic waters off the country's
southeast coastline. -- Full Article via Wall Street Journal
Petrobras Fined US$ 3.7 Billion for Tax Irregularities
Mar. 11- Petrobras has received five notices of violation from the Brazilian revenue
service since October, amounting to R$8.768 billion (USD $3.7 billion). This is
equivalent to 37.2% of the company's total profits in 2013, which stood at R$23.6
billion (USD $10 billion). The company is studying all resources at its disposal, and
has therefore not published the payments in its budget as probable losses.
The information is contained in a preliminary prospectus delivered yesterday by
Petrobras to the Security and Exchange Commission (the institution which regulates
capital markets in the United States), for the emission of bonds worth USD $8.5
billion. Making public the notices of violation is a means of warning investors about
potential risks involved. --Full Article via Folha de S. Paulo
Brazilian lawmakers to monitor any probes of Petrobras bribery claims
Mar. 12- Brazil's lower house of Congress approved on Tuesday the creation of a
special committee to monitor any probes in the Netherlands of allegations that a
Dutch company paid bribes to officials at state-run oil company Petrobras. By a vote
of 267-28, the 513-seat lower house decided to create the committee despite
opposition from President Dilma Rousseff's ruling Workers' Party, or PT. The vote
underscores a growing rift between the PT and the center-right PMDB, its largest
partner in the ruling coalition, ahead of the October presidential election. In recent
days, PMDB lawmakers have threatened to weaken the alliance with the PT because
of what they see as the PMDB's shrinking role in the cabinet. Brazilian media, citing
a former SBM executive, reported last month that SBM allegedly paid bribes to win
contracts for floating oil platforms with Petróleo Brasileiro SA. --Full Article via
Reuters
Brazil to disclose funding plan for extra energy costs on Thursday
Mar. 13- Brazil will announce plans to refund power distributors for skyrocketing
energy prices later on Thursday, two government sources told Reuters, as it seeks to
reduce market uncertainty over potential budget shortfalls and price increases.
Extra energy costs caused by an unusually dry spell in southern Brazil could climb
as high as 18 billion reais ($7.6 billion) in 2014, according to some estimates,
complicating efforts to shore up government finances and avoid a credit downgrade
by rating agency Standard & Poor's. Brazil's Treasury is expected to cover only part
of that bill as it scrambles to meet its fiscal savings target, considered out of reach by
most analysts in a Reuters poll last month. The remaining extra costs will be
covered through an increase in electricity rates to consumers, which would push up
inflation towards the ceiling of the central bank's target range. -- Full Article via
Reuters
Brazil looking most vulnerable in Latam to any bursting of China’s credit
bubble
Mar. 13- The outlook for Brazil over the next months and years is tough, but it could
get a lot worse if there is a banking crisis in China, according to the British firm
Oxford Economics. Brazil is the most vulnerable Latin American country if China’s
credit bubble were to burst, economists Aryam Vazquez and Marcos Casarin argued,
because of the potential impact on exports of soy and iron ore and the likely plunge
in commodities prices overall. Impact on Brazil’s GDP would be not only sharp, but
would also last long, according to their exercise. Brazil’s economy in 2018 would be
6.6 percent smaller than in the more likely scenario in which China avoids a crisis,
compared to a 3.6 percent impact on the U.S. economy. China’s huge credit
expansion is one of the most important reasons behind the country’s economic
miracle, especially after the world financial crisis in 2008 reduced demand for the
country’s exports. But a large part of that growth happened through the so-called
shadow banking system, through which non-financial institutions offered loan
products with little if any supervision. The probability of a full-blown China crisis
remains very low at 10 percent, according to Oxford Economics estimates. Yet their
study is an interesting reminder that a severe downturn could be just around the
corner for Brazil’s economy, already walking on a very thin line. -- Full Article via
Reuters Blog
Commodities
Brazil Drought Jolts Commodities' Prices
Mar. 4- Brazil's worst drought in decades is decimating crops but breathing new life
into battered commodity markets. It hardly has rained in some of the South
American country's top farming regions since the start of the year, a period when
precipitation is usually the heaviest. Traders, analysts and government forecasters
who were calling for record harvests in coffee, sugar and soybeans as recently as
December are cutting production estimates, triggering a spike in futures prices that
may translate into higher costs for consumers later in the year. --Full Article via Wall
Street Journal
Coffee Tops $2 in Surge to Two-Year High on Brazil Drought Woes
Mar. 5- Coffee futures topped $2 a pound in a surge to a 24-month high as drought
conditions that started in January eroded prospects for crops in Brazil, the world’s
top producer and exporter. “The limited rains in Brazil have made the size of this
year’s crop a moving target,” Robbert Van Batenburg, a director of market strategy
at Newedge Group SA in New York, said. “It’s not easy to just turn on the switch and
start producing more.” Next year, Brazil’s output may fall as low as 40 million bags
from 47.7 million this season, Christian Wolthers, the president of the Fort
Lauderdale, Florida-based Wolthers Douque, said yesterday in a report. -- Full
Article via Bloomberg
Security/Defense
Saab signs contract with Brazilian Army
Mar. 3- Defence and security company Saab has signed a contract on deliveries of
the RBS 70 VSHORAD (very short range air defence system) to the Brazilian Army.
The order has a value of approximately SEK 80 million (EUR 9 million) and
comprises deliveries of man-portable launchers, missiles and associated equipment.
First deliveries of materiel are scheduled during 2014. The deal comprises an
undisclosed number of RBS 70 man-portable launchers, Mk II type missiles,
simulators, night vision equipment, a test set, maintenance tools, spares, associated
equipment, and training for the weapon's operators and maintainers. The systems
are among others intended to protect Brazil’s strategic infrastructure, and would be
employed in protection of major incoming events, including the 2014 FIFA World
Cup, and the 2016 Summer Olympics in Rio de Janeiro. Full Article via Evertiq
Paraguay Admits Brazil Organized Crime Has Taken Root
Mar. 3- Paraguay's top anti-drugs official has admitted that Brazilian organized
crime groups have permanent presence in some strategic drug trafficking and
production areas of the country, confirming the extent of the Brazilian criminal
migration to its ill-prepared neighbor. Luis Rojas, head of Paraguay's anti-drug
agency SENAD, told EFE that the border towns of Ciudad del Este and Pedro Juan
Caballero have become operational centers for Brazilian gangs including the Red
Command (CV), the First Capital Command (PCC) and Amigos dos Amigos, which
control drug trafficking in these regions. -- Full Article via Insight Crime
Brazil Plans to Build Aircraft Carrier, Defense Minister Says
Mar. 11- Brazil plans to build an aircraft carrier with a foreign partner as part of an
effort to enhance its military readiness, Defense Minister Celso Amorim told
reporters today. “The idea is for it to be built in Brazil, probably based on an existing
project,” Amorim told a group of foreign correspondents. Latin America’s largest
country will require a new aircraft carrier within 15 years and will modernize its
existing one in the meantime, Amorim said. Brazil has stepped up spending on
military equipment in recent years as it seeks to beef up its defense mostly of
natural resources, from deep-sea oil to fresh water. “We are indeed a peaceful
country, but no way will we be a defenseless country,” President Dilma Rousseff said
last year. --Full Article via Bloomberg
Foreign Policy
Will a new president make any difference in foreign policy?
Feb. 2014- (lead in paragraph of article)“In Brazil presidential elections are never
about foreign policy. Even when international issues gain domestic salience, the
attention seldom leads to meaningful discussion of the state of the country’s foreign
policy and what changes should—or could—be made. Unfortunately, this is likely to
be the case again this year. But if the main presidential candidates were to have an
earnest debate on foreign policy, what issues would most likely arise? How would
criticisms of the government’s current policy options metamorphose into viable
policy alternatives? In essence, what would Brazil’s foreign policy look like in
2015?...” -- Full Publication via FGV Vargas Foundation/ João Augusto de Castro
Neves)
What is Behind Brazil’s Timid Approach to Protests in Venezuela?
Mar. 4- (excerpt of article from the Brazil Institute’s Paulo Sotero) The contrast
between the Brazilian Foreign Ministry’s criticism of the crackdown on protesters in
Kiev and the cautious statement released as protests spread in Venezuela was
highlighted in commentary published in the Brazilian media last week that was
critical of Dilma Rousseff’s timid foreign policy, in contrast to the active diplomacy
during the Lula administration. ”The situation in Venezuela is different from
Ukraine,” Rousseff said, defending her government’s posture. She noted that
Venezuela has achieved important social gains in democracy for the poorest sectors
of the population and that those gains should be preserved. Referring to the protests,
the Brazilian president added that “Brazil supports freedom of expression,”
stressing that “we believe, under any circumstance, that dialogue, consensus, and
democracy building are better than any kind of institutional rupture.” Most
observers in Brazil, including those who oppose Brasília’s often accommodating
attitude vis-à-vis the Bolivarian governments of South America, agree that the
conflict in Venezuela is unlikely to lead to an outcome similar to the Ukrainian crisis,
which resulted in a change of government.” Read Full Article from Paulo Sotero
Brazilian Foreign Minister Supports Dialogue in Venezuela
Mar. 4- The Brazilian foreign minister Luiz Alberto Figueiredo supports Venezuelan
President Nicolas Maduro's opening of talks with opposition leaders and protestors.
Violent protests in the country have killed at least 17 people over the last month.
Figueiredo also discussed the American whistleblower Edward Snowden, in an
interview reproduced below:
Folha: Some critics have observed that Brazilian foreign policy has lost its impetus
under the government of Dilma Rousseff. Does she have some kind of prejudice
against foreign affairs?...Luiz Alberto Figueiredo: No, to the contrary. President
Rousseff and I frequently discuss foreign affairs and she is extremely well informed.
The idea that she is not interested in foreign policy is a myth; I don't know how it
arose. When I took the job as foreign minister, she told me that the Brazilian foreign
office had been practicing a lot of diplomacy but without involving itself in external
politics. -- Full Article via Folha de S. Paulo
U.S. advised to let Brazil push for peace in Venezuela
Mar. 6- (excerpt) “…Foreign policy analysts, on the other hand, question whether
any moves from U.S. soil can help. Instead, these voices say, the U.S. should step
aside and urge mediation by an interested party closer to the turmoil — Brazil. The
United States’ long-standing travel and trade embargo against Cuba has left it with
an image as a bully across Latin America, in the view of Cuban native Arturo LopezLevy, a former policy advisor for the Castro regime who now lives in Denver…“The
fact is that the U.S. influence is not that great in Venezuela,” said Peter Hakim,
president emeritus of Inter-American Dialogue, a Washington think tank on
Western Hemisphere affairs. “The two countries most suited to shape Venezuela’s
actions are Brazil and Cuba.”
“Luiz Alberto Figueiredo, Brazilian minister of foreign affairs, has asked that the
Venezuelan government and its opposition party begin a dialogue with one another.
But Brazil has taken no direct action. Hakim said that’s just what the U.S. should
urge. Venezuela trusts Brazil, Hakim said, and it is in Brazil’s national interest to
encourage stability in its neighbor. Escalating protests and violence could lead to a
mass migration of Venezuelans into Brazil, causing instability there and potentially
damaging the economy…If Brazil agrees to mediate, Lopez-Levy said, the U.S. must
practice patience. He recalled that former President John F. Kennedy was given that
same advice by Thomas Mann, a top Latin American adviser in the State Department
to Presidents Kennedy and Johnson. The advice was largely ignored.” -- Full Article
via The Tampa Tribune
With an eye on Argentina and Venezuela, Brazil private sector wants Mercosur
trade in local currencies
Mar. 7- Brazil's private sector concerned with harsh times ahead, particularly with
exports to Argentina and Venezuela are proposing that Mercosur trade should be
done with local currencies leaving aside the US dollar. The initiative was launched
by the president of the Brazil-Argentina Commerce Chamber. “Our proposal is to
stimulate trade in local currencies through central banks” said Alberto Alzueta,
chairman of the chamber. “The Brazilian exporter sells in reales and the Argentine
buyer pays with Pesos, this will automatically increase trade and reduce demand for
dollars”. Likewise Jose Francisco Marcondes, president of the Brazil-Venezuela
Federation of Chambers supports the initiative: “it is absolutely positive and
adequate to organize this kind of trade which cuts us lose from the US dollar which
we don't issue and from inflation”. The comments follow reports from Brazil's main
financial daily Valor Económico which estimates Brazilian exports to Argentina and
Venezuela this year can be expected to drop by at least 4 billion dollars. Alzueta said
that trade in local currencies in the framework of Mercosur, launched five years ago
is no greater than 5% between Brazil and Argentina. . -- Full Article via Merco Press
UNASUR will have a commission to mediate crisis in Venezuela, says Dilma
Mar. 12- Dilma announced at the UNASUT summit that it plans to create a
commission in order to bring stability to the situation of political unrest in
Venezuela. Dilma reaffirmed that Brazil seeks to have a stable democratic order in
neighboring Venezuela. -- Full Article via Folha de S. Paulo (em português)
Special Mention
Shepherd of the City’s Rebirth, Rio’s Mayor Feels the Strains, Too
Feb. 28- Nice piece from Simon Romero on Rio’s major, Eduardo Paes – as he and
the city prepare to host upcoming mega events. -- Full Article via New York Times
Brazil's Workers' Party firm on maintaining current Cabinet distribution –
Falcão
Mar. 7- Brazil’s ruling Workers’ Party (PT) will not permit any redistribution of
ministerial posts in an upcoming Cabinet shuffle, despite complaints by coalition
partner PMDB, PT National Chairman Rui Falcão said Friday at a news conference
for foreign correspondents. “This is the last Cabinet shuffle before the October
elections,” Falcão said. “It is made necessary by the need for Cabinet members to
resign in order to run for elective office. President Dilma Rousseff sees no need to
rebalance the political party forces within the Cabinet.” PMDB leaders have
complained that they hold only five posts in the 39-member Cabinet. They have
threatened to withdraw support from President Rousseff’s re-election campaign
unless they receive more Cabinet seats. Falcão said, “I am highly confident the PT-
PMDB coalition will remain in place for the election.” -- Full Article via Brazil-U.S.
Business Council
Brazil to Sponsor Program of Study in Washington
Mar. 11- The Brazilian Agency for the Promotion of Exports and Investments
(APEX), is to sponsor a program of study and debate about Brazil in one of
Washington's biggest think tanks. The Center for Strategic and International Studies
(CSIS) will promote a series of 16 public debates as part of a program called
"Iniciativa Brasil," which will run from April until the end of 2015. Among the issues
to be discussed are Brazilian technology, energy, environment and commerce. --Full
Article via Folha de S. Paulo
Brazil's president faces revolt by coalition allies
Mar. 12- The rift between President Dilma Rousseff and her main political allies
widened on Wednesday one day after they voted in Congress to look into bribery
allegations leveled at Brazil's state-run oil company Petrobras. Disgruntled
congressmen from coalition parties summoned an array of Rousseff's cabinet
members to appear before various congressional committees in a new display of
discontent. They also invited Maria das Graças Foster, the chief executive officer of
state-controlled oil producer Petróleo Brasileiro SA, to answer questions about the
allegations that a Dutch company paid bribes to company officials to win contracts
for floating oil platforms. The revolt in the ranks of the ruling coalition is led by
Brazil's largest party, the center-right PMDB, which is jockeying for a bigger role in
Rousseff's government and more funds for its members' districts in an election year.
Government and foes were surprised by the extent of Tuesday's defeat that showed
the strength of the disaffected bloc in Congress. The lower house voted 267-28 to set
up a special committee to monitor investigations by the Netherlands and Petrobras
into the bribery case involving Dutch ship leaser SBM Offshore NV. The committee
has no power to subpoena witnesses and its work is not expected to lead to any
consequences for the government. But it can draw attention to a bribery case that
would be fodder for Rousseff's opponents on the campaign trail. -- Full Article via
Reuters
Arms wide open
March – Short (and interesting) write-up about Rio’s Cristo and its history. “Brazil’s
statue of Christ is, for some, the ultimate religious symbol. For others, an irresistible
tourist attraction. Its image is known the world over, but few know the story behind
Cristo Redentor.” --Full Article via BBC
Winning hearts and likes
Mar. 13- (edited excerpt on the role social media will play in the 2014 elections) “Just
before Dilma Rousseff was elected president in 2010, 6m Brazilians used Facebook
at least once a month. As they gear up for a presidential poll in October, 83m do…In
September, shortly after the protests petered out, Ms Rousseff reactivated her
Twitter account, dormant since the 2010 election. She has also joined Instagram and
Vine, two image-sharing sites, and revamped her Facebook profile. Last month Ms
Rousseff’s Workers’ Party (PT) held its first workshop for activists on how best to
use social networks. It plans 13 more in the coming months. The opposition is
pinning even more hope on social media, in large part because the president is likely
to dominate the traditional sort. Small wonder, then, that Ms Rousseff’s likeliest
rivals have been busy making Facebook friends. Aécio Neves, a senator from Minas
Gerais state and leader of the centre-right Party of Brazilian Social Democracy
(PSDB), and Eduardo Campos, governor of Pernambuco and head of the centrist
Brazilian Socialist Party (PSB), have so far notched up many more “likes” than the
president. The most popular of all is Marina Silva, a former environment minister
and Mr Campos’s probable running mate. All are active on other social networks,
too…”-- Full Article via the Economist