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Even after huge nationwide protests last June, when millions of Brazilians took to the streets to vent anger at ineffectual politicians, President Dilma Rousseff’s approval rating never dipped below 45%—and then rebounded. And even though more Brazilians tell pollsters they want “change” rather than “continuity”, few pundits expect Ms Rousseff’s Workers’ Party (PT) to be booted out in October’s presidential election after 12 years in power. But an upset may be on the cards.

Around 48% of Brazilians now approve of the president, down from roughly 55% in February. Her fall in popularity is at last beginning to translate into support for her two main rivals: Aécio Neves (pictured left), a senator who heads the Party of Brazilian Social Democracy (PSDB), and Eduardo Campos (pictured right), leader of the Brazilian Socialist Party (PSB). They continue to trail Ms Rousseff but the gap has narrowed, especially with Mr Neves. He is now just ten points behind the president if it were a straight second-round race, down from 23 points two months ago.

As voters learn more about the anti-Dilma duo—both are still little-known outside their home states—they will spot some uncanny parallels. At 54 and 48, respectively, Mr Neves and Mr Campos are younger than Ms Rousseff, who is 66, and belong to a generation of Brazilian politicians who came of age after the end of the military dictatorship in 1985. Both are scions of political dynasties; each cut his teeth as an aide to a prominent grandfather. (Tancredo Neves was the first president elected after army rule but died before taking office; Miguel Arraes, Mr Campos’s forebear, ruled Pernambuco before and after the junta.)

Both are trained economists. Both served stints as congressmen, then went on to become successful governors. In 2003-10 Mr Neves turned Minas Gerais, Brazil’s second-most-populous state, from a basket case into one of the country’s best-run states. His “management shock”, carried out by a team of able technocrats, involved cutting costs, boosting tax revenues, setting performance targets, capping public-sector pay and leaving 3,000 jobs unfilled rather than handing them over to political placemen. Poverty fell faster than in Brazil as a whole; the state now boasts the country’s best-performing pupils. Mr Campos emulated this approach in Pernambuco, in Brazil’s poor north-east, with equally impressive results from 2007 until last month, when he stepped down to focus on his candidacy. Both faced down unions opposed to reforms and were re-elected by big margins.

Small wonder, then, that Mr Neves and Mr Campos see eye to eye in many areas, especially on the economy. Armínio Fraga, an admired former central banker who is Mr Neves’s chief economic adviser, bashes Ms Rousseff for too little macroeconomic discipline (swelling budget deficits, persistently high inflation) and too much microeconomic intervention (suppressed petrol and electricity prices, subsidised credit from state-controlled banks). Eduardo Giannetti, a professor at Insper business school who is close to Mr Campos, recites the same criticisms nearly word for word.

Businessmen and bankers come out of meetings with both men purring. Both want to grant independence to the central bank, simplify Brazil’s convoluted tax system, slash the number of ministries (which has ballooned from 26 to 39 under PT rule), and do more to drum up private investment in much-needed infrastructure.

But many see Mr Neves as a better bet than the PSB leader, whose party’s bylaws still call for “common ownership of the means of production”. João Doria Jr, an entrepreneur and founder of Lide, an employers’ federation, which invited both men to a powwow in Bahia earlier this month, says that Mr Neves has so far been “more assertive” in articulating his market-friendliness, citing proposals such as a six-month deadline for tax reform.

Racing uncertainty

Mr Neves’s talk of “unpopular measures” is honeyed by an affable manner, mischievous grin and fun-loving image. But it still leaves him open to charges of elitism. To mitigate that same risk to his campaign, Mr Campos has forged an electoral alliance with Marina Silva, a popular former senator and environmentalist who came third in the presidential race of 2010.

João Castro Neves (no relation) of Eurasia Group, a political consultancy, thinks that Mr Campos and Ms Silva will strive to portray themselves as the true heirs of Luiz Inácio Lula da Silva, Ms Rousseff’s mentor and predecessor. Lula enjoys sainted status among Brazil’s poor thanks to the generous cash-transfer programmes he introduced, but also earned grudging respect from the markets for not reversing economic reforms under the previous PSDB government of Fernando Henrique Cardoso, president from 1994 to 2002. Mr Campos and Ms Silva, who held the science and environment portfolios respectively during Lula’s first term, will claim that Ms Rousseff has wasted this progressive legacy.

Mr Campos is also banking on Ms Silva’s presence as his running-mate to attract growing ranks of her fellow evangelicals, as well as better-educated, wealthier Brazilians, especially in big southern cities like São Paulo and Rio de Janeiro, where the PSB is weak. But her—and her base’s—principled opposition to relaxing the onerous environmental-licensing regime scares employers. In private, businessmen cite the “Marina factor” as a concern.

Another is the strength of Mr Campos’s team. He surrounds himself with north-eastern business folk and can apparently count on the support of the Setúbal family, the clan behind Itaú, a big bank. He also inherited two top-notch economists from Ms Silva: Mr Giannetti and André Lara Resende, who helped vanquish hyperinflation 20 years ago. But neither has shown much interest in joining a potential Campos cabinet. Mr Neves, by contrast, has a crack team ready to take the reins, many with hands-on policymaking experience in the Cardoso administration.

That, combined with Mr Neves’s ideological clarity and strong party structures in the biggest states, puts him in better stead to challenge Ms Rousseff, reckons Alberto Almeida, a psephologist at Instituto Análise, another consultancy. Ms Rousseff remains the favorite to win. Unemployment is at historic lows and disposable incomes are unlikely to slide between now and October (although the possibility of protests at the World Cup may provide a focus for discontent). She will enjoy more free TV time than Messrs Neves and Campos put together. But she is in fight.

Banks Join E-Commerce Boom

The market for electronic commerce payment services has just gained a heavyweight competitor, who promises to increase competition in the segment. Bradesco, Banco do Brasil and Cielo Wednesday announced the creation of Stelo, an intermediary of online payments for commercial establishments and “virtual pocketbook” for consumers.

The new company marks the entrance of banks in a field until then dominated by independent and internet-linked companies, such as Mercado Pago (owned by Mercado Libre), PagSeguro (from the Uol group), Paypal and Moip.

Known as “payment facilitators,” these companies are an alternative for retailers to the traditional payment-processing companies (like Cielo and Rede) at the time to decide on whether to accept credit card purchases. Their main appeal is to assume the risks of fraud, which is the responsibility of retailers in online purchases.

“This is the first company of its kind created by banks in Latin America,” says Marcelo Noronha, executive director of Bradesco. According to him, e-commerce transacted $52 billion last year, including airlines. The estimate is that it reaches R$74 billion in transactions in 2016.

According to Igor Senra, executive president of Moip, between 20% and 30% of commercial sales volume is transacted via facilitators.  He recalls, however, that the scope of action of the companies grew in recent years, also to transactions in the physical realm. In the spaces left by the large payment processors, they try to gain ground among small shop owners using card readers coupled to cell phones and tablets. “There (among the small shop owners) the volume is even larger. Door to door sales alone account for R$50 billion in the country,” says Mr. Senra.

Stelo’s goal is to carry out R$2.5 billion in e-commerce transactions and have 4 million active users (at least one transaction per month) through 2016. For 2018, the target is to have R$9 billion in transaction and 10 million users. “Our levers for growth are very strong, because we’re going to act simultaneously on both ends: on accrediting establishments and on reaching consumers with the virtual pocketbook,” says Ronaldo Varela, CEO of Stelo.

Stelo is in an operational test phase and will effectively begin operation in the second half. According to Mr. Varela, the company’s technological platform was developed in house, integrating its own tools with those of global technology suppliers, such as the case of its risk analysis platform.

Read more at Valor International

Opportunity to do Business with Brazil

Exploring Business with Brazil: Projects and Opportunities

Tuesday, May 13th, 2014
3:30 pm Registration Opens
4:00 pm Program Begins
6:30 pm Program Concludes
1301 Fifth Avenue, Suite 1500
Downtown Seattle
 
$15 for Members
$25 for Non-Members
 
rsvp here
 
Join the Trade Development Alliance and AmCham Brazil to meet with a delegation of innovation and technology advisors and companies from Brazil, get first-hand information about how Brazil is fostering its own “innovation economy”, and explore opportunities for partnership and collaboration.Brazil is an important business partner for Greater Seattle and Washington state, importing over $2.6 billion in merchandise from Washington state in 2013. Brazil also recognizes the importance of entrepreneurialism, as seen with PRIME, a project launched by Brazil’s Financing Agency for Projects & Studies (FINEP) which supports startups.About the DelegationThe main purpose is to introduce Brazil and its opportunities to American companies interested in foreign trade in order to foster business and strengthen relationship between both countries. It will be also a great moment to meet American executives to know more about the regulation and opportunities in the visited states, as well as its best practices and success cases, aiming to promote and establish business partnerships.

The State of Sao Paulo is Brazil’s largest state with some 40 million inhabitants. The state is a major driver of Brazil’s economy and home to a highly skilled labor force.

Rio Grande do Sul is the southernmost state in Brazil. It is the largest wine producing center in Brazil, known for its vinticulture and industrial output.

___________________________________________________________________

Featuring:

 Renato de Barros Silva – Business Development Manager, Investe São Paulo 

Hélio Moraes – Partner, Pinhão & Koiffman Advogados 

Mariana Pfitzner  Director of Economic Development, Campinas City Hall (to be confirmed) 

Representative from the State of Rio Grande do Sul

Camila Galvão – Partner, Machado Meyer, Sendacz e Opice Advogados (to be confirmed) 

Charleen Baumgart – Head of International Product, Santander (to be confirmed)

Sérgio Pessoa – General Manager, Apex Brasil (to be confirmed) 

___________________________________________________________________

Registration: The cost for this program is $15 for members $25 for Non-Members. Questions? Contact Samantha Paxton at (206) 389-7319/ samanthap@seattletradealliance.com.

 

Thank you to our Co-Sponsor:

AmCham Brazil

Investors Optimistic about Brazil

According to an investor survey by Franklin Templeton Investments in Toronto, the two most bullish countries right now are India and Brazil. Investors there expect year-ending returns on equity funds of more than 13.5%.

This is also an election year, so the country finds itself at a political crossroads too. Dilma is expected to win, but her re-election will not be as easy as once thought. If she is re-elected, Brazilians and the market will be expecting changes in economic policy.  Middle class citizens will expect Dilma to make good on promises to improve infrastructure and public services, like health care and education.  The market will expect stability on macro-economic policies, rather than Dilma’s preferred method of short term tax breaks in hopes to spur consumption and job creation.

Since 2005, Brazil has relied on a consumption-driven growth model that was made possible by a favorable global environment of high commodity prices and ample liquidity. This liquidity allowed consumption to expand without Brazil “hitting the wall” against possible external constraints, Volpon said during the 2014 Brazil Summit in New York at the Harvard Club on Monday.

Brazil managed to avoid its boom-bust cycle of old, but did not avoid a serious correction to its economy pre-Dilma.  Or as the Financial Times put it this year, Brazil’s “go-go” economy has become a “so-so” economy under Dilma.  Some of the fault lies in the external landscape beyond her control. But a chunk of it also lies with Brasilia.

Today’s model — the “Lula model” — has many now well-recognized deficiencies. However, it allowed a large section of Brazilian society to become participants in society. Lula made this a goal of his first term in the early 2000s, and delivered on the promise to diminish poverty in the northeast and keep poor children in school.

The Lula model began to show its limitations in 2009. Specifically, the low growth in industrial production seen after 2010 and the persistent increase in service sector inflation were signals of severe supply-side constraints, and it is because of these that we have seen low growth ever since, Volpon said.

Brazil’s President Dilma took over the “Lula Model”, but changes to the world economy post-2008 made that model difficult to continue. Despite solid wage growth and low unemployment, Brazilians are less happy now than they were four years ago. Disdain over lackluster public services, high taxation and Dilma’s economic policies threaten her shot at re-election in October.

“One way to understand the errors made by the Rousseff administration during 2011 and 2012, the years of the new economic matrix, is that the government made a fundamental mis-diagnosis of why Brazil was seeing low growth, which emphasized demand-side factors at the detriment of the supply side of the economy,” he said.

Brazil will have to reverse course to some extent, and that is making some analysts pessimistic about a true turnaround.  Punishing demand means higher interest rates, or higher unemployment, or stagnant wage growth.  This worries investors as much as it does everyday Brazilians.

But like the new currency plan in the mid 1990s that saw Brazilians throw away Cruzeiros for Reals, and like the Lula model of stable inflation and wealth redistribution, Brazil is ready for its third act.  The Central Bank has shown more interest in defeating inflation and keeping it under 6%. The market likes Central Bank governor Alexandre Tombini. It’s not so sure about Dilma and Guido.

In poll after poll, Brazilians of all social classes have expressed concern over volatile inflation. It’s made them overlook historically low unemployment and solid gains in real income, which continued under Dilma even as the economy weakened.

“What I see here is a manifestation, like in 1994 and 2003, of Brazilian society holding economic stability as a core value,” Volpon said. In Brazil, playing with inflation is a losing proposition for presidents.

“This political reality will go a long way to push the current economic debate in the right direction, regardless of who wins in October,” Volpon said.

Year-to-date, the iShares MSCI Brazil (EWZ) exchange traded fund is up over 3.8%, beating the benchmark MSCI Emerging Markets Index, plus the S&P 500, MSCI Europe and MSCI Japan.

Not bad for a core member of the “Fragile Five.”

-Kenneth Rapoza for Forbes

Can Brazil Defend Democracy in Venezuela?

An article in the Economist, for example, recently stated that “most of the region has been uncritical of Mr Maduro since the protests began in early February; Brazil, the regional heavyweight, has been characteristically mute.” The Wall Street Journal, in an article entitled “Venezuela Crackdown Meets Silence in Latin America,” reported that “Brazil’s president Dilma Rousseff has stayed on the sidelines.” A New York Times article reported that Dilma Rousseff “has not commented on the crisis in Venezuela” and that “Brazil’s foreign minister, Luiz Alberto Figueiredo, has also sidestepped any Maduro critique.” The Times quoted Michael Shifter, president of the Inter-American Dialogue, saying that “now it’s, ‘We’re focused on democracy in our own country, but if something happens with a neighbor we are not going to say anything.’”

Criticism has come not just from sources outside Brazil but from within Brazil as well. Former president Fernando Henrique Cardoso wrote in early March that Brazil’s current government was acting with “incredible timidity” in the face of human rights abuses in Venezuela.

Brazil has so far taken a noticeably soft, even passive line toward the current crisis. Rather than at least issuing statements pointing out that both the Venezuelan government and opposition share some of the blame, Brazil has co-issued three rather bland communiqués through the Union of South American Nations (UNASUR), the Community of Latin American and Caribbean States (CELAC), and Mercosur. The latter statement was particularly controversial among those hoping to see Brazil productively engaged, as it was generally interpreted as being soft on the Maduro government, characterizing protesters as antidemocratic forces.

In response, Brazil’s Foreign Minister Luiz Alberto Figueiredo defended his country’s strategy, arguing in an interview with Folha de São Paulo that the Mercosur statement had been “misunderstood.” Yet when the reporter asked whether Mercosur leaders had tried to send a message to President Maduro, the foreign minister replied that “Maduro did not need a message”—hardly a sign that Brazil was eager to try to exert some positive influence on the Venezuelan government.

It would be wrong, however, to argue that Brazil’s passive rhetoric so far vis-à-vis the Venezuelan crisis is proof that it does not care about defending democracy in the region. Quite the contrary: over the past decade, helping consolidate democracy in the region has become one of Brazil’s principal foreign policy goals. Starting during Cardoso’s presidency (1995–2002), Brazil has often assertively engaged in political events in the region, diplomatically intervening when political crises have threatened democracy. Partly to strengthen regional institutions and partly out of fear of being seen as a bully, Brazil usually acts through Mercosur and UNASUR—a strategy that, while correct in principle, at times leads to less agile actions than acting bilaterally might. In addition, Brazil has been more concerned about constitutional crises and the possibility of an undemocratic removal of any presidents in the region than about what some Brazilian officials consider to be “procedural aspects” of democracy, such as free speech.

An important test of regional leadership is whether Brazil can help bring the government and the opposition in Venezuela to the table to overcome the current standoff. A negotiated settlement must oblige the government to disband the armed militia groups, release all those imprisoned for peacefully taking part in street protests, end restrictions on both the printed media and social media, and allow greater space for political activity generally. In return, the opposition must give up any aspirations of ousting President Maduro outside the normal electoral channels, and commit to curbing violence in protests.

In April 2002, President Cardoso was active in behind-the-scenes negotiations to return the then Venezuelan president, Hugo Chávez, to power in the forty-eight hours after he was deposed by a coup d’état. The incoming government led by President Luiz Inácio Lula da Silva kept working with all sides to assure continued political stability. While today’s crisis in Venezuela is different, Brazil will yet again have to engage and assume regional leadership, whether through UNASUR and Mercosur, or bilaterally. With trust largely eroded between the government and the opposition, it seems increasingly unlikely that Venezuela can solve the crisis on its own. A credible outside arbiter is needed.

WHY BRAZIL HOLDS BACK

In contrast to the Venezuelan crisis of 2002 and 2003, when Brazilian Presidents Cardoso and Lula were able to positively influence the internal dynamics in Venezuela, Brazil today is a far less credible mediator than it was a decade ago.

Back in 2003, Lula insisted on including the United States and Spain in the group “Friends of Venezuela,” which helped bri

ng the government and the opposition together. Lula’s move proved crucial as it convinced the opposition to seriously engage in the debates. Lula may have been a left-wing president, but he was still seen as a legitimate and relatively impartial mediator. Both he and Brazil have since then lost this status, principally in the eyes of the Venezuelan opposition. After Chavez’s death, Lula—still one of the most powerful political actors in Brazil and highly influential with the current administration—actively supported Nicolás Maduro’s campaign, a move that firmly placed Brazil in the chavista camp.

While one should be careful not to exaggerate the importance of ideology when explaining Brazilian foreign policy, it is certainly true that the strong affinity withchavismo of leading Brazilian foreign policy makers, such as presidential adviser Marco Aurélio Garcia, has played an important role.

Yet economic interests are likely even more important in shaping Brazil’s thinking and action. Large Brazilian construction firms have projects in many parts of Caracas. While many other foreign firms have been expropriated or castigated by the Venezuelan government, Brazilian investors have received preferential treatment—though now an increasing number of payments are being severely delayed to Brazilian investors as well. According to Valor Economico, a Brazilian business daily, Venezuelan public sector companies now owe Brazilian companies $2.5 billion. If political tension and conflict increases still further in Venezuela, Brazilian business interests would be increasingly in danger from the spillover economic problems. Accordingly, a growing number of private sector representatives have attempted to put pressure on Dilma Rousseff to take a clearer stand.

Yet the Brazilian president’s centralizing leadership style and limited interest in foreign policy—especially as she is preparing for the upcoming presidential election—have turned Brazil into a far more hesitant and less visible international actor than was the case under Cardoso or Lula. A growing number of critics point out that in addition to failing to develop Brazil’s regional vision further, Rousseff’s foreign policy is characterized by a lack of participation and overall diplomatic retreat, in sharp contrast to Lula’s highly active, albeit sometimes controversial, foreign policy. While Presidents Cardoso and Lula provided their foreign ministers with ample room for maneuver (a writer in Foreign Policy once wondered whether Celso Amorim, Lula’s foreign minister, was “the world’s best”), both foreign ministers under Rousseff have faced strong internal restraints.

Read more at the Carnegie Endowment for International Peace

 

Brazilian VP visits Council on Foreign Relations

Brazilian vice president Michel Temer visits CFR to discuss Brazil’s current economic status, its success in attracting foreign investment, and its progress in reducing extreme poverty in a conversation with Foreign Affairs editor Gideon Rose. Temer credits the 1988 constitution with creating the political and institutional conditions that have made Brazil’s recent economic rise possible. He also says that recent tensions between the United States and Brazil as a result of the Edward Snowden leaks do not endanger the long-term relationship.

 

 Watch the video here

 

Brazil Installs “Spy Proof” Email System

BRASILLIA: Brazil’s defence ministry has started installing a secure digital communication network for federal government offices, a government source said.

The system aims to protect official emails from the type of surveillance US intelligence agencies were reported last year to have carried out on Brazil’s President Dilma Rousseff and her top aides, reported Xinhua.

The coordinator of the federal government’s data processing service Serpro, Marcos Mello, said the system uses passwords and digital markers to safeguard emails from snooping, as well as certifying the authenticity of the email’s origin.

The system employs “digital signatures and encryption to ensure the integrity and confidentiality of the message”.

“All the security tests were done” on the system, including “a simulated break in”, Mello added.

Government intelligence worked on developing the software with the help of the Federal University of Santa Catarina.

The system is expected to be fully installed at the defence ministry by June 30, and in all federal government offices by the end of 2014.  Read more here.

Consulado Itinerante em Seattle – Dias 4 e 5 de abril de 2014

Consulado Itinerante em Seattle – Dias 4 e 5 de abril de 2014
O Consulado-Geral do Brasil em São Francisco informa aos cidadãos brasileiros e suas famílias que vivem na área de Seattle que haverá Consulado Itinerante nos próximos dias 4 e 5 de abril.
Durante o Consulado itinerante serão processados apenas documentos que, por lei, exigem a presença do interessado:
1 – Autorização de viagem para menores
2 – Registro de nascimento
3 – Registro de casamento
4 – Atestado de vida
5 – Certificado de alistamento militar
6 – Procurações
7 – CPF – Cadastro de Pessoa Física
8 – Regularização da situação eleitoral
OBS: NÃO serão processados pedidos de passaporte durante o Consulado Itinerante em Seattle. Os passaportes podem ser requeridos via postal, conforme instruções neste website.
O Consulado Itinerante em Seattle, WA
Onde: Kitanda Açaí and Espresso
12700 NE 124th St #2
Kirkland, WA 98034
(425) 820-4371
Quando: 4 e 5 de abril de 2014
Horário: de 10h00 a 16h00

Brazil grows wary of Venezuela under Maduro

 

Reuters reports that Brazil, Latin America’s biggest economy and diplomatic power, has toned down its support for Venezuelan President Nicolas Maduro because of disappointment over how he is handling mounting economic problems and opposition-led street protests.

The shift, while subtle, has deprived Maduro of some of the regional backing he wants at a time of food shortages, high inflation and political uncertainty in the OPEC nation.

Broadly speaking, Brazilian President Dilma Rousseff remains an ally of Maduro. While Rousseff is more moderate, both are part of a generation of leftist Latin American presidents who grew up opposing pro-Washington governments and believe they are united by a mission to help the poor.

However, Rousseff has been increasingly disappointed by some of Maduro’s actions and has reined in the more enthusiastic support that characterized Brazil-Venezuela relations under his predecessor, the late Hugo Chavez, according to two officials close to Rousseff’s government.

Rousseff is worried the Venezuelan government’s repression of recent street protests, and Maduro’s refusal to hold genuine dialogue with opposition leaders, may make the political crisis worse over time, the officials said.

Brazil Passes Internet Law

Today, Bloomberg reports that the law for Internet rights passed the lower house of Brazil’s Congress last night, advancing the bill after President Dilma Rousseff ended a six-month standoff by giving up on a measure she said would protect Brazilians from spying.

The removal of a requirement for companies to host data from Brazilian users within the country’s borders was a win for Google Inc. (GOOG) and Facebook Inc., which had lobbied against the provision. Rules preventing Internet service providers from favoring some types of Web traffic over others were left intact, despite resistance from phone carriers such as Oi SA and Telefonica Brasil SA.

The bill makes Brazil the leader among large countries in upholding the principle of net neutrality, in which providers must grant equal access to the entire Internet, without selectively blocking or slowing down services. With Brazil weeks away from hosting an international Internet conference, Rousseff chose to let the law advance, even with weaker provisions for the country’s oversight of its citizens’ data.

“Brazil is a giant country, and passage of this law will provide a model for implementing net neutrality as a policy measure in other major markets,” Katherine Maher, advocacy director for international digital rights organization Access, said by phone from Washington before the vote.