May 05 2023 | Nº. 65

Editorial

Early indicators suggest that the Brazilian economy performed slightly better than expected in the first four months of the year. Bradesco, the third largest bank in Latin America, for example, revised its growth projection upward from 1.5% para 1.8%. Perhaps relatedly, the latest opinion poll released by IPESPE (Instituto de Pesquisas Sociais, Politicas e Econômicas) this week showed that 52% of the population approve of President Luiz Inácio Lula da Silva’s administration, a slight uptick from the results two months ago. This result has to be encouraging for the government, which had a bumpy few weeks following some international criticism of Lula’s stance on Russia’s war against Ukraine and a sense that he was picking pointless public fights at home with the likes of the Central Bank president and former judge, now-senator Sérgio Moro. In a sign of the country’s enduring polarization, Lula’s standing is effectively unchanged since taking office. 

This is not to say, of course, that short- and medium-term challenges won’t alter this outlook. Outgoing Argentine President Alberto Fernández was in Brasília on Tuesday to meet with Lula. His main goal was to find a way for his country to continue importing Brazilian goods without having to pay for them in dollars, which are in alarmingly short supply as Argentina faces yet another wave of economic crisis characterized by rampant inflation and growing unemployment. One potential solution would be for the Brazilian government to create a line of credit through the Brazilian Development Bank (BNDES) for domestic companies that export to Argentina with the intention of working around the dollar. This is what China does, for example. Although no concrete plan was announced this week, Lula stated his interest in working with Brazil’s largest neighbor: “the meeting was long, difficult and we will carry out many more meetings,” he said. “I made a commitment to my friend Alberto Fernández that I will do every and any sacrifice so we can help Argentina in this difficult moment.”

That sentiment immediately stoked a furor among skeptics who worry that such schemes recalled supposedly the worst kind of economic diplomacy of Lula’s first stint in office. Brazil’s economy is hardly booming, these critics note. Does it really make sense to financially shore up another country’s economy? Whatever one thinks of Lula’s approach to regional diplomacy, the argument that Brazil would be transferring cash to Argentina is wrong. The way BNDES has been used, and how it could be used in this case, is to finance Brazilian companies themselves looking to sell goods to Argentina. No money would be transferred from Brazilian to Argentine coffers. If Argentina fails to pay what it owes, the Brazilian finance ministry’s Export Guarantor Fund (Fundo Garantidor de Exportações) would cover the loss and make the BNDES whole. The potential plan is therefore not without risk, but it is not a case of Brazilian taxpayer resources changing hands. Still, Lula’s attempts to reposition Brazil as a key hemispheric and world player carries potential costs. Success will likely be measured by the extent to which they deliver real material gains for Brazilians. In that context, finding a way to continue selling Brazilian goods to Argentina, Brazil’s third-largest trading partner, seems worthwhile. 

Highlights

• VACCINATION FRAUD. The Brazilian Federal Police, equivalent to the FBI in the United States, arrested six aides to Jair Bolsonaro on Wednesday, May 3. The police also entered the former president's residence in Brasilia, carrying search and seizure warrants. By order of the court, Bolsonaro's cell phone was confiscated, as well as a firearm and documents. The Supreme Court Justice overseeing the case also ordered Bolsonaro's passport confiscated, but the Federal Police considered the measure unnecessary. The investigation deals with a scheme to falsify certificates indicating that the holder of the card had been vaccinated against COVID-19.

• CRIMINAL SCHEME. According to the investigation, Bolsonaro's advisors entered the computers of the national health system where vaccine dose application records are stored. Accesses took place between November 2021 and December 2022 at the height of the pandemic. These advisors and others connected to them entered false information into the system, forging COVID-19 immunization cards.

• VACCINE DENIALISTS. Bolsonaro and those around him have spent the last few years campaigning against the COVID-19 vaccination in Brazil. They were dismissive of the danger of the virus and the scope of the pandemic. In addition, they spread lies about immunizers and created difficulties in expanding vaccination coverage in Brazil. The country has 2.7 percent of the world's population, but 11 percent of deaths from COVID-19 in the world. In absolute numbers, this corresponds to more than 700,000 deaths.

• BOLSONARO KNEW. Until this investigation was carried out, there was no public document that clarified whether or not Bolsonaro had been vaccinated. The former president said and continues to say that he was not vaccinated. However, when he was still in the presidency, he decreed that records about his vaccination be sealed for one hundred years. What the Federal Police have now revealed is that Bolsonaro's advisors entered the system, created a false vaccination card for the former president, issued a certificate, and then undid the adulteration, in an attempt to erase the traces of fraud. According to the Federal Police report, “Jair Bolsonaro, Mauro Cid and, possibly, Marcelo Câmara (two of the advisors involved in the scheme) were fully aware of the fraudulent insertion of vaccination data, the facts of which were unknown until the present”.

• US ENTRY. The adulteration of Bolsonaro's vaccination record was made on December 21, shortly before the former Brazilian president traveled to the United States. Bolsonaro left for Orlando, Florida, on December 30, the day before he officially left the presidency. The Center for Disease Control (CDC), the U.S. government agency which oversees public health policies, requires proof of vaccination from all foreigners entering the country, but makes an exception for those traveling with a diplomatic passport. US immigration authorities have never clarified under what condition Bolsonaro entered the country – whether with a diplomatic passport or with a regular tourist visa. Asked if Bolsonaro may have violated US laws by presenting a falsified vaccination certificate, the US government declined to comment on the specific case.

• MARIELLE CASE. The Federal Police picked up mentions of the murder of councilwoman Marielle Franco in the wiretaps that were carried out during investigations into fraud of vaccination cards. In one of the legally authorized phone tappings, the lawyer and former police officer Ailton Barros appears telling someone that he knows who ordered the killing of Marielle Franco. Barros insinuates that former Bolsonarist advisor Marcelo Siciliano may be behind the crime. Siciliano had previously been mentioned in the investigations into the murder of the Rio de Janeiro city councilor. Barros was the person who acted as an intermediary between Siciliano and the members of Bolsonaro's team who were involved in the fraud of vaccination cards.

• BOLSONARO'S VERSION. Bolsonaro even cried during an interview on Jovem Pan, a media conglomerate sympathetic to the extreme right. He said he has never been vaccinated for COVID-19 and has never asked anyone to tamper with his vaccination records. The president used the word “abusive” (esculacho) to refer to the operation of the Federal Police. This expression is used by criminals in Rio de Janeiro when they refer to police actions that are intended to humiliate and demoralize someone. Politicians loyal to the former president attributed the actions to political persecution by the Lula government. However, significant figures who have supported Bolsonaro – such as the former vice president and now senator, General Hamilton Mourão, and the former Lava Jato judge and now Senator Sergio Moro – kept silent on their social networks about what happened.

• SUPREME POWERS. This entire investigation into fraud in vaccination cards is part of a much broader investigation, which has been conducted for months by Alexandre de Moraes, a justice on the Brazilian Supreme Court. This broader inquiry investigates the action of extreme right-wing digital militias that acted to subvert the democratic order in Brazil and to threaten justices on the Supreme Court. The scope of this investigation has given a lot of power to Moraes, a justice who has taken the lead in the criminal prosecution of perpetrators of anti-democratic acts, but whose performance has received criticism from jurists concerned about the decisive and single-minded judicial orders he has issued.

• TALKS ABOUT A COUP D’ETAT. In addition to being caught on recordings talking about the murder of Marielle Franco, Ailton Barros, a former member of the military, also appears discussing the details of a military coup d’état to prevent Lula's inauguration, shortly after the Worker’s Party’s electoral victory. In the recorded conversation Barros insists that the army commander should make a statement on television, informing the population about his refusal to accept the results of the polls. In addition, Barros argues that the military should arrest the Supreme Court Justice Alexandre de Moraes to prevent him from issuing judicial decisions contrary to the coup. The discovery of the dialogue shows that figures very close to Bolsonaro were directly involved in the coup planning that even resulted in a draft of a military intervention decree, which was found in the house of Bolsonaro's former minister of justice during investigations into the January 8, 2023 failed coup attempt.

Feature Article

by Pablo Ibañez

The Centrality of the Regional Environment to the US in Relationship to Chinese Expansion

Lula's visit to China in April 2023 resulted in almost fifty agreements, many of which are in sensitive areas in technologies, such as aerospace, information, and communication (ICT). Common sense usually sees the Chinese presence in Brazil, as well as other countries in Latin America, based on its interests in areas related to agriculture, raw materials, and energy. The meeting seems to have made it clear, therefore, that the focus has evolved and now goes beyond the issues related to the export of primary goods to China.

The official note from the Chinese Embassy in Brazil explained something much deeper. In addition to not mentioning the agricultural sector, which has been consolidated due to Brazilian exports and the presence of Chinese companies in the production and acquisition of land in Brazil, and the further development of technology via ICT, there was emphasis on a future with greater participation in competitiveness, high-end added value, space technology, climate change (offshore wind projects, solar energy and hydrogen), low carbon innovation, biodiversity, the fight against hunger and poverty, and projects in the areas of education, tourism and culture. That is, China represents a spectrum of influence far beyond what we have today.

Members of the business sector are skeptical about the fulfillment of all of the signed agreements. On the Chinese side, much is said about bureaucracy and the difficulty of getting some of these goals off the ground. In relation to the Brazil, the main issue is that the Chinese do not fulfill everything they promise. Regardless of the two versions, the governments of both countries celebrated the beginning of a 'new era'.

The regional context, in turn, follows the same trend of the deepening presence of the Asian dragon. Direct investments in recent years have been massive and have been accompanied by diplomatic commitments to recognize “one China.” Most countries in the region have stopped recognizing Taiwan, including Panama. Now, even Paraguay, the last bastion, is studying the possibility of changing its position.

From an economic point of view, according to United Nations Conference on Trade and Development data for 2022, Chinese direct foreign investment in Latin America in recent decades has increased significantly, especially in Brazil. China's participation in the region had a slight decrease for the 2020-2022 period, but that doesn’t represent the previous upward trend, which, according to the survey, will tend to increase in coming years. Brazil did not follow regional patterns, as it recorded a 207% increase in Chinese investments in 2021 alone, with a focus on energy and ICT areas. In terms of trade, it is now the second largest partner in the region, second only to the United States.

Regarding South America in particular, in the last decade its member countries failed to carry out regional integration, due to local political and economic instabilities, something that has hindered the efforts undertaken since at least the 1990s. Therefore, today, there is no institution or regional authority that speaks for the whole. It is a relatively fragmented region in which the Chinese strategy is implemented on a case-by-case basis.

Among the factors that explain the increased Chinese presence in the region, the one that has emerged as significant is the ease of trade in basic products and its interests in strategic resources – energy, minerals, and agriculture. Added to this is the centrality that the New Silk Road Belt and Road Initiative has had in promoting agreements, investments and loans in infrastructure, which has promoted a massive participation of South Americans in the Chinese strategy. Brazil should soon sign the agreement, which will mean that only Colombia and Paraguay are not part of the arrangement. And the recent Paraguayan presidential debates have been guided by a discussion on whether or not to increase the Chinese presence in the local economy.

The issue of decreasing dependency on the dollar also gains greater importance. The Argentine case is the most serious at the moment, and discussions about the use of other currencies are increasing. In this regard, China stands out as a power in favor of exchanges in local currencies.

Since the 2000s, US geopolitics has focused on faraway regions. According to exponents of US strategic thinking, such as John Mearsheimer, Washington must position itself and act in an increasingly incisive way in the Asia Pacific. Even if they do so and leave aside a focus on areas of the world closer to home, they still run the risk of witnessing Chinese supremacy in the region.

China has demonstrated great institutional ability in adapting to the different socio-spatial realities of South America, even co-opting traditional US partners. This flexibility seems to be lacking in the United States, especially in the centrality it places of its international actions, which are always so distant from its neighbors. As the region is extremely lacking in infrastructure, technology, and essential environmental assets for current geopolitics, more assertive actions, based on feasible financing, could bring investments and a significant presence in the region consistent with effective demands. Maintaining a traditional position, given such an altered geopolitical reality, will not bring sensitive strategic benefits in the current complex international situation.

Pablo Ibanez has a doctorate in geopolitics from the University of São Paulo. He was a researcher at the Pan American Health Organization (OPAS), investigating the regionalization of health in the Amazon region. He was also a consultant to the Institute of Applied Economic Research (IPEA) in the evaluation of industrial and innovation policies. He has been a researcher at FUDAN University in Shanghai. At the time, he was responsible for analyzing the role of technological innovation in the expansion of the Belt and Road Initiative, the New Silk Road. He is currently an Adjunct Professor at the Federal Rural University of Rio de Janeiro, where he coordinates the Observatory of Asian Studies and participates in the Laboratory of Economic and Political Geography.

Feature articles express the opinions of the author and do not necessarily reflect the opinions of the editors or WBO.