January 23, 2019

Jair Bolsonaro was inaugurated as president of Brazil on January 1. Since taking the helm of Latin America’s largest democracy, the Bolsonaro administration has announced controversial decrees and discussed necessary reforms. The Atlantic Council’s Adrienne Arsht Latin America Center, in partnership with the Brazilian Center for International Relations (CEBRI), hosted a public event on the heels of the Davos Economic Forum and just three weeks following the inauguration to discuss the next one hundred days of the new administration and the potential impacts of its policy proposals. Panelists included Fabio Kanczuk, executive director for Brazil at the World Bank, newly appointed by the Brazilian administration; Dr. José Pio Borges, chair of the board of trustees for CEBRI; and Pablo Bentes, managing director for international trade and investment at Steptoe and Johnson, LLC.

Jason Marczak, director of the Adrienne Arsht Latin America Center, set the stage for the discussion stating that “President Bolsonaro entered office on a wave of popularity, and his approval ratings have remained high since. This stems from aspirations that he will be able to fix long-simmering challenges in Brazil.”

Roberta Braga, associate director at the Adrienne Arsht Latin America Center, moderated the discussion by posing the first question to Fabio Kanczuk, who commented on the impact of Bolsonaro’s speech in Davos. Kanczuk praised the speech for its strong content, reminding however that many of the large reforms proposed by the Bolsonaro administration will take time to materialize. In the short term, Kanczuk predicted the social security reform and other reforms aimed at slimming bureaucracy in the government will serve as positive signs for international investors.

Regarding the political will to pass necessary reforms, Dr. José Pio Borges noted the unprecedented turnover within Congress in the 2018 elections, highlighting the upcoming elections for presidencies of the lower and upper houses of Congress as essential in determining the trajectory for transformations in Brazil. Most notably, Borges noted pension reform is a necessary but insufficient component of increasing investment and securing economic growth in Brazil. Stagnation of productivity is another pressing issue that must be tackled.

On the economic front, Pablo Bentes addressed the importance of Brazil’s new economic minister, Paulo Guedes, who, he said, “has been at the helm of perhaps the greatest overhaul in the executive administration of Brazil in the last 30 years.” Bentes commented that Guedes’s increasing power over trade, finance, and economic planning in Brazil could be viewed as a form of power-sharing with President Bolsonaro, and he made clear that Guedes’s number one priority will be addressing Brazil’s acute financial crisis. He predicted Guedes will likely attempt to use the near-insolvency of numerous Brazilian states as a bargaining chip to progress on the necessary but unpopular pension reform.

Pivoting the conversation toward the ways Brazil will better open itself up to global investors, Borges acknowledged the need to stabilize both the oil and infrastructure sectors, which he affirmed could serve as future sources for international investment. He also doubled down on his claim that pension reform will serve as a critical inflection point for the Brazilian market. Kanczuk noted that international prospects are already beginning to look more promising. He ended the conversation by saying, “I am very optimistic, at least in the short term. I think that investors and the market will be very optimistic, too.”

Shifting to Brazil’s leadership on the world stage, the panel discussed Brazil’s changing environmental and agricultural policies under the new administration, and how these might impact the country’s standing in multilateral settings. Bentes noted that, although President Bolsonaro originally took strong positions that suggested dramatic environmental overhauls, the administration has shown signs of grasping that environmental protection is a very important topic for trade partners, particularly in the European Union. Bentes noted that Bolsonaro’s speech at Davos can be viewed as “an asserted effort to assuage those concerns and to give a strong signal that his goal is to combine economic development with environmental protection.” Borges agreed with this analysis, stating that “for Brazil to double its agricultural production, it needs to have environmental standards. We don’t need one square meter from the Amazon to do so.”

After acknowledging the impact of environmental policy on trade relations, the panel addressed Brazil’s relationship with China and the United States. Borges expressed reservations about the productivity of the US-China trade war and encouraged Brazil to continue pursuing a partnership with both countries moving forward. Kanczuk agreed, noting that opening up the Brazilian market to trade would be one of the most consequential actions the Bolsonaro administration could take, and that it would be possible to execute without Congressional approval.

Braga then brought up the topic of corruption. The panel discussed the probability of the Bolsonaro administration passing systemic corruption reform considering recent allegations of corruption against those close to the administration itself. All three panelists expressed concern over corruption and a commitment to combatting it, with Bentes noting that as allegations become more serious, so too should the call for reform.