Crisis in Brazil is a leading international risk in 2016

Crisis in Brazil is a leading international risk in 2016
JAMIL CHAD - CORRESPONDENT IN GENEVA - S. PAULO STATE
January 4, 2016 | 10h 15
For American consultancy, situation in the country is among the ten events presenting the highest risk in the world
Updated at 15h34
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GENEVA - The political and economic crisis in Brazil is among the top ten risks to the international scene in 2016. The alert is the Eurasia Group consulting firm that published its ranking of the facts and risk situations to the world in the year. Brazil appears in eighth position, and foreign analysts point out that even former President Luiz Inacio Lula da Silva (PT) can "act a bit like (Hugo) Chavez and ask workers to intervene." But they rule out the possibility that a revolution has space to occur.
Government crisis in Brazil's international prominence
Crisis in the government of Brazil's international prominence
"The fall in the Brazilian economy will be great," said Ian Bremmer, president of consulting when asked by the state. Called "guru on the rise" by The Economist, Bremmer is a professor at New York University and created a first political risk index used by Wall Street.
"As much as the stock market in Brazil and its currency have suffered in 2015, the political and economic crisis will worsen during 2016," warned the Eurasia.
According to the consultancy, "Brazil is in the midst of a 'deep recession' 'and it can last" multiple years ". "President Dilma Rousseff (PT) is fighting for his political survival, and political and economic crisis is expected to worsen in 2016," he insisted.
For consulting, betting that there is a political solution should not be viewed with optimism. "The battle over Rousseff's impeachment should not put an end to the current political deadlock", said the group, one of the world's largest in terms of political risk analysis.
"If she survive, which seems to be the case, his government will not gain the political strength needed to push forward the economic reforms that the country needs to address its fiscal deficit increasing," he said. "To ensure the support you need to prevent the impeachment in Congress, Rousseff will have to compromise your left base. These openings will weaken their fiscal agenda and explain the decision to replace his minister of Orthodox Finance Joaquim Levy for a less hard on fiscal terms, Nelson Barbosa, "he said.
The choice of Michel Temer (PMDB) is not frowned upon. "If Rousseff fall, the government led by Vice President Michel Temer will not do much better and the division between the parties will endure far beyond impeachment."
For the group, the problems faced by Temer would offset the fact that the country restart the political process with a new government. In the evaluation of consulting, investigations into the PMDB will increase during Operation Lava Jet, "implying members of his new government and reducing incentives for the PSDB continue to give him his already tenuous support."
Analysts also point out that, assuming the government, Temer will have to live with the PT in opposition, in a scenario in which Dilma's party will be eager to do it "pay by the fall" of the president. The PT will also want to show their disagreement with his "neo-liberal agenda."
"With the unemployment rate rising to over 10% in the course of the year, the policy space of the new president will be deeply limited."
The firm also points to the impact of Operation Lava jet. "The president will still be vulnerable to the case of Lava Jet corruption," he said. "This should reveal new evidence of irregularities within his party, the PT, which can also lead to new applications for his impeachment."
Squid. For Eurasia, your destination can be set even faster if "his mentor and former President Luiz Inacio Lula da Silva feel the pressure of the investigation and turn against Rousseff's reform agenda."
The former president himself may have a central role in 2016, in the assessment of analysts.
"Lula does not hesitate to speak of conspiracy and is willing to act a bit like Chavez, take to the streets and ask them to intervene workers. But we do not see room for a revolution to be accepted," said Bremmer.
For him, there would be this option in Brazilian society on what he calls "strong institutions", a "mature middle class" and "level of education".
Still, in assessing the group, Dilma continue in power, it will be a president increasingly captive of radical elements of his party "in conflict with Congress and that can lead to a" political paralysis ".
Impact. For Bremmer, the economic impact of this political impasse will be important. "The market will punish Brazil given the lack of ability to make reforms," ​​he said. "But perhaps the crisis that Brazil needs", he said.
The impact promises to affect even the Olympic Games, taking place in Rio de Janeiro in August. "It will be a bad event. There will be demonstration, popular dissatisfaction is high and will not be quiet as the World Cup," he said.
He said the venues in the 2016 Games are distant from one another and thus can be easy for protesters closed the access roads to the sites. "It will be a year to go to Brazil. There will be a place for the party," he said.
Election. The Eurasia estimates that "the cleanest way out of this political crisis" is in the hands of the Supreme Electoral Tribunal, which evaluates allegations of fraud in the 2014 presidential elections. "" If the Court find illegal financing evidences campaign, she can summon elections within 90 days. Although unlikely, such a result would have the benefit of putting a new president elected with new political legitimacy. "
"A new government would benefit from an initial wave of optimism in the private sector. A new president would ask national unity, count at least the tacit support of the PSDB and would propose structural economic reforms." But the very advice not bet in this scenario and does not believe that this will occur.
"In the end, Brazil would have a year of lower risk if there was an election and that the country got rid of Dilma," Bremmer said. In his evaluation, a "light at the end of the tunnel may come the end of 2016 or early 2017, when it begins to be clear who will compete in the 2018 elections" Many people still want to invest in Brazil, "he said.
Besides Brazil, the list of the biggest risks for 2016 is led by the fragility of the alliance between the United States and European Union, which promises to have a "global impact on the political risk."
According to Eurasia, the report "Top Risks" of the year trying to "identify the most challenging political and geopolitical trends and stress points for global investors and market participants in 2016".
Second in the ranking is the risk that Europe closes its borders before the influx of refugees and the terrorist threat. The impact of the slowdown in China comes in third position, followed by the terrorist threat of the Islamic State.
The fifth position in the rankings is Saudi Arabia, before internal destabilization signals. In the sixth, the consulting points to the emergence of magnates of the technology sector as political actors, able to influence international decisions.
The seventh position among the major risks in 2016 is the strengthening of "unpredictable leaders," as Vladimir Putin and Recep Tayyip Erdogan.
If Brazil is in eighth, the ninth is also related to emerging countries "lack of free elections" in many of them. The ranking is completed with the political situation in Turkey and the target Erdogan.