BRAZIL – TEMER LANGUISHING, LULA AND HIS OLD COMPANIONS CALLING FOR DIRECT ELECTIONS

Michel Temer continues to languish gradually in the chair of power.

The increasingly violent demonstrations and the rise of extremism in Brazilian society, which have forced and summoned the armed forces, are just a few more warnings to the power instituted. Even if Temer remains in the presidency until the end of his term, he has lost all strength or credibility. He seems to be unable to carry out the reforms proposed by his government.

A number of accusations have spread among all levels of power - legislative, executive and judicial. Now Temer may have to respond in writing to a testimony hold by the Federal Police, about the audio that leaked from a conversation between him and Joesley Batista which put the country in even greater agony. The defense claims that now is not the time to inquiries, because this audio has not  been examined yet, therefore the best that Michel Temer has to do is remaining silent.

To complete the picture, the Supreme Electoral Court ruling on the Dilma / Temer case will be resumed on June 6 - possible cassation for alleged illegal funding in the 2014 presidential campaign.

We have already figured out Temer is resilient trying to save his mandate. Thus, he seeks reforms advance at all costs. Despite the reforms being central, Temer is politically destroyed.

As for Lula Inácio da Silva, he increasingly seeks confrontation and victimization politics, in addition to trying to gather around him his party, unions, and all movements linked to the Brazilian left wing. His defense has also been very active, trying to discredit Sergio Moro (Judge of the operation “Lava Jato”) and obstructing his investigation even proposing his compulsory departure.

Movements, unions and left-wing parties are in the hustle and bustle, promoting direct elections, most likely to bring Lula back to the presidency, and thus return to the same kind of political practices that eventually led to one of the most serious crises in Brazil

One of the most beautiful and charismatic periods in Brazil was the so-called "Diretas Já", in 1984. At that time, the Workers' Party (WP) did not support the direct voting campaign, as it contradicted the interests of then-candidate Lula. Today, the WP is campaigning for direct elections, after having already been against the 1988 Constitution, the Real Plan and the Fiscal Responsibility Law (2000). All these prerogatives represented social, political and economic advances.

Aren’t we watching a left wing struggle in favor of its party interests and to protect Lula from prison, rather than actually supporting the development of Brazilian society?

Miguel Verde - Senior Consultant, Professor of International Relations

PORTUGAL: A GLIMPSE INTO HOW PORTUGAL IS HANDLING THE NEW STAGE

Nowadays Portugal is full of optimistic news that is spreading throughout society.

It is true we’ve had economic growth, reduced the deficit and unemployment is decreasing. Yet, this stage is rooted more on the current conjunctural economy.

If we observe an economic miracle is most of all due to tourism. The restore of historic town centres is also a consequence of tourism revival and local housing. Today, about one third of beds for tourists is linked to local housing. How was that possible? New platforms in the internet were developed that approach people, new rental laws were implemented, and finally, Portugal had a secretary of state for tourism – Adolfo Mesquita Nunes, who took some important measures to uncomplicate business. Unfortunately, when some businesses have success Socialist goverments increase taxes and complicate them with bureaucracy. When economic difficulties or bankruptcy arise, Socialism creates state subsidies to assist the companies which had been previously destroyed.

The reforms that are spoken of, or at least the foundations for it, haven’t been created, and this allows us to look into the future with some apprehension - a structural growth would give us much more guarantees.

Most of the portuguese prefer to be distracted by trivialities: football, gossips, and being deceived by the sympathetic words of some supposed heralds of truth.

Football is over, but for those who don’t appreciate football commentators, I have to remind we're  now going to have endless speculation about market transfers.

Gossip will continue to be part of our daily lives. It is part of human nature. The most recent and eye-catching for our media is finding out if Madonna will come to live in Portugal - after all Portugal is trendy, as the exponential growth of our tourism has shown.

And now that we are approaching the so-called "silly season" we should have at least some points of interest so that we can “recharge our batteries” on vacation.

Local elections will take place – there’s the likelihhod of the right-wing parties downfall on the one hand and the remarkability of some individualities in charge of some municipalities without partisan support on the other.

It should also be singled out the general strike in the civil service was convenient for all involved. The unions gave a sign of life, the Communists, at least in appearance, demonstrated some autonomy in relation to the Socialist party, which also benefited because the attitude and language on that day showed some restraint.

Finally, in international affairs, the country has shown some indifference with regard to the conditions of the portuguese residing in Venezuela, and the government in particular, seems to remember the refugee situation only from time to time.

Miguel Verde - Senior Consultant, Professor of International Relations

MOZAMBIQUE: UNDERSTANDING AND HOPES, BUT ...

The two main parties - Mozambique Liberation Front (FRELIMO) and Mozambique National Resistance (RENAMO) are drawing an agreement that hopefully will allow the country to celebrate an effective peace.

Notwithstanding the seeming goodwill of both sides, a number of impedments have arisen for its implementation, notably in the revision of the laws for the decentralization of the State and in military affairs, particularly the question of the reintegration of RENAMO armed men into the regular army and the non-politization of the armed forces.

This sluggish process is not surprising, since it was already foreseen how much these issues can generate altercations.

In any case, it is preferable that the peace settling take some time, than to conclude a fake agreement, to be soon disrespected thereafter.

Moreover, Frelimo, the government party, must pay attention to what the population is thinking, especially after the general population  impoverishment and the course taken on peace negotiations.

Let us not forget what was already highlighted in the "GlobalSProspective". External support to Mozambique is considerably lower as a result of the crisis generated by the hidden debts contracted by state-owned companies over Guebuza's term.

Miguel Verde - Senior Consultant, Professor of International Relations

ANGOLA: JOÃO LOURENÇO AND THE COMBAT TO CORRUPTION

General João Lourenço, candidate for the angolan presidency appointed by José Eduardo dos Santos is defending in his rallies the fight against corruption.

There is clear evidence that institutionalized corruption in Angolan governing bodies is perhaps the biggest problem Angola has experienced for many years. For those who are distracted, the words spoken by João Lourenço can mean signs of change, however, a well-informed person acknowledges there’s an endemic corruption in MPLA for a long time.

Recently, after a plea bargaining at the Car Wash operation (Brazil), an Angolan company named ORION (advertising and production agency) was identified as having received USD $ 15 million from the multinational Odebrecht in Angola. Not going into details, it was revealed that this figure would be part of a scheme set up to finance the MPLA in the 2012 election campaign.

According to the portuguese jurist Rui Verde, the organic law on general elections prevents Angolan political parties from receiving external funding. Thus we had illegal financing from a foreign company (Odebrecht) to MPLA, through a company in which João Lourenço has a share.

Therefore, Angola has a candidate that despite strongly enhancing fight against corruption, both his party and himself don’t seem to be a good example.

So, what practical actions can João Lourenço take in the fight against corruption. According to the jurist Rui Verde, he could start with these 5 simple measures:

- Remove the current Attorney General of the Republic, General João Maria de Sousa. Its ineffectiveness in the fight against corruption is appalling and we have already seen there are several people with the ability to carry out such a position.

- Create a special unit to combat corruption in the CIS (Criminal Investigation Service) with its own independent leadership.

- The consummation in Angola of investigations already carried out, or in progress abroad. Take for example, the aforementioned Odebrecht case.

- Commit to review the sons’ President participation on the great projects.

- Finally, even for ethic reasons, José Eduardo dos Santos’ sons should be removed from all non-elective public functions.

Obviously there are other measures to be taken, but if you start with these 5, ultimately one can observe signs of change.

João Dias - Senior Consultant

BRAZIL – DIRECT ELECTIONS, YES OR NO?

Brazil is facing another crisis that has left the country on the edge of the abyss in the political, economic and institutional field.

The survival of Michel Temer as President seems like an increasingly remote scenario. After a conversation recording between Temer and Joesley Batista (one of the owners of JBS company - the world's largest beef company), it came to the public, the President stands between the rock and a hard place, since, among other things, had allegedly given consent to pay a bribe to Eduardo Cunha (former president of the Chamber of Deputies and currently in jail) to buy his silence. In fact, this recording after much information and counterinformation, does not prove that fact. Nevertheless, it shows Temer was at least conniving in the various information provided by the businessman. He should have reported the crimes confessed by Joesley, or even immediately issued a jail sentence.

An exasperated hysterism in the disclosure of this recording by the media group Globo (a biased opinion as it was in the case of Dilma's impeachment), demonstrated it was a trap perpetrated against the president and involved several political and economic interests. This recording has been edited at least 70 times. How does the Attorney General's Office (AGO) accept it?

Having said that, this doesn’t mean Temer is a victim, therefore innocent. Anything that involves the content of this hearing should be investigated as quickly as possible, and the President, surely should be fully investigated. Presently, this recording doesn’t prove Temer bought the silence of Eduardo Cunha, in relation to “Lava Jato” scandal.

In this complex plot of interests, which unfortunately Brazil has accustomed us to, there are no saints.

After a period of economic recovery and job creation, as well as important reforms for the country (welfare and labor), we came across with the darkest economic week since Temer took office.

The Batista brothers, beneficiaries of this plea-bargaining, were treated by the AGO almost as heroes, when in reality they are nothing but thugs. Former State Prosecutor Marcelo Miller, Janot's right arm man in the “Lava Jato” work group until March of this year, currently works at the law firm hired by Joesley Batista to represent the JBS group in closing a leniency agreement being signed with the public prosecutor’s office. This gentleman, Marcelo is thus an JBS employee and managed to conjecture a fabulous agreement for the Batista brothers.

.Aecio Neves (candidate to Brazil’s presidency in 2014)  also suffered consequences from this plea-bargaining, being removed from the Senate and the presidency of his party. As for Lula and Dilma, they allegedly received illicitly 150 million USD from JBS in foreign accounts.

Who is taking advantage from all this?

• The Batista brothers agreed to pay R$ 225 million in the settlement agreement. They get safe conduct and now live in New Yourk.  After all the financial speculation that this whole situation generated, they made about  R$ 1 billion in the purchase of dollars.

• The left wing parties, with special emphasis on the PT (Workers Party) and Lula da Silva. Lula managed to divert the attention of his trial for some time. He also calls for the immediate removal of President Temer and the convening of direct elections. The left wing movements believe Lula can win a direct election in this context.

The great loser, of course, is President Temer, his situation is rather shaky. Even if he succeeds in maintaining power, he has lost all the strength or credibility to be the “helmsman” of  reforms that are already under way. AGO already accuses him of 3 crimes - Obstruction of justice, passive corruption and organised crime. The present situation may lead into the annulment of his mandate, his resignation or move forward again to an impeachment process.

If any of these perspectives move forward, the following question arises: should Brazil advance to direct or indirect elections? The direct elections are being proclaimed by the PT and other left wing parties, claiming that with direct elections itb will be restored the truth and democracy in the political system. Many people are deluded with this kind of bait. It should be noted, however, that article 81 of the Federal Constitution in such circumstances with elections scheduled for 2018 is very clear and considers only indirect elections (national congress) as viable. The President elected would only hold office until 2018, the year in which direct election will take place. This movement which aims direct elections is led by PT and usual supporters. In addition to disrespecting the Constitution, this movement doesn’t  intend to preserve democracy, but to ensure Lula´s election. It doesn’t recognise Lula and Dilma’s crimes, thereby isn’t concerned with Brazil. The leftist parties advocate a bolivarianism which has brought only poverty and misery – see Venezuela.

In short, the Brazilian citizen should take another look at the ways the country can overcome this crisis and not enter through cunning ways. He should require the law enforcement and the punishment of all criminals, regardless of the political faction

Ultimately, this and other recent episodes of Brazilian politics are putting the political system at risk.

Miguel Verde - Senior Consultant, Professor of International Relations

PORTUGAL: A SWINDLER GROWTH

After a cheerful and vibrant weekend for the portuguese - a visit from Pope Francis to Fatima, a championship won by Benfica and the unprecedented and resounding victory at the Eurovision song contest; we also had the announcement that Portugal had a 2,8% economic growth in the first quarter of this year.

If we check portuguese and some international media, we deduct  that Portugal, after a very serious crisis which has shaken but not overturned the existing “status quo”, is now on the "crest of the wave". The growth of tourism, exports and foreign investment (real estate for example) attest the external factos are being more significant than domestic ones and are promoting the favorable economic performance over the last years.

This situation boosts current socialist government – austerity continues though at lower levels.  Most importantly, the increase of the foreign investment is a consequence of the international scenario: drop in oil prices, crisis in Syria and Middle East and the widespread crisis / stalemate that is crumbling in key EU countries.

The previous right-wing government, although it had applied well-known austerity measures, was implementing measures promoted by Troika, and eventually applied this austerity in disproportionate portions.

Despite different policies and the rhetoric which distances the last two governments, current economic outcomes are unlikely to differ greatly regardless of whether we have a leftist or right-wing government.

António Costa’s government, continues eagerly following the Socratic’s government steps. One shouldn’t neglect Socrates also presented very interesting economic statistics beforeTroika’s intervention.

Passos Coelho, the former Prime Minister could have had a feast for having met austerity and the country survived the crisis. Unfortunately, in effect the portuguese right wing doesn’t proceed the liberal policies which value the investment, the competitiveness and the productivity.

As for the current government, it masters the art of the illusion through an efficient propaganda. That will probably bring victories to the Socialists both in the next local government and legislative elections.

This country has recently reached unique standards in music, tourism and sport, but at political level it continues a doldrums of ideas.

In short, let’s not forget what recent economic history taught, especially over the Socratic government period.

Miguel Verde - Senior Consultant, Professor of International Relations

MOZAMBIQUE: TRANSPARENCY IS ESSENTIAL

The US consulting company Kroll has just submitted its audit report on the so-called "hidden debts" to the Attorney General's Office (AGO), which is linked to three state-owned companies - Ematum (Mozambican Tuna Company), Proindicus and Mozambique Asset Management.

During the years 2013-2014 these companies contracted a debt in the amount of $ 2.2 billion, with government guarantees, but without the approval of Parliament or inscribed in the public accounts. This lack of transparency was during Armando Guebuza's presidential mandate (he became the owner of several state-owned companies), although the knowledge of this situation was already under Filipe Nyusi’s mandate.

The disclosure of the report will be released by AGO, and although no date has been se yett, the IMF extols this disclosure, hoping that this will happen during the current month.

It is essential to re-establish a climate of confidence in government agencies after such an episode, as this has generated strong indications of budgetary legislation violation, as well as representing a criminal offense in the form of abuse of office or function. In addition, as the Mozambican state assumed the inability to pay benefits to creditors, and the scandal burst (April 2016), the IMF and other international financial entities froze the various State budget support.

There are great expectations about this report, although it has already been pointed out by the AGO that the judicial confidentiality would be safeguarded.

Several questions (where is the Money?) have arisen since the beginning of this scandal, however, the fact that this report was drawn up by an independent foreign company is already an indication that transparency might not be an unattainable mirage. Transparency, macroeconomic reforms as well as the struggle for an effective peace are the foundation of a more reliable State.

Miguel Verde - Senior Consultant, Professor of International Relations

ANGOLA: ANGOLAN ECONOMY MODEST GROWTH

The IMF forecasts a 1.3% growth in the Angolan economy this year, especially at the expense of increasing public spending. After the suffocating stagnation that struck the country last year it looks like growth might again be a reality, not only in 2017 but also for next year (1.5%).

Although this  auspicious growth in the face of current scenario, it isn’t naive, since the presidential elections will take place next August; Hence a more expansionary budget perspective.

The Angolan economy, indeed, has kept a growth below average since the beginning of the decade. Among other things, the IMF warns about the accumulation of arrears by the State, and allow me to add: the country's excessive dependence on oil. The low-price trend of recent years has led to an imbalance in public accounts due to declining fiscal revenues, coupled with the global economic slowdown.

The IMF also highlights the importance of fiscal consolidation, as the decrease in revenues has led to high inflation - forecasting 27% this year and 17.8% in 2018.

Finally, with regard to public debt, the IMF stresses that the more restrictive financing conditions and the greater acknowledgement to debt financing have worsened the cost of servicing the debt.

P.S.- There were rumors the President José Eduardo dos Santos health condition worsened. This circumstance has left his MPLA comrades apprehensive. We must bear in mind the presidential campaign of General João Lourenço (MPLA candidate) is controlled by the Republic Presidency. José Eduardo dos Santos is only the second President since Angola’s Independence (1975) and has been in power for 37 years.

João Dias - Senior Consultant

BRAZIL - RETAIL TO GROW IN 2017

The first months of 2017 brought good news to the retail trade, after 2 consecutive years of retraction. Large companies that depend on consumer spending have increased revenue and profit in the first three months of the year. The course of the following months seems to be promising not only for big companies with shares in the stock market, but also for small, medium-sized retailers.

There is a very positive reaction in several sectors such as clothing, construction material sector, or even in the optical industries.

According to some analysts March was the big turning point in revenue growth; the new growth prospects point to a recovery in domestic consumption that may result into a real boost.

Notwithstanding these good prospects, there’s some research showing that six out of ten consumers want to cut spending in May and only 15% of Brazilian have a bigger income than monthly expenditure, thus the level of indebtedness tends to increase.

The euphoria or exaggerated optimism that has been Brazilian hallmark for many years, today only gives way to moderate optimism.

Miguel Verde - Senior Consultant, Professor of International Relations

PORTUGAL- CGD vs. POPULATION: WHO’S TO BLAME?

The last few months have brought CGD (Caixa Geral de Depósitos) to the front pages of the newspapers. The diverse factors responsible for the mediatisation of the state bank have not been the noblest, and many times we have the idea that the bank's destiny seems doomed to a hectic reform, or even to a privatization.

The latest controversy involves the closure of several bank branches, leading to protests in some countryside regions – Almeida Council the most visible. Under this constant turmoil of the state bank, the trend will be to look for the culprits. Is CGD, through its managers, the culprit? Does population understand the need of the bank reorganisation?

As a matter of fact, both CGD and the citizens are right. Both are victims of the bank's administrative past, as well as the policies followed by the past governments with regard to the countryside where the investment is nil.

Desertification in the countryside intensifies and no measures are taken - the loss of population, the loss of Health Centers, the loss of equipment, and now it is the loss of CGD branches. People have the right to be outraged, but CGD is not to blame for this. The Bank is not responsible for creating wealth in the countryside. The decrease in population is due to goverment’s lack of investment. Furthermore, we mustn’t forget CGD has a program approved in Brussels which, because of the recapitalization, requires a decrease on expenditure, both in reducing employees and branches.

Thus, who should we assign responsibilities to? Previous governments, namely the Socrates government and previous administrations - Armando Vara and Santos Ferreira, for example, who let CGD in an odd situation where it was necessary to inject a lot of money.

Miguel Verde - Senior Consultant, Professor of International Relations

MOZAMBIQUE: TOWARDS EFFECTIVE PEACE?

The recent times have been prodigal in optimistic statements regarding a an effective peace process, both by FRELIMO and RENAMO.

The center of the country, notably the Gorongosa region, has undergone a progressive military demobilization, with reports and testimony from the population itself that the few remaining security and defensive militar forces ambulate unarmed.

Afonso Dhlakama, RENAMO's historic leader, points out that he has maintains regular contacts with President Filipe Nyusi and announced a "truce without deadlines". Effective peace is starting to become a reality, and it shows we are facing increased confidence among belligerent factions.

The negotiating agenda aims not only the decentralization and cessation of clashes, but also integrating the depoliticization of the Defense and Security Forces and the disarmament of the opposition armed wing and their reintegration into civilian life.

In any case, if peace is to become effective, there must be goodwill on both sides and a massive support from all sectors of society.

Miguel Verde - Senior Consultant, Professor of International Relations

ANGOLA: OIL ACTIVITY IS IN CRISIS

The high cost of producing the barrel of oil and the steady decline in price on the international market is leading two of the world's largest oil companies, Chevron and Exxon to rethink their business strategy in Angola. The possibility of abandoning activity in this country is not out of the question.

Sonangol (the Angolan state oil company) led by Isabel dos Santos faces serious cash-flow difficulties and has for some time been unable to monitor with foreign investments. In addition to requiring Chevron to reduce considerably its budget (40% this year), it often fails to respond to proposed new projects, such as Exxon intension to develop a drilling project of 40 to 60 new oil wells in deep waters.

This skewed policy in which nothing is decided is attributed to Isabel dos Santos, accused by many of not being able to manage Sonangol and only being interested in personal enrichment.

Impatience has already taken over both Chevron and Exxon. Another good example of careless management is BP - itself had planned an investment of $ 800 million in Angola - after a four months deadlock the proposal succumbed.

With the reduction of investments in this sector, production will naturally tend to fall and the national budget will suffer even more harmful consequences than today.

The Angolan State can’t neglect this created scenario, as these and other companies will certainly change their strategy and invest in more attractive markets.

João Dias - Senior Consultant

BRAZIL - THE LABOR REFORM: WILL IT HARM THE WORKER’S CONDITION?

Last Friday, April 28, we had a general strike in Brazil, led by the Central Workers’ Union (CUT) and the Workers' Party (PT). This kind of strike had not been occuring since 1996, and has been another mote of discord between the various societal and political groups.

Firstly, it should be enhanced that this general strike has been used mainly by leftist parties and movements, especially the PT and the CUT, to destabilize political power and preserve its influence on workers.

Secondly, we must remember that this labor reform was passed by a majority in the Chamber of Deputies, but it still has to go through the senate and finally be ratified by President Michel Temer.

Now, the prime question one may arises is what rights will the worker lose? None! Yes, in fact, this whole frenzy about this reform is only an exaggerated hysteria, mainly fueled by the PT and CUT, because they realize their sphere of influence tends to decreasei n the coming times.

The new law will in fact modernize labor relations and follow the trend of other countries, with much more developed labor laws. Nowadays there is the compulsory union contribution (salary withdrawal). This sort of “contribution” has in fact, run its course. Contrary to what common sense may radiate to us and which is publicized by some, the less unionized countries are those in which the workers’ wage are higher.

The vacation issue is an example of how trade-unions and their acolytes seek to mislead citizens. What will happen after this reform comes into force is that the employer and the worker can enter into an agreement to divide vacations. This can be beneficial for both sides.

Wages, vacation, Christmas bonus - there isn’t any change in values, and everything the employer gives extra to the employee (performance bonus for example) can become a bonus, without this being incorporated into the pre-determined wage.

Unemployment insurance remains, except in a situation where there is agreement between the employer and the employee to leave the company, and in which the severance pay fund fine is divided.

With the planned reform, you can still fall short of expectations, but it is necessary. Despite the prospect of improvement, it would have been vital first to promote tax reform.

Miguel Verde - Senior Consultant, Professor of International Relations