Apr 012023
 April 1, 2023  Posted by at 4:51 pm Finance Tagged with: , , , , , ,  25 Responses »

Georgia O’Keeffe Red poppy 1927


Andrew Korybko:


Background Briefing

Brazil and Chinese reached an agreement earlier this week to de-dollarize their trade, which will accelerate financial multipolarity processes amidst the global systemic transition. The timing was curious, however, since Brazil’s Agriculture Minister Carlos Favaro told the media last weekend that “All government actions are postponed” due to Lula canceling his planned trip after falling ill. Even though he rescheduled it for 11-14 April, the parties decided to sign it last week instead of waiting till then.

Furthermore, this took place on the same week that the US hosted its second “Summit for Democracy”, which Lula didn’t attend via video as planned on the pretext of his recent illness. Nevertheless, he sent a lengthy statement that allied media misreported as pro-Russian, the description of which is discredited by verifiable facts from official sources here as well as the text itself that was later published in full here. Russia isn’t mentioned therein at all, and it actually reads like a love letter to the US Democrats.

Lula’s Ideological Alignment With The US’ Liberal-Globalists

Lula is ideologically aligned with those liberalglobalists, which intrepid readers can learn more about by perusing the collection of articles shared at the end of this analysis here. It’s therefore unsurprising that his letter implied that the Brazilian opposition are “extremists”, condemned the “disinformation” that he hints is driving the latter as a pretext for potentially imposing more censorship in the coming future as part of his US-backed power consolidation campaign, and praised “LGBTQIA+” people.

These agendas that he pushed in his statement to the “Summit for Democracy” also align with the causes that are aggressively propagated across the world by Color Revolution financier George Soros, who enthusiastically endorsed Lula in his speech at the Munich Security Conference in mid-February. The last one regarding LGBTQIA+ people in particular directly contradicts Russia’s official support for traditional moral values as promulgated in its new foreign policy concept that can be read here.

In the eighth paragraph, Russia warns that “A wide-spread form of interference in the internal affairs of sovereign states has become the imposition of destructive neoliberal ideological attitudes that run counter to traditional spiritual and moral values.” This passage justifies its official goal of defending traditional moral values that’s mentioned a dozen times, explains why Russia banned LGBT+ propaganda, and adds context to President Putin’s conclusion that the liberal elite promote pedophilia.

Managing US Perceptions Of Brazil’s Financial Multipolarity Policy

The socio-cultural dimension of Lula’s worldview is therefore opposed to Russia’s, which he presumably regards as “bigoted” and “fascist” just like his liberal-leftist supporters generally do. Nevertheless, these two BRICS countries still share the common goal of financial multipolarity, thus explaining his decision to de-dollarize Brazilian-Chinese trade. Returning to that development, its timing suggests that Lula wanted this to happen comparatively more quietly than him announcing it while standing with his counterpart.

Since it was already agreed upon, his challenge was therefore to manage US perceptions since he didn’t want to risk offending his fellow “social justice warriors” there like AOC and Bernie Sanders, both of whom he met during his trip to DC in February. Lula also wanted to avoid offending his new buddy Biden too after those two agreed to comprehensively strengthen their countries’ strategic partnership in their joint statement, which can be read at the official White House website here and was analyzed here.

To that end, his latest illness was politically convenient in the sense that it allowed him to postpone his planned trip so that it didn’t coincide with the US’ second “Summit for Democracy” and subsequently authorize the de-dollarization deal’s signing in his absence to comparatively less attention. As was explained above, he wanted to do his best to manage US perceptions about this development that advances Brazil’s goal of financial multipolarity at the dollar’s indisputable expense.

The Scenario Of Russian-Brazilian Ideological Competition In Africa

For as much as his media allies and social media sycophants claim otherwise, it’s nevertheless factually false to describe Lula as opposed to the US as proven by his previously cited statement to the last week’s summit participants as well as his joint one with Biden in February that was hyperlinked above too. Despite his promotion of financial multipolarity at the dollar’s indisputable expense, he’s solidly aligned with the US’ ruling liberal-globalists, especially in the domestic political and socio-cultural sense.

The two referenced statements prove that Lula shares Biden’s liberal-globalist mission of delegitimizing their respective opposition as “extremists”, preparing for imposing more censorship on that aforementioned pretext, and propagating LGBT+ causes in full cooperation with each other. The last-mentioned part directly contradicts one of the key precepts contained in Russia’s new foreign policy concept regarding the defense of traditional moral values and thus constitutes a hybrid threat.

Be that as it may, Brazil as a state isn’t a threat to Russia, but its potential propagation of LGBT+ causes in collusion with the US in third countries where Moscow also has interests such as those traditionally conservative ones in Africa like Uganda could constitute an unfriendly asymmetrical challenge. Russia and Brazil might therefore find one another competing for hearts and minds there, with the first defending restrictions on LGBT+ propaganda and the second agitating locals against them.

Brazil’s Envisaged Balancing Act Between China & The US

As regards China, however, Brazil isn’t expected to clash or compete with it in any form since Lula actually envisages his country balancing between it and the US. On the one hand, China is Brazil’s top economic partner and an ally in advancing their shared goal of financial multipolarity. On the other hand, the US is Brazil’s top security partner and is nowadays also a source of inspiration for its liberal-globalists who model themselves off of its ruling Democrat Party, thus explaining his balancing act.

It was earlier touched upon in passing in this analysis here, which interpreted Foreign Minister Vieira’s praise of China in an interview as implying “the possibility of Brazil attempting to balance between the Golden Billion’s US leader with whom Lula has politically aligned himself against Russia and the Sino-Russo Entente’s Chinese economic engine”. Regardless of how successful this approach proves to be, observers should note that Russia isn’t expected to play any prominent role in Lula’s grand strategy.

Trade will likely continue to grow since it’s mutually beneficial, but political ties could soon worsen in the event that Lula extradites a suspected spy to the US to face charges instead of deporting him back to Russia, which readers can learn more about here. Foreign Minister Lavrov’s potential trip to Brazil this month will likely focus on that issue while also exploring the possibility of further expanding their economic ties, particularly in the energy sector like that country’s Ambassador to Russia suggested.

Debunking The “Big Lie” Of The Brazilian Left

Lula’s appointment of former President Rousseff to lead BRICS’ New Development Bank (NDB) should therefore be interpreted in the context of advancing Brazil’s financial multipolarity goals instead of having anything to do with Russia like his media allies and social media sycophants are spinning it as. The ”Big Lie” of the Brazilian left and their supporters abroad is that Lula is pro-Russian even though the facts prove that he’s politically aligned with the US against it in that country’s proxy war with NATO.

They’ll spin anything that he does to lie that he’s secretly allied with Russia against the US despite the facts cited in this analysis from official sources comprehensively debunking that literal conspiracy theory. This “politically inconvenient” fact can never be openly acknowledged even in the scenario that he extradites that suspected spy to the US to face charges instead of deporting him back to Russia since those propagandists fear that it’ll expose the truth about Lula’s US-aligned liberal-globalist worldview.

In their minds, the false perception of Lula as a “multipolar revolutionary opposed to US hegemony” must be maintained at all costs lest the aforesaid truth about his worldview prompts a political revolt among the Workers’ Party’s base that results in him being pressured to recalibrate his grand strategy. This explains why they’re so actively pushing the latest disinformation narrative falsely alleging that his de-dollarization deal with the US supposedly means that he’s opposed to it and aligned with Russia.

The Future Of Russian-Brazilian Relations

In reality, Russia is only considered by Lula to be a commodities partner and a country to cooperate with in pursuit of their shared financial multipolarity goals. He’s fiercely opposed to its official defense of traditional moral values and especially the military moves that it was forced to make in defense of its national security red lines in Ukraine after NATO clandestinely crossed them there. Lula won’t ever say so openly, but he in all likelihood thinks that Russia is “bigoted”, “fascist”, and “imperialist”.

Even so, he’ll still cooperate with it on issues of shared interest as explained, but neither can rely on one another beyond that like Russia can depend on fellow BRICS partner India, which Lula probably also thinks is led by “bigots” and “fascists” in accordance with his liberal-globalist worldview. Artificial limits are imposed on their partnership due to the Brazilian leader’s radical ideology, which all honest observers must acknowledge if they aspire to accurately analyze his grand strategy going forward.




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Mar 042015
 March 4, 2015  Posted by at 11:50 am Finance Tagged with: , , , , , , ,  9 Responses »

NPC Communist Party Young Communist League, Washington, DC 1925

It’s not that long ago, in 2001, that Jim O’Neill, then still with Goldman Sachs, coined the term BRICs, for the fast emerging markets of Brazil, Russia, India and China. O’Neill saw a global power shift from the west to these four nations happening. Fast forward to today, and we see Russia under multiple attacks, including economic ones, from the west, as India just announced the second rate cut this year and China is attempting controlled demolition of the possibly biggest financial bubble in the history of the world.

And Brazil? If anything, it’s falling even faster off its pedestal than the other three nations. And in Brazil, it’s as much corruption scandals as it is the financial crisis and the plunge in oil revenues that take center stage. The stories have long been simmering, but they all came together in the media yesterday.

First, a seemingly minor one. Eike Batista was once the richest man in Brazil, and one of the 10 richest men on the planet, having made a fortune in gold mining and later oil. Then he went on to become probably the one man to lose the most money in the shortest time, going from $32 billion in early 2013 to minus $5 billion or so a little over a year later, impossible to pin down exactly for numerous reasons, but spectacular for sure.

Yesterday Mr. Batista made the news when the judge in a case against him for insider trading, was taken off that case for driving one of Batista’s luxury cars to his own home. He claimed the police had no place to store the vehicle…

Brazilian Court Upholds Removal of Judge From Eike Batista Trial

An appeals court on Tuesday upheld a decision to remove the judge presiding over the trial of Brazilian businessman Eike Batista , throwing out many of the judge’s rulings, according to a spokeswoman for the court in Rio de Janeiro. Later Tuesday, the court said it granted the judge— Flávio Roberto de Souza —a medical leave until April 8th. A separate appeals court had ordered last week that Federal Judge de Souza be removed from the case after he allegedly drove one of the cars he had ordered seized from Mr. Batista. Tuesday’s ruling was on a motion filed in December by Mr. Batista’s lawyers to have Judge de Souza removed from the case, claiming he had given a number of news interviews in which he used language demonstrating bias against Mr. Batista.

Judge de Souza has denied being partial. His removal will delay the case, which could be assigned to a new judge as early as Tuesday, the spokeswoman said. Mr. Batista is on trial for market manipulation and insider trading, charges he has denied. The judges who ruled on Tuesday overturned all of Judge de Souza’s actions during the trial until another judge can decide how to continue the case. The freeze on Mr. Batista’s assets ordered by Judge de Souza remains in place, however.

Police in February seized 11 vehicles, including a Porsche Cayenne the judge allegedly drove, as well as a Lamborghini Aventador, from Mr. Batista’s homes. They also took jewelry, a grand piano and a fake Fabergé egg as guarantees to repay investors in the event the entrepreneur is found guilty. The cars were to be sold at auction and the proceeds placed into escrow until the conclusion of the trial, an action allowed under Brazilian law. The piano, which was being kept at the apartment of one of Judge de Souza’s neighbors, along with one of the seized cars have been returned to Mr. Batista…

Then, on the same day, Brazil’s top prosecutor asked the country’s Supreme Court to start 28 separate investigations against 54 individuals, mostly politicians, in the Petrobras kickback scandal (‘under Brazilian law, politicians and cabinet members can only be tried by the Supreme Court.’) I don’t know how many politicians Brazil has, but it would seem 54 is a solid haircut. And, of course, current president Dilma Rousseff was herself head of Petrobras from 2003-2010, the period in which the kickbacks took place. She’s probably not among the 54 to be investigated, however.

Petrobras did Batista one better. Its market capitalization was a reported $310 billion in May 2008. It has since lost $270 billion of that. According to the BBC, $100 billion was lost just since last September.

Petrobras Scandal Takes Politicians To Court

Prosecutor-General Rodrigo Janot’s office did not release the names of the politicians, but plea bargain testimony by defendants in the case leaked to local media indicate that most are members of the ruling Workers’ Party and coalition allies in Congress. O Estado de S. Paulo and other newspapers said the list includes Senate President Renan Calheiros and Speaker of the Chamber of Deputies Eduardo Cunha, both the top leaders of Congress and members of the PMDB party, the largest ally in Rousseff’s ruling coalition. The judge in charge of the case must decide whether to lift a secrecy provision and release the names and plea bargain statements.

The politicians were named by a former senior manager at Petrobras and a black market currency dealer whose arrest last March triggered an investigation into the funnelling of money from overpriced infrastructure contracts into the pockets of corrupt executives and politicians. Some of that money, prosecutors say, may have helped finance election campaigns for political parties, including Rousseff’s Workers’ Party and other members of her governing coalition.

The corruption probe known as “Operation Car Wash” has so far led to 40 indictments on racketeering, bribery and money laundering charges. Officials have indicted two former senior managers at Petroleo Brasileiro as the company is formally called and 23 executives from six of Brazil’s leading construction and engineering firms. The scandal threatens to have a ripple effect on Brazil’s already weak economy, prompting Petrobras to halt or cancel several investment projects.

Prosecutors are seeking the return from construction firms of about $1.6 billion siphoned off Petrobras contracts and are investigating Swiss bank accounts where funds were transferred and in some case laundered through off-shore front companies. The investigation and possible trial of politicians by the Supreme Court could take years. Brazil’s largest political corruption case to date, involving monthly payments to lawmakers in return for support in Congress for the Workers’ Party, took seven years before it went to trial in 2012.

Rousseff has denied knowing about the scheme during those years and has vowed to respect the Judiciary’s independence. A recent opinion poll, however, showed three in four Brazilians believe Rousseff knew about the scam. … even opposition leaders believe that recent calls for her impeachment will go nowhere.

Sabrina Valle and Anna Edgerton, writing for Bloomberg, must have seen this coming. They have a very long article on Rousseff and her power politics, very much worth reading. Some excerpts:

Petrobras CEO Lost Job Over a $30 Billion Disagreement

As the kickback and money-laundering scandal engulfing state-run oil giant Petrobras escalated in late January, Brazilian President Dilma Rousseff got calls from two of her top appointees. They were in the midst of a marathon board meeting and they heatedly disagreed. The first was from her former finance minister and current Petrobras chairman, warning her that the board was discussing the release of a potentially embarrassing number: a $30 billion writedown that company auditors were saying was partially tied to scandal-related losses. The chairman left in the middle of the meeting to call his political benefactor to discuss releasing it – believing it was a bad number conjured up by faulty methodology. Rousseff agreed.

The second call, later in the same evening, came from Maria das Gracas Foster, the Petrobras chief executive officer whom Rousseff had appointed three years earlier. She expressed the opinion that under Brazilian law the $30 billion figure, whether faulty or not, had to be released because if the board now knew the number, the market had a right to know as well. Foster was aware Rousseff preferred the number not be released and hoped her close friend the president would understand her position..

After a dramatic ten-hour boardroom showdown, the number would in fact be included in a note to Petrobras’s overdue third-quarter earnings but it would be costly to Foster. On Feb. 6, Rousseff replaced her with Aldemir Bendine, CEO of state-run Banco do Brasil – a government executive popular with Rousseff’s leftist Workers’ Party. The appointment sent the shares of the company formally known as Petroleo Brasileiro down 6.9% that day.

Rousseff’s replacement of Foster also has ruptured the long-held bond of loyalty the two forged over more than a decade as business and political allies rising up in the ranks among a sea of powerful men. Foster’s departure further helps to isolate Rousseff as Foster joins a cadre of onetime close supporters who have been swept aside in various government dust-ups.

For Brazil and millions of ordinary Brazilians, Petrobras has become both an embarrassment and a source of anger even as they hope for a rebound. Only five years ago, the company was the darling of the global energy world, able to raise a staggering $70 billion at a share sale because of deep-water oil and natural gas finds so huge that they were expected to propel Brazil to decades of growth.

The first allegations of Petrobras corruption came in March of last year [..] Foster, however, seemed to be weathering the storm until October, when video tapes published online by a federal judge in a Parana, Brazil, court showed that same executive confessing to investigators that Petrobras had long been compromised – that for at least nine years he and others siphoned millions in kickbacks from companies to whom Petrobras awarded inflated construction contracts.

As allegations of wrongdoing escalated, the public became more outraged and investors continued to dump Petrobras shares; the hard-charging Foster found the political weather turning foul. [..] Throughout the ordeal, Foster had offered to resign several times. Rousseff wasn’t having it..

But the scandal kept escalating. A growing list of former executives started cooperating with investigators, hoping for reduced sentences. Cash deliverymen went by flamboyant nicknames such as Big Tiger, Watermelon and Eucalyptus, according to testimony before the Parana court. One former Petrobras manager admitted to taking as much as $100 million in kickbacks as part of a plea bargain deal.

As the drama unfolded, the one constant was Rousseff’s support for Foster, the woman she met in the early 2000s when she was an energy secretary for a southern state of Brazil and Foster was Petrobras’s representative for a gas pipeline to Bolivia. This trust began to unravel in December, when Foster decided to ban 23 construction companies caught up in the probe from doing business with Petrobras, according to a person familiar with the situation. Rousseff’s public position was that corrupt individuals — not the companies that employed millions of Brazilians and worked on strategic infrastructure projects — should be held accountable.

Then came the contentious Jan. 27 board meeting. Foster found herself at odds with Guido Mantega, the Italian-born, left-leaning Petrobras chairman. Foster knew that a fight with Mantega was a fight with Rousseff. But at some point, with the back and forth exhausted, Foster signaled to her management team and declared “enough, huh?” according to people who were in the room.

A week later, on Feb. 3, Foster was summoned by Rousseff to the presidential palace about 465 miles away in Brasilia. After two hours of candid discussion, the two came to terms. Foster and her executive team would be replaced by month’s end while a search for successors proceeded… Foster then boarded a commercial flight back to Rio de Janeiro and was booed by other passengers. There was no relief back home. Dozens of protesters greeted her at her Copacabana apartment, banging pots and pans outside her door, demanding she resign.

The CEO was still willing to stay on until Rousseff named a replacement but in a conference call from Brasilia with her five-member executive staff they declined to continue as lame ducks. Since Foster had said publicly she would never serve without her team, she had no choice but to go. The announcement came on the morning of Feb. 4 in a one-line regulatory filing that took the market by surprise.[..]

Petrobras continues to face huge challenges. With its market value shrunken, its debt ratings in the tank and its global image tarnished, it desperately needs to get back to basics. Over the past decade, its oil and gas production has lagged the company’s own projections — due to equipment delivery delays, maintenance issues and faster-than-expected declines in its older fields – even though that is starting to change.

Starting in 2007, stupendous deepwater offshore finds in an area known as the pre-salt had exponentially raised its reserves. Those discoveries still afford Petrobras plenty of potential upside assuming they are managed properly, analysts say. The most productive of its pre-salt wells pumps 35,000 barrels of crude a day. At the Bakken shale formation in North Dakota it takes more than 300 wells to pump that much. That’s in the top 1% for “all oil wells on the planet,” said Cleveland Jones, a geologist and researcher at Rio de Janeiro State University.

I think it might be wise to question the real reserves in those ‘stupendous’ finds. And in any case, the deeply inbred culture of corruption could easily waste all of it even if they are indeed so huge. With Lula as president, things seemed to go well, though he might have just been lucky to be at the right place at the right time. Rousseff has no such luck. And she doesn’t seem able to cope with the power she has, either. But it doesn’t look like she’ll have to bother with that for much longer:

Brazil’s Senate Resists Rousseff’s Austerity Push

Brazil’s Senate on Tuesday threw out a presidential decree that reduces payroll tax breaks for businesses, in a political setback for President Dilma Rousseff’s new fiscal austerity crusade. The Senate’s president Renan Calheiros said the matter was not urgent and should be presented to Congress in a bill rather than a temporary decree that bypasses lawmakers. Rousseff immediately responded by sending Congress a legislative proposal to trim the tax breaks, saying the change does not hamper the government’s fiscal savings plan.

In an action applauded by financial markets, Rousseff on Friday moved to pare back tax breaks on payrolls and export revenues to save the government up to 7 billion reais ($2.39 billion) this year and reduce its widening budget deficit. The new-found fiscal rigor threatens to tip the Brazilian economy into a deep recession, raising opposition from lawmakers and even senior members of her own Workers’ Party who want to water down the savings measures.

Since her narrow re-election win in October, Rousseff has made a dramatic U-turn in economic policy to regain the trust of investors worried with the financial health of an economy that until recently was one of the world’s most dynamic. Calheiros, a member of Rousseff’s main ally in Congress, the PMDB party, said her government was trampling on the constitutional right of Congress to legislate on important matters that affect Brazilians, such as raising taxes.

Opposition leaders praised Calheiros’ decision to assert the independence of the Senate, which will make it harder for Rousseff to push through belt-tightening legislation needed to avoid a credit rating downgrade. The surprise move by Calheiros, who has been a loyal ally to Rousseff during her first term, comes at a time of tension in Congress where politicians are worried that they will be implicated in a corruption scandal engulfing state-run oil company Petrobras.

One of other measures under fire includes a controversial decree that trims unemployment and pension benefits to save state coffers about 18 billion reais this year.

If the Petrobras affair doesn’t bring Rousseff down, her decisions will. You have to be an exceptional politician to survive the kind of huge economic downturn that Brazil finds itself in. Rousseff is no such exceptional politician. And of course most ‘leaders’ are not (that makes the few exceptional). That in turn means we will see increasing numbers of leadership changes as economies go downhill. Argentina went through 5 presidents in less than 3.5 years at the beginning of the century. Don’t be surprised if Brazil goes down that path too. And many other countries.