After multiple skidding and the unforgivable initial underestimation of the Coronavirus, Brazilian President Bolsonaro has lost a lot of consensus and has been de facto taken over by the military who have greatly increased their weight in the Government as oil and exports to China collapse.

In the last few days there have been rumors about what could be the first coup during Covid-19, as half the world’s population is in “lockdown” and coronavirus infections have exceeded one million individuals. The rumors come mainly from Miami, where there is talk of a possible coup d’état to destabilize Brazilian President Bolsonaro. At the same time, the benchmark on emerging currencies, the MSCI Emerging Markets Currency, closed the week unchanged on the settlement of the US dollar and oil, the champions of volatility in recent days.

The Brazilian President, like many other Heads of State, took a sharp turn on the Covid-19 emergency a few days ago, changing his mind with respect to the ” downplayed” version of the risks, where he had taken a distance from our Country and instilled confidence only on the basis of Brazil’s decidedly more favorable demographics. He then moved to a more realistic position, which had become necessary also in light of the doubling of cases, now over 10,00. Bolsonaro is aligned with his Health Minister Mandetta, who currently surpasses him in popular support, flaunting Trump’s slogan whereby: “We cannot let the cure be worse than the problem itself”.

The situation changed after 25 out of 27 local Governors asked the President to extend quarantine measures more decisively and effectively. The discontent then spread to Congress and the Supreme Court, which called on the Presidency to comply with the procedures defined by the World Health Organization (WHO). His photographs in the streets in the midst of the people fostered the protest, favouring discontent on the part of the military which had in fact supported his election. In as many as three government reshuffles the weight of the military has grown with General Walter Souza Braga Netto as head of the Presidential Staff, former Chief of Staff and Army.

With almost two-thirds of the population which has proven to be more reasonable and realistic than Bolsonaro, his position has become increasingly isolated and critical, with a popularity reaching historic lows. This situation was also favoured by data: unemployment in 2019 exceeded double figures reaching 11% and the debt/GDP ratio grew close to 90%,  thus fuelling an expansion of the black economy and leaving little room for a further increase in public spending that would not become unsustainable, given the current budget deficit.

Thus, in view of the municipal elections in October, the presence of certain Generals of the Army in the government structure seems to represent more of a thorn than an effective guarantee of stability. And the winds of the “lost decade” of the Latin American continent are blowing again, wiping out the bizarre positions on the “Metapolitics” of Foreign Minister Araujo, based on the construction of a new conservative nationalist Brazil under the leadership of an anti-globalist troika which, in addition to Araujo, gather the support of Presidential Councillor Martins and the President’s son.

The current Brazilian scenario can be described as follows: on one hand the press is flaunting the institutional crisis, by sounding the alarm on the growing problems related to consumption and the banking system, due to soaring default rates; on the other hand there is Bolsonaro’s unsuccessful attempt to build a new identity for Brazil, violating the agreements with Mercosur and the European Union and leaving free space for “landowner” liberalism.

It is clear that at this moment the power is in the hands of a sort of military junta led by General Braga Netto, as can be seen from the document of March 31 signed by the Minister of Defence and the three military commanders in Government. This concentration of power allows the army to “guarantee the State and democratic freedoms”, according to the document, and therefore probably also the possible removal of Bolsonaro if he continues to have a controversial behavior which could raise an important civil protest. These facts suggest that this pandemic does not forgive irresponsible politicians.

The question remains as to the future of Brazil, which in the meantime is facing the effects of the collapse in oil prices together with the collapse in exports to China, while the outflow of foreign investments has been going on since last summer, when diplomatic clashes began, which marked  the start of Brazil’s international isolation.

About the author, Claudia Segre

As a financial expert, author, speaker, and the president of Global Thinking Foundation, Claudia Segre believes the only way to build a brighter, more prosperous future is to invest in the financial education of all women and girls.

She uses her platform to fight economic violence, accelerate financial inclusion for women, support female entrepreneurs, and promote the role of fintech in closing the gender gap.

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