The ‘doctrine Guedes’ puts Brazil on sale

The brazilian Government wants to sell everything. It is not a license in journalism or an attempt to engage the reader: are the literal words of the tsar's ec

The ‘doctrine Guedes’ puts Brazil on sale

The brazilian Government wants to sell everything. It is not a license in journalism or an attempt to engage the reader: are the literal words of the tsar's economic Jair Bolsonaro, the ultra-liberal Paulo Guedes, and of the secretary-general of Privatization, Salim Mattar, a figure whose mere existence is a statement of intent. Beyond the rhetoric, have already been put to work, demonstrating that go with everything in a plan privatization started in the time of Michel's Fear, but has gained force with the nacionalpopulista in power. The goal autofijado raise 20,000 million dollars ($17.860 million) in 2019 through sale, partial or total, of packages shareholding in companies or assets owned by the State has fallen short: until the end of September, the brazilian authorities had been disposing of shareholdings in companies by more than 19,000 million, had been tendered infrastructure by 6,000 million and auctioned off exploration rights in raw materials —especially oil— for 12,000 million. Although with more obstacles than she would have liked to the new Administration, in the last quarter of the year —a period for which there is not yet data available— the figure has continued getting fatter.

The argumentario for the sale of public assets that remain in the hands of the State rests on two pillars. The first, prosecutor: need more income in order to rebalance the public accounts and reduce the debt that is dangerously close to 80% of GDP. The second, the most weight, purely ideological: Guedes, faithful to the doctrine of the Chicago School, is fully paid to the idea that the private sector is, by definition, better manager than the State and makes a claim that the sale of public assets will decrease corruption. The cravings privatization, are born, in the mouth of the own superministro of Economy, of the “dysfunctionality” of the own public companies, which culpabilizan the PT Luiz Inacio Lula da Silva.

On the horizon of the representative far-right emerges with one goal: to more than 320,000 millions of dollars on privatization and auctions of infrastructure —from oil wells to roads, airports and ports— during his tenure. Only in the year just released, Mattar has announced the willingness of the Government to get rid of his participation in 120 companies, a number that could more than double to achieve the approval of the Senate —an extreme that is not at all clear, given the political controversy and the social resistance— for the sale of Electrobras and its subsidiaries. Beyond the holding company's electrical state, Guedes and her team have taken a step to the front for the sale of the port of Santos, the largest in South America and the second most important of Latin America— and its shares in the telecommunications company Telebras. A list of that were already part of the postal service (Correios) or the House of the Currency and just adding the 21% of the giant meat JBS, even in the hands of the State through the development bank BNDES and that will go on the market, taking advantage of his good time the stock market, booming exporter to China.

True to the Chicago School, believe that the private sector is the best manager

The movement with JBS it seems so much that the Government wants to carry out with the oil company Petrobras: continue to crumble little by little from its position shareholding, even higher at 42%. In parallel, the Congress has already moved tab to facilitate the entry of private money in the sector of water purification in a country where almost half the population, about 100 million people, still do not have access to this basic service. Are the signs of identity with which Bolsonaro want to present to investors at the end of January at the Davos Forum, where they will try to exploit the image of a Brazil that has left behind the days of the recession and strengthen the winks to the investors.

Before the fanfare with which the Government is selling the process, prudence. “On paper this looks impressive, but the execution will be very difficult. Is one operation, above all, out of doors and it is advisable to lower expectations,” says Aldo Musacchio, of the University of Brandeis. “Experience shows us that there is that you take it with a grain of salt.” In the same line, Lourdes Casanova, director of the Institute of Emerging Markets at Cornell University called to the caution and warns of two risks: the creation of private monopolies, as has happened in other Latin american countries, and the weakened bargaining power of Brazil, having set themselves a specific objective of privatization. “You must always sell from a position of strength. When you are obligated, and the buyer knows it, you press”. Not see clear the majority of brazilians: more than two-thirds of respondents in August by Datafolha showed contrary to the plan of privatization.

public debt tightens and they have to get resources quickly

“it Is true that the Government has managed to surpass its fundraising goal this year, but above all for concessions, especially oil and gas. The only option of total privatization is Electrobras, for which we hope to achieve the approval of the Congress in 2020 or 2021,” stresses Chris Garman, of Eurasia. “In summary: progress has been positive, but far from what Guedes promised in the campaign.” Something more upbeat shows Alberto Chong, a professor of Economics at Georgia State University and the author of Privatization in Latin America: myths and realities, which provides for “a relatively immediate in the quality of the public services of most privatized firms, an improvement is evident in the coverage of services” and, yes, “the dismissal of workers of the former state-owned companies”.

satisfied finally the projected figures for Brasilia, there is no precedent nearby the wave of privatisation of this size. Between 1991 and 2001, the public sector transferred the control of 119 companies or participations in companies. He obtained 68,000 and millions of dollars and reduced its debt by 18,000 million, according to data from the inter-American Development Bank (IDB), a few numbers that made the operation in one of the largest transfers of public assets in history. “There were sold of the crown jewels: Vale, Petrobras, Siderbras...”, highlights Musacchio. But even after that move, the south american giant has 418 companies under public ownership, according to the Getulio Vargas Foundation, one of the largest think tanks in brazil. Nearly 140 of them are in the hands of the central Government, and a hundred, within the radar privatization of Bolsonaro. Faithful to its strategy of hard hand, your holder of Infrastructures, Tarcísio Gomes de Freitas, has already dropped that in the cases in which it is imposibland sell it will be chosen directly by the settlement. Anything to meet your mission: shrink the maximum size of the State.

Updated Date: 05 January 2020, 02:00

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