Brazil risk assessment

Map of Brazil (credit

by Federico Pistillo*

From a political perspective, as the data highlights, Brazil might face instability. There are inner pressures for replacing the current president, Jair Bolsonaro, also considering the recent green light for Lula’s candidacy at the next election in 2022.

During Bolsonaro’s presidency, new issues arose: the environmental situation due to forest fires and the management of COVID-19. The situation is still uncertain, but the first polls show a possible change of direction.

Economically, the situation is not disastrous: data show an improvement since the pandemic started, demonstrating the good foundations of the country. New investments are coming in the tech sector, showing the government’s will to stay competitive (especially in Cloud Technology, 5G and cybersecurity).

Security issues are still mostly neglected, poverty in the outskirts of the big cities (favelas) produces a large majority of the country’s criminality, but new investments could lead in two directions: accentuate the difference among social classes or reduce it – the first possibility is, unfortunately, more likely. But it’s necessary to consider possible facilitation of accessibility to services and infrastructures even for the poorer classes.

A change of leadership could help to resolve two of the listed issues, with a direction change: LGBTQ+ hate crimes and the environmental issue, with possible deals with Biden’s America.

Risk of political instability: HIGH

Brazilian Politics is no longer stable – Jair Bolsonaro was elected president of Brazil in 2018. He is a right-wing nationalist, a law-and-order advocate, and also a former army captain. He was elected in a peculiar economic period driven by one of the worst crises the country has had to face. After the impeachment of former president Dilma Rousseff because of the Petrobas scandal, her successor, Michel Temer, was deeply unpopular with an approval rating of 7%. He was accused of wrongdoings and corruption, primarily with the perception of corruption buried deep inside the political system.

Bolsonaro introduced himself as an anti-establishment insurgent candidate with no concern for political correctness. He was known for being racist, misogynist, anti-LGBTQ+, and fond of the country’s brutal military dictatorship. His election broke the electoral tradition of the two previous ones when only leftist candidates had been elected. He was successful for two reasons: the system was perceived as corrupt, so an anti-system candidate was the only hope for a change. Second, his military background could have equipped him with the ability to lead society out of one of its significant problems: criminality (which had spiked in the previous years, and successive governments had been unable to control it). The popular and populist president resorted to fake news and a strong presence on social media for better interaction with his electorate. After an initial period of relatively smooth political guidance, many issues came to light: including the rainforest fires and the management of COVID-19.

The first matter, which is not just a Brazilian issue, raised concern among many institutions and countries. The environmental agencies’ power has been reduced by Bolsonaro, creating a lack of protection for the indigenous people who live in the area and the rainforest itself. This policy was implemented to improve the country’s economy by introducing more fields and mines. When the vast fires broke the environmental stability in the area, the international community responded with a strong concern about a tremendous climate change. Bolsonaro responded with a 60-day ban on fires and deployed 44.000 military personnel to fight the existing fires.

The management of the virus in Brazil has been perceived as inefficient. Bolsonaro denied the perils related to COVID-19, and no effective strategies have been deployed to deal with it. When he contracted the virus, he kept speaking in public, with no social distancing or masks, making the work of the sanitary personnel even harder. With the affiliation of the Brazilian president to figures such as Donald Trump, these two issues made his reputation even worse, both within Brazil and among the wider international community.

After the Supreme Court Judge – Edson Fachin – dismissed the corruption charges against Lula (March 2021), this cleared the way for Lula to be the next candidate who might take Bolsonaro’s place as president (next election in 2022). In the last period, a new movement has grown in popularity on social networks – the hashtags #FueraBolsonaro #ForaBolsonaro and #BolsonaroOut started to appear in opposition to the president’s next electoral campaign.

Brazil’s influence is decisive in South America, where for a long time, the country worked as an unofficial intermediary between the two American blocks. Relations have been particularly close, between the two countries, during Trump’s presidency. Brazil is also one of the most prominent countries in the South American block. Its influence within the institutions is distinguished; it is the leading representative country for South America in the WTO (World Trade Organization). Currently, the relations between Bolsonaro and Biden are particularly tense over the climate agreement because it concerns Bolsonaro’s commitment to the climate standards to safeguard the Amazon Forest.

Financial and economic risk: ELEVATED

With the pandemic taking its toll, every country globally has experienced economic damage, and Brazil has too. Data show positive results in economic growth, though, better than expected by economists, giving credit to Bolsonaro for the strong foundations of the country. After three consecutive quarters of decline, economic standards are slowly returning to pre-pandemic standards. However, it’s still necessary to consider the fragile public finances and the seriously damaged sectors.

Brazil’s first-quarter growth was predominantly driven by services, industry and fixed business investment, IBGE shows. Agriculture grew by 5.7% in the quarter, its fastest pace in four years. But other sectors, such as services and household consumption, fell by 4.5% (one of the sharpest declines since 2000). The data showed that economic activity is still 1.2% below if compared to the end of 2019.

Growth appears to be stable, but further considerations are necessary: the tight fiscal policy, the rise of interest rates, and the uncertainty that the pandemic eventually brought in each sector may signify a stable but slower growth.

The unemployment rate is still concerning; during the last year, it has been oscillating between 14.2% to 14.6%[7]. The situation could change with the accelerating vaccine campaign and the positive summer perspectives (when covid-19 cases significantly decrease). Worthy of notice is the significant amount of money distributed from the Government during the pandemic, a move that stopped consumer confidence from being downgraded and, in general, prevented the country from falling to pieces during the hardships of the period. The inflation rate data show, at the moment, a 4.64% growth in comparison with the last year.

As for monetary policy, the central bank has raised its benchmark SELIC rate by 75 base points at each of its last two policy meetings and has indicated that it means to do so again next month[8]

Social Risk: SEVERE

Brazil is the most populous country in Latin America and has the fifth largest population globally, mainly due to its vast territorial range. Density is highest in the coastal and inland South-Central areas and lowest in the Northwest. Brazilian society is multi-ethnic. The nowadays Brazilian population results from Portuguese settlers, African slaves, Indians and many other immigrant groups who arrived between 1820 and 1970. Immigrants were mainly Italian and Portuguese, but also German, Spanish, Japanese, and Syrian Lebanese.

Brazil’s official language is (Brazilian) Portuguese, a variation of standard Portuguese, especially on a phonetical level. The different language (with a significant amount of other factors) allowed the evolution of a particular culture, significantly different from the other Latin American countries, even though there are 274 unofficial languages spoken in tiny indigenous communities.

The main cities of Brazil are São Paulo, Rio de Janeiro, the previous capital, Brasilia, the current capital, Belo Horizonte, Salvador, which was the first capital, Fortaleza, Recife, Curitiba, Porto Alegre and Manaus.

The average age in Brazil has significantly risen compared to the past: from 18.2 years, it now reaches 31.2 years. The fertility rate has also dropped, and it’s lower than the natural replacement rate at 1.78 children per woman. Life expectancy is higher than the average for developing nations.

The government provides healthcare in Brazil through the SUS (Sistema Unico De Saùde) for Brazilian residents and foreigners. Health perception parameters are high. According to a survey in 2014, 74,2% of the population has consulted a doctor during the previous 12 months, and data are roughly similar in the following years.

The marks indicate the most dangerous cities in Brazil

Security risk: HIGH

Security and criminality are severe issues in Brazil, especially in some particular areas. The country is ranked third in South America for homicides rate, right after Venezuela and Colombia. Also noteworthy are the trafficking routes from Colombia, Peru, and Bolivia (the three biggest cocaine producers in the whole world). These factors make the country a seedbed for violence and organised crime. Violent crimes can occur everywhere and often involve weapons.

Also significantly widespread are robberies and pickpocketing, especially during the festivals and on the beach: they are even more frequent after dark. The most dangerous beaches in Rio De Janeiro for this kind of crime are Copacabana Beach, Ipanema Beach, and the areas of Lapa and Santa Theresa. Also appealing for robbers is the Corcovado walking trail to the Christ the Redeemer statue.

Regarding Sao Paulo, thefts or pickpocketing is common around Avenida Paulista and the historical downtown area nearby. They also occur in the red-light districts located on Rua Augusta (north of Avenida Paulista), Catedral da Sé, Praça da República and in the Estacao de Luz metro area (where Cracolandia is located).

Other common crimes are vehicle theft and bank and credit card fraud – including cloning. Less common are sexual assaults against both men and women, sometimes including “date rape” drugs.

Favelas are widespread because they make up the outskirts of every big city in Brazil. They are dangerous places. Violence in Rio de Janeiro favelas increased during the time, but especially in 2017, armed clashes and shootouts between police forces and gangs take place regularly. They have also occurred on major thoroughfares, like the main highway to and from the international airport in Rio de Janeiro because it runs alongside a large and dangerous favela.

The most dangerous cities in Brazil are, in order: Natal, Fortaleza, Belém, Feira De Santana, Maceió, Vitoria Da Conquista, Aracaju, Salvador, Macapá and Campos Dos Goytacazes. The statistics were created using the homicide rates.

Particularly endangered by criminals is the LGBTQ+ community, who are frequently victims of violent deaths in Brazil. People between 15 and 34 years old are the main target of violence and abuse.

The Brazilian borders with Paraguay and Argentina—are considered concentrated areas of criminal and terrorist activities. In 2011, in Veja, it had been reported that there were roughly 20 people affiliated with al-Qaeda who was, at the time, living in Brazil.

Hamas (the U.S.-designated Palestinian terrorist group) also operates in Brazil, according to Brazilian Federal Police. His militants are believed to plan attacks and recruit followers in the South American country.

Moreover, in 2015, Brazil’s federal police arrested members of a money-laundering group with possible affiliation to ISIS.

Also noteworthy is that after Germany was defeated in WW II, many Nazis relocated to southern Brazil, among other South American countries.  Today, in Brazil, there are several active Neo-Nazi groups.

Technology Risk: MODERATE

Brazil has the 5th largest number of mobile phone and Internet users in the world. According to an article by Claudionor Coelho in the EE Times, there are 189 million mobile phones, 200 million tech-savvy consumers, and exploding demand for PCs, leading to an increase in Internet usage in Brazil.

With the world’s third-largest stock exchange, it’s no question that multinational companies including ARM, Freescale, Google, and Intel have increased their investments in Brazil’s high-tech business sector. IDC (International Data Corporation) says that Brazil’s investments in technology and telecommunications ought to rise 7.1% during 2021.

Important sectors in which companies invest are cybersecurity (and cyber defence,  critical infrastructure, confidential information, and protection against data breach), software and security equipment. The first field is the priority, and the second and third have seen an increase of 12.5% over 2019, with a total amount of 900 million dollars in 2021.

At Painer Telebrasil, Julio Semeghini, Minister of Science, Technology and Innovation reaffirmed the pledge to make the digital transformation reach the most significant number of Brazilians – the pandemic has intensely slowed down the process.

One of the issues is the lack of connectivity among households, especially in the most impoverished areas: 35% of houses in Northeast areas can’t access the web – low-income families in the country suffer from the same issue.

The Brazilian Strategy for Digital Transformation covers actions across health, education, agribusiness, tourism, and industry. In addition to other initiatives in entrepreneurship, assistive technologies, artificial intelligence and scientific research and start-ups, the main focus is to include more people in the digital economy.

Semeghini said that Brazil had adopted a national Internet of Things plan. A great foundation is being built for 5G to come to life. The public cloud in Brazil is expected to grow by 35% annually to reach US$ 6.5 billion by 2022.

*Federico Pistillo attended one of our Open Source Intelligence courses and produced this risk assessment as part of its training.