Brazil and COVID-19: A Perfect Storm?

On July 7, Jair Bolsonaro, president of the world’s second hardest-hit country by COVID-19, announced he had tested positive for coronavirus and had mild symptoms. Shortly afterwards, he removed his mask to show everyone he was ok.

Then, in a series of tweets, he claimed no country in the world had managed to save lives and jobs as well as his without spreading panic – which, he said, leads to depression and to deaths generally. He also argued that, contrary to other leaders in the region who had merely tried to delay contagion by implementing social distancing measures, the Brazilian government had worked to save jobs.

Few moments capture the Brazilian president’s handling of the health crisis as well as this. A mix of bravado, denial and populism have characterized his reaction to the pandemic during the past four months, a period in which COVID-19 claimed more than 80,000 Brazilian lives and infected more than two million citizens.¹ And his attitude is unsurprising to those who followed his pre-electoral campaign and rise to power.

Brazil registered its first case of COVID-19 on February 26, and the first death on March 17. In line with the rest of Latin America, it was not part of the first wave of the virus’s spread but, by late May, the World Health Organization (WHO) declared Latin America the new epicenter of the pandemic.

But the Brazilian government was slow to accept and confirm the gravity of the situation. Policy responses on the federal level were inadequate when compared to those in Asia and Europe, or to those of other countries in the region such as Argentina and Uruguay.

Bolsonaro was quick to downplay the new lethal virus as a ’gripezinha’ (little flu) and refused to implement coordinated formal lockdowns, allocate resources for the health crisis or develop a contingency plan. State governors and mayors did move quickly to shut down non-essential commercial activities and public spaces, shielding the national health system from major collapses.

As a result, ICU occupancy did not reach full capacity during the first 100 days of the health crisis. Some of the most affected states, and the two largest cities São Paulo and Rio de Janeiro, declared a state of emergency and introduced lockdown measures, such as prohibiting interstate travel.

But the lack of nationwide parameters for lockdown and reopening at the federal level is now leading to a chaotic loosening of state restrictions, in spite of the lack of science-based data to support this move, and with a possibility of cases spiking again this year.

Bolsonaro’s rhetoric echoes US president Donald Trump’s early attitude to the coronavirus, in making the vulnerability of the economy a central theme. He also challenges scientists by defending use of the anti-malaria drug hydroxychloroquine for prevention and treatment of COVID-19. Even after contracting COVID-19 himself – the second leader in the region to do so after Honduras’ Juan Orlando Hernandez – he insisted he was not at risk having regularly taken hydroxychloroquine.

To demonstrate this belief in his invulnerability, Bolsonaro had not been wearing a mask in public, not even in large gatherings, such as protests, leading to a federal judge ordering him to do so in June.

The political crisis

Even before Brazil reached its tragic levels of contagion and death, the controversy over the government’s approach to the health crisis and its mitigation had brought to the surface underlying political tensions, some in explosive ways.

Disagreements between the federal government and state governors had already become evident at the peak of the Amazon forest fire crisis in 2019. Following the suspension of the Amazon Fund due to donor concerns about federal environmental policy, a group of states in the Amazon moved to negotiate its own partnerships for the preservation of the forest, bypassing the federal government.

During the pandemic, local governments in 25 out of Brazil’s 27 states defied the president’s plan to keep Brazil open by implementing stay-at-home orders. In retaliation, the president has often repeated that governors will be to blame for the economic contraction and rise of unemployment that will follow, even though all forecasts suggest this is inevitable.

Under Brazil’s constitution, states are financially dependent on the federal government. In spite of Bolsonaro’s resistance, Congress approved a 60 billion reais plan to provide states and municipalities with financial relief. But five months after the first confirmed case the Ministry of Health has only spent less than one-third of the available budget to fight the pandemic.

Tense relations between the president and Brazil’s Congress – especially with Rodrigo Maia, the influential speaker of the lower house Câmara dos Deputados - have been aggravated by his controversial attitude, especially when he joined a demonstration calling for military intervention to close Congress and lift quarantine measures. The political tension was intensified by the dismissal of health minister Luiz Henrique Mandetta and the resignation of his successor Nelson Teich - both doctors - within two months.

Disagreements with health ministers are indicators of the president’s refusal to comply with scientific advice, but the political crisis reached its peak with the resignation of minister of justice Sergio Moro over his refusal to accept the president’s alleged attempt to interfere with police investigations into members of his family.

As a powerful judge and the major figure in the fight against corruption in Brazil, Moro’s participation in the Bolsonaro government was an early endorsement to its anti-corruption agenda. With Moro now gone and credible allegations against two of his sons, Bolsonaro is witnessing the collapse of one of the main pillars of his electoral success - the promise of a war against corruption.

Far-right Bolsonaro supporters are also under investigation for an alleged disinformation and intimidation campaign and for financing anti-democratic demonstrations. This led to the president clashing with the Supreme Court and accusing it of targeting his base.  

Rodrigo Maia publicly sided with the Supreme Court on several of these occasions ², in what increasingly looks like a clash of powers. With his ratings plunging to 32% and municipal elections coming up in November ³, the president has moved to reinforce ties with old allies - namely the military - and to create new ones through transactional relations with the centrist block in Congress (Centrão). This means he has reversed his electoral promise not to engage in practices of his predecessors.

The health crisis

While political scandals have been taking up a lot of the president’s energy, Brazil remains without a health minister⁴ while infection rates skyrocket, putting extreme pressure on its public health system. And there is reason to believe that real numbers far surpass official numbers given limited testing.

One study by the Federal University of Pelotas, funded by the Health Ministry, suggests the actual number of infected people could be up to seven times higher than those reported. In early June the government faced serious allegations of manipulation of virus-related data, as well as violations of transparency and access to information on the spread of the pandemic.

In general, there is a high disparity in testing within Latin America. This would explain why - despite much stricter policies and lockdowns - Chile and Peru have higher rates of infection per capita. Both have more aggressive testing policies than others in the region. But what is common across Latin America is the extreme pressure that the pandemic is putting on already overburdened health systems.

The Brazilian universal health system (SUS) is a point of global reference. Brazil was one of the first in a non-OECD country to offer universal health coverage by law. Yet even the SUS, which has struggled throughout Brazil’s economic turmoil, has been underequipped to respond to this crisis. Brazil has 22 ICU beds per 100,000 inhabitants, which would place it between Italy and Germany, but only about half of them are in the public system (14 per 100,000).

The country’s structural weaknesses, namely inequality and a lack of efficient transport infrastructure, have created disproportionate access to health both in geographic terms - the richer south vs. the poorer north - social terms with less access for vulnerable indigenous communities, and economic terms with access to private healthcare.

A key concern in the coming weeks and months is the trend of the pandemic moving from large urban centers towards the countryside, where shortages of healthcare supplies are acute and hospitals less accessible. While the pandemic has empowered the SUS both in capacity and authority, it remains to be seen if the scale of the health crisis continues to grow in ways that will overwhelm its capacity further.

One thing seems certain - plans to reduce public expenditure in healthcare are now off the table, not least as Brazil moves into 2021 – a pre-electoral year. Improved healthcare has been a longstanding concern of Brazilian citizens, having been among the main demands of the memorable 2013 protests.    

The economic crisis and the consequences for inequality

COVID-19 will have a devastating impact on the Latin America economy with the World Bank forecasting a 7.2% contraction of the regional economy with some recovery in the coming year, and the International Monetary Fund (IMF) recently downgrading its growth predictions to 9.9%.

The WTO predicts exports from South and Central America could fall by between 13-31% due to both the effects of lockdowns - reduced economic activity, reduced demands for goods - as well as to the disruption of international value chains, the decline in the global demand for goods and services and the drop in foreign direct investment.

For countries in the region already facing a sovereign debt crisis, such as Argentina, effects on inequality and unemployment are acute as the nature of the economic downturn of this crisis will disproportionately affect the poorest.

The Brazilian government did announce an emergency package including temporary income support for the most vulnerable, and that public banks would expand credit lines for companies and households. Taken with other fiscal measures, this economic response amounts to more than 6.5% of GDP. This is higher than other countries in the region but lower than Peru, which announced it would spend up to 12% of GDP.

Despite governmental provisions for emergency relief, thousands of citizens across Latin America – including Brazil and Peru, the two hardest-hit countries – have struggled to access it, with informality being the main reason. Research by the London School of Economics shows 11 out of 27 Brazilian states have more than half employed work in the informal sector, while in Peru it is almost 70%. Many of these people have no bank account, and face technological obstacles to accessing digital banking, or benefits which link eligibility to digital records.

Beyond the informal sector, recent reports estimate the pandemic will affect up to 81% of Brazil’s labour force and, according to research by FGV, almost 40% of the Brazilian population have seen their monthly income decline between 10-30%. Most strikingly, those witnessing the biggest decline in their income are those in the lowest income category with almost 30% of them claiming to have lost more than half their income. In comparison, more than 43% of the highest income class say they have not lost any income. COVID-19 has become an accelerator of inequality in a country which is already the world’s seventh most unequal country in terms of income distribution. 

As in most of the region, the least affluent also tend to live in overcrowded households, creating a vicious circle between poverty and contagion. Informality, reduced access to technology and overcrowding explains why countries with different approaches to the crisis, such as Brazil and Peru, are still similarly harmed by its effects.

No end in sight

Identifying which is Brazil’s biggest challenge is rather like the mythical nine-headed hydra monster which grew two new heads for every one cut off. Each development in Brazil’s politics and the government’s handling of the pandemic seems to generate new risks for its economy, society, environment, international relations and beyond. And a larger discussion about the state of human rights, particularly for women, indigenous people and Afro-descendants, in the context of COVID-19 is also unfolding.

Much of Brazil’s economic future depends on its ability to attract foreign investment and boost trade, which may depend on the president’s political and personal capacity to recalibrate foreign policy. This requires a monumental balancing act between the ideological desire to align with Donald Trump, and the pragmatic need to work with China despite rising US-China tension.

It also means bridging the distance between Brazil and its European investors which, despite the triumphant conclusion of the EU-Mercosur negotiations in 2019, has been widened by European concerns about the Brazilian administration’s record in environmental protection, human rights, and approach to multilateralism.

Domestically, the pandemic has heightened public concern and polarization over Bolsonaro’s anti-democratic tendencies, and has brought long-standing structural challenges into focus, such as the size of the informal economy, better access to healthcare, efficient infrastructure and the availability of proper sanitation and clean water.

The pandemic also shows that, when crises hit, weak federal policies lead citizens to shift loyalty to other institutions and leaders such as local governments, but also the gangs and militia which rule Brazil’s numerous favelas. But, although the pandemic has created a perfect storm in Brazil’s already troubled waters, it may also be a chance to reconsider the interconnectedness among the maladies that plague this very promising South American country which remains the world’s fourth largest democracy. 

* A shorter version of this article was originally published in The World Today Magazine.