Brazil's economy keeps surprising on the upside -- again today, with news that GDP grew 1.4% in Q2. It might grow a healthy 3% again this year. So why are so many investors still worried? A short 🧵

(Graphic via @folha ) Basically Brazil is taxing and spending at very high levels under Lula. Government spending grew a stunning 15% over inflation over last 12 months, the biggest such increase on record. The overall budget deficit (including debt payment) is 10% of GDP -- unsustainable.

For those asking my opinion about the X ban in Brazil -- OK, I think several things, some of them contradictory: 1) The balance between "free speech" and managing misinformation and threats -- and who makes those decisions, governments and/or companies -- is a global debate. No perfect solutions anywhere yet.

Not a popular opinion, but US, Brazil and Colombia are all behaving as if they expect Maduro to stay.

Trying to maintain pressure on him by not recognizing his fraudulent result. But also recognizing sad reality: Maduro controls repressive apparatus & it's been effective (more) Hopes of a massive popular Venezuelan mobilization against regime seem to have faded due largely to arrests & intimidation. González & MCM in hiding. Fall of dictatorship does not seem imminent, unfortunately.

It’s early but it feels like Venezuela’s opposition & its allies abroad are choosing a “Brazilian strategy” rather than an “American strategy” in reacting to Maduro’s stolen election 🧵 The (traditionally) American strategy is big sanctions, diplomatic recognition of true winner (Guaidó or in this case González), immediate focus on mass protests. During Trump years it also involved (absurd, empty) talk of US invasion or vague “all options on table”

Will Claudia Sheinbaum be an AMLO puppet, if she wins in Mexico on Sunday?

Everybody has their opinion -- but the recent history of presidential "succession" in Latin America actually paints a pretty clear picture 1/x 2010, Colombia: Alvaro Uribe helps elect Juan Manuel Santos, who campaigned on continuity of Uribe's hard-line security policies -- and then went in a very different direction, seeking & eventually agreeing peace with the FARC. Uribe was enraged.

Why is a port at "the end of the world" suddenly gaining interest from both Washington and Beijing? 1/x Punta Arenas, Chile, has seen shipping traffic nearly double in the last 4 years -- as wars choke shipping lanes in the Middle East and Europe, climate change snarls the Panama Canal and technological breakthroughs such as green hydrogen come to the fore.

I’m not sure anybody realizes JUST HOW MUCH oil Guyana has. On a per-person basis, it’s more than any country in the world — and it’s not even close. This sudden bonanza could improve lives, or ruin the country as it has Venezuela & others. Which will it be? A short thread. *At least in theory*, Guyana could become as rich as Italy or Japan by the end of this decade, according to the IMF. Before oil was discovered in the 2010s, this former British colony was one of the poorest countries in South America.

That speech was Lula staking his claim to be the true voice of the Global South, a mantle he aspires to share with Modi. A few observations: The speech was very ambitious, more so I thought than 20 years ago when Lula focused on hunger & inequality. Today he also touched on climate, democracy, big tech, war in Ukraine & more -- appealing to conscience of the rich world to do more.

Here finally is the untold story of how Biden administration helped dissuade Bolsonaro & parts of Brazil’s military from overturning the 2022 election. Congrats @mj_stott & team. A few thoughts follow

ft.com/content/075335… The story gets the most critical detail right — the survival of Brazilian democracy in 2021-22 was mostly a tale of Brazilian institutions & individuals. Some of whom showed great personal courage.

This piece accurately reflects how Lula’s foreign policy is being perceived in much of Washington – that Brazil has become a threat to the US. I disagree with the author's analysis of Lula's motivations -- I don't think it's anti-Americanism per se (more)
theglobalamericans.org/2023/06/brazil… ... Rather, I think Lula & allies believe a multipolar world order will be better than the current US-dominated one. That's a valid & rational doctrine for a country like Brazil, even if I personally have doubts (multipolar worlds historically more unstable... )

Last July during Brazil's election, Bolsonaro summoned the diplomatic community to give a completely unfounded presentation alleging the voting system was vulnerable to fraud

This week, as a result, he is likely to lose his eligibility to run in elections until 2030 Brazil's electoral court will consider charges that Bolsonaro abused his power and misappropriated government resources to spread fake news about the election, which he lost to Lula in October. More here:

g1.globo.com/politica/notic…

Biden & Lula meet at White House tomorrow.

There’s one big opportunity & one big risk

The opportunity: Both leaders defeated a wannabe authoritarian, anti-Constitutional threat. They are democrats in world where democracy is under pressure. More meeting about this, the better The risk: Ukraine.

Lula has engaged in both-sides-ism, saying Putin & Zelensky share equal blame. He is also interested in mediating peace, which is 1) unviable at present 2) reminiscent of Lula’s failed effort at Iran deal in 2010

If this dominates mtg they will walk away mad

The new issue of @AmerQuarterly explores how #Uruguay became arguably Latin America’s greatest success story. No, it’s not perfect — but it looks pretty good right now.

I visited in November & came away with 4 main reasons why. A🧵 First, to define “success”

Uruguay is Latin America’s leader in many metrics — highest per capita GDP, lowest poverty rate. Its democracy is strongest in the region & above United States, Britain & Spain, according to EIU. Cleanest energy matrix, best institutions, etc, etc

Really upsetting to see the symbols of Brazilian democracy and law and order being vandalized today. January 8 is Brazil’s January 6. Not even on the calendar were Bolsonaro fanatics capable of much originality.
Two observations
1) Brazilian leaders of Congress are not present So unlike US the lives of Brazilian Congressional leaders are not in danger, nor is the transition of power which has already taken place in Brazil
2) Jan 6 upset enough law abiding, democratic Americans - including yes many Republicans - that it backfired on Trump & accelerated

Huge news out of Peru: Backed against the wall and facing impeachment, Castillo doubles down and tries a Fujimori-style self-coup.

https://twitter.com/mitrataj/status/1600533983154020354

Here's a clip of Castillo's announcement. Note the shaking hand

https://twitter.com/jsudaka/status/1600534673469616129

There it is — Bolsonaro endorses his party’s challenge of the October 30 election he lost to Lula. It won’t succeed, but things could still get rocky in coming weeks as pro-Bolsonaro protests continue & some in his party push for radical next steps (more)

reuters.com/world/americas… In São Paulo this week I stopped by pro-Bolsonaro protests outside military barracks to hear what they were saying. Heard a bunch of fake news & some residual hopes that armed forces would “intervene” to keep Bolsonaro in power (Won’t happen.)

The Brazilian military’s audit of the Oct 30 election found that — hey wait a minute, why is a military auditing an election again??? Ah yes it’s because Brazil’s electoral court saw it as a possible step to pacify or neutralize Bolsonaro’s constant rhetoric this year about the voting system being open to fraud — and figured they had nothing to hide, so let’s let the soldiers in

Bolsonaro finally speaks. He did not explicitly recognize Lula's win, but said he would obey Constitution.

His chief of staff then took podium and said transition to Lula would happen normally.

Overall: About as bland/normal as one could hope from him The speech was not much longer than my tweet

I believe Team Biden deserves credit for balanced handling of Brazil over past 2 years. Avoided falling into war of words with Bolsonaro - which he would have loved - kept president at arm’s length but also continued economic & strategic relationship with Brazil (more) This year, as Bolsonaro attacked voting system in clear echoes of Trump, Biden folks consistently expressed confidence in Brazil’s election — then congratulated Lula right away on election night, which was key. Think history will show US (& others) helped preserve democracy.

Bolsonaro supporters were never going to lose quietly, and there were hundreds of these roadblock protests overnight. Many truckers participating which conjures up memories of 2018 crisis (& Canada more recently). Courts ordering roads to be cleared. President still silent.

https://twitter.com/reportersalles/status/1587303603873751040

Highway patrol, which has been militantly pro-Bolsonaro in recent days (and engaged in attempt at voter suppression on Sunday), seems to be grudgingly breaking up some of the roadblocks/protests overnight following court order

https://twitter.com/prfbrasil/status/1587371449853120512

Where is Bolsonaro? I spoke to some good contacts this morning, and while none of them knew for certain, the general view is: Bolsonaro believes there was fraud**, but also understands "the game is over," & may be genuinely unsure what to do next The Lira statement in particular was devastating to Bolsonaro's chances of contesting result, they said. Timing & content "liquidated him." He also hearing no support from military. Others pleading with him not to endanger broader conservative movement

https://twitter.com/BrazilBrian/status/1586865535043735552?s=20&t=2XvhLLwgmfelPMr9Z1TjNA