Country Risk Report (August 2019)
RISK LEVEL: MODERATE
RISK OUTLOOK: STABLE
Brazil is a democratic federal presidential constitutional republic. The elected president is head of state, government, and of a multi-party system. Brazil is politically and administratively divided into 27 federal autonomous sub-national entities with their own governments, who exercise a high degree of authority over non-federal issues. The current constitution, passed in 1988, is progressively democratic and expansive. It contains many statutory acts including legislation relating to taxation and social security. Voting is compulsory for citizens aged between 18 and 70 years-old and electronic voting is utilised throughout the country.
The current president of Brazil, elected in 2018 and sworn in on 1 January 2019, is President Jair Bolsonaro, the head of the conservative Social Liberal Party (PSL). His election signalled the end of the 13-year rule of the leftist Workers’ Party. His pledges to “cleanse” Brazil of corruption, improve the Brazilian economy, and tackle high crime rates through the relaxation of gun laws, gained him the widespread support of conservative voters. He is viewed as a charismatic yet deeply polarising figure and opposes progressive causes such as same-sex marriage, abortion, and immigration. He supports a free market and privatisation of industry and has actively encouraged improved relations with the US on trade matters. Although not self-proclaimed as being far-right, Bolsonaro does espouse nationalist and populist views, and is often accused of being deliberately provocative. Prior to his election to president, he was charged by the attorney general for inciting hate speech against minorities. The Americas Society/ Council of Americas currently pitches Bolsonaro as having an approval rating of 33 per cent comparable to 49 per cent in January 2019. A poll by research group Datafolha revealed that Bolsonaro had a lower approval rating after 100 days in office than any other leader since the country returned to democracy.
Despite Bolsonaro’s stated intention to improve the state of Brazil’s economy, GDP actually shrank in the first quarter of 2019 and unemployment remains relatively high at 13 per cent. In order to raise much needed finances, many of Brazil’s long-protected 400 state-owned companies were sold, raising R$8 billion ($2 billion). Bolsonaro has been widely criticised for the introduction of plans to freeze funding for universities and to increase the retirement age in the country. In response to suggested educational funding and pension reforms, hundreds of thousands of people attended demonstrations to protest across Brazil in May 2019. Protest against political issues is commonplace in Brazil, with demonstrations often occurring at short notice and occasionally descending into violence. In August 2019, thousands of people took to the streets in order to protest the government’s response to widespread fires affecting the Amazon rainforest. There were calls for the Environmental Minister, Ricardo Salles’ resignation. The recent Amazonian fires have drawn international attention to Brazil and Bolsonaro himself, who has previously been viewed as emboldening miners and loggers; those accused of deliberately setting fires in order to clear the land. Countries threatened to target Brazil’s economy if it did not act to stop the fires. Bolsonaro later deployed soldiers to nature reserves and indigenous lands affected by the blaze. This environmental issue provides a key opportunity for Bolsonaro to illustrate whether he can take decisive action and to prove to international powers and his own citizens that he can address a crisis effectively. He has already come under criticism for claiming NGOs may have set the fires in order to “embarrass” his government due to funding cuts. Environmental issues have been contentious for Bolsonaro during his time in office and more widely within the country. Activists have claimed that that the government is systematically trying to destroy Brazil’s environmental protection policies, with the president having been condemned for his claims that environmental protections have hindered Brazil’s economic growth.
The economy has been a focal point for Bolsonaro’s administration since he took office, and despite a reduction in GDP, there is a more positive economic forecast for the rest of 2019 and 2020 if proposed reforms on social security and taxation are approved. Proposed reforms to pensions would increase the retirement age and increasing workers’ contributions. It is estimated this could save the Brazilian economy up to R$913 billion ($221 billion). However, trade unions and opposition politicians have argued that such a move would penalise the poorest, forcing them to work longer. Low inflation is expected to continue whilst investment is predicted to increase, according to the Organisation for Economic Co-operation and Development (OECD). Therefore, despite many criticisms of Bolsonaro’s proposed policies, it looks as though the economy in Brazil is set to steadily improve over the next two years.
The promise of an improved economy and crackdown on corruption were key motivating factors behind voters backing Bolsonaro. Following the worst ever recession in Brazil, and ingrained corruption within government, voters had lost faith in a system they viewed as being ruled by a corrupt political class. Corruption has been prevalent within Brazilian politics for many years. The investigation known as ‘Operation Car Wash’ or Operação Lava Jato that began in 2014 has so far indicted 429 people, including many central government members. Ex-president Luiz Inácio Lula da Silva was jailed for 12 years after being charged on numerous corruption charges. His former chief of staff, Dilma Rousseff was later impeached for breaking budgetary laws. The investigation uncovered a prodigious money laundering operation and bribes paid by businesses and members of government and political parties in return for support. The state-owned Petrobras petroleum company had also been used to funnel funds and overcharge on contracts. The company was ordered to pay a substantial settlement. Bolsonaro has suggested plans to privatise the company before the end of his term in 2022, although this would be a controversial move for Brazilian industry.
Politically, Brazil faces ongoing challenges under the leadership of Bolsonaro, in order to boost the economy, necessary reforms must be legislated and unemployment decreased. The country faces external scrutiny relating to environmental issues, specifically the fires that have occurred in the Amazon rainforest. With a decreasing approval rating, Bolsonaro must ensure his government is able to retain its authority in Brazil and on a global scale. The outcomes of reforms and proposals presented by Bolsonaro will remain to be seen in the coming months and years.
RISK LEVEL: MODERATE
RISK OUTLOOK: STABLE
When travelling to Brazil, a visa is not always necessary, however it is recommended for visitors to check with the relevant authorities in order to ensure admission into the country. When entering Brazil, the Brazilian Immigration Authority must be satisfied with the intended purpose of a travellers visit. Details of accommodation and evidence of return or onward travel is also likely to be required. Passports must be stamped when entering the country in order to avoid having to pay hefty fines. Brazil shares land borders with all South American countries except Ecuador and Chile, however many of these areas are not recommended for travel and should be avoided due to high levels of crime. Visitors should check with up to date advice regarding safe crossing areas. The land border between Brazil and Venezuela was temporarily closed between February and June 2019, it has now reopened but it is advised to avoid due to threat of unrest in the area. There have been increased been tensions between the two countries relating to political and immigration issues. Alternatively, Brazil has around 2,500 airports, with its largest, Guarulhos International Airport in São Paulo, handling over 20 million passengers annually, along with the majority of the commercial traffic for the country.
Travel within Brazil is conducted largely by road or air. Although the country has an extensive rail network, the railway infrastructure is limited and there are regularly reported safety and security incidents. Trains are often poorly maintained and infrequent. São Paulo and Rio de Janeiro do however have rapid and fully-electrified commuter train routes, and both systems are continually being expanded. The majority of passenger traffic utilises the extensive roadways, however it is important to note that overall driving standards in Brazil are considered to be poor. The quality of roads away from the principal highways and thoroughfares is also lacking and road traffic collisions are frequent. All accidents including personal injury must be reported to authorities via the 193 emergency services phone number. Riding bicycles on the larger roads is discouraged and if driving a car, individuals are advised to keep doors locked as car-jackings can often occur. Waterways around and within Brazil are important for freight transport and coastal shipping links widely connect different parts of the country. Southwest river routes including in the Amazon and Solimões Rivers are commonly used for drug trafficking and so are dangerous to travel on. The individuals and organisations responsible for this trade have previously targeted merchant vessels and should be assumed to be armed.
Visitors are recommended to seek local advice before swimming off the coast of Brazil as shark attacks can occur, especially near the north eastern city of Recife. Supplementary medical insurance is advised as the public hospitals in Brazil tend to be overcrowded and under-resourced, especially in the larger cities. Private hospitals tend to have a higher standard of resources and medicine, however proof of ability to pay for treatment is usually required prior to assistance being provided to foreign nationals. Despite the significant progress made in Brazilian universal healthcare system since 1988, public health problems persist, such as the spreading of certain disease and complications during childbirth. There are several vaccinations recommended prior to travelling to Brazil, these include Measles, Mumps and Rubella (MMR), Hepatitis A, Tetanus, Typhoid, Tuberculosis, and Yellow Fever. Contact with mosquitos should be avoided as insect-borne illness can pose a risk.
Brazil can present an unpredictable climate, and flash floods and landslides can occur during heavy rainfall. The rainy season runs from November until March in the south and south east of the country and from April until July in the north east. Poorer urban areas are more likely to be susceptible to damage from flash floods due to poor infrastructure. Travellers should be aware of local authority warnings and avoid travelling during heavy rainfall periods. Fires in the Amazon rainforest can also cause large amounts of smoke to affect areas in the São Paulo region. It is always advised to consult with governmental advice regarding travelling to places that may be particularly vulnerable to adverse weather or environmental issues.
When conducting business in Brazil, it is often advised to learn some key Portuguese phrases, it is the official language of the country and is spoken by most people. English and Spanish can also be used occasionally for business purposes, although they are not spoken commonly in many areas outside of the larger cities. Foreign companies have been drawn to Brazil in recent years due to a commodities boom and an increase in family consumption. As such, it has increasingly experienced high growth levels. It is still considered to be a developing nation therefore some areas of the economy are still under-developed, the regulatory environment is still lacking to an extent, and this should be taken into consideration when attempting to conduct business in Brazil. The reforms of legislatory regulations for opening and running businesses in Brazil has not progressed as quickly as the growth in the economy, this may present issues for foreign countries operating there. According to the World Economic Forum, Brazil currently ranks as 107 out of 144 countries in its level of infrastructure development.
While Brazil is now among the leading destinations for foreign investment and is forecast for increased economic growth, corruption remains a pervasive issue. As within politics in Brazil, corruption, bribery and kickbacks can impact operational efficiency. The Clean Companies Act was passed in 2013 in an attempt to tackle corruption and hold companies responsible within the corporate sector, unfortunately its enforcement has been inconsistent. However, under Bolsonaro there is likely to be a further ostensible clampdown on corruption, which hampers economic progress and deters foreign investment. Many companies who choose to move into Brazil do so in partnership with local companies in order to make the transition less disruptive for consumers and gain an insight into the local economy. Labour laws can often be difficult to navigate in Brazil, especially for foreign companies. Unions exert a lot of influence and non-compliance can result in fines for organisations and individuals. It is recommended to seek advice regarding labour regulations and to form a professional and communicative relationship with employee’s unions.
RISK LEVEL: HIGH
RISK OUTLOOK: DETERIORATING
Brazil suffers from a number of on-going security issues, due to this there is often a large police presence on the streets, particularly in the city of Rio de Janeiro. Brazil receives over six million tourists annually and they can often prove easy targets for criminals. Street crimes such as muggings, express kidnappings, and pickpocketing are a common occurrence particularly in the tourist areas of the country. Travellers are advised to be vigilant when in crowded areas and are encouraged not to wear expensive jewellery or carry valuables on their person. Use of ATM machines in low-lit areas is discouraged due to the risk of theft or credit card fraud. Thieves often operate in areas around hotels, outdoor markets or on public transport. Street crimes and robberies can often involve weapons, and individuals are encouraged to comply in such a situation to avoid physical harm. Checkpoints are utilised in the cities of Rio de Janeiro and Brasilia in an attempt to reduce crime rates, vehicles may be searched by police and this may incur delays. Car-jacking occurs frequently and both locals and visitors alike may be targeted. It is advised to avoid travelling along highways after dark unless necessary and always plan a route prior to travelling to avoid having to make stops along the roadside.
Gang violence in Brazil remains a pervasive problem. Police and security officials are often the target of such violence, however it is possible others may be caught in the crossfire. The endemic corruption within Brazil has allowed criminal gangs to thrive as ties can be identified between gang leaders some police officers and politicians. Bribery is used to allow illegal activities to persist in the poorer neighbourhoods, commonly referred to as Favelas. These urban areas typically have a high concentration of informal housing and exist in all major Brazilian cities. Violence in the Favelas has reportedly increased over the last five years and armed clashes between gangs and police are unpredictable. Violence may also spread out into nearby areas, it is advised to seek local advice when travelling to an area that is not familiar. Whilst Favela tours are marketed towards tourists, it is strongly advised that such tours are avoided. In 2017, police accidentally shot a foreign national who was partaking in a Favela tour in Rio de Janeiro. Other areas that should be avoided during hours of darkness due to a significantly high crime rate are Pina Beach in Recife and Brasilia’s administrative regions of Santa Maria, Paranoa, and Ceilandia. Before travelling to Brazil, it is useful to consult the latest travel advisories in the country relating to where may pose an increased risk of crime or civil unrest.
Protests that take place relating to political or social issues are typically carried out without warning and have the potential to turn violent. In previous incidents, tear gas and rubber bullets have been used by police. During festive periods, specifically Carnival, there is a more substantial risk of crime and therefore increased vigilance is recommended. Carnival is Brazil’s largest festival. It is held in Rio and takes place in annually to mark the beginning of Lent; the Christian period of fasting that takes over the forty days before Easter. Crime statistics indicate that public transport presents a heightened likelihood of crime, where possible the use of buses should be avoided. It is recommended that visitors use licensed taxis or legitimate travel applications services such as Uber.
Drug trafficking constitutes a substantial portion of crime within Brazil, a trend that has markedly increased over the last decade. If found to be in possession of drugs, or attempting to traffic narcotics, individuals are likely to receive extensive custodial sentences in a Brazilian prison. Brazil’s domestic drug policy programmes and legislation have been criticised, and many international authorities have suggested the need for significant reform of the criminal and legal system. Police brutality and lethality is also an issue that has been identified by US public policy organisation The Brookings Institution. Assistance should be sought by the relevant embassy or consulate if travellers encounter any issues with Brazilian security forces or authorities.
Despite the high levels of crime within Brazil, the country still attracts an increasing level of tourists annually. Visitors to the country are recommended to ensure they are vigilant, especially when travelling in the largely tourist areas of Rio de Janeiro and São Paulo. The urban neighbourhoods known locally as Favelas should be avoided due to high crime rates, protests and demonstrations can also present an increased crime threat. It is advised to consult with up to date security information prior to travelling to Brazil, which may describe any deterioration in the political or social environment.
RISK LEVEL: LOW
RISK OUTLOOK: STABLE
The threat of traditional, ideologically-driven terrorism in Brazil is relatively low. There have only been a couple of incidents over the last decade. In 2016, Brazilian Federal Police uncovered a plot by an Islamic Jihadist terror group to carry out attacks at the Olympic Games. More recently in 2019, two former students opened fire at a school in Suzano, São Paulo, believed to be motivated by a right-wing agenda. However, attacks such as these are rare. Nonetheless, travellers are advised to remain vigilant when in large crowds and to report any suspicious activity to authorities. Organised crime gangs may employ tactics similar to terror groups, such as kidnap, torture or bombings. The threat of a coordinated attack occurring is not seen as a principal issue, however it cannot be discounted completely. Areas with a high concentration of tourists or Western nationals could be targeted by anti-Western terror groups and so it is necessary for heightened vigilance in the cities of Rio de Janeiro and São Paulo.