[News] Petrodollars, Not Corruption Is the Reason for Brazilian Coup
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Fri May 27 14:26:30 EDT 2016
http://www.telesurtv.net/english/opinion/Petrodollars-Not-Corruption-Is-the-Reason-for-Brazilian-Coup-20160527-0017.html
Petrodollars, Not Corruption Is the Reason for Brazilian Coup
Haneul Na’avi - May 27, 2016
Dilma Rousseff’s impeachment was motivated by her efforts to circumvent
U.S. dollar dominance through trade with Iran.
In ancient times, communities would place their sins on the body of an
al-Azazel, or scapegoat, and cast it into the desert to die. This was
done every year in order to garner favoritism in the eyes of God and
ensure a bountiful harvest. In the same ritualistic fashion, Brazil’s
acting government has chosen to honor this tradition at the expense of
the consent of the governed.
Ousted President and Worker’s Party (PT) leader Dilma Rousseff awaits a
fabricated impeachment trial despite the chagrin of the Chamber of
Deputies Speaker Waldir Maranhao who ordered an annulment. A defiant
Congress has hurled its entire weight at the gates of Brasilia’s
Superior Courts with burnt offerings of her political career; with the
hope her sacrifice will birth a neocolonial Dark Age. Hands clasped,
they await the blessings of Chevron, Royal Dutch Shell, and the U.S.
State Department to affirm their convictions.
Brazilian Democratic Movement Party (PMDB) leader, coup initiator and
interim president Michel Temer has longed to sell out Rousseff for his
30 pieces of silver, according to WikiLeaks
<https://wikileaks.org/plusd/cables/06SAOPAULO30_a.html>, and despite
the endless sins permeating Brazil’s legislative branch, the mainstream
media has equated her financial mistakes to treason, completely
obscuring the bigger picture.“Dilma Rousseff has not been accused of any
financial impropriety. However, 318 members of the Brazilian Congress,
including many who backed her impeachment, are under investigation or
face charges,” Democracy Now highlights
<http://www.democracynow.org/2016/4/20/is_the_us_backing_rousseff_s>.
The undercurrents of the coup flow directly from Petrobras, Brazil’s
state-owned oil enterprise, currently under fire after Operation
<http://pandeia.eu/staff/greg-bianchi/what-is-operation-car-wash/>Car
Wash <http://pandeia.eu/staff/greg-bianchi/what-is-operation-car-wash/>
unearthed several massive corruption scandals in 2014, and
multi-partisan thievery saw Rousseff inherit the company’s US$130
billion debt. Fortunately, to protect the country’s national currency,
the Brazilian real, Petrobras cleverly retained its debt in U.S. dollars
for easy convertibility into bonds, while maintaining revenue in reals.
“[…] 80 percent of the company’s debts are dollar-denominated, but much
of its revenue comes from domestic fuel sales in reals”, an Energy Fuse
article stated
<http://energyfuse.org/beyond-political-crisis-future-brazils-energy-sector/>.
Unfortunately, last year the dollar strengthened and fluctuated, which
inflamed the nation’s debt burden. “Inflated by a stronger dollar,
Petrobras' gross debt swelled to 799.25 billion reals [$223 billion] at
the end of 2015 […] even as the company slashed investment spending and
spent the last six months of the year trying - with limited success - to
sell off assets,”MarketWatch states
<http://www.marketwatch.com/story/brazils-petrobras-posts-worst-ever-quarterly-loss-2016-03-21>.
A combination of weakening exchange rates, high global oil supply, and
falling domestic demand, did little to stop Petrobras’s hemorrhaging
revenues amidst the corruption scandal.
The swell in global supply was attributed to failed OPEC negotiations
with Saudi Arabia, the cartel’s undisputed leader, after it childishly
responded to
<http://oilprice.com/Energy/Energy-General/Why-Saudi-Arabia-Has-No-Intention-To-End-The-Oil-Glut.html>
North America’s “shale oil revolution” with a textbook oil glut that
needlessly shrank global revenues to historic lows and threatened
<http://www.bloomberg.com/news/articles/2016-01-12/petrobras-reduces-production-estimates-on-deeper-spending-cuts>
Petrobras’s limited 2.7 bpd upstream rates. With dwindling funds, the
company was forced to sell assets
<http://www.straitstimes.com/business/petrobras-selling-oil-gas-fields-worth-up-to-27b>
to avert the onset of reverse Dutch disease. "If oil prices stay low,
I'm not very hopeful,” Fabio Fuzette of Antares Capital mentioned
<http://www.reuters.com/article/us-petrobras-outlook-idUSKCN0UQ1C020160112>.
With rising debt in U.S. dollars and tanking profits in reals, Petrobras
found itself at the mercy of the petrodollar. The company’s Q4 report
reflected staggering losses, where market prices had “decreased 49.6
percent from the year earlier to $33.50 per barrel,” Zack’s Research
highlighted
<http://www.zacks.com/stock/news/211257/petrobras-q4-loss-wider-than-expected-on-low-oil-prices>.
This had been aggravated by a previous Moody’s downgrade to “junk”
status, which “rocked the country’s equities and currency, with […] the
real tumbling 1.3 percent,” the group also discovered
<http://www.zacks.com/stock/news/165918/brazil-stocks-down-real-tumbles-petrobras-cut-to-junk>.
Another Energy Fuse article also revealed increasing bouts of
in-fighting between the government and private investors after the 2007
discovery of pre-salt extraction reserves. “A 2010 reform under former
President Luiz Inacio Lula da Silva requires Petrobras to be the sole
operator in all pre-salt fields with a minimum 30 percent stake,
severely limiting private investment in those areas.” To protect them
from corporate exploitation, the Worker’s Party leadership mandated this
to safeguard current and future welfare programs, but still required
borrowing from the Central Bank of Brazil. Borrowing also heavily
subsidized <https://www.imf.org/external/pubs/ft/wp/2015/wp1530.pdf>
petrol costs to domestic consumers using the state bank. “Petrobras was
not allowed by the government to pass on higher input costs to its end
consumers and the company had to sell gasoline, diesel, and other
refined petroleum products in Brazil at a sharp discount to
international prices,” a Seeking Alpha article
<http://seekingalpha.com/article/3976275-latin-america-handling-low-oil-prices>
illustrated.
This explains the rampant embezzlement and the central bank’s egregious
freeze
<http://www.wsj.com/articles/brazilian-real-weakens-after-central-bank-holds-rates-1453384957>
of Selic benchmark rates at 14.25 percent. Recently, Temer replaced
<http://www.ynetnews.com/articles/0,7340,L-4803273,00.html> the bank’s
leadership with IMF/ World Bank crony Ilan Goldfein to limit borrowing
to all state-funded programs and impose austerity regulations.
Heads also began to roll at Pemex, Mexico’s Petrobras equivalent to
which Brazil joined forces via Latin America’s largest trade agreement
<http://oilpro.com/post/13703/brazil-proposes-petrobras-pemex-tentative-alliance>,
dealing a heavy blow to the continent’s energy reform plans. “Emilio
Lozoya (Pemex's CEO) lost his job back in February, after failing to
stop a production decline despite heavy leverage.” As a result, Rousseff
was forced to continue selling off Petrobras assets, but continued to
subsidize oil costs with borrowed money. This was a mistake, but not a
crime.
To prepare a motive, the overthrow was preplanned in a businesslike
manner. A Folha de Sao Paolo report
<https://www.rt.com/news/344117-phone-recordings-rousseff-brazil/>
containing leaked recordings
<http://www1.folha.uol.com.br/poder/2016/05/1774018-em-dialogos-gravados-juca-fala-em-pacto-para-deter-avanco-da-lava-jato.shtml>
confirmed the pivotal moment in which Temer’s allies moved into position
weeks before the coup. In it, Planning Minister Romero Juca and former
Transperto President Sergio Machado commented that they wanted to “stop
the bleeding” in Petrobras’s finances; a casus belli to form a national
pact with Temer as the acting president. “I think we need to articulate
a political action,” mentioned Juca to Machado. Juca has since stepped
down
<http://sputniknews.com/news/20160523/1040125441/romero-juca-brazil-coup-dilma.html>
in response to the leak.
However, it was her new methodology to reduce company debt that was the
final straw. Reuters saliently reported
<http://www.reuters.com/article/us-brazil-iran-trade-idUSKCN0VP249>
that, following her January lifting of sanctions against Iran, the two
countries met on the sidelines
<http://www.itamaraty.gov.br/en/press-releases/13784-brazil-iran-political-consultations-mechanism-meeting>
prior to the April 17 OPEC summit in Doha to discuss lucrative trading
opportunities and bilateral agreements. “[Trade Minister Armando]
Monteiro said Brazil aims to triple trade with Iran to $5 billion by
2019” and that “Rousseff lifted UN-imposed sanctions against the OPEC
nation last week after meeting with the Iranian ambassador, […] despite
tensions with the West,” Reuters continued. This trade was to occur in
“euros and other currencies”, not dollars, and fit seamlessly with
Petrobras’s 2015-2019 Business and Management Plan
<http://www.investidorpetrobras.com.br/en/presentations/business-management-plan>.
Additionally, Brazil’s recent row
<http://www.reuters.com/article/us-venezuela-election-brazil-idUSKCN0SE2SC20151020>
with UNASUR and OPEC member Venezuela further encouraged Rousseff to
seek new partnerships. With increasing fallout
<http://www.independent.co.uk/news/world/middle-east/saudi-arabia-threatens-to-sell-off-us-assets-if-congress-passes-911-bill-a6987281.html>
between Saudi Arabia and the U.S. over the 9/11 bill, coupled with
embarrassing results from the Doha summit, Rousseff’s plan became an
extra headache for the administration. Amidst all the hostile
finger-pointing, she was in fact taking genuine steps to correct the
company’s mismanagement using the P5+1 talks as a springboard for
cooperation. “Relations between Brazil and Iran […] experienced new
momentum in the context of implementation of the Joint
<http://eeas.europa.eu/statements-eeas/docs/iran_agreement/iran_joint-comprehensive-plan-of-action_en.pdf>Comprehensive
Plan of Action
<http://eeas.europa.eu/statements-eeas/docs/iran_agreement/iran_joint-comprehensive-plan-of-action_en.pdf>
(JCPoA) last January and of the lifting of international sanctions
against Iran,” Brazil’s Ministry of Foreign Affairs quoted
<http://www.itamaraty.gov.br/en/component/tags/tag/977>.
This is precisely what prompted the desperate political coup, which
occurred <http://www.bbc.com/news/world-latin-america-36021230> the day
after (April 12) Brazil’s meeting with Iran - Congress voted during the
OPEC summit after Iran’s absence confirmed this. Washington panicked at
the thought of endangering petrodollar dominance and losing control of
Iran’s post-sanction partnerships. Even Reuters perceived this threat by
voicing “…although it is not clear whether any attempt to circumvent the
U.S. financial system could raise tensions with Washington, Brazil's
leftist government in the past has annoyed the United States by drawing
closer to Tehran.”
Apparently, it did, and Brazil’s plans for reform eventually ran
diametrically opposed to Washington’s future Iran ambitions, activating
the CIA assets in the Brazilian Congress to overthrow Rousseff. With her
impeachment underway, speculators were practically speaking in tongues
<http://www.generali-invest.com/content/getdoc/aeec1673-bbab-40d1-8bc4-a447de91908d/160703_GI_Research_Market_Commentary-%281%29.aspx>
at the possibility of raking in profits to the private sector. “Brazil's
currency climbed by 1.7 percent to 3.6262 per dollar earlier today on
heightened speculation that President Dilma Rousseff is nearing
impeachment,” The Street rejoiced
<https://www.thestreet.com/story/13524366/1/petrobras-pbr-stock-surges-as-brazilian-real-oil-prices-advance.html>.
Unrelentingly, Temer has opted for massive budget and department cuts,
rather than continuing with Rousseff’s socialist trajectory, threatening
Brazil’s long-term autonomy with nearsighted profits and further dollar
dependency. Additionally, appointing new FM Jose Serra also poses a
serious threat to the BRICS alliance by moving away from a clear and
holistic strategy. “Relations with new partners in Asia, especially
China […] and India, will be a priority,” expressed Serra, insinuating
that, armed with new pre-salt field reserves, it may not honor ties to
Russia.
Furthermore, Temer has also replaced Petrobras CEO Aldemir Bendine with
Pedro Parente, another favorite of the U.S. financial elite, who was
“formerly the top executive at the Brazilian unit of U.S. agribusiness
giant Bunge Ltd. and currently chairman of stock-market operator
BM&FBovespa SA,” MarketWatch explained
<http://www.marketwatch.com/story/brazil-state-oil-giant-petrobras-names-pedro-parente-new-ceo-2016-05-19>.
It is important to recognize that Brazil’s current ‘leadership’ benefits
both the American empire and Brazilian capitalists. On the U.S. side,
Brazilian debt continues under the U.S. dollar, and U.S. President
Barack Obama can maintain the CIA tradition of supporting the “moderate
opposition” around the world in order to stifle democracy and plunder
foreign markets. While Brazil’s terrorists aren’t chopping heads, they
are slashing budgets; bleeding Brazil’s fragile democracy dry, and over
the next 180 days, this will reflect in the will of the people as they
take to the streets to fight their puppet government. Temer couldn’t
have picked a better time, as the Olympics will see him and his enablers
persistently humiliated through by a rapturous organization of the
masses; from the grassroots to the Most High, until President Dilma
Rousseff’s miraculous resurrection.
/Haneul Na’avi, independent analyst for RT. The article was originally
published on RT.
<https://www.rt.com/op-edge/344231-rousseff-coup-brazil-oil/>/
--
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