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Bloomberg Businessweek
May 14, 2018
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champions restrictions on foreign ownership of
farmland and mineral deposits.
These politicians are banking that anger over
corruption, the worst recession on record, and
empty public cofers can help change voters’ atti-
tudes toward privatization. It’s not a sure bet: In a
recent survey, 7 out of 10 Brazilians opposed the
idea, led by the poorer and less educated.
“In all its history, the state always dominated eco-
nomic activity in Brazil,” says Marco Troyjo, a pro-
fessor of international afairs at Columbia University.
Brazilians pay the equivalent of almost one-third of
gross domestic product in taxes, one of the highest
shares in the world. The country ranks 153rd out
of 180 nations in the Index of Economic Freedom
compiled by the conservative Heritage Foundation.
France ranks 71st and Mexico is 63rd.
In the 1990s, Brazil sold scores of state-run busi-
nesses, including the telephone monopoly and
mining and steel companies. The sales drew much
needed investment, technology, and managerial
know-how—often to the beneit of the consumers
those companies served. Even so, left-of-center
politicians complained of sweetheart deals bene-
iting political cronies or foreign companies.
Among the poor, the stigma lingers. “It won’t
reduce corruption,” says Maria Madalena, an oice
assistant in Brasília, when asked if she supports
privatization proposals. “What it’ll do is leave even
more people unemployed.”
In Congress, support for divesting state
assets has also been lukewarm—not surprising,
considering that politicians often reward support-
ers with jobs at state-owned companies. A proposal
to privatize power utility Eletrobras, which could
fetch an estimated $3.4 billion, has been stuck
in Congress for almost four months. The federal
mint and Congonhas Airport in São Paulo are
often mentioned as potential candidates for auc-
tion. The planned June 14 tender of a management
concession for the Lotex scratch card lottery has
generated interest from several international com-
panies, the inance ministry says.
Renato Nobile, chief executive oicer of BullMark
Financial Group, is encouraged that presidential
aspirants are willing to discuss what was once
taboo. “With one or two exceptions, there are no
disaster candidates in terms of economic policy,”
he says. “Independent of who wins, there’s a bigger
chance of getting a pro-market candidate than in
previous elections.”
—Raymond Colitt, with Gabriel
Shinohara and Samy Adghirni
THE BOTTOM LINE A recent poll shows the majority of Brazilians
oppose privatization, led by the poor. Many legislators do, too,
because it would deprive them of a large pool of patronage jobs.
○ Alckmin
○ Bolsonaro
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