Public Law, Project Finance and Regulatory

Brazil infra executives worried about long-term impact of attack on democracy

Although Brazilian authorities acted quickly to restore order after Sunday’s assault on the country’s main democratic institutions in capital Brasilia, infrastructure executives tell BNamericas they are concerned over the long-term impact.

Live broadcasts showed thousands of supporters of former president Jair Bolsonaro storming and vandalizing congress, the supreme court and the presidential palace. It became the violent culmination of their protests against the narrow election victory of President Luiz Inácio Lula da Silva in the runoff vote on October 30.

According to executives at major infrastructure firms, speaking to BNamericas on the condition of anonymity, there is concern that stronger social tension will prompt the Lula administration to adopt more populist measures, leading to increased spending that will force the central bank to maintain interest rates at a high level for longer than planned.

The long-term impact will depend on the effectiveness of the authorities’ measures, according to one expert.

“The next steps will be decisive to maintain order and show Brazilian and international investors that Brazil, despite everything, faces its crises within the constitutional order and preserving its institutions. Depending on how this is implemented, it may even strengthen Brazil’s image,” Paulo Dantas, an infrastructure and project finance specialist at law firm Castro Barros Advogados, told BNamericas.

“With the risk of prolonging the difficulties it has been facing for decades, Brazil cannot allow acts of this nature to postpone the execution of projects capable of providing development,” local industry and infrastructure association Abdib said in a statement.

“In Abdib’s opinion, it is essential that the debate, definition and implementation of measures that stimulate the economy and promote social well-being take place in an environment of full democracy, institutional strength and legal security.”

Brazil’s infrastructure alliance, a business forum representing highway, airport, port and railroad concessionaires, also expressed its concern: “Violent acts offend the institutions, and also compromise stability and the eyes of investors on the country,” it said in a statement.

Over 1,000 arrests have been made after Lula ordered that federal forces intervene. Security is normally locally managed, but the supreme court suspended federal district governor and Bolsonaro ally Ibaneis Rocha for 90 days on suspicion of tacitly aiding the attackers.

Changes on the agenda

Late Monday, Lula met with all the country’s state governors to request that their police forces act quickly to stop any outbreaks of violent protests in major cities.

Lula admitted that the events have led to some changes in the priorities of the new government’s initial agenda.

“Before my inauguration | had promised that | would meet with all of you governors in the first days of my term to discuss the priority projects for each state, but today the agenda has changed,” he said at the meeting, which was broadcast live by several TV channels.

During the election campaign, Lula said he would ask all governors to rank the three biggest pending infrastructure projects in their states, in order for the federal government to create a support strategy for them.