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Mnuchin Tells Thunberg to Go Study Economics: Davos Update



(Bloomberg) — Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.The rich and powerful are in Davos, Switzerland, for the World Economic Forum’s 50th annual meeting, and the gathering is being closely watched to see how the global elite aims to tackle problems they helped create, above all climate change.Germany’s Angela Merkel will speak this afternoon as the Group of Seven’s longest-serving leader runs out of time to reset Europe’s biggest economy before her era as chancellor draws to a close.U.S. Treasury Secretary Steven Mnuchin had some words of advice for Greta Thunberg, questioning whether the 17-year-old Swedish activist is qualified to talk about economic issues linked to climate change and telling her to go and study the subject in college.To get all the highlights delivered to your inbox, sign up for the Davos Diary newsletter. Here’s the latest (time-stamps are local time in Davos):Le Maire Urges Germany to Spend (12:40 p.m.)French Finance Minister Bruno Le Maire renewed his call for Germany to spend more to bolster the euro-area economy and prevent countries with stretched finances from plunging further into debt.Speaking on a panel discussing global growth, Le Maire said France is delivering on its promise to overhaul the economy with changes to taxation, labor laws and pensions, but others in the currency region need to “do their homework.”“We are waiting for Germany and the Netherlands and all the countries that have the necessary fiscal space to use that fiscal space to feed growth in their own country and everywhere within the euro zone,” Le Maire said.It’s all the more urgent for Germany to act because the European Central Bank has little room left to stimulate the economy, he added. “The margin for maneuver for monetary policy is right now a very limited one, a very thin one.”Saudi Arabia Must Act on Emissions: Minister (12:30 p.m.)Saudi Arabia must advocate for solutions to tackle climate change as one of the world’s largest energy producers, according to Energy Minister Abdulaziz Bin Salman.“We cannot sit on our hands as a producer without advocating for something that brings a solution to the emissions issue,” he said during a panel discussion. “We can’t see all components of sustainability and market stability without also being involved in the other debate which has to do with climate change.”Facebook Says Bezos Hack May Highlight Phone Vulnerabilities (12:13 p.m.)The hack of Inc. billionaire Jeff Bezos’s phone, allegedly via a WhatsApp message, brings to light potential security weaknesses in smartphone operating systems, according to Facebook Inc. Vice President Nicola Mendelsohn.The company would take allegations that its service was used in a hack very seriously and would look into it, Mendelsohn, who helps run Facebook’s Europe, Middle East and Africa business, said in a Bloomberg TV interview.The Idea of a Waste-Free Global Economy Is Catching On (11:50 a.m.)When British yachtswoman Ellen MacArthur was promoting the idea of the circular economy on the sidelines of Davos in 2012, the big attraction was curiosity about what she was up to after her sailing career.Eight years on, firms such as Adidas AG, Unilever NV, and BlackRock Inc. are embracing MacArthur’s vision. Her foundation is pushing an economic system where product lifespans are extended and components used repeatedly. The idea is to replace the “linear” model of growth — extraction, production and disposal — and reduce the strain on the planet’s limited resources.“We had our own event in one of the hotels, and to be honest most people came because they were intrigued about what I might be doing,” said MacArthur, who once held the world record for the fastest solo circumnavigation of the globe. “Things have changed enormously since then.”Swiss Re Says Big Questions Remain on China Virus Risks (11:40 a.m.)The extent of risk posed by China’s deadly virus outbreak is difficult to assess, because many details are still unknown, such as how fatal it may be, how easily it will spread and whether it can be contained, according to Swiss Re AG Chief Executive Officer Christian Mumenthaler.Last year marked a return to normality for disaster payouts, Mumenthaler said in an interview. Climate change is increasing disaster risks, and that’s going to effect insurance prices, but its very hard to break down what the impact will be over 20 years, he added.Novartis Keeping Generics Unit for Now (11:21 a.m.)Novartis AG is “very committed” to keeping its Sandoz generics unit despite efforts to sharpen company’s focus on next-generation treatments including cell and gene therapies, Chief Executive Officer Vas Narasimhan told Bloomberg TV in an interview.Generics unit is growing and profitable, and there are opportunities in countries that have struggled to obtain high-quality generic medicines, Narasimhan said. Having a position in generics “matters” for now, though that may not still be the case in five or 10 years, he added.Deutsche Bank Expects ECB Review to Be ‘Constructive’ (11:07 a.m.)Deutsche Bank AG Chief Executive Officer Christian Sewing is “hopeful” that the planned strategy review by the European Central Bank will lead to change.The ECB’s decision to cut interest rates below zero was right at the time, but “we missed the exit,” he said on a panel. Negative rates are leading to a widening gap between winners and losers as only a small share of the population benefits, Sewing said, adding that monetary policy is “reaching its limits.”U.S.-Europe Risk Trade Flare-Up Over Cars, Digital Tax (10:43 a.m.)The U.S. and Europe looked set for a renewed clash over everything from car tariffs to digital taxes in a sign that a new American focus was emerging following President Donald Trump’s trade truce with China.Commerce Secretary Wilbur Ross said the U.S. was still considering slapping levies on European auto imports even as it hopes for a “peaceful resolution” of differences. Mnuchin declined to say if he was still pushing for an optional digital tax after an agreement for a global framework was reached with France on Wednesday.Mnuchin Tells Thunberg to Go to School (10:35 a.m.)Mnuchin questioned whether 17-year-old Swedish activist Greta Thunberg is qualified to talk about economic issues linked to global warming.Asked at a press conference to comment on the debate over the economics of climate change spurred by the teenager, Mnuchin quipped: “Is she the chief economist?” He then said: “After she goes and studies economics in college, she can go back and explain that to us.”Mnuchin has repeatedly clarified the U.S.’s climate stance after Trump took a swipe at environmental “alarmists” in his speech Tuesday. “There’s a misinterpretation as to what our view is,” Mnuchin said. “The U.S. administration very clearly believes in clean air and clean water.”Canada in Strong Fiscal Position: Morneau (10:30 a.m.)Canadian Finance Minister Bill Morneau said low interest rates mean central banks have less room to maneuver and suggested fiscal policy needs to play a greater role in addressing economic challenges.“I think we have to be realistic” about expectations of central banks, Morneau said in an interview with Bloomberg TV. “Their ability to be effective in the case of challenges is different than it was in the last real challenge.”Canada is managing its “fiscal framework very well,” which makes it “resilient in the face of challenges,” Morneau added.“What we see is that Canada has taken a very responsible approach,” he added. “Whether you’re a rating agency or someone looking at our ability to deal with financial issues or concerns, we’re in a particularly strong position. Probably the strongest position among G-7 countries because of our very strong balance sheet to start with.”Allow Venezuela to Unleash Its Potential: Guaido (10 a.m.)Juan Guaido, Venezuela’s opposition leader, called for a return to democracy in the South American nation so that it can fully exploit its oil reserves and “unleash” its potential.“What we want is a free Venezuela, a democratic Venezuela which respects human rights, where you can invest, where we can also make the most of our oil reserves and so that we can really unleash the potential that we have,” Guaido said in a speech. “We want to mobilize people despite the terror unleashed by the dictatorship.”Nigeria Says OPEC Ready to Cut Further (9:49 a.m.)OPEC’s production cuts are enough for now to avoid an oversupply, but ministers will convene again in March and will be ready to make further cuts if necessary, Nigerian Minister of State for Petroleum Resources Timipre Sylva said in a Bloomberg TV interview, adding that the country would like to see oil prices between $60 and $70 a barrel.“We see a lot of optimism in the market” amid easing of trade tensions between U.S. and China,” Sylva said. “If the U.S. and China are able to consummate a good deal at the end of the day, we expect that there’ll be demand growth.”Cantor’s Jain Concerned by Negative Rates (9:38 a.m.)Cantor Fitzgerald LP President Anshu Jain said there are long-term adverse consequences linked to investing in trillions of dollars of negative yielding debt.“If you wind up investing at negative yields in effect locking in a loss, that will have repercussions,” Jain said in an interview. “Of greater concern for me is repercussions for insurers and pension funds, and these will be felt for years to come.”Italian Coalition is Stable, Gualtieri Says (9:20 a.m.)The stability of Italy’s ruling coalition will not be affected by Foreign Minister Luigi Di Maio stepping down as head of his party, according to Finance Minister Roberto Gualtieri.“Di Maio will remain the foreign affairs minister and the parties have said they are strongly committed to the stability of the government. So nothing will change,” Gualtieri told Bloomberg TV.“What we can have is a continuation of this alliance or a strengthening of this alliance, these are the only two options,” he added. “We have very strong numbers in the parliament in both chambers and the government will continue until the end of the legislative term.”U.S. Isn’t Abandoning Car Tariffs, Ross Says (9:15 a.m.)U.S. Commerce Secretary Ross said the U.S. isn’t abandoning car tariffs but is hoping for a peaceful resolution of the matter with Europe.“We have not abandoned the tariffs,” Ross told reporters. “The auto tariff decision was to negotiate in hopes of a peaceful resolution” with individual car companies and countries, he added.Treasury Secretary Mnuchin said he met with Volkswagen AG Chief Executive Officer Herbert Diess in Davos.Europe Vows to Tax Polluting Imports, Tech (9 a.m.)The European Union will go ahead with plans to impose new taxes on pollution and technology companies, despite a pushback from China and the U.S. that could exacerbate global trade tensions, the bloc’s economy chief said.“I will be clear: if there is no global agreement we will have an EU proposal at the end of this year,” European Commissioner for Economic Affairs Paolo Gentiloni told Bloomberg TV. Gentiloni was asked about the EU’s controversial plans to impose a levy on the digital services revenue of the likes of Facebook Inc. and Alphabet Inc.’s Google.Kaeser’s Wish for Trump: Listen to the Kids (8:45 a.m.)At a Tuesday dinner that Donald Trump held with business executives, Siemens AG Chief Executive Officer Joe Kaeser said he told the U.S. president he had three things to say: a compliment, a request, and a wish.The compliment was on how Trump has spurred U.S. Economic growth. The request was for Siemens to be treated like a U.S. company on government projects because of its 50,000 American workers. His request was to urge the president to listen to young people’s demand to protect the climate.“They may not be able to help us. They’re young people — they have a problem and they don’t know how to solve it, but shouldn’t we bring them to the table,” Kaeser said he told Trump, adding that his daughter Ivanka Trump responded that it was something that they might look into.Merkel Succession Team to Be Decided This Year (8:42 a.m.)Germany’s Christian Democrats want to assemble their team to succeed Chancellor Merkel by the end of this year, the party’s chairwoman said in a Bloomberg TV interview.Annegret Kramp-Karrenbauer, who is also Merkel’s defense minister, said that now isn’t the time for a cabinet reshuffle as proposed by a party ally earlier in the month.“For 2021, the CDU needs a new team for the future, with new faces, and we’ll put that in place this year. For me, that’s a more important perspective than a short-term change,” she said.Debt Buildup Reaching Danger Point: Georgieva (8:40 a.m.)IMF Managing Director Kristalina Georgieva warned that debt in some countries is at dangerous levels.“The buildup of debt is reaching a point where for some borrowers it’s a present danger — for example poorer countries,” Georgieva told Bloomberg TV. “43% of low income countries are already at or close to debt distress.”Low interest rates “means high, high appetite for yield,” Georgieva said, adding that “high appetite for yield means high appetite for risk.”The global economy is in a better place than in October, when the IMF published its latest forecasts, and central banks have done what they can to support growth so it’s up to governments to step up, Georgieva said.Siemens Urges Deeper Globalization (8:28 a.m.)Globalization needs to advance, as nationalist retrenchment would be a giant step backward for industrial companies, according to Siemens CEO Kaeser.“We better find a way or the fourth industrial revolution is not happening and we have decoupling instead and go back to the stone age of productivity,” Kaeser said in a Bloomberg TV interview.The company’s biggest markets are the U.S., China and Germany respectively, which Kaeser said might make it look like he’s stuck in the middle of several trade wars, but the company’s heavy localization has so far protected Siemens.Time Rapidly Running Out on Climate, Kerry Says (8:20 a.m.)Former U.S. Senator John Kerry warned that time is very rapidly running out to tackle climate change and blamed both the U.S. and China for a lack of progress.“We are missing years, and we don’t have years,” Kerry said . “We are not getting the job done.”Kerry said that scientists have given the world a decade to resolve the problem, urging financiers and business leaders to direct their money toward renewable energy sources.“China is having it both ways: they are exporting their solar panels industry and at the same time they are the largest coal user,” Kerry said. “China and the U.S. are 45% of emissions.”Germany Must Spend Cash More Quickly: AKK (8 a.m.)Germany needs to speed up the process of spending government funds, and surplus cash should be invested “sensibly” in infrastructure and the military, according to German Defense Minister Kramp-Karrenbauer.“If we look at our budget and our investment right now, then we see that we have no problem with money, we have enough money,” Kramp-Karrenbauer, who is also the head of Chancellor Merkel’s party, said in an interview with Bloomberg TV.“The problem is that we are too slow and too complicated in the process. Not enough is invested as a result and this is the construction site we need to work on,” she said.Merkel’s government agrees that surpluses “shouldn’t be tucked away for a rainy day” but instead directed toward “investment in technologies of the future, in our infrastructure,” Kramp-Karrenbauer added.Coronavirus Only ‘Real Threat’ to Markets: Prince Max (7:45 a.m.)There is nothing “really threatening” on the horizon for markets, with the possible exception of the coronavirus, according to Prince Max von und zu Liechtenstein, chief executive officer of LGT Group Foundation.“I think there is a little bit more downside risk than upside chances,” Prince Max said in an interview with Bloomberg TV. “But the market has been resistant so hopefully we will enjoy a good market for a little bit longer.”LGT is hoping for the long-term trend of negative rates to eventually reverse, Prince Max added. “But realistically our expectations for this year for a significant rate change is not there,” he said. “So we are not too optimistic on that front.”Turkish Guidance Intact After ‘Deep’ Rate Cuts (7:30 a.m.)Turkey’s central bank is standing by its promise of a positive real rate of return to investors despite five interest-rate cuts that Governor Murat Uysal conceded “were a bit deep.”Speaking in interviews with Turkish TV in Davos, Uysal said returns will run above zero based on the projected path of slowing inflation. The governor also downplayed concerns that the lack of a buffer against market sell-offs could now present a threat by saying the country has had negative real rates in the past.“Our interest rates steps in 2019 were a bit deep,” Uysal said. “I can say that we have entered a period in which we need to fine-tune inflation and monetary policy.Sanctioned Deripaska Returns to Talk Climate (6 a.m.)Two years after being sanctioned by the U.S. government, billionaire Oleg Deripaska is back among the global elite.The tycoon, who used to be regular at Davos and known for throwing extravagant parties, echoed the climate change message from activist Greta Thunberg and said not enough is being done to stop global warming.“Until payments are imposed for CO2, nothing in the world will change,” he said by phone from Switzerland. “All this talk at Davos about climate change is just words. In reality, nobody’s doing anything.”Thursday Highlights2:15 p.m. | German Chancellor Angela Merkel gives special address2:30 p.m. | Green New Deal panel with Dutch Prime Minister Mark Rutte and Greek Prime Minister Kyriakos Mitsotakis2:30 p.m. | Future of Energy panel with Saudi Aramco CEO Amin H. Nasser and Siemens CEO Joe KaeserBe on the lookout for Bloomberg Television’s interviews with:UBS CEO Sergio ErmottiGoldman Sachs CEO David SolomonU.S. Commerce Secretary Wilbur RossSingapore Prime Minister Lee Hsien LoongMoelis founder Ken Moelis\–With assistance from John Follain, Birgit Jennen, Craig Stirling, Cagan Koc, Yuliya Fedorinova, Javier Blas, Fergal O'Brien, Oliver Sachgau, Patrick Donahue, Jenny Leonard, Saleha Mohsin, Viren Vaghela, Haslinda Amin, Francine Lacqua, William Horobin, Reema Alothman and Matthew Martin.To contact the reporters on this story: Iain Rogers in Berlin at;Chris Reiter in Berlin at creiter2@bloomberg.netTo contact the editors responsible for this story: Chad Thomas at;Simon Kennedy at skennedy4@bloomberg.netFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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As President Trump Heads to India, the U.S. Struggles to Forge a Trade Deal Between the Two Countries



(WASHINGTON) — American dairy farmers, distillers and drugmakers have been eager to break into India, the world’s seventh-biggest economy but a tough-to-penetrate colossus of 1.3 billion people.

Looks like they’ll have to wait.

Talks between the Trump administration and New Delhi, intended to forge at least a modest deal in time for President Donald Trump’s visit that begins Monday, appear to have fizzled. Barring some last-minute dramatics — always possible with the Trump White House — a U.S.-India trade pact is months away, if not longer.

“I’m really saving the big deal for later on,” Trump said this week. “I don’t know if it will be done before the election, but we’ll have a very big deal with India.’’ The U.S. presidential election is Nov. 3.

For now, the failure to reach a deal, despite the pressure of an approaching summit, may reflect not so much the differences between Trump and Indian Prime Minister Narendra Modi as the similarities. Both men are fierce nationalists who favor protecting their own producers over opening their markets to foreign competition.

“You’ve got two leaders who are looking at trade very much as a zero-sum game,’’ said Richard Rossow, a specialist in U.S.-India relations at the Center for Strategic and International Studies.

Long notorious for high trade barriers and a cumbersome bureaucracy, India had for the past two decades or three decades been slowly reforming and opening its economy. Under Modi, that trend has reversed.

Regarded as a business reformer when he took office in 2014, Modi has increasingly turned protectionist, matching Trump’s “America First” example with “India First” policies of his own.

“U.S. behavior on the trade front has pushed India in the opposite direction of where we could like it to go,’’ Edward Alden, senior fellow at the Council on Foreign Relations, told reporters Friday.

One of Trump’s first acts was to withdraw from a 12-country Asia-Pacific free trade pact negotiated by the Obama administration. Similarly, Modi last year abandoned another Pacific Rim trade agreement, worried that India would be overwhelmed by Chinese imports.

Modi may be even more sensitive about exposing Indian companies to foreign competition because his country is in an economic slump. The International Monetary Fund last month scaled back its expectation for India’s growth this year to 5.8% from the 7% it had expected back in October. Indian loan companies, struggling to collect on bad debts, have reduced lending, thereby squeezing Indian consumers.

The Trump administration escalated the pressure on India last year by denying some of its products preferential duty-free entry to the American market. In effect, that move raised tariffs on Indian imports.

The administration is annoyed by a deficit in the trade of goods with India that last year reached $23.3 billion. The Office of the U.S. Trade Representative last year argued that India had failed to provide assurances that it would give U.S. products “equitable and reasonable access” to its markets.

The thinking was that India would make concessions to regain its duty-free benefits. But India hasn’t yielded yet.

“We had hoped that India would respond with a little more urgency,’’ said Roger Murry, senior policy adviser at the law firm Akin Gump Strauss Hauer & Feld.

Negotiations between U.S. Trade Representative Robert Lighthizer and India’s commerce minister, Piyush Goyal, seemed to be advancing until about a week ago. Yet they failed to bridge their differences.

“I would have thought they would have been able to pull off a mini-deal,’’ said Safiya Ghori-Ahmad, an India specialist at the consulting firm McLarty Associates. “It seems there are a lot of sticky issues.’’

One irritant is that just as negotiators were scrambling to conclude an agreement, India this month made another lurch toward protectionism. It issued an annual budget that raises import taxes on everything from cheese to shoes to toy tricycles.

The two sides have also squabbled over access to India’s dairy market. A predominately Hindu nation, India prohibits, on religious grounds, dairy imports that do not derive from cows that have been raised on vegetarian diets. The U.S. dairy industry argues that such restrictions are scientifically unnecessary and burdensome.

The administration has complained, too, about Indian restrictions on imported medical devices. In 2017, Indian officials imposed price controls on coronary stents and knee implants, forcing American companies to sell those products at a loss.

U.S. distilleries also have a big stake in a more open Indian economy. India is by far the world’s largest market for whiskey. In 2018, Indian drinkers downed nearly 1.7 billion liters of whiskey, worth $25 billion, accounting for half the world’s consumption and out-drinking Americans by a factor of three, according to Euromonitor. But facing 150% tariffs on imported spirits, U.S. distilleries sold just $7 million worth whiskey to India in 2018, according to the Distilled Spirits Council of the United States.

“There is no doubt that India has turned protectionist during the last two to three years,” said Columbia University’s Arvind Panagariya, a former Indian government official and a specialist in India’s economic policymaking. “And that is surely making matters more difficult by hardening Indian positions.’’

Still, Modi puts a high value on a strategic partnership with the United States, especially in the face of an increasingly assertive China. For that reason, he may be willing to make trade concessions for stronger ties with Washington.

“I remain optimistic about an agreement in due course,’’ Panagariya said.

But Sadanand Dhume, resident fellow at the conservative American Enterprise Institute, said he was discouraged by the failure of negotiators to reach a modest, confidence-building deal before the Trump-Modi summit.

“The ambitions were small to begin with,’’ Dhume said. “If a presidential visit cannot force these two countries to get over a small speed bump, that really does not augur well’’ for a more ambitious trade agreement.

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No Evidence Russia Helping Trump, Top U.S. Security Aide Says



(Bloomberg) — Donald Trump’s top security aide said he’s seen no evidence that Russia is interfering in the 2020 U.S. election in an effort to support the president’s re-election bid.On the other hand, National Security Adviser Robert O’Brien told ABC News that it would be “no surprise” if Moscow was trying to help Senator Bernie Sanders win the election, as reported on Friday.“I haven’t seen any intelligence that Russia is doing anything to attempt to get President Trump re-elected,” O’Brien said in an interview set for broadcast Sunday on “This Week.”“So if it’s out there, it hasn’t been shared with me,” he said, according to a transcript of the remarks posted by ABC. “And I get pretty good access.”O’Brien’s comments come after a senior intelligence official briefed House lawmakers recently that Russia is continuing to interfere in the U.S. election and that the Russian government favors Trump’s re-election, according to people familiar with the matter.The president felt blindsided when he learned belatedly that intelligence official Shelby Pierson on Feb. 13, under questioning from Democrats, told lawmakers about Russia’s preference for Trump, the people said.Maguire OutOn Wednesday, the president announced that he was replacing acting Director of National Intelligence Joseph Maguire, a veteran intelligence official, with Richard Grenell, the U.S. ambassador to Germany and a staunch Trump supporter.O’Brien on ABC denied that the end of Maguire’s service had anything to do with the briefing on Russian interference.“Admiral Maguire had to leave his acting position on March 11. And so that’s why he left,” said O’Brien. “All I know is that the Republicans on the side of the House hearing were unhappy with the hearing, and said that there was no intelligence to back up what was being said.”“I mean, why would the Russians want the president, who’s increased NATO spending $400 billion from non-American NATO member states over through 2024, who has spent $ 2.2 trillion in upgrading our military, which had been in a terrible state of readiness because of sequestration of the prior administration, and who’s moving out of endless wars and moving American troops into Europe and Asia to confront the great powers,” O’Brien said.“Why would they want him re-elected? That doesn’t make any sense to me.”O’Brien said, however, that reports that Russia is trying to help Sanders, the Vermont senator win the election were credible.Read more: Sanders Tells Putin to Stay Out After Briefing on Meddling“Well, there are these reports that they want Bernie Sanders to get elected president. That’s no surprise. He honeymooned in Moscow,” he said.Sanders traveled to the Soviet Union in 1988 shortly after getting married. His long-ago trip has become regular fodder for Trump and his re-election campaign.To contact the reporter on this story: Erik Wasson in Washington at ewasson@bloomberg.netTo contact the editors responsible for this story: Joe Sobczyk at, Ros Krasny, Linus ChuaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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Brazilian Police on Strike Amid Carnival Celebrations



(RIO DE JANEIRO) — A violent police strike in northeastern Brazil has shed light on dissatisfaction among cops elsewhere in the country, with some forces threatening to protest as rowdy Carnival celebrations start.

The strike by military police demanding higher salaries in the state of Ceara, and which led to a senator being shot, is a headache for President Jair Bolsonaro, a staunch supporter of police forces who has pledged to curb violent crime.

“Of course, police strikes could spread,” said lawmaker Guilherme da Cunha of the state of Minas Gerais, where police obtained a 42 percent salary increase this year after threatening to strike. “From the moment people who have a monopoly on firearms discover the strength it has, there is a risk.”

In Ceara, violent crime has risen sharply during the police strike, with at least 88 people killed over three days, according to online news site G1, citing state officials. Bolsonaro has sent hundreds of national guard forces and 2,500 soldiers to maintain order.

During the strike, Sen. Cid Gomes was shot in the chest as he tried to drive a backhoe through a police protest. He is in stable condition. Earlier that day, masked officers forced businesses to close, occupied barracks and damaged police vehicles.

Mayors in several of the state’s small cities — 30,000 inhabitants or less — canceled Carnival celebrations. In Paracuru, where authorities were expecting 40,000 revelers a day, the mayor said he was no longer able to ensure security in his city’s streets.

Even though police strikes are illegal in Brazil, other states are at risk of seeing similar protests, lawmakers and public security experts told The Associated Press.

In Alagoas state, civil police, in charge of investigating crimes, have been on strike for two weeks.

“The governor has made a lot of empty promises to the military police. At some point, that bomb can explode,” said lawmaker Davi Maia, who has met police in Congress to discuss their demands.

In Paraiba, military police organized a 12-hour strike on Feb. 19. In Santa Catarina, public security agents threatened to slow work to a bare minimum, paralyzing operations to an extent but avoiding illegal strikes.

In Rio, one association of municipal guards, who police city parks and properties, began a strike Saturday, during Carnival.

Police strikes aren’t new, according to Ilona Szabó, co-founder of a security research center, the Igarapé Institute. A study by the Federal University of Rio Grande do Sul showed that between 1997 and 2017, Brazil had 715 police strikes, but only 52 by military police.

“More than ever Brazil needs to democratize and professionalize its police forces,” Szabó said.

Many believe police officers are emboldened by the 2018 elections, in which Bolsonaro and other fervent law-and-order supporters were elected. A former army captain, Bolsonaro supported the armed forces during his 30-year legislative career and has said police who kill on duty should be decorated.

Many Brazilians states’ finances are in the red, with public servants often receiving partial or delayed salaries. Carnival celebrations often prove a good opportunity for public servants, including police, to pressure authorities, who fear violence and looting during the festivities.

Tourists and party-goers at Carnival are often targeted by pick-pockets. In the state of Sao Paulo, police have arrested 240 suspects as part of a carnival security operation.

Last year, public security officers in Minas Gerais also chose February to threaten the newly elected administration of Gov. Romeu Zema Neto with strikes if he didn’t readjust their salary.

“The government was pressured to choose between a terrible, and least worst option,” said state lawmaker da Cunha. Police shut down a motorway and armed men attempted to invade the governor’s office, according to witnesses who asked that their names not be used because of safety fears.

As part of the negotiations, the governor obtained an agreement that the increase be postponed one year, meaning the proposal only landed this month in the state’s legislative assembly.

The news of a 42 percent salary increase spread rapidly, boosting similar requests in Ceara and other states, and angering governors who have resisted threats of illegal protests.

“Minas Gerais granted this increase, in a state that is not paying salaries, and is in a situation of bankruptcy,” said Ignacio Cano, coordinator of the Violence Analysis Laboratory at the State University of Rio de Janeiro.

“It says a lot about the moment the country is going through, and the strength that public forces are acquiring,” he said.

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