“Brazil’s Will Be the Most Dysfunctional Major Election in 2022”: Ian Bremmer, of Eurasia Group

Ian Bremmer and the political risk consultancy firm he founded, Eurasia Group, are among the most sought after sources for major political and financial players across the globe.

In a interview with Bloomberg Línea, Bremmer analyzed the main events marking Latin America’s geopolitical scene: he showed skepticism about El Salvador’s bitcoin rollout and estimated that the Argentine government’s defeat in Sunday’s primary midterm elections will deepen the country’s economic crisis.

He also criticized Brazilian President Jair Bolsonaro following September 7′s protests, when he launched several attacks against the Supreme Court, as well as his backtrack and attempt to strike a more moderate tone two days later. And while Bremmer assured that Bolsonaro won’t be able to stay in power through “extra-legal” means after the 2022 elections, he did say that there is a real possibility that an event similar to January 6′s assault on the United States’ Capitol takes place, although the one in Brazil would be “much more violent”.

The following conversation has been edited for length and clarity purposes

Bloomberg Línea: What’s your take on El Salvador’s bitcoin rollout?

Ian Bremmer: Bukele is in a difficult spot. The economy is not doing well, they’re under a lot of pressure from the US and they don’t like that, they don’t like being dollarized. So for Bukele, my concern is that not just he’s a crypto bro who wants to show he’s technologically sophisticated but also that he’s making a one way bet on his country’s currency. It’s like going to a casino and putting your money on red or black. I think the hope is that btc is going to go up like crazy and as a consequence the econ is going to do a lot better.

But as we know, the amount of volatility that btc experiences makes it fundamentally inappropriate as a country’s currencies. This should be for wealthy people who have money to potentially bet. That’s why I don’t like it when Robinhood creates a casino environment. Everyone can trade, but we all know that in that environment it is usually the poor people who don’t know very much and don’t have discretionary income that end up getting screwed. People are a little scared and don’t really understand it. It’s clear that a lot of people are downloading the app. He said everyone would get US$30 if they signed up, so why wouldn’t they?. But that’s different to saying it will be a successful rollout.

BL: And how do you interpret Jair Bolsnonaro’s actions on September 7? Both his combative rhetoric and the conciliatory letter he issued two days later following strong criticism.

IB: Bolsonaro is a clown for his supporters, but he also understands that there are certain lines that he can’t cross. The statements he made on Brazil’s independence day, during the rallies, where very clear. He would not accept any mandates from a SC justice that has been looking into his inner circle. Two days later he issues a written statement saying he’ll follow everything according to proper judicial channels. Those statements are completely inconsistent, as if they were made by different human beings.

He’s a showman, he’s an entertainer, he’s throwing up some red meat for his base but he’s also willing to change his tune to whatever is expedient and useful on the day. It’s a great disappointment to have a country as important as Brazil run by someone who is so clearly unfit for that office.

BL: Do you think this affects the country’s role in the region? Especially taking into account that Lula is the main presidential contender and he also stirs strong emotions both domestically and in the international scene.

IB: When the president of the country says there’s no way he can lose a democratic election, he says that the alternatives to winning are being arrested or killed, that’s a lie. It’s ludicrous. As a consequence, he’s likely to lose. He’s not going to be able to take over the country through extra-legal means. He has no more capacity to do that than Trump did in the US despite the events of January 6.

The danger in Brazil is that a January 6-type event could be much more violent. Bolsonaro, unlike Trump, was a military man and there are lots of specific military police in some of the states reporting to governors that are loyal to Bolsonaro. If there were an extra-legal challenge to the elections I could see them splitting with the military, the armed forces’ chain of command, with the military leadership and decide they were actually going to recognize and support Bolsonaro, which, of course, didn’t happen at all in the US.

In that environment, a lot of people could get killed. It seems to me Bolsonaro, with a year before the elections, is leading up to a potentially more fractious and violent breakdown as we head into what will be the most dysfunctional major election of the 2022 season. I worry about it but I want to be very clear: he cannot steal the election. It’s a national election at a federal level. Not state by state so it’s harder to do than in the United States. His party doesn’t have a lot of strength.

The big question is whether it’s Lula or whether Bolsonaro becomes so incompetent, so unable to function, that enough of his supporters peel off and create an opportunity for a third party option in the center. In the US it doesn’t really happen but in Brazil it could and I think that’s the interesting question for the markets.

BL: In Argentina, the electoral scene was quite different. Could the country try to position itself as a more stable alternative in the region?

IB: No. Elections are much more smooth but, in terms of political and economic stability, Argentina is in a lot of trouble and because the party in power, the Fernández government, performed so badly on the primary elections and also in the Buenos Aires province, where it lost against the conservative opposition lost by about five points.

It’s a big big loss for the Peronists. What it means is that Fernández is going to lose a lot of power and Cristina Kirchner will have much more influence and her view is that he’s not been interventionist enough in the economy. So I think over the coming months you’ll see much more of an economic crisis in Argentina because she’s going to be able to say “we want to intervene heavily in the economy”. The IMF talks will become much worse. I think that’s a problem. Long term it means that they get forced out but in the short term this is dangerous for the country.

BL: What’s your analysis of the Venezuelan negotiation process in Mexico?

IB: There’s a little bit of progress in the sense that Capriles is much more willing to engage in talks with the President and is taking a more gradual approach towards reform than Guaidó, who was much more of a “we need this guy out now no matter what”. I think that creates the ability to have some concessions on both sides that could improve the humanitarian situation and reduce sanctions to a degree. But again, the country is being ran horribly and is in an economically disastrous zone. So that basis is not going to change any time soon.

BL: After Biden was elected, there was a lot of talk about him being the American President who knew Latin America the most. But it doesn’t seem like the regional agenda has changed much since January. How do you see the overall relationship between the US and Latin America right now?

IB: It’s not a priority for the US with the exception of the border situation, which has gotten worse to a degree because the Biden administration is less hawkish in the treatment of illegal migrants at the border and into the US. It was interesting that he decided that Kamala Harris should have the portfolio to deal with the border and specifically with the Northern Triangle.

She is from California, has a lot of experience historically on this issue. Biden knows Latin America very well but actually doesn’t engage with the Hispanic community in the US so much. They’re not in Delaware. As a senator he talks to the workers, the Black community, he’s engaged soldiers, the military. But Latinos in the US, not so much. I think that’s why he said “you’re Vice President, this is yours”. That’s a fairly difficult issue for her to deal with effectively and I don’t think she’s done very well so far.

BL: Do you think both parties can find areas of mutual benefit with the global shifts caused by the pandemic?

IB: The US is trying to shorten supply chains to a degree. Certainly with American workers but also with the USMCA. I think that area can see more investment, more integration. And America’s backyard is an area where you’ll see more willingness to invest more in infrastructure to compete with China. The Build Back Better world investment plan started off with the Americans, Japanese, Australians focusing on Asia, but there’ll be interest to focus in Latin America as well.