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Corona chronicles: the situation in Brazil

J.M. Amaral Gurgel

Amaral Gurgel Advogados

Overwhelmed as we are by virus-pundits and covid-bulletins on an hourly basis, it’s frustrating to fill the reader in on all local circumstances with a paper that shall become dated by the time it reaches the audience. And yet, I thought it only fitting to give the idea a try.

It was not until the virus outbreak was labelled a pandemic that Brazilian authorities started acting, and enacting a number of complacent ordinances aiming to be their covid-response. In Brazil, a federation of twenty-plus States and a territory of continental dimension, the legislative authority as regards quarantining and lockdowns lies in each of the States, with concurrent (sometimes conflicting) federal Government fiats and municipal-level arbitrary orders.

The federal government, which the opposition charges with a degree of denialism and insensitiveness under perplexing pandemic politics (‘scientific illiteracy rapidly moving from risible to lethal’), faced stark, Faustian choices: keep the economy locked down and risk unemployment, social unrest and industries’ furore to keep functioning, or let it be free and fluid, and risk lives and healthcare collapse.

As a matter of fact, Brazilian States/Municipalities have imposed not the lockdown, but just varying and constantly evolving degrees of theoretically enforceable quarantining rules to which, as it happens, not all Brazilians pay due attention. Surprisingly, should one consider Brazil’s 210-million population, 0.01% of fatalities (so far) does not stand out as a devastation. Still, one must say, every single increase in deaths from covid-19 is a tragedy in itself.

The corona crisis has exposed Brazilian structural flaws and an overstretched health system that will need time and help to return to a semblance of ''normalcy''.

The extent of disruptions has been rather comprehensive. Gyms, malls, restaurants, retail outlets, apparel, groceries, parcels, nearly all economic sectors have been affected, one way or the other, due to regulatory measures put in place by the authorities, whilst aviation, the hospitality industry, fashion and non-food retailers were the most severely hit sectors.

Overall arrears came in the aftermath of businesses suffocation. Contractual obligations, commitments, commercial arrangements, the relationship amongst businessmen: a great deal of them show symptoms of exhaustion, need of moratorium, risk of bankruptcy. Legal opinions are much in demand, with force majeure (and what a force this is!) being invoked, where words like ''legal liability'', ''tort risk'', ''non-performance'', ''breach of contract'', ''grace'', ''limitation periods'', ''debt-restructuring'' and others abound, while ''default'' seems to be the hardest word.

Within our own law firm, no redundancies occurred. Most of the practitioners and trainees went remote, having been home on furlough since mid-March with no signs of quarantine-fatigue. We did furlough staff (flexitime policy combined with forced holidays) and, in a time of pestilence and penitence, partners braced for disrupted distributions.

What the remainder of 2020 will be, that’s hard to predict. The virus lingers, the whole picture still prompts concerns, and the upcoming weeks still look bleak: no matter what, we’re bound to abandon a lockdown that was not.

Now a gradual lifting of the covidian constrictions is likely to generate hysteresis effects (and the rebound of the economy does depend on hysteresis). Underemployment of production factors and partial unemployment, with consequential labour grievances, could become permanent.

As a further matter, this is a new virus, the extension and life-cycle of which cannot be predicted. Thence, Knightian uncertainty is set to persist, with mid-term consequences of the lockdown decompression, or even the lessening of enforced restrictions, being unknown.

I suspect we will reemerge stronger in a post-pandemic world with reasons to expect a staunch recovery. With all due respect to the toll of dead, once we’re over the worst the pandemic shall have been rather an extraordinary experience!

Finally, being an incurable optimist, I’d risk playing the Pangloss of the group by saying there’s quite a good many benefits associated with the ongoing pandemic, e.g., the fact that the planet regenerates quickly without human interference, but I oughtn’t daresay it in the face of so much human misery under our very eyes.

J.M. Amaral Gurgel, AMARAL GURGEL ADVOGADOS

Early June, 2020

 

Picture: Catedral da Sé

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