June was a busy month on Brazil’s diplomatic schedule. President Jair Bolsonaro attended the G20 summit on Osaka, in an attempt to improve his image abroad, while Foreign Affairs officials were in Brussels, bashing out the final negotiations on the historic European Union–Mercosur free-trade deal. As we move into July, however, international talks have not let up, and the new counterparts on the negotiation table are the governments of Norway and Germany, which have threatened to pull their support from the billionaire Amazon Fund.

</span></p> <p><span style="font-weight: 400;">Set up in 2008, the Amazon Fund is the largest project of its kind to help preserve the Amazon rainforest. Resources are gathered in order to implement a number of conservation initiatives in the region, with the <a href="https://brazilian.report/power/2019/06/17/exit-bndes-president-ideological-whim-bolsonaro/">Brazilian Development Bank</a> (BNDES) managing the funds and distributing them to states, municipalities, NGOs, and universities.</span></p> <p><span style="font-weight: 400;">The latest point of contention regarding the fund, however, concerns the Brazilian government&#8217;s decision to scrap the two decision-making committees which are responsible for deciding where resources should be allocated.</span></p> <p><span style="font-weight: 400;">Norwegian and German representatives met with Environment Minister Ricardo Salles earlier today to discuss the impasse. While Norway—the fund&#8217;s largest donors—declared they intended &#8220;to continue their collaboration with Brazil,&#8221; they did not rule out abandoning their funding if proposed changes did not &#8220;contribute to reduce deforestation and promote sustainable development in the Amazon region.&#8221;</span></p> <p><span style="font-weight: 400;">&#8220;Theoretically,&#8221; both sides say, the Amazon Fund could end.</span></p> <p><span style="font-weight: 400;">Since the fund&#8217;s inception, it has raised BRL 3.4 billion in investments. BRL 3.2 billion came from the Norwegian government. Norway is the 15th biggest producer of oil in the world—and 4th worldwide in oil production per capita—as such, it has a significant carbon footprint and has always been keen on contributing to environmental concerns, such as conserving the Brazilian Amazon.</span></p> <h2>Sprouting tensions</h2> <p><span style="font-weight: 400;">The Amazon Fund has been a source of tension within the Environment Ministry since 2017, when Norway announced it would cut its yearly contributions due to increasing levels of <a href="https://www.reuters.com/article/us-climatechange-amazon-norway/norway-to-complete-1-billion-payment-to-brazil-for-protecting-amazon-idUSKCN0RF1P520150915">deforestation in Brazil</a>. The terms of Norway&#8217;s participation in the fund are that investments will be tied to reductions in CO</span><span style="font-weight: 400;">2</span><span style="font-weight: 400;"> emissions: when deforestation goes up, so do carbon emissions, meaning Norway&#8217;s funding goes down.</span></p> <p><span style="font-weight: 400;">Recent data from the National Institute for Space Research (INPE) has shown that deforestation is still on the rise in the country. Latest studies from INPE&#8217;s Amazon Rainforest Satellite Monitoring (PRODES) program indicate that deforestation has increased by 15 percent over the last 12 months, reaching 4,565 square kilometers between August 2018 and June 2019 and sure to increase pressure further on the Amazon Fund.</span></p> <p><span style="font-weight: 400;">Since the current government took office this year, Environment Minister Ricardo Salles has come to blows with Norway on a number of occasions. In May, he angered investors by suggesting the Amazon Fund should be used to pay compensation to rural landowners who had lost rights over their territory as a result of environmental conservation areas.</span></p> <p><span style="font-weight: 400;">The ministry&#8217;s list of outstanding debts is extensive, with the federal government being unable to pay redress to these landowners, who claim they were forced out of their homes due to the creation of protected areas.</span></p> <p><span style="font-weight: 400;">The Norwegian government claimed that paying off these debts would not go toward reducing deforestation in the Amazon, and positioned itself against the change.</span></p> <p><span style="font-weight: 400;">Investors were bothered further when Mr. Salles made claims that there were &#8220;indications of irregularities&#8221; in the fund&#8217;s contracts, suggesting there were excessive amounts paid on human resources, administration, travel, and courses. This was his justification to request more government presence on the fund&#8217;s decision-making committees—boards which, in the latest flaring up of tensions, cease to exist entirely.</span></p> <p><span style="font-weight: 400;">In broad terms, the Amazon Fund is used to finance projects to conserve the Brazilian Amazon, in areas such as monitoring, management of public rainforests, and the recovery of deforested areas. However, these projects have all been frozen with the extinction of the fund&#8217;s decision-making committees.</span></p> <p><span style="font-weight: 400;">Representatives of Norway and Germany delivered a series of questions to the Environment Minister, and expect to receive answers in mid-July to continue talks over the future of the Amazon Fund.

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MoneyJul 04, 2019

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BY Euan Marshall

Euan Marshall is a Scottish journalist living in São Paulo. He is co-author of A to Zico: An Alphabet of Brazilian Football.