Good morning! Brazil’s Infrastructure Minister defended oil-drilling in the Amazon rainforest. Lula comes back to the center stage of political discussions. The Senate must now analyze and vote on the pension reform. A rollercoaster ride for the Brazilian currency.


Drilling oil from the rainforest?

Brazil’s Infrastructure Minister Tarcísio de Freitas defended

oil-drilling activities in the mouth of the Amazon River. Mr. Freitas criticized what he called an &#8220;ideologization&#8221; of debates around environmental issues, and called for a more &#8220;technical, rational&#8221; approach. &#8220;We are sitting on an immense wealth, waiting for [it to be replaced by another energy source]. The stone age did not end for a lack of stones, just as the age of oil won&#8217;t be over for a lack of it. Everyone&#8217;s exploring. What are we waiting for?&#8221;</p> <figure class="wp-block-image"><img src="https://brazilian.report/wp-content/uploads/2019/08/oil-amazonas-1024x577.jpg" alt="oil amazonas rainforest" class="wp-image-21924" srcset="https://brazilian.report/wp-content/uploads/2019/08/oil-amazonas-1024x577.jpg 1024w, https://brazilian.report/wp-content/uploads/2019/08/oil-amazonas-300x169.jpg 300w, https://brazilian.report/wp-content/uploads/2019/08/oil-amazonas-768x433.jpg 768w, https://brazilian.report/wp-content/uploads/2019/08/oil-amazonas-610x344.jpg 610w, https://brazilian.report/wp-content/uploads/2019/08/oil-amazonas.jpg 1128w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Oil reserves next to the rainforest</figcaption></figure> <p><strong>Why it matters.</strong> Ocean currents are too strong along the coast of Amapá, making operations harder and riskier. &#8220;Not by accident, none of the 95 attempts to get oil from there since the 1970s were successful,&#8221; said Greenpeace&#8217;s Thiago Almeida. In 2011, a Petrobras oil rig in the area went adrift. In December 2018, Brazil&#8217;s environmental agency denied French oil company Total a permit to explore the region, due to the risks a possible leak would represent. Sea biodiversity and nearby reefs could be irreversibly damaged.&nbsp;</p> <p><strong>Pressure.</strong> The debate comes at a moment when the international community has its eyes on the destruction of the rainforest and Brazil&#8217;s role to prevent it. President Bolsonaro has taken a lot of heat from news outlets, foreign governments, and independent organizations. Environment Minister Ricardo Salles defended the administration, lashing out at Norway, the country which finances 94 percent of a BRL 3.4bn fund to protect the Amazon rainforest. &#8220;They drill oil from the Arctic and hunt whales. And then call us out,&#8221; he said.</p> <ul><li><strong>Go deeper: </strong><a href="https://brazilian.report/money/2019/07/07/climate-change-food-prices-brazil/">How climate issues and rainforest destruction are pushing food prices up in Brazil</a></li></ul> <hr class="wp-block-separator"/> <h2>How the devaluation of the Chinese Yuan impacts Brazil</h2> <p>Markets are deeply worried that the ongoing trade war between the U.S. and China will effectively morph into a currency war. Yesterday, investors ran for cover, seeking traditionally safer assets such as sovereign bonds, gold, and currencies such as the Swiss Franc or Japanese Yen. In Brazil, the U.S. Dollar gained 0.50 percent against the Real, closing the day at BRL 3.9746—amounting to rise of 4.09 percent this month.</p> <p><strong>Why it matters.</strong> A strong global economic slowdown will certainly be bad for Brazil, which is already struggling to grow. Expectations for GDP expansion this year went from 2.5 to 0.8 percent between January and now. However, the uncertain international scenario could have a positive side effect, potentially pushing political operators to more swiftly approving economic reforms. Of course, that prediction comes with a dose of wishful thinking, as the 2020 municipal elections could prevent politicians from taking on any unpopular measures in the near future.</p> <p><strong>Commodities. </strong>A bump in Brazilian soybean prices has put off Chinese buyers, two traders told <em>Reuters</em>—even though the rise was driven by an expected growing demand from the Asian giant, with the trade war imposing hurdles on buying American soybeans. Since U.S. President Donald Trump announced a 10-percent tariff on Chinese products, Brazilian prices have risen (from USD 380 to 400 per ton since last week). “Most Chinese importers are staying away from the market.”</p> <div class="flourish-embed" data-src="visualisation/577676"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <hr class="wp-block-separator"/> <h2>Lula is back to the center of the political debate</h2> <p>Since April 2018, former President Lula has served his prison sentence in the Federal Police headquarters in Curitiba, Paraná state. But, claiming logistical issues and elevated costs, the Federal Police requested Lula be transferred to a regular penitentiary, which was granted by a federal judge—allowing Lula to be placed in a collective cell. Just hours later, however, the Supreme Court overruled the move, keeping him in the Federal Police building.</p> <p><strong>Why it matters.</strong> Especially for its timing, the move was perceived by political operators as a reaction to the recent Car Wash leaks—which placed Justice Minister and former Judge Sergio Moro (who oversees the Federal Police) under massive scrutiny. Twelve congressional parties (from the left to the center-right) lambasted the decision to transfer Lula, calling it an &#8220;escalation of arbitrariness.&#8221; And that could elevate political tensions.</p> <p><strong>Loop.</strong> In Lula&#8217;s Workers&#8217; Party, the decision turned an event which was supposed to be an opportunity for the party to propose an economic agenda for the country into a &#8220;Free Lula&#8221; rally. As political scientist Fernando Bizzarro, a Ph.D. researcher at Harvard, wrote on <strong>The Brazilian Report</strong>, &#8220;the Workers’ Party [is] back to its Lula-centered trance, delaying the reorganization that the party and the Brazilian left so badly need.&#8221;</p> <ul><li><strong>Go deeper: </strong><a href="https://brazilian.report/opinion/2019/08/04/deinstitutionalization-brazil-workers-party/">The deinstitutionalization of Brazil’s Workers’ Party</a></li></ul> <hr class="wp-block-separator"/> <h2>You should also know</h2> <p><strong>Pension reform.</strong> The House voted down seven proposed changes to the core text of the pension reform, officially passing the bill to the Senate. The changes—which included more generous pensions after death—would slash savings within a decade by almost half. Now, the Senate must approve the reform in two rounds of voting. If senators change anything in the text, the bill goes back to the lower house.</p> <p><strong>Car Wash.</strong> Eike Batista, formerly the wealthiest man in Brazil, was <a href="https://g1.globo.com/rj/rio-de-janeiro/noticia/2019/08/08/eike-batista-e-preso-na-manha-desta-quinta-feira.ghtml">arrested</a> for a second time this morning, as part of the latest phase of Operation Car Wash. Federal Police picked up Mr. Batista at his home in Rio de Janeiro, where he has been under house arrest since early 2017. The Car Wash operation in question, dubbed &#8220;Operation Secrets of Midas,&#8221; is investigating stock market manipulation and money laundering.&nbsp;</p> <p><strong>Open skies.</strong> President Bolsonaro signed an &#8216;open skies&#8217; accord with eight Latin American countries (the Dominican Republic, Guatemala, Paraguay, Panama, Colombia, Chile, Uruguay, and Honduras). The deal had been initially signed in 2011, but will come into force now. Following a recommendation by the Brazilian Air Force, however, Mr. Bolsonaro vetoed one article allowing airlines from those countries to operate domestic flights within Brazil.</p> <p><strong>Anti-vax. </strong>The São Paulo special court ruled to force a couple to vaccinate their 3-year-old son, establishing a precedent on how to deal with the growing anti-vaccination movement in Brazil. <a href="https://brazilian.report/power/2019/08/05/anti-vax-movement-brazil-measles-comeback/">Lowering vaccination rates</a> are allowing once-eradicated diseases, such as measles, to stage a comeback. Brazil didn&#8217;t register a single case of measles between 2016 and 2017. Last year, however, over 10,000 people were infected.</p> <p><strong>Symbolism.</strong> Politics is made up of symbols, Brazilians say. Today, President Bolsonaro is set to welcome in his office Maria Joseíta Brilhante Ustra—the widow of the late Army Colonel Carlos Alberto Brilhante Ustra, the first agent of the military dictatorship to be officially deemed a &#8220;torturer&#8221; by the Brazilian Justice system. The visit should reignite debates on the president&#8217;s appreciation for democracy.</p> <p><strong>Business.</strong> The House is expected to vote next week on a provisional decree signed by President Bolsonaro to cut red tape in several business activities. The so-called “Economic Freedom Decree” loosened several requirements for new companies to obtain operating licenses, but Congress must confirm it by August 28 or it will expire.

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BY Gustavo Ribeiro

An award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.