Good morning! Today, we cover the massive oil spill along the Brazilian coast. The future of Operation Car Wash—and a soap-opera story involving the former prosecutor general. And the Central Bank’s growing optimism. (This newsletter is for platinum subscribers only. Become one now!)


The mysterious oil spill on Brazilian shores

Brazil’s environmental agency is monitoring the appearance of

oil stains along the Northeast coast. So far, 46 municipalities in eight states have registered the presence of oil on their waters or on the beach. Petrobras says the substance is crude oil—which is <em>not</em> produced in Brazil. However, authorities still don&#8217;t know where the oil might have come from.</p> <p><strong>Why it matters.</strong> The episode is proof of just how poor Brazil&#8217;s monitoring of its 7,500-kilometer coastline is. &#8220;If we had naval <a href="https://brazilian.report/newsletters/daily-briefing/2019/06/05/june-5-2019-preserve-amazon-environment/">oversight</a>, this wouldn&#8217;t happen,&#8221; said Anna Carolina Lobo, of NGO WWF-Brasil.</p> <figure class="wp-block-image"><img src="https://brazilian.report/wp-content/uploads/2019/09/oil-spill-brazil-shore-1024x760.jpg" alt="oil spill brazil shore" class="wp-image-25027" srcset="https://brazilian.report/wp-content/uploads/2019/09/oil-spill-brazil-shore-1024x760.jpg 1024w, https://brazilian.report/wp-content/uploads/2019/09/oil-spill-brazil-shore-300x223.jpg 300w, https://brazilian.report/wp-content/uploads/2019/09/oil-spill-brazil-shore-768x570.jpg 768w, https://brazilian.report/wp-content/uploads/2019/09/oil-spill-brazil-shore-610x453.jpg 610w, https://brazilian.report/wp-content/uploads/2019/09/oil-spill-brazil-shore.jpg 1600w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure> <p><strong>Impact.</strong> The first oil stain was identified on September 2, but the extent of the spill remains unknown. That makes it much harder to assess its impact on sea life. Environmental agents have found nine dead sea turtles and one dead shearwater, but so far, contamination of fish and crustaceans has not been confirmed. Petrobras will make 100 staff members available to help with cleaning efforts.</p> <p>Affected cities are fearing a drop in tourism, which is one of the region&#8217;s main revenue sources. Restaurants and hotels say they have registered a drop in customers of up to 70 percent since the first stains were spotted.&nbsp;</p> <p><strong>Origins.</strong> A probable explanation is that the oil stains come from a <a href="https://www.fastcompany.com/90232848/the-ocean-cleanup-vessel-is-on-its-way-to-clean-up-the-great-pacific-garbage-patch">ship</a> that cleaned its tank in the ocean—and that currents brought it to the Brazilian coast. </p> <p><strong>Other cases. </strong>Back in April, oil appeared along the coast of Rio de Janeiro, polluting the beaches of Arraial do Cabo, Búzios, and Cabo Frio—a region known as the &#8220;Brazilian Caribbean.&#8221; After analysis, it was proven that the product was a residue from Petrobras&#8217; nearby operations.</p> <hr class="wp-block-separator"/> <h2>Operation Car Wash: the writing on the wall</h2> <p>The Supreme Court has reached a majority in favor of a decision that will essentially overturn dozens of Operation Car Wash-related convictions. In a 7-3 vote, justices considered that defendants not collaborating with law enforcement must have more time to submit their closing arguments to the court, as they could be implicated by those providing plea bargain testimony.</p> <p>The trial, however, was suspended—and will be resumed next week.</p> <p><strong>Why it matters.</strong> The decision might very well be the biggest defeat for Operation Car Wash to date. Many cases (including that of former President Lula) would go back to trial courts, and defendants could benefit from the statute of limitations in several situations. It shows how fragile the position of the investigation is—receiving attacks from the Judiciary and Congress—as well as that of its public face, former judge—and current Justice Minister—Sergio Moro.</p> <p><strong>2022.</strong> The decision also serves President Jair Bolsonaro. With lowering approval ratings, Mr. Bolsonaro bets on polarization to galvanize supporters. The possibility of Lula leaving prison would allow him to return to his &#8220;role&#8221; as the leading anti-Workers&#8217; Party figure in Brazilian politics.</p> <p><strong>Politics over the law.</strong> The Supreme Court was supposed to discuss the constitutional principles around the right to a fair hearing and due process. Instead, justices from both sides relied on political arguments to base their understandings. The minority warned about the impact restarting cases would have on anti-corruption efforts, while the majority chose to talk about Operation Car Wash &#8220;inquisitorial&#8221; positions. Arguments more suited for a townhouse discussion rather than a constitutional court.</p> <script src="https://www.buzzsprout.com/299876/1078964-53-the-new-face-of-brazil-s-operation-car-wash.js?player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>Murder in the Supreme Court?</h2> <p>Former Prosecutor General Rodrigo Janot gave an explosive interview to weekly magazine <em><a href="https://veja.abril.com.br/politica/janot-gilmar-ia-dar-um-tiro-na-cara-dele/">Veja</a></em>. He said that in May 2017—when Operation Car Wash was at its peak—he seriously considered a murder-suicide plot against Supreme Court Justice Gilmar Mendes, the probe&#8217;s fiercest enemy. Mr. Janot said he went to the Supreme Court building one day, armed and ready to &#8220;shoot [Justice Mendes] in the face and then commit suicide.&#8221; But he froze.</p> <p><strong>Why it matters.</strong> The interview has shocked the political world in Brasília, and is set to create an even more toxic atmosphere around Operation Car Wash. Moreover, it could fuel calls for aggression against members of the judiciary. In recent months, there have been several calls to jail Supreme Court justices and even shut down the court altogether.</p> <p><strong>Promotion.</strong> Mr. Janot&#8217;s revelations don&#8217;t come out of the blue. He is about to launch his memoirs—which are sure to include details of the murder that never was.</p> <p><strong>Bloody history.</strong> Had Mr. Janot <em>actually</em> pulled the trigger, he wouldn&#8217;t be the first to do so in Brazilian public life. Fifty-six years ago, then-Senator Arnon de Mello (father of former President Fernando Collor de Mello) killed a colleague in the Congress building following regional political disputes.</p> <hr class="wp-block-separator"/> <h2>Why the Central Bank expects more growth in Brazil</h2> <p>After positive employment numbers for August, Brazil&#8217;s Central Bank announced a slight improvement of its economic forecast for the country this year, elevating its GDP growth prediction from 0.8 to 0.9 percent.&nbsp;</p> <p><strong>Why it matters.</strong> While 0.1 percent is a very small improvement, it is an improvement nonetheless. It indicates that the monetary authority, which is headed by orthodox economist Roberto Campos Neto, sees a silver lining ahead for the country&#8217;s ailing economy.</p> <p><strong>Outlier.</strong> On Monday, the bank&#8217;s Focus Report—a weekly survey among top-rated investment firms—showed that markets maintained GDP expectations at 0.87 percent for this year, and 2 percent for 2020. Investors are still adopting a cautious stance on Brazil.</p> <div class="flourish-embed" data-src="visualisation/529619"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <p><strong>Focus on growth. </strong>Roberto Campos Neto tenure as the Central Bank chairman shows that he is willing to tolerate a weaker currency. Actions by the monetary policy committee—which sets the benchmark interest rate for Brazil—are less driven by possible spillover effects on the currency exchange rate and more worried about fostering investments. The bank has recently reduced the Selic interest rate to its lowest point ever, 5.5 percent.&nbsp;</p> <hr class="wp-block-separator"/> <h2>What else you need to know</h2> <p><strong>Aviation.</strong> Delta Air Lines announced the purchase of a 20-percent stake in the Chilean-Brazilian Latam group. The deal is worth USD 1.9 billion for the shares and USD 350 million in future investments. Delta also made a commitment to purchase some of Latam&#8217;s planes. The move should end Delta&#8217;s longtime partnership with Gol (of which the American carrier owns 9 percent). In New York after-hours trading, Latam stock was up 37 percent—and Gol was down 8.5 percent.</p> <p><strong>Infrastructure.</strong> The federal government will today auction off the concession for the BR-364/365 highway, connecting the states of Goiás and Minas Gerais. It will be the first <a href="https://brazilian.report/money/2019/07/22/seaborne-cargo-transportation-in-brazil/">roadway</a> auctioned under the Jair Bolsonaro administration—but the project was prepared during the Michel Temer government. Despite being considered the least attractive among assets to be auctioned, today&#8217;s process will serve as a thermometer for concessions to come. The federal administration plans on privatizing 16,500 kilometers of roads by 2022, expecting to raise up to BRL 35 billion.</p> <p><strong>Beef.</strong> Anticipating a possible boycott from consumer markets, <a href="https://brazilian.report/money/2019/04/20/china-swine-fever-brazil-beef/">beef producers</a> JBS, Marfrig, and Minerva are preparing a series of marketing campaigns in order to convince international markets that their product is not linked to Amazon deforestation. Brazil&#8217;s Agriculture Ministry has received informal queries from Saudi Arabia, Germany, and Egypt about the risks of Brazilian meat plants buying cattle from deforested or illegally occupied land.</p> <p><strong>Not Soros.</strong> <a href="https://brazilian.report/power/2019/07/17/jair-bolsonaro-true-super-infrastructure-minister-tarcisio-freitas/">Infrastructure Minister Tarcísio Gomes</a>—the government&#8217;s lowest-profile member—has been targeted by far-right online militants for holding meetings with investment funds who are considering putting their money in Brazilian projects. The reason for the outrage is the reported presence of multi-billionaire philanthropist George Soros—a sort of bogeyman for far-right movements across the globe, who believe he is behind a global left-wing conspiracy. The Infrastructure Ministry and the Chief of Staff&#8217;s office both deleted mentions to Mr. Soros on their websites.</p> <p><strong>Streaming. </strong>Lets, Brazil&#8217;s first streaming platform, was launched last night. With over 2,200 productions (including movies and series), the new, Brasília-based company also wants to invest in original content by way of a fund to finance productions, without going into much detail. It will also launch a 24-hour newscast on international news—&#8221;from Brazilians, to Brazilians,&#8221; its founders say. Brazil is the world&#8217;s sixth-largest streaming market, but the sector is dominated by Netflix, which holds an 18-percent market share (4.5 times bigger than Globo Play, which comes second).</p> <p><strong>Will he, won&#8217;t he?</strong> Since 2014, TV presenter Luciano Huck has mulled over a <a href="https://brazilian.report/power/2018/02/09/luciano-huck-2018-election-back/">possible presidential bid</a>. The ritual is always the same: Mr. Huck holds meetings with political players, who try swaying him into politics, arguing that his charisma and TV personality make him an instant favorite. In the end, Mr. Huck <a href="https://brazilian.report/power/2018/02/16/election-huck-competitive-candidates/">opts to stay put</a>, not giving up his fat checks from sponsors and TV Globo. This past week, the presenter held a dinner party with political leaders and high-profile economists to discuss a possible candidacy in 2022. Enthusiasts say he can break the polarization in Brazilian politics, as he defends a hands-free approach on economics—while preaching social protections for the poor. But his family still fears the scrutiny that would come with a campaign.

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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.