Brazilian stories you may have missed during the holidays

The end-of-year holidays are usually a quiet period for Brazilian politics and business, as Congress and the Supreme Court take a month-long recess, and most of the population enjoys its summer vacations. However, with the increasingly powerful role of Brazil’s legislative branch, an oddly large number of laws were sanctioned on the days between Christmas and the New Year, some of them receiving important vetoes from President Jair Bolsonaro. Elsewhere, the drone killing of Iranian general Qassim Soleimani came as a shock, leading everyone to consider how an escalation of violence between the U.S. and Iran may affect the entire world, including Brazil.

To bring you back up to date, we have prepared a run-down of the most important issues of the past two weeks.

A new crisis in the Middle East

As we explained in our January 6 Weekly Report, the latest crisis sparked by the killing of Iranian general Qassim Suleimani by the U.S. military may have an impact on Brazil’s economy and politics.

While Brazil is far from the potential wave of violence that may break out in the Middle East, any retaliations that impact oil prices could have repercussions for the country’s most important state-owned company, Petrobras. As the firm has pegged its fuel prices to international oil benchmarks, a spike would force it to increase prices in Brazil, thus altering inflation. The recurring fear of government interference in Petrobras led to the company’s biggest crises of the past two years, including the infamous truckers’ strike in 2018.

According to news website G1, President Jair Bolsonaro believes oil prices are taking a step back and the crisis did not have “such a major impact” on the commodity. However, he is said to have taken part in meetings to discuss the impact of the unrest on fuel costs in Brazil. On the business side, Petrobras is poised to profit from higher oil prices—the company has a privileged position, with its facilities located outside conflict zones. On Monday, Petrobras’ preference shares (PETR4) rose 1.18 percent.

Politically, Brazil’s Foreign Affairs Ministry has positioned itself “against terrorism” and its next steps will be crucial to define Brazil’s foreign policy, which has traditionally been one of remaining impartial in external conflicts, ever since the country became a republic.

Supreme Court v. Bolsonaro

The latest tug of war between the Executive branch and the Supreme Court is literally...