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Brazil’s Pre-Salt Auction and the Development of the Libra Field

September 30, 2013

by Christian Gómez, Jr.

On September 18, only 11 companies signed up to participate in the auction of Brazil’s pre-salt Libra oil field, one of the largest offshore oil discoveries since 2007. This outcome fell sharply below the Brazilian government’s expectations. In fact, Magda Chambriard, head of the Agência Nacional do Petróleo (National Petroleum Agency—ANP), said the following day that she expected about 40 companies to sign up for the auction.  

Because of its size and recoverable potential, the Libra field is known as one of the “elephants of pre-salt.” The field is estimated to contain between 8 to 12 billion barrels of oil, making it one of the largest in the world. Therefore, the Brazilian authorities placed a hefty price tag on registering for the auction—$2.05 million reais, or just over $900,000.

The companies that registered to participate included several Asian firms, such as Petroliam Nasional and Petronas from Malaysia; Oil and Natural Gas Corporation Limited (ONGC) from India; and China’s National Offshore Oil Corporation (CNOOC) and China National Petroleum Corporation. There were also joint ventures—such as the Chinese company Sinopec’s alliance with Spain’s Repsol—in addition to individual international oil companies that will bid, such as Total S.A., Royal Dutch Shell and Mitsui. The only Latin American company to register was Ecopetrol of Colombia.

Analysts have pointed to the absence of large international companies such as ExxonMobil, Chevron, and BP as representing the “failure” of the registration process. As stated in a recent AS/COA report, “Brazil’s Energy Agenda: The Way Forward,” government intervention in the bidding process may have deterred some companies from participating. One such deterrent, for example, is that Petrobras must be the sole operator in the pre-salt fields, and they must take at least a 30 percent stake in the project.

The relative lack of interest may spur Petrobras to change the terms of its participation, but it is unlikely to do so. Petrobras CEO Maria das Graças Foster recently stated that the company has the technical capacity to explore and produce all the oil from Libra, but needs financial backing to invest. Thus, Petrobras will need the winning bidder to put up a large share of the oil to sell from its own account in order to maximize its financial gain.

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Tags: energy, Brazil, Libra oil field

Brazil’s Supreme Court Decides Against Public Opinion

September 26, 2013

by Vítor de Salles Brasil

Brazil’s Supremo Tribunal Federal (Supreme Federal Tribunal—STF) was deeply divided on the afternoon of September 18. The court’s eleven justices had to decide whether they would accept a motion to hear the appeals of twelve politicians charged in last year’s landmark corruption trial, popularly deemed as the mensalão (monthly allowance).

Ten justices voted in last week’s decision:  five voted in favor of the motion and five voted against it. The nation waited eagerly until last Wednesday to learn which way Justice Celso de Mello—the Court’s deciding vote—had leaned. If Justice Mello were to decide that the Court should deny the motion, the eight-year-long mensalão trial would have concluded that very day. But the result is now public: Justice Mello voted to accept the motion, thus beginning a new chapter in the historic case.

In a symbolic expression that represented the disappointment of millions of Brazilians who watched the televised judgment live on TV Justiça, Chief Justice Joaquim Barbosa appeared visibly frustrated upon learning of the results. But what does the decision mean, and why is the majority of the Brazilian public seemingly opposed to it?

The mensalão case has been recognized as the biggest corruption scandal in Brazilian history, involving important political figures such as José Dirceu, former chief-of-staff for President Luiz Inácio Lula da Silva, and João Paulo Cunha, former president of the Câmara dos Deputados (Chamber of Deputies).

Collaborators organized an intricate vote-buying scheme to ensure that legislation received quick congressional  approval from a diverse governing coalition that otherwise lacked consensus. The scheme started in 2003, during Lula’s first year as president, but was not made public until 2005. The infamous trial leveraged a series of allegations against 39 politicians—25 were ultimately sentenced to various criminal charges in 2012. 

Brazil’s Supreme Court has historically been seen as the nation’s moral pillar. Following the court’s 2012 verdicts, the media and the Brazilian public celebrated the emblematic outcome as the beginning of a new era, in which those involved in corruption could finally be held accountable.  Sadly, they rejoiced too soon—the appeals process would quickly prove them wrong.

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Tags: Brazil, Mensalão Scandal

Leaders of the Americas Address UN General Assembly

September 24, 2013

by AQ Online

Leaders from throughout the hemisphere will convene in New York City today for the opening of the sixty-eight session of the United Nations General Assembly (UNGA). For the third year in a row, Brazilian President Dilma Rousseff will deliver the first address. In her speech, she is expected to propose global measures against cyber-espionage—a practice considered by Rousseff as a violation of human rights—following recent revelations that the U.S. National Security Agency (NSA) monitored e-mails and phone calls of the presidential team and of Brazilian oil company Petrobras.

In addition to President Rousseff, other heads of state from the Americas that will be addressing the General Assembly today include U.S. President Barack Obama, Chilean President Sebastián Piñera, Colombian President Juan Manuel Santos, Costa Rican President Laura Chinchilla, Paraguayan President Horacio Cartes, Uruguayan President José Mujica and Argentinian President Cristina Fernández de Kirchner. Salvadoran President Mauricio Funes, Guatemalan President Otto Pérez Molina, Panamanian President Ricardo Martinelli, Peruvian President Ollanta Humala have also confirmed their attendance.

A number of high-level meetings will take place throughout the week, covering topics that range from updates in the sustainable development agenda to more pressing political issues such as the crisis in Syria, U.S. diplomatic relations with Iran and the future of Israel-Palestine peace talks. The schedules and speakers for the following days of the General Debate will be announced on the night before of each daily session.

Tags: President Dilma Rousseff, Brazil, United Nations General Assembly

Flamengo's Twelfth Man

September 20, 2013

by Stephen Kurczy

What’s more important to a Brazilian than allegations of U.S. spying on their president? Not the stuttering economy, rising inflation, preparations for next year’s World Cup and 2016 Olympics, or even the looming presidential election—all of which factored into recent nationwide demonstrations still reverberating in outbursts of violent protest. 

Futebol. And with it comes one of the most important questions in Brazil, impacting every Brazilian day to day and how they interact with each other and the world. 

Who’s your futebol club? 

As a recent transplant to Rio de Janeiro, I expected deep conversations about democracy and rule of law. More often, I face existential questions about why one is loyal to a losing team, forcing me into a dilemma that Brazilians rarely confront. Most Brazilians are born into fandom, their allegiance to one of the nation’s futebol clubs received at birth from their parents and grandparents and seemingly all the way back to the founders of the Brazilian futebol league in the early 20th century. 

But I would have to choose a club—which, in Brazil, is like choosing a religion itself. It means community, belonging, and—for a newcomer like me—arrival. For a gringo to speak Portuguese is good; to support a Brazilian futebol club is divine.

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Tags: Brazil, Soccer, Flamengo, World Cup

Bahia Empowered in Brazil’s Search for Truth

September 16, 2013

by Shari Wejsa

Brazil’s Comissão Nacional da Verdade (National Truth Commission—CNV), responsible for investigating human rights violations committed by state agents under the country’s military dictatorship between 1964 and 1985, was inaugurated on May 16, 2012 with much fanfare.

At the time, Brazilian President Dilma Rousseff emphasized the importance of democratic progress, calling the ceremony “a celebration of transparency of truth of a nation that continues in its democratic path.”  But not everyone has agreed with Rousseff’s optimism.

Many military and police officials have raised questions about the Commission’s partiality, arguing that it fails to consider the “war” Brazil endured during the dictatorship against an “infiltrated enemy, [who was] armed, unknown, and used false identities.”  Some have even claimed that Rousseff designed the entity in retaliation for the torture she endured as a political prisoner during the military dictatorship. The Clube Naval (Naval Club), a private association for members of the Brazilian Navy, created a "parallel truth commission" to shield military officials who may be called to testify at the CNV and to present a countermeasure to possible criticism of the Armed Forces.

Non-military criticism also exists. Many human rights groups allege that,  lacking the ability to punish the accused, the CNV will not provide adequate justice to victims and their families.  Other critics argue that the CNV could "reopen wounds" in Brazilian society and "divide Brazilians," thus threatening the country’s democratic progress.  Some suggest that two years—the period the Commission has been granted to execute its mandate—is an inadequate period of time for a commission of only five members. Others claim that the Brazilian government should have consulted the public before determining the role of the CNV.

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Tags: Brazil, Truth Commission, Bahia

Monday Memo: Colombian Farmers Reach Deal – Capriles’ IACHR Case – Peña Nieto’s Reforms –Brazilian Protests – Colombia Peace Talks

September 9, 2013

by AQ Online

Likely top stories this week: Colombian government and striking farmers reach a deal; Henrique Capriles takes Venezuela’s election results to the IACHR; Enrique Peña Nieto outlines his plans for reform; Brazilians protest again; and the Colombian government and FARC resume peace talks.

Colombian Government Strikes Deal with Farmers: The Colombian government announced on Sunday that it had reached an agreement with protesting farmers that have been striking since August 19. The strike aimed to draw attention to the economic difficulties they face in competing with cheap imports from abroad. The farmers agreed to lift all road blockades by Tuesday and will join the government in negotiations to address their demands and reach a final agreement. The government has already agreed to cut fertilizer prices and provide cheap credit to farmers.

Venezuela's Capriles to Challenge Maduro's Win Before IACHR: Former Venezuelan presidential candidate and opposition leader Henrique Capriles will bring a case challenging Venezuela's April 14 election results before the Inter-American Commission on Human Rights (IACHR) on Monday. Venezuela's Consejo Nacional Electoral (National Electoral Council—CNE) confirmed in early June that President Nicolás Maduro had won the election by a slim 1.49 percent margin over Capriles, and the Venezuelan Supreme Court upheld the decision. The IACHR must first decide whether the case is admissible. This comes as Venezuela's withdrawal from the Inter-American Court of Human Rights is to become effective on Tuesday, September 10, a year after the government announced its withdrawal from the human rights body.1

Peña Nieto Champions Tax Reform: Mexican President Enrique Peña Nieto outlined his plans for tax reform on Sunday in a speech from the presidential residence. The tax plan is intended to generate billions of dollars for social programs by closing tax loopholes for the wealthy and create a new universal pension for Mexicans over age 65. Meanwhile, Mexican opposition politician Andrés Manuel López Obrador led a demonstration of about 30,000 Mexicans on Sunday to protest Peña Nieto's tax, energy and education reforms.

Brazilians Protest on Independence Day: Brazilians in 150 cities took part in protests on September 7 (Brazil's Independence Day), interrupting a military parade in Rio de Janeiro, chanting outside Congress in Brasília as President Dilma Rousseff gave a speech, and clashing outside a soccer match in Mane Garrincha stadium in Brasília. Police fired tear gas at demonstrators in both cities, and at least 50 people in Brasília and 50 people in Rio were arrested. The protesters are continuing to demonstrate against poor public services, political corruption and public spending on the 2014 World Cup.

Colombian Peace Talks Resume in Havana: The fourteenth round of peace talks between the Colombian government and the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia—FARC) begin in Havana on Monday. The last cycle concluded on August 28, after nearly coming to a halt when the government proposed holding a public referendum on any peace accord. The rebels have said that they would like to incorporate the agreements into Colombia’s constitution, a demand that the government has rejected. However, the FARC confirmed that they are willing to restart the talks this week.

1Editor'sNote: Venezuela withdrew from the Inter-American Court of Human Rights, not the Inter-American Commission on Human Rights. See AQ's Daily Focus on Tuesdsay, September 10 for a complete explanation.

Tags: Brazil, Colombia, FARC, Mexico

Brazil Cancels Preparatory Trip to the U.S. Over Espionage Claims

September 6, 2013

by AQ Online

Brazilian authorities canceled a delegation trip to Washington that had been scheduled to lay the groundwork for President Dilma Rousseff‘s meeting with President Barack Obama in October. The decision was made on Thursday in response to allegations that the Brazilian president was a target of U.S. electronic espionage.

The allegations were made on September 1 by American journalist Glenn Greenwald, who obtained secret government documents on U.S. electronic surveillance programs from former intelligence contractor Edward Snowden. The documents revealed that the U.S. National Security Agency (NSA) monitored the communications network of the Brazilian president and her staff, including telephone, Internet and social network exchanges. According to Greenwald, Mexican President Enrique Peña Nieto was similarly targeted. Both presidents have demanded an explanation from Washington by the end of this week.

For Brazilian Foreign Minister Luiz Alberto Figuereido, “this represents an inadmissible and unacceptable violation of Brazilian sovereignty.” Brazil’s Senate is creating a special committee to examine the spying allegations and to seek federal police protection for Greenwald, who lives in Rio de Janeiro. Figuereido said that Brazilian authorities also will file a complaint with the United Nations and reach out to other developing nations to protest against this breach of national sovereignty.

According to former Brazilian ambassador to the U.S., Rubens Barbosa, though Brazil-U.S. relations have waned in recent years, the scandal won’t affect commercial ties between the two countries. “Rousseff will probably end up going through with the trip and speak out against the espionage in Obama’s face,” Barbosa said.

The October 23 trip would be Rousseff’s first state visit to Washington DC.

Tags: Brazil, President Dilma Rousseff, President Barack Obama

Brazilian Foreign Minister Resigns Amid Diplomatic Scandal

August 27, 2013

by AQ Online

The Brazilian government confirmed Monday night that Foreign Minister Antonio Patriota has resigned after the Brazilian embassy in La Paz facilitated the passage of a Bolivian opposition senator to Brazil. The diplomatic scandal has heightened tensions between Brazil and Bolivia, which accuses Brazil of violating international agreements.

Brazil granted Bolivian Senator Roger Pinto asylum last year, when he alleged that he was a victim of political persecution by the government of Bolivian President Evo Morales, which had accused Pinto of crimes including corruption. Pinto had been living in the Brazilian embassy in La Paz for 450 days when he was transported across the Bolivan-Brazilian border in a Brazilian diplomatic vehicle with Brazilian Chargé d’affairs Eduardo Saboia, who provided diplomatic immunity. He crossed the border on Saturday after a 22-hour car ride and arrived by plane in Brasília on Sunday.

Bolivian Foreign Minister David Choquehuanca has demanded an official explanation from Brazilian authorities. “This is a most negative incident: under protection of diplomatic immunity you can traffic drugs, arms and people. What happened is extremely serious,” Choquehuanca said, adding that Pinto faces four pending arrest warrants. Pinto, meanwhile, accuses the Bolivian government of involvement in drug trafficking.

The Brazilian government in Brasília reportedly did not know about the plan to facilitate Pinto’s entry into Brazil. Bolivian Communications Minister Amanda Davila said that the case “has not affected bilateral relations with Brazil.”

Patriota will be replaced as foreign minister by Luiz Alberto Figueiredo, the permanent representative of Brazil to the United Nations, while Patriota will take Figueiredo’s place at the UN.

Tags: Bolivia, Brazil, Antonio Patriota, Roger Pinto

Brazil's Future in the Shadow of the Mensalão

August 22, 2013

by Maria Paula Schmidt Carvalho

For four months in 2012, like a national soap opera, Brazilians watched the biggest political corruption trial in the country’s history unfold inside Brasilia’s Supreme Federal Court. The complex plot, whose script was based on seven years of investigation, revealed a bribery scheme known as the mensalão—in which members of the Partido dos Trabalhadores (Workers’ Party—PT) bribed members of Congress in exchange for political support between 2003 and 2005.

According to the investigation initiated in 2005 and carried out by the Public Ministry, the Federal Police and the Brazilian Court of Audit, the scheme involved about 100 million reais (about $50 million) in irregular payments to congressmen.

In December 2012, 37 people, including politicians, businessmen, lawyers, and bankers were put on trial, with 25 found guilty.

“The results of this trial shake the feeling of impunity that exists in Brazil,” explained Federal Court Minister Marco Aurélio de Mello.  

Last week, the Supremo Tribunal Federal (Supreme Federal Court—STF) began the final stage of the trial, considering the last possible appeals by the defendants. The judges may adjust the sentences or even render new verdicts.

Impunity is so entrenched in Brazil that not even the federal police officer in charge of the investigations believed that those charged would be convicted. “The result was better than I expected,” said Luís Flávio Zampronha. “In Brazil you don’t see effective punishment—for example, imprisonment of people who have greater economic power.”

José Dirceu, the all-powerful former chief of staff to former President Luiz Inácio Lula da Silva, was sentenced to 10 years and 10 months in prison for masterminding the scheme. He was also fined $338,000. The former president of the PT, José Genoíno, and the former PT treasurer, Delúbio Soares, were found guilty of corruption alongside Dirceu.

The key player in the mensalão case, entrepreneur Marcos Valério, was sentenced to 40 years in jail and fined $1,319,800. The whistleblower, representative Roberto Jefferson, along with former federal representatives from four different political parties were charged with crimes and convicted.

The mensalão case has strong political implications.  Those condemned have yet to be jailed because of appeals; during the recent protests, Brazilians demanded that the mensalão's defendants be sent to prison.

But this is not the first corruption scandal involving important Brazilian politicians in recent history. Until now, unethical or illegal behavior has yet to be an impediment to a long career in Brazilian politics.

In September 1992, Fernando Collor de Mello became the first president of Brazil to be removed from office for criminal liability after Congress voted to impeach him, with 441 votes in favor, 38 against and one abstention. Though found guilty by his peers, Collor was nonetheless acquitted by the Supreme Federal Court, which also judged the mensalão scandal. Today Collor is back in power as a senator for the Partido Trabalhista Brasileiro (Brazilian Labor Party—PTB)

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Tags: Mensalão Scandal, Brazil

2014 World Cup Ticket Sales Begin with High Demand

August 21, 2013

by AQ Online

The 2014 FIFA World Cup website went live at 10:00 am GMT (6:00 am EDT) on Tuesday, with over 1 million applications for tickets submitted in just seven hours. Around 3 million tickets will be available for the 64 matches in Brazil scheduled to begin on June 12, 2014, with Brazil playing the opener in São Paulo. In the first day, the majority of applications came from Brazil, Argentina, the U.S., Chile, and England.

According to Thierry Weil, FIFA’s marketing director, ticket demand is expected to be similar to that seen for the 2006 World Cup in Germany. Approximately 7 fans applied for each ticket that year and 3.3 million people attended the tournament. The 2010 tournament in South Africa had a significantly smaller turnout of almost 2 million people.

Each applicant can request up to four tickets for a maximum of seven matches. Tickets range in price from $90 for first-round matches to $990 for the final match at Maracanã Stadium in Rio de Janeiro. Brazilians over the age of 60, local students and recipients of the Bolsa Familia family grant will be allowed to purchase tickets for $23. About 500,000 tickets were set aside for Brazilian recipients.

If not enough tickets are available to fulfill all requests, all applications submitted by October 10, 2013, will be entered into a lottery with winners automatically receiving tickets. Additional tickets will become available on November 5 on a first-come, first-served basis. After the World Cup draw has determined where and when each nation will play, a second application phase will begin on December 8. That lottery will be held on January 30, 2014, with a second first-come, first-served phase to follow.

World Cup ticket sales are taking place only weeks after massive demonstrations shook the biggest cities in Brazil, with citizens protesting against corruption, income inequality and the rising costs of hosting the World Cup and the 2016 Summer Olympics.  Another concern is Brazil’s timeline for completions of the necessary infrastructure to host the games. According to FIFA secretary general Jérôme Valcke, Brazil is almost ready. Still, the organization is expecting more protests during the 2014 World Cup similar to what took place in June during the Confederation Cup.

Tags: FIFA World Cup, FIFA, Brazil

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