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Lula's petro-state plans

French culture and military make their way into Brazil with culinary events, films, and 36 fighter jets. Green Party candidate Marina Silva captivates the public. Lula is to cut auto emissions and sugar cane expansion. The presidential races start to un-officially heat up. Lula proposes controversial government controls over newly-found oil reserves. Interest rates get stuck at 8.75 percent. Economists and analysts predict 4 percent growth next year. The soccer team beats Argentina, Brazil taunts the losers. Also, the first Brazilian Matisse exhibition gets little attention.

 Top News: We’re almost five months into the Year of France in Brazil, but cultural exhibitions, culinary events and film festivals notwithstanding, Monday was the Frenchest day so far.  Nicolas Sarkozy was in Brasilia with President Lula, supposedly to celebrate Brazilian Independence Day and to sign a 20-year, $12 billion military agreement and “strategic partnership” that includes the purchase of French submarines and helicopters and will significantly modernize and strengthen the Brazilian military.  But news also broke that Brazil was nearing an agreement for 36 French Rafale F3 fighter jets, for a cool $5 billion. The Americans and the Swedes had been competing for the contract.


Meanwhile, the potential presidential candidacy of Marina Silva continued to reverberate through the Brazilian political system. She became an instant celebrity, granting interviews ranging from the New York Times to Veja, by far the country’s most read news magazine.  Among other things, it is believed that Silva’s presence on the ballot for the Green Party, which she officially joined on August 30, will make environmental issues much more prominent in the 2010 campaign.


In other environmental news, the Minister of Environment, Carlos Minc, announced that preliminary numbers for 2008-2009 showed that deforestation in Brazil had likely reached the lowest levels in 20 years. Folha reported that Lula will announce severe restrictions for expanding sugar cane planting to protect native vegetation, as well as 33 percent stricter emissions standards for cars sold in Brazil, which will go into effect in 2014.


In political news, a new poll shows Lula’s Chief of Staff and chosen successor, Dilma Rousseff, slipping further behind Sao Paulo governor Jose Serra in the not-yet-officially-started race to succeed Lula at the end of next year. Marina Silva scores best, at 9.5 percent. And for the first time in months, the scandals in the Senate have faded into the background.


Money: Until Brazil flashed its future military might over the long weekend, the biggest news of the last two weeks had the Lula administration flashing its might as a growing oil power, with his plans to control recently-discovered off-shore oil known here as the “pre-sal,” or subsalt, since much of it is under a thick layer of salt at the bottom of the sea. Lula and Dilma announced the government’s plan for the state to take a wider-than-expected role in controlling the extraction of the reserves and the money that comes from them.


The plan – which needs to be approved by the congress ­– would form a state management agency, Petrosal, have the privately traded, state-controlled oil company Petrobras head up most drilling efforts, and direct some profits toward social goals. Participation of multinational oil companies would be considered largely minority partners.


Political opponents and trade groups have questioned the wisdom of the plan, and Dilma has defended it in a lengthy interview with the Financial Times. Lula avoided one area of controversy by agreeing to maintain royalties to states in oil-producing areas, rather than divide revenues equally across the country.


The Central Bank’s COPOM committee, which sets the benchmark SELIC interest rate, and has been consistently lowering it since January from 13.75 percent in late 2008, announced that it had decided to stick with 8.75 percent. Industry leaders reacted with pro-forma anger, saying that Brazil’s high interest rates were still slowing down the economy’s recovery and that inflation – the historical reason interest rates have been so high – was not a concern.


On Friday, Brazil’s second-quarter GDP numbers will be released. Predictions have varied, but all call for a positive result that would officially end the two-quarter recession. The latest Focus poll of economists and analysts predicted that overall, the economy would contract 0.16 percent this year before growing 4 percent in 2010.


Elsewhere: A couple of cases, coincidentally featuring Brazilian women who married Italian men, caught the country’s fancy this past week.  On a beach in the northeast city of Fortaleza, an Italian man was arrested on charges of sexually assaulting a minor, though it turned out he was kissing his nine year-old daughter and witness accounts varied widely over whether it was inappropriate.


In the second case, Simone Moreira, a Brazilian woman living in Italy and separated from her Italian husband twenty-one years her elder (whom she met when he was in Rio de Janeiro for Carnival) was arrested and accused of killing their two year-old daughter Giuliana Favaro, who drowned in the Monticano River in Oderzo. She remains in jail, though Moreira claims the girl simply disappeared. “I didn’t raise a murderer,” Moreira’s mother told Folha de Sao Paulo from Rio.


That the Brazilian national soccer team qualified for next year’s South Africa World Cup is not a surprise – they are the only country that has qualified for every World Cup in history – but the way they did it was especially sweet: with a 3-1 trouncing of a Diego Maradona-led Argentine side that was playing at home. Brazilians despise Maradona even more than they despise the other 40 million Argentines, and hooted and laughed after each goal as images of a miserable Maradona filled the TV screen.


Finally, anyone coming by Sao Paulo between now and Nov. 1 might consider checking out Matisse Today, the country’s first-ever Matisse exhibition in perhaps the city’s most attractive museum, the Pinacoteca. (Though, true to Brazilian form, the Pinacoteca’s website does not mention it beyond a hard-to-find four-line summary. Search “Matisse” and you get asked “Did you mean ‘Mattos?’”)