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Brazil picks sides in soccer and politics

Brazil and the U.S. clash over Iran’s uranium. Amazon clear-cutting jumps, and now malls dot the jungle. Economic growth in Brazil hits a Chinese pace, as Sam Zell plans a major real estate investment. And is Brazil’s World Cup coach taking the wrong approach?

Top News: Brazil sent a soccer squad to the World Cup in The Republic of South Africa that lacks big names but is ranked No.1 by soccer federation FIFA. One marquee player is Kaká, the attacking midfielder who plays for Real Madrid andwho returned to the squad despite concerns over his health. Some say Brazil is the team to beat, although others complain coach Dunga has sacrificed flair for results. The Brazilians are certain to look like extroverts in their first World Cup match, on June 15, where they will face the reclusive hermit kingdom of North Korea.

Peace-loving Brazil wants to be a player in international diplomacy, and so in May Brazilian president Luiz Inácio Lula da Silva helped negotiate a deal under which Iran would export 2,640 pounds of low-enriched uranium (about half its stockpile) to Turkey in return for high-enriched uranium for a medical reactor. The deal weakens the case for U.N. Security Council sanctions against Iran that the U.S. has been lobbying for.  

Why is Brazil friendly with U.S. enemies like Cuba and Iran? It’s all very annoying to America, which explains the fiery diplomatic spat over the deal, which U.S. Secretary of State Hillary Clinton called a “transparent ploy”  to buy Iran time and stall sanctions. Tehran’s critics took their chance to lay into the Brazilian president, with New York Times columnistThomas Friedmancalling da Silva a moral weakling who for vanity’s sake is enabling a tyrannical regime. But Brazil managed to turn the diplomatic tables a few days later when someone leaked a letter from U.S. President Barack Obama encouraging Brazil and Turkey to pursue a deal.

Polls show that Brazil’s presidential race is now tied after big gains by Workers Party candidate Dilma Rousseff, increasing the odds that Brazil’s left-leaning government will retain power following elections in October. In the poll, by IPOBE, Rousseff, who is da Silva’s hand-picked successor, was tied at 37 percent with opposition politician Jose Serra, the former governor of São Paulo state. Her lead is significantly larger among Brazilians on the dole.

Since this is Brazil, there is of course an alleged secret dossier involved. The dossier, which has not been made public, purportedly details malfeasance by Serra’s daughter, Veronica. Serra accused Rousseff of being the author of dossier and now the Ministry of Justice is investigating.

Even more intriguing than the suggestion by Brazil's Green Party presidential candidate, Marina Silva, that Brazil should cut taxes is whether her running mate Guilherme Leal paid his. Leal, a majority owner of Natura, Brazil’s largest cosmetics company and master of green marketing, stepped down from the company to run for office, but now Natura is said to owe over $600 million in unpaid taxes.

After a big decrease in the pace of deforestation in the Amazon over recent months, satellite data showed clear cutting jumped, reaching about 102 square kilometers in March and April. There may be help from wealthy countries, who pledged $4 billion to help developing nations conserve forests.

Money: In the first part of the year, Brazil’s economy was growing at a “Chinese” pace according to the Instituto Brasileiro de Geografia e Estatística. Economic output expanded by 2.7 percent in the first quarter, notching a 9 percent gain over the same period last year. Market polls of economists have them betting on a total 6.6 percent expansion in 2010. This is Brazil’s fastest growth in recent memory. Brazil is currently the world’s 8th largest economy but may be the 5th largest in a decade, president da Silva predicted.

The rapid economic growth is stirring inflation fears. Brazilians hate inflation but it’s in their blood, and prices have been rising faster than the government would like. It’s all due to growing consumer demand inside Brazil, and now the Central Bank is expected to raise rates again in June to tame the overheating economy.  That said, Brazil hardly gives money away: the country’s benchmark interest rate is 9.5 percent, and is expected to rise to 10.25 percent in June.

Investors still love Brazil, and American tycoon Sam Zell said he planned to raise $500 million to plow into the country’s real estate sector. Zell is already a backer of Brazilian builders including Gafisa SA.

Brazil’s state-controlled oil giant Petrobras is sitting on major deep-sea petroleum reserves, and just discovered more. The company says there is no risk of a deep-water disaster like the BP oil spill in the Gulf of Mexico.  Petrobras is now planning a massive stock market offering of $50 billion to pay for exploration of the fields, but the size and timing depend on Brazil’s Congress, which is debating laws to increase Petrobras’ power over the off-shore fields and hike the government’s stake in the company.

Elsewhere: Mall rats in the Amazon? Once the home of uncontacted indigenous peoples, today Amazon boom towns like Rio Branco are getting U.S. style malls. Four out of five largest Amazon cities will have malls soon.

Russia and Brazil agreed to eliminate visa requirements for travel between the two countries. But you still need a visa if you are American, which is how some of director Oliver Stone’s entourage got held up at São Paulo’s airport when they tried to enter without them. Stone was there to promote his road-trip documentary/love fest about the Latin American left,South of the Border. The film features interviews with Hugo Chavez and Brazil’s da Silva.