Heavy rainfall here in the Amazônia region frustrated

Heavy rainfall here in the Amazônia region frustrated my communication devices, i.e. my radio-antenna for internet and my telephone line. Consequently for some weeks now I have not been able to post new articles, although some interesting things happened.
I know, I know, it is the rain season, but nevertheless there is much more and much more heavy and intense rainfall than in previous years. At this moment my internet is working again and I hope to post some articles in the next few days. They have been written during the last weeks and I shall use the date of writing and not the date of posting, to get them in the right order.
I hope my connection stays stable, so that I can upload the articles.
Sorry for the inconvenience and please come back soon.
Anton

Update: All articles about the World Social Forum have been posted in order with the date of writing. I hope they will give the reader a good impression of the event as it took place. With regard to the discussions the bloggosphere reports in great length about all topics, so that I could restrict myself to the periphery.

In 2008 Fines for Environmental Crimes Exceeded 1 billion Euro

In 2008 more than BRL 3 billion (€ 1 billion) in fines was imposed in the Amazônia for environmental crimes. But the question is, who is crazy enough to pay the fine? For sure not the Brazilian environment criminal.

A report stipulating the by Ibama (the Brazilian Environment Authority) imposed environmental fines shows that between January 1 and December 8, 2008 22,697 reports of environmental offences were made with a total of BRL 3.25 billion (€ 1.05 billion) in fines. The figure is 38% higher than in 2007, when it was BRL 2.37 billion (€ 0.772 billion).

The bulk of the amount came out of actions against deforestation in the Amazônia. Fines for illegal logging, storage and transport of illegal timber in this region reached BRL 1.76 billion (€ 0.57 billion), accounting for 54% of the total.

Pará is the federal state, which picked together the highest amount of fines with € 196 million. Followed by Mato Grosso (€ 195 million), Amazonas (€ 148 million), Minas Gerais (€ 140 million) and Rondônia (€ 75 million).

Writing criminal reports is one, but collecting the fines is a different chapter. A study by the Instituto do Homem e Meio Ambiente da Amazônia (Imazon = Institute of Man and Environment in the Amazon region) points out that a very small portion of that money actually gets into the public purse.

According to Imazon, the value of fines collected between 2001 and 2004 was only 2.5% of the total amount of fines imposed in this period. If the same pattern is repeated for 2008, the federal treasury will only collect BRL 81 million (€ 26 million).

But there is probably some progress, whatever that is supposed to mean in the Brazilian legal confusion. According to the researcher Paulo Barreto, one of the authors of the study, there were four legal bodies where could be appealed, now there are only two. Paulo, faithful believer as he is, thinks that this might speed up the process, but he warns that one of the main constraints of collecting fines is the lack of lawyers with Ibama. "What has to be done to improve the collection of fines, is focussing on the most important cases. All the studies show that 80% of the value of the fines should be raised by 20% of the processes.”

For Ibama it is not just the amount of fines in their fight against environmental crime. "Together with the fine, we have the seizure of the area, the confiscation of the illegal product, the removal of livestock, the seizure of trucks, machines and the deterrent effect of an inspection." says Roberto Borges, national coordinator for environmental operations of Ibama.

According to Borges, in addition to the fines Ibama also tried to permanently seize the property of the criminals. "It started with seized timber, but we have to expand to tractors and trucks, used for the environmental crime. We have to de-capitalize the environmental criminal." he says.

Source: O Liberal
(cartoon J.Bosco)
81230
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Brazil: The Country of the Future

With Lula 'highly commended' in the world, my last series of posts may have created the impression that I'm negative about Brazil and everything the government Lula does or fails to do. That certainly is not my intention. I am well disposed towards Brazil, where I live, and so it is with a bleeding heart when I see the (often unnecessary) injustice that goes around. What Lula is concerned, I can say that I am indeed very disappointed in what he has implemented during his six years of governing the country.

Almost everything that is achieved is not due to the Lula government, but despite the Lula government. It is the result of an independent continuation of the Plano Real, proposed by the then President Itamar Franco and implemented by his successor and former President Fernando Henrique Cardoso (FHC), and his social politics thereafter. Lula has not fulfilled his socialistic election promises. The economic policy is a continuation of the FHC policy. Social programmes, such as the Bolsa Familia, are based on the policy put in motion by FHC. The growing prosperity of the Brazilian is not due to Lula, but due to the explosive expansion of the private initiative, the discovery of large oil reserves and the (silently admitted) illegal logging of the Amazônia, allowing both livestock and soy and sugar cane production to explosively spread.

Health, Education, Public Safety, Infrastructure, Public Transport are treated like neglected children. Police and Justice fail by all means and the Judiciary is shamelessly 'powerless'. Corruption remains polluting the country unpunished. The with great pomp announced Aceleração do Programa de Crescimento (PAC = Program to Accelerate Growth) is still mainly on the drawing board. The North and Northeast of the country remain backward areas and it looks unlikely that any additional investments will be gained. Senate and Congress are still dominated by a large number of criminals, ah yes, elected by the people. But it can’t be otherwise, as long as the people are accustomed to nothing else than corrupt politicians.

Years ago, the ABN/AMRO bank described Brazil as "the country of the future, and so it will always remain." And it is still so, despite all the progress. The big turning point came during the administration of FHC and Lula has not used his socialistic streak to expand this during his administration. Without a great own vision, he has continued indolently, what was transferred to him by the previous government.
And that disappoints me. I had expected more. The Brazilian people, after so many years of suffering earned to expect more. Take a look at Lula's election promises:

In his inaugural speech in 2002, the word "mudança" (reform, change) took centre stage. "Reform is the key word. This is the main message the Brazilians sent with the elections in October. Because of this, the Brazilian people have elected me as President of the Republic."

And he claimed that all the attention will be given to social action, literally saying: "We should not lose sight that the ultimate goal should be human well-being." After 6 years of government we have unfortunately to observe that safety in the street (robbery and assaults) has reached rock bottom, that education, housing, health care apparently are activities without the necessary glamour, that Brazil can not meet its economic prospects for growth due to a lack of public investments in infra-structure in all corners of the country.

I wish to remain optimistic, and sincerely do not hope that Lula continues to just let Brazil run its course which consequently requires a fierce price to be paid afterwards.
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Pure nature - The fragrance of the Amazon dancing in the wind

The capillarity of the wooden sticks transmits the fragrance of the perfume from the Amazon region to the ambiance of the room.

15% of the world’s total of all known vegetal species (plants, trees) and 10% of all mammals are concentrated and trying to survive in the Amazon region.
This source of fresh air to the world, home to (besides man and animal) many super-fruits, medicinal plants and other useful species, will be destroyed soon. Between 2006 and 2007 11.224 km2 has been deforested - 20% less than in the period 2005-2006. Compare 2004 when one of the highest indices (27.379 km2)) in history had been registered. Hopeful? No! In the last 5 months of 2007 the devastating activities for prime wood, soy and cattle has been accelerated. Between Aug and Dec 2007 3.235 km2 has been cut down and satellite pictures show it could be twice as much.

It is no wonder that many individuals, research centre and companies are feverishly looking to the Amazon forest as a tremendous source for sustainable exploitation, which might stop the illegal activities that cause the destruction. Responsibility and sustainability are the keywords.

With the recent trends in healthy food, energy and fortification drinks, interest in Amazonian “superfruits” is growing. It’s little wonder that .......continue reading

The Owner Doesn't Care Much

There is still no strategy to defend the Amazônia
In just one month, the deforestation of the Amazônia exploded. The National Institute for Spacial Research (Inpe) reported data on deforestation in the Amazônia Legal, for the month of April. According to the Deter system (Detecção do Desmatamento em Tempo Real = Deforestation Detection in Real-Time) there was an increase of 774.48% in deforestation in the region, eight times more. In March 2008, 145 km ² was cut down, while the number in April rose to 1,123 km ². Unfortunately Deter is only able to detect deforestation polygons of areas larger than 25 hectares due to the resolution of the space sensors.

And the owner of the Amazônia?
Unfortunately it occurs that the Amazônia has a not-properly-caring owner. Approximately 62% of the Amazônia delta with its rain forests belongs to Brazil, but the numbers of deforestation are alarming. Just in the first five years of Lula’s government, it was 100 thousand km2 (2½ x the Netherlands).

The Brazilian economic columnist Míriam Leitão stated in Bom Dia Brasil: “The argumentation that the world has no right to claim the protection of the Amazônia because rich countries pollute or have already destroyed their forests, is not quite correct. If the Amazônia is ours, we have to preserve it. ........ If Brazil protects its biodiversity, they have to use its wealth for the production of medicines, cosmetics, timber in a sustainable way and industrial production of various items.”

That’s why the Brazilian Academy of Sciences proposes to invest heavily in universities, technological institutes, training of scientists in the Amazônia, to activate research in the region to find the best model of exploitation of its wealth. Today, it is only being occupied by ‘grilagem’ (unlawful claiming of rain forest areas), deforestation and even criminal slave labour.
This is not development.

The main task of the extraordinary minister of Strategic Affairs, Roberto Mangabeira Unger, as coordinator of the Plano Amazônia Sustentável (PAS = Program for a Sustainable Amazônia) is to develop "a strategy of zoning the Amazônia, one with forest and another one without forest." As quoted by his own words.

"Let’s stop talking about the fiction that there is a war between environmentalists and developers. This is not the problem. The problem is that we have not yet formulated the necessary measures neither to defend the forest, nor to develop the Amazônia," he assessed.

The coordinator of the PAS believes (what others are saying for years on end) in a correlation between the unemployment rate and the (illegal) deforestation of native forests: "The Amazônia is not just a collection of trees, it is also a group of people, and if the Brazilians who live there do not have economic opportunities they will be inexorably led to illegal deforestation activities."

But from whom is the Amazônia, after all?
A story published in the American newspaper The New York Times suggests that global leaders argue that the Amazônia is not a unique heritage of any country, which is causing concern in Brazil. And continues: "a chorus of international leaders are more openly declaring the Amazônia as part of a much larger heritage then the only nations that share its territory."

The newspaper quotes the former US vice-president Al Gore, who in 1989 said that "contrary to what the Brazilians believe, the Amazônia is not owned by them, it belongs to us all."

In the meantime the government of President Luiz Inácio Lula da Silva tries to pass a law to restrict access to the Amazônia Forest, imposing a licensing scheme for both foreigners and Brazilians.

"But many experts say that the Amazônia in the proposed restrictions conflict with his own efforts (of President Lula) to give Brazil a greater voice in the negotiations on global climate change - an implicit recognition that the Amazônia is critical to the world as a whole," the article reads.

"It's a fight that shall only become more complicated in the coming years in the light of two conflicting trends: a growing demand for energy resources and a growing concern with climate change and pollution."

But President Lula is adamant: "The Amazônia has an owner and that’s us, Brazilians."
President Luiz Inácio Lula da Silva said, attending the 20th National Forum in May that "the world needs to understand that the Amazônia has an owner and that we, Brazilians, are that owner."

He questioned the conditions of developed countries, the biggest polluters, to discuss this issue. "The countries which are responsible for 70% of the world’s pollution are talking now about the Amazônia," he said. Lula advocated the preservation, but also the development of the Amazônia. "It will be a discussion for the next two decades," he said.

“But don’t cry out prematurely”, the "Economist" is right after all
Although most Brazilians do not like it when someone, particular a gringo, wants to "put a finger" in the Amazônia, as President Lula called it, the truth is that the British "The Economist" had it spot on, when it stated that it is almost impossible to put rules in the region,” writes the Brazilian journalist Ricardo Kotscho in one of his columns. And he follows with:

In its story "Welcome to our shrinking jungle" the Economist states bluntly that it is very difficult for the Brazilian government to control the exploitation and deforestation of the Amazônia forest "because there is no control over the ownership of land in the region."

Nobody has control - and hardly somebody will one day. I say this with sadness. In Amazônia region everything is too grand, too immense, too vast, too dense and far too huge for anyone to even dream to place the forest under some form of order.

You can see it with the naked eye: the pastures progressing in cleared areas owned by nobody, where the law has not yet arrived and the State is a distant mirage for the owners of cattle that are multiplying in geometric progression.
Some alarming data show how the burst of cattle raising is devastating the forest:

• In 1964, Amazônia had a flock of about one million cattle and less than 1% of the area had been deforested for pastures.
• In just thirteen years, between 1990 and 2003, the Amazônia herd rose from 26,6 million to 63 million heads, an increase of 6,7% per year, ten times the increase in Brazilian population.
• Today, the pastures shelter more than 70 million heads of livestock, one third of the entire cattle herd in the country. Since the Amazônia has a population of 23 million people there is an average of three heads of cattle per capita (including babies and old people).
• To open the pastures 16% of the forest area has been deforested, which is more than 70 million hectares, equivalent to Spain and Portugal together.
• The Amazônia continues losing 24.000 km2 of native forest per year, an area equivalent to two thirds of the territory of Belgium. As 1% of the forest turns into grass each year, and the current progress of livestock in the region is kept, in 2050, half of the forest will have been cut to house a corral of 285 million head of cattle.
• The main reason for this burst in cattle raising is the low or even non-existent price of land by pure and simple invasion of public areas, the popular ‘grilagem’. It is cheaper to cut trees (USD 200 to USD 300 per hectare) than to recover land from areas already deforested and degraded and turned into ‘juquira’ (USD 700 to USD 750 a hectare). Juquiras are deforested areas which are claimed back by nature with the springing up of small trees and an abundance of weeds. As sugarcane took the place of pastures in the fever for ethanol and soybean moved to the centre west of the country, cattle farms were pushed into the Amazônia in search of new pastures.

A study carried out by Instituto do Homem e Meio Ambiente da Amazônia (Imazon = Institute of Man and Environment of the Amazônia), and commissioned by the World Bank, brought to light that 42 million hectares - an area corresponding to 8,5% of the Amazônia (an area the size of Germany, the Netherlands and Belgium together) is in illegal possession and totally outside the control of the government.

"This is, in practice, a free privatization of the forest. They never paid for the land and continue without paying taxes," said the coordinator of the research, forestry engineer Paulo Barreto. The process is always the same: the ‘grileiro’ "lends" the land to a timber friend to "clear the area", that is, overthrow the forest, and then plant grass, moving forward without limits and without any control, because, here a title deed is a fiction, even if it were existing.

In this context, some initiatives announced by the federal government to stop the destruction of the rain forest after the world started to protest against the progressive deforestation, sound romantic. But the government actions are entirely insufficient and even laughable and can only be considered as serious and might even revert the situation, if and when the federal government sends the Brazilian Armed Forces with all available equipment including helicopters and planes to the Amazônia.

The worst thing is that this time, we are obliged to accept that the English magazine is correct to say: "In practice, it is almost impossible for the Brazilian government to impose its will within the limits of its empire, even if it wanted."

If Lula claims: "the Amazônia is ours." Why can he only launche a grand-scale manoeuvre with the armed forces, including the navy and air forces, to defend the Amazônia Azul (Blue Amazon, in my next post I shall explain the Blue Amazon) and not do the same for the Green Amazon. Well, frustratingly, the answer is simple, as always: the Amazônia Azul has all to do with oil, while the Amazônia Verde has, as it is, only to do with the environment and global climate change.

source: IG Ultimo Segundo, Ricardo Kotscho
80612

An irreversible trend - It's the economy, stupid!

In Brazil energy products derived from sugar cane were responsible for 16% of the total energy supply in 2007, holding the second position in the total of consumed energy, surpassing for the first time hydraulic power, which supplied 14,7% last year, according to preliminary data released in the balance by the Empresa de Pesquisa Energética (EPE), Brazilian’s Energy Research Company. The fossil-oil and derivatives remained in first place as an energy source, with a 36,7% stake.

The energy consumption rose with 13,5 million tonnes and of this more than 70% was from renewable sources. Once again, renewable energy of sugar cane grew most with 41,4%. The share of renewable energy in the matrix of Brazilian energy increased from 44,9% in 2006 to 46,4% in 2007.

The number of vehicles using bio-fuel exceeded five million in April 2008.

According to the chairman of EPE, the domestic consumption of energy, which takes into account any final energy consumption by individuals, companies and processing, grew 5,9%, more than the GDP, which advanced 5,4%. Of that total, according to him, there was an increase of fuel consumption with a 7,3%, against a 5,4% increase of electric energy, compared with 2006.

“For the first time energy supply from cane sugar exceeded hydro electric energy and became the second source of the Brazilian energy matrix, after fossil oil. I believe it is an irreversible trend” the president of EPE stated. At the end of the presentation of the energy balance of 2007 he defended the production of Brazilian ethanol, saying: “In Brazil, we have sufficient soil to increase the production of ethanol without affecting the production of food”, when asked about the criticism that the production of ethanol affects the prices of food in the world market.

Obviously so far so good. Brazil is a world example for renewable (green) energy resources, thanks to President Lula’s cuddling of his darling pet, promoting his fads and fancies with pride and little essential knowledge during all his official international visits with potential buying countries. Stubbornly fighting off his critics as even his Latin American colleagues call him a traitor.

It is a fact, the country’s emergence is partly accelerated by bio-fuels as bio-fuels have become the vanguard of the green-tech revolution. For politicians and corporations the trendy way to go as most of the damage created by bio-fuels is less direct and less obvious.
Indeed only a tiny portion of the Amazônia region is being torn down to grow the sugarcane that fuels most Brazilian cars. The shocking explosion of deforestation is a result a subtle chain reaction: Farmers in the USA are selling one-fifth of their corn to ethanol production, so US soybean farmers are switching to corn, as a result Brazilian soybean farmers are expanding into cattle pastures, so Brazilian cattlemen are displaced to the Amazônia.

Amazônia rain forest pushed back by large areas of soybean fields in the state of Mato Grosso

So far Lula’s ‘green’ positioning on bio-fuels is correct. Sugar growers here have a greener story to tell than do any other bio-fuel producers. They provide 45% of Brazil's fuel (all cars in the country are able to run on ethanol) on only 1% of its arable land. They've reduced fertilizer use while increasing yields and they convert leftover bio-mass into electricity. With the slogan: "Grain is good for bread, not for cars. But sugar is different." their trade group expects production to double by 2015 with little effect on the Amazônia.

So far, they are right. Corn ethanol and soy bio-diesel produce about twice the emissions of gasoline. Sugarcane ethanol is much cleaner, and bio-fuels created from waste products that don't gobble up land have real potential. So, obviously the Amazônia region is safe.

But take a look at the Cerrado, south of the Amazônia region, an ecological jewel in its own right.

Map of the Cerrado eco-region. The limits of the eco-region are marked in yellow.

Photo: NASA

The Amazônia gets the ink, but the Cerrado is the world's most bio-diverse savannah, with 10.000 species of plants, nearly half of which are found nowhere else on earth, and more mammals than the African bush. You can watch toucans and macaws, find puma tracks and admire a carnivorous flower. The Cerrado's trees aren't as tall or dense as the Amazônia ones, so they don't store as much carbon, but the region of some 2 million km2 (50 times the Netherlands) stores its share. Or should we say ‘stored’ its share, as it is transforming by the march of progress - first into pastures, then into sugarcane fields.

Caracteristic vegetation in the Cerrado

But also in another way sugarcane is a shady business. Sugarcane is a typical product from the slave era and that is exactly what it still is.

In 2007, the federal government freed 3.131 “sugar cane” slaves. In the same period the Brazilian Bank for Development released 3,6 billion USD for projects of the sector.

The Cerrado near "The three lakes" - Mato Grosso do Sul

Almost daily there are stories in the news papers about rescue of sugarcane labour (including children) working under - what is now euphemistically called – a “degrading situation”, but in fact is just pure and simple slavery.
But let us just have a look at one:

In March 2008 the papers headlined, after the Ministry of Labour and Employment visited the premises of a company called Brenco (Brazil Renewable Energy Company, note that this Brazilian company has an English name and you will see why):
- Workers of Brenco are living in precarious housing
- Investigating Brenco ends with 17 labourers freed and 140 “slave” contracts terminated

Brenco is commanded by the former president of Petrobras, Brazil’s giant state-owned petroleum company, Henri Phillipe Reischtul.
Brenco has, among its shareholders, the former US President Bill Clinton, James Wolfensohn, former World Bank chairman, Steve Case, former America Online (AOL)-Time Warner, and Vinod Khosla, multimillionaire Indian rooted in the United States who founded the Sun Microsystems. Not by any means the ordinary slave driver you should expect.

But the story does not end here. In August 2008 Brenco reached the headlines of the news papers another time:
The BNDES (Brazilian’s Bank for Development) releases 1,2 billion USD to deploy four units of sugar cane processing in Mato Grosso, Goias and Mato Grosso do Sul (all Cerrado states). In all, the units will install 15 million tonnes of sugar cane grinding capacity per season, producing 1,4 billion litres of alcohol. And the market could sell up to 220 MW of energy through cogeneration. The project has an estimated investment of 1,8 billion USD, with the BNDES entering with 2/3, although, the BNDESPar should get only some 15% to 20% of the shares of the venture. According to the bank, the venture will generate 8.400 jobs and will run a fully mechanized harvesting.



In regard to the “progressive social policy” of a President who was a militant union leader first, do you understand this? No? Neither do I.
But Clinton himself gave us the answer to this apparent contradiction when he was campaigning for US president in 1992: "It's the economy, stupid!"

Note:
For this post I used some text extracts from the article in Time Magazine “The Clean Energy Scam” by Michael Grunwald published March 27, 2008. The story and facts relating to slavery I took from the websites of Leonardo Sakamoto and Repórter Brasil. Both websites are worth visiting, although unfortunately they are only in Portuguese.

80515

“Passamos A Ser Donos Do Nosso Nariz”

At last we are masters of our own nose

The international rating agency Standard & Poor's announced on 30 April the upgrading of Brazil from BB to BBB- (BBB-(minus): is the lowest rating above non-investment grade BB) with which the country joins the group of "reasonably secure countries for investments". On the stock market in São Paulo (Bovespa) the value of shares rose dramatically after the news broke, while the shares of Brazilian companies listed on the stock exchange in New York joined the euphoria.

President Luiz Inácio Lula da Silva commemorated the promotion to "investment grade" with the words:
"I don’t know how to pronounce the word, nor what it means, but if it is translated into a language Brazilians understand, then it seems, that Brazil is classified as a serious country … .. It is a victory for the Brazilian people, which waited for this moment for years. With this new classification, there is no doubt that Brazil is now a serious country." Clearly alluding to the infamous words of Charles de Gaulle.
According to Lula, the upgrading is of great importance. "It is the guarantee that we are now master of our own nose, and can decide on a policy which we deem suitable for Brazil."

Of course the national press was full of praise and positive analysis and even the international press could not remain at the sideline to extol Brazil to the skies.

The British "The Independent" suggested that the Brazilian economy undergoes a "carnivalesque experience.”
The "Financial Times", meanwhile, put Brazil “among the first countries on the investment list", although it warned that the prevailing high interest rates could impede economic growth.
The French newspaper "Les Echos" wrote that the country "is bathing in sweet euphoria" referring to the absurd stock market rise of 6% in São Paulo within one day.
The Spanish "El País" pointed out that the addition of Brazil to the list of "secure countries" will encourage investors to switch from the speculative markets to a secure investment in this country."
Economists expect that some 1,000 billion USdollar will enter the country.

The essential advantage of the change to investment grade is that large institutional investors, who according to their statutes only can invest in low risk assets, are now allowed to invest in Brazil, as the classification is an instrument that reflects the risk of a country being capable of complying with its obligations. The higher the classification, the lower the risk, and with it the likelihood that investment capital will enter the country.

The president of the Central Bank, Henrique Meirelles (see photo), called the S&P decision "very significant." For him, it shows that Brazil has sufficient immunity against external shocks.

But if everything is so positively judged by everyone, why do I feel so worried about it.
Fortunately I am not the only one as a few critical comments appear on various blogs. Just let’s take one. A résumé of the blog of Jose Paulo Kupfer, a renowned Brazilian journalist.

Résumé: By upgrading Brazil, S&P has completely ignored its own fundamental parameters. Where are the tax reforms, the redesign of the labour legislation and the reconstruction of the social security? And what about the correlation between government debt and GDP, which should be 30%, but actually is more than 40%. And Jose ends by saying: "It looks like, that Brazil has given some "grant" to the "dilapidated" reputation of S&P."

I conclude with my own vision.
Across the board the new classification by S&P has induced euphoria. However, it is questionable whether that is based on real grounds. I admit that the elevated standards for Brazil - to investment grade - will cause an influx of foreign capital. As a consequence, many Brazilian companies can negotiate loans against better conditions abroad, but at the same time, many smaller and medium-sized Brazilian production companies will be pushed even harder to keep up their export due to the USdollar falling further against the real. Although the volume of Brazilian exports measured in USdollars will not diminish, as the overwhelming part consists of commodities (not enriched raw materials and agricultural products), which prices are determined by the market in Chicago, many companies with manufactured products are forced to discontinue their exports. It is obvious, that it will not be beneficial to the country as all manufacturing companies have to concentrate exclusively on the home market. Without doubt the home market will grow, but never to the extent that it will benefit from the S&P classification. Exports of manufactured products will decrease, while the imports increase, both due to the declining value of the USdollar. The trade balance will, as a consequence, entirely rely on the export of commodities whose price is determined by Chicago in which Brazil merely is the direct object. No significant exports in manufactured products with added value almost always lead to a fatal blow to a country.

But there is yet another side to the new upgrading of S&P, which is much more dangerous and could even be disastrous. With the crisis in the U.S. housing market, S&P (and other financial graduators) demonstrated its absolute ignorance, or its involvement in the manipulation of the banking system. It would not be the first time that S & P and its peers manipulate an economy of a country, after firstly praising it into the sky, and then opening the door to hell for the mere benefit of the big money guys.
What is more, we live in a special time cycle. The valuation of the real is only partly due to the performance of Brazil itself and for the other part to the fact that the U.S. is ruled by the worst president of all time and that in an election year the economic cycle of a free fall of the currency always can be observed. That means that after the U.S. presidential elections have given certainty about the successor, the dollar will rise worldwide, as the financial institutions "suddenly" discover new confidence in the economy of the country. This will certainly happen if Barack Obama is elected as president. In the unlikely event that John McCain will be president, I believe, the dollar will probably continue its free fall.

This means that in 2009 another ratio will be seen between the dollar and the real. But beginning in 2009 Brazil seriously starts thinking about the succession of Lula. Herewith we enter the next time cycle of elections, which will have a negative impact on the position of (in this case) the real. We have also seen this during the presidential election to replace the predecessor of Lula, during which the real grossly was manipulated (not to use the word speculated) by the financial institutions with the ABN / AMRO as the frontrunner. If we run in a situation that the U.S. economy shows an improvement, as a result of the appointment of a new president and the period before the Brazilian presidential elections shows no absolute clarity about Lula's successor, the value of the real against the dollar will deteriorate.
That is also the moment the international financial world will withdraw its investments from Brazil to profit in the short term.

I shall illustrate this danger. I read in ValorOnLine, the following:
"The private sector has been hopeful about reducing the financial costs due to the upgrading.
For Renato Vale, president of CCR, one of the largest transport companies in the country, Labor Day was one big party. The CCR, which in March won a concession for a piece of the Rodoanel in São Paulo, is currently negotiating abroad a loan of 1.6 billion reais to be paid to the government of São Paulo. The upgrading of Brazil means a savings of several million USdollars in drawing expenditures on foreign funds."

Ok, let’s assume that CCR indeed attracts BRR 1.6 billion (the rate is now USD = 1.60 BRR, thus USD 1 billion) with an interest rate of 5% from the international market. The investor pays in USdollars and both interest and principal have to be paid back in USdollars. 5% interest means an annual interest charge of USD 50 million or 80 million BRR. Suppose he has a payback period of 10 years. That represents is an annual redemption of 100 million USD or 160 million BRR. Total = 150 million USD = 240 million BRR.
I believe the USdollar will return at a rate of around 2.25 BRR, as a result of two presidential elections, restoration of the US economy, the future expectations of the Chicago commodities market, rising imports and the lack of Brazilian exports of products with added value.
This leads for CCR in a rise in annual payments of 240 million to 337 million BRR. It is of no importance whether the dollar changes +5% +10% or in any other different value. The fact remains that a Brazilian company suddenly is facing much higher operating costs and a much higher debt.

We have seen this before. In Pará during the government of Fernando Henrique Cardoso, shipping companies in the Amazônia region could arrange loans from the BNDES (National Development Bank) to build ships for the expansion of the transport capacity in the region. The loans were in USdollars (rate 1:1), although the revenues of the companies were in BRR. We do not have to detail here (see above) what happened during the election year of FHC/Lula (picture right). Suddenly, but insurmountably, the companies faced payments, which were 2 to 3 times higher, than they were accustomed to. It took many on the verge of bankruptcy.
Brazil is not (yet) in a position to withstand foreign manipulation or speculation as the country’s economic cushion is (still) too fragile.
History repeats itself. Always.

I'm afraid that's Lula’s: “Passamos a ser donos do nosso nariz”, will end up with people getting their nose pinched.

80469 - cartoons courtesy of J. Bosco/O Liberal

An unwelcome pet - A cobra in the garden

In Brazil and particularly in the Amazon region the word: cobra is used for snake. Any snake is called cobra, whatever the scientific or popular name. A snake is a cobra and a cobra is a snake. Period. So the cobra is going to town. The deforestation of the Amazon causes an invasion of cobras in the neighbourhoods of Belém, according to Ibama, the governmental environment institute. Only this year already 21 cobras are reported by the citizenry, while last year an average of 2 reports per month came in.

Up till now no venomous snake has been caught, although they found species of some 3 meter long. Imagine the fear of the people to step into their garden with the chance to stand eye to eye with a 3 meter long cobra ready to attack. According to Ibama, the infiltration of cobras in the town is a direct result of the illegal deforestation activities in the areas around Belém.
"The deforestation destroys the habitat of the snakes and they move into town", declares a spokeswoman for Ibama. After they have caught the cobras Ibama brings them to local zoological gardens or places them back into the natural habitat of ecological reservations.

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Climate Change and Evolution - The Amazônia

During a virtual safari visitors of the Futuroscope in Poitiers (France) can learn about future animals. An exposition shows how the fauna of our planet will be over some million years.

It is not likely that anyone of us will have the pleasure to experience the changes and meet the future animals personally, but it is a good thing to know how our fauna will evolve taking into account our destructive way-of-life.
The exposition is a result of scientific studies and projections with regards to the influence of climate change and future landslides. The sketched environment and the animals are the results of a theory developed by British scientists, who studied the geological movements of the earth, the climate and the capacity of the fauna to adapt itself towards its new habitat.

As I live in the delta of the Amazônia I restrict this overview to the “evolution” of the Amazônia fauna referring to the pictures (from top to bottom), whereas, as far as, known the “ancestor” is situated aside of the “evolved” descendant.

The “Baboukari” is the descendant of the “White Uacari Monkey with the Red Face” (Cacajo calvus), which, according to researchers can only be found in the Amazônia reservation Mamirauá. Little is known about the Uacari, except that it is already close to extinction. In the theory of the future the “baboukari” will not live in trees any longer as there will be no more trees in the Amazônia. The baboukari will use their tail, not for balancing between branches, but to communicate with each other in the high vegetation of the savannah like habitat, which is the future of the Amazônia region.

The “Tortunossauro” evolves from the Giant Tortoise (Podocnemis expansa). In 100 million years this tortoise will be the largest land animal with a height of 7 meters. Largest than the dinosaur, he will weigh some 120 metric tons, 40 times an elephant. Without having to face a predator he will loose the better part of his shell.
The present Amazônia tortoise is a nocturnal animal, living in groups and able to live up to a 100 years. He feeds with plants and fish, is a freshwater animal, located in the Amazônia River and its estuaries. Adults can reach 80 cm in length and 60 cm in width, weighing up to 60 kg.

Although the descendant of this rodent, the capivara (Hydrochaeris hydrochaeris), has a more densely covered skin, the "cuirasson" will have a densely covered shell with callous spines, like a porcupine.
The capivara is world’s largest rodent. It adores to bath in the river and may stay there for hours with just its snout above the water surface. A docile herbivore with a length of 1 meter. Its meat is much appreciated by the native inhabitants of the Amazônia and thus consumed lavishly.

This future terrestrial bird seems to have been evolved from the turkey or the ostrich. Thanks to its sturdy legs it will be one of the fastest predators of the Amazônia. It will find his food on the ground and uses its wings just to balance during a run similar as to ostriches.

The “Large Blue Glider” will live on the mountaintops. As it is in the air most of its time the evolution has given it two pairs of wings with 15 meter wingspread. To be protected against the sun, the feathers are metal blue to reflect the sun rays.

It is a pity really that the exposition does not show a projection of the future human being. Probably he already has cooked his goose and belongs as so many animals to the extinct species.




BBC Photogalery
source: IG/BBC Brasil
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**

Eco-friendly Condom From The Amazon

It is unlikely you ever will get a chance to use the “Green Johnny”, a male preservative based on eco-friendly extracted natural latex from the Amazônia rainforest. Maybe when you ever visit Brazil during the carnival or one of the holiday centres you might be offered one of the 120 million condoms courtesy of the federal government of Brazil. Brazil’s Public Health Ministry distributes the free condoms as part of its successful Health Programs to combat STD/Aids.

Up till now the approx. 120 million condoms are imported from China, South Korea and Thailand, made from cultivated rubber trees. That will change soon.

Natex, a Brazilian company founded by the Public Health Ministry and the government of the federal state of Acre, will manufacture male preservatives from pure natural latex extracted from the Amazon rainforest in a sustainable and eco-friendly way. The condoms will be solely sold to the federal government for its national program to combat STD/Aids.
The expected initial production will be 100 million pieces a year. The factory, the only one in the world to use natural latex as raw material, will have a future capacity of 270 million condoms a year. The construction of the factory is based upon sustainable, social and environmental development.
Natex will create 150 direct jobs and employ 700 native families of the Chico Mendes reservation for the supply of the raw material. It is estimated that in the Amazon rainforest of Acre some 70.000 native rubber tappers are active.

source: Flores & Versos
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Operação “Arco de Fogo” - Operation “Arc of Fire”

By the end of March the results of the first month of the Operation “Arc of Fire” started to be visualised. Operation “Arco de Fogo” is a hard police action, initiated by the federal government to combat the illegal deforestation of the Amazônia.

Approximately 35% of all illegal deforestation in the federal state of Pará is feeding the charcoal ovens; the other part is selective log cutting of noble wood species. Illegal charcoal is purchased by legal companies, and exported mainly to China and the USA to be used in the steel production process.
But the demand for charcoal is only one of the factors causing the deforestation. Brazil's Environment Ministry places more of the blame on farmers who clear large areas in the rainforest to create soybean fields and cattle ranches. Officials say that ranching and farming are responsible for up to 80 percent of total deforestation nationwide.

In Aug.2007 Lula and his government celebrated the fact that for the third consecutive year deforestation in the Amazônia had decreased almost to the historical lowest level of 1991 of 11.030 km2 (roughly 25% of a country the size of Holland), while the Environment Minister Marina Silva claimed that the government policy had saved 20.000 birds, 70.000 primates and some 600 million trees from being cut illegally. However in the same month satellites registered 16.592 fires, mainly in the Amazônia area and illegal deforestation had restarted at a large scale.
According to figures supplied by Marina Silva deforestation between August and November 2007 increased with 10%, mainly due to the delayed start of the rainy season, which enabled the loggers to extract the lumber from the forest to almost the end of the year.

A quick response was evidently required and Lula’s decree prohibited any sale of agriculture products, and imposed fines on all trade of meat, soy and other products originating from illegally deforested areas.
Concentrating on 36 municipalities in the Amazônia responsible for more than 50% of all illegal logging Ibama (the federal environment bureau) initiated its activities, with this decree in hand, to effectively combat the deforestation.
The operation was baptized: “Arco de Fogo” (Arc of Fire).

Operation “Arco de Fogo”, which started on the 26th of February and focused on Tailândia, a little town in the south of the state Pará, is run by Ibama with warlike support of some 1.000 military, civil and federal police agents and contingents of the national security forces. The results after its first month of action are staggering: 23 million BRR (9 million euro) in fines. Furthermore 23.300 m3 illegal logs confiscated, while 14 sawmills and 25 charcoal companies were shut down in an area of 4.200 hectares where illegal deforestation was detected.
The action did not restrict to confiscating the illegal lumber or by fining the company owners, but went a step further by dismantling illegal sawmills and razing illegal charcoal ovens to the ground. By the 25th of March, 53 sawmills were inspected, of which 14 shut down and dismantled and 1.175 charcoal ovens completely demolished. Those destroyed ovens alone would have consumed about 23.000 young trees in one month, according to average production rates.
The environmental action groups were delirious.

Given the scope of the operation it is more than likely that the name Tailândia never ever will be connected to environmental crimes, if, at least, the little town will not be wiped out completely.

The journalist Valterlucio Bessa Campelo comes in his article published in Agência Amazônia with a nicely constructed economic analysis, which I recount here. In Brazil there is a lack of reliable demographic figures and therefore Valterlucio interpolates existing figures to come to a mathematical conclusion for Tailândia.
But let’s have a look at the town Tailândia first. Tailândia has 64.000 inhabitants, a Gross National Product (GNP) in 2005 of 266 million BRR (105 million euro), of which the lumber activities represent (2006) some 67,2 million BRR (26,4 million euro) and the agriculture 28,0 million BRR (11 million euro). On the national Human Development Index (HDI) *) Tailândia figures as number 3046. In 2007 the town received 10,6 million BRR (4,156 million euro = 650 euro per capita) for education, health care etc., from the federal tax funds.

As we can see, the economy of Tailândia leans heavily on the exploration of wood products, whose value represents twice the value generated by agriculture activities. According to data from the IBGE*) some 1.400.000 m3 logs are produced annually in this area, representing 25% of the municipal GNP.
In the opinion of the federal government: All of them illegal.

A recent study carried out by the IBGE indicates that for every 1.000 m3 of logged lumber 15 jobs are created. When we transfer this figure to Tailândia we see 21.000 jobs, of which, according to another study, in average 1/3 is direct labour and 2/3 indirect. The calculation for Tailândia ends up with 7.000 direct jobs in the lumber industry.
In the opinion of the federal government: All of them illegal.

An analysis released by the government of Pará shows that 48% of the total populace is employable, of which 92,7% has indeed a job. When we transfer these indices to Tailândia we see that out of the 64.000 inhabitants, 30.720 are employable of which 28.477 have a job.
In other words of all inhabitants older than 10 years, regardless of what type of work, 25% or 7.000 have a job in the lumber industry. If and when this activity in Tailândia is eliminated the unemployment figure rises from 7,3% to 30%.

The above reconstructed figures help to understand the magnitude of the problem which develops when operations as “Arco de Fogo” are extended to other municipalities and federal states. The question is: leads an operation, which only criminalises the deforestation to a sustainable solution of the problem.
Keep in mind, that Tailândia only represents a minuscule fraction of the deforestation in Brazil.

It should be prudent, and particularly for a Lula, telling everybody his government has a socialistic signature, when operations combating the deforestation of the Amazônia go hand in hand with the necessary social actions to remain the local economy at its level. It is a mistake to belief that thousands of labourers in the lumber industry, direct or indirect, illegal or not, will not be stimulated by the instigating words of the lumber barons. The labourer thinks economically. He wants a job, preferably one he knows best. If he defends the interests of the lumber baron, he defends his income. He might not do that, if an alternative is available.

Apparently, after its operation in Tailândia, Ibama came to the same conclusion. According to the director of Ibama in Pará, Aníbal Picanço, social programs are getting in place to minimize the economic impact of the operation, as have been seen in Tailândia, where the local commerce came to a full stop after the sawmills were fined and shut down and the charcoal ovens demolished.
In the meantime it is clear that the national and international press is waiting with oversized expectations to hear from imprisoned lumber barons. While photographs of “definitely” shackled environment criminals no doubt give a double doses of XTC to the public opinion.
But after the over excitement comes the hangover: What are we doing with the 7.000 jobless people in Tailândia.

Caption of the last 5 images: Hundreds of logs of the expensive species maçaranduba, copaíba, ipê and angelim, were buried under a soybean field, close to the PA-150 state road.
Fonte first seven photographs: Paulo Santos/Reuters, Paulo Whitaker/Reuters and Roberto Stuckert/O Globo, last five: Policia Federal.

Footnotes:
*) (wiki) HDI or the Human Development Index is the normalized measure of life expectancy, literacy, education, standard of living, and GDP per capita for countries worldwide. It is a standard means of measuring well-being, especially child welfare. It is used to determine and indicate whether a country is a developed, developing, or underdeveloped country. It is also used to measure the impact of economic policies on quality of life
*) (wiki) IBGE or the Brazilian Institute of Geography and Statistics (Portuguese: Instituto Brasileiro de Geografia e Estatística), is the agency responsible for statistical, geographic, cartographic, geodetic and environmental information in Brazil. The IBGE performs a national census every ten years, and the questionnaires account for information such as age, household income, literacy, education, occupation and hygiene levels.

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