Brazilian big agro cheering against U.S.-China trade deal

In today’s issue: Brazilian big agro cheering against U.S.-China trade deal. Supreme Court to decide on future of Operation Car Wash. Lingering questions on Marielle Franco assassination.

Brazilian big agro cheering against U.S.-China trade deal

Negotiations to settle the U.S.-China trade war are intensifying, with both sides holding frequent talks to clear the final hurdles. This could spell bad news for Brazillian agricultural producers, who fear that a truce will come with China opening up its market to American agribusiness—which could then ‘steal’ a BRL 30bn market share now occupied by soybean, meat, sugar, and ethanol producers.

It doesn’t help the fact that the Jair Bolsonaro administration has been hostile to Beijing in the past. The last such instance was a leaked lecture given by Foreign Minister Ernesto Araújo to students of Brazil’s school of diplomats, saying the country “won’t sell its soul to secure iron ore and soybean exports.” Mr. Araújo also said that, “coincidentally or not, the period over which China has been Brazil’s top trade partner has also been a period of recession.”

China is the destination of 86% of Brazil’s exported soybeans. The Asian giant, however, has slowed buying. “Importers did not buy lots of Brazilian beans recently, as they were waiting to buy U.S. soybeans, amid optimism of a final Sino-U.S. trade deal,” said Tian Hao, a senior analyst with First Futures. Last week, President Jair Bolsonaro vowed to improve relations with Beijing and confirmed his wish to visit leader Xi Jinping this year.

Supreme Court to decide on future of Operation Car Wash

Brazil’s Supreme Court is expected to trial a case today on whether or not crimes related to campaign financing should be handled exclusively by the Electoral Justice system, instead of criminal courts. The move would have deep implications on the future of Operation Car Wash—the five-year-old corruption probe—as most of its cases are, after all, linked to campaign financing.

The case’s rapporteur, Justice Marco Aurélio Mello, declared that sending cases to the electoral courts would not create additional hurdles to punishing corrupt politicians—but the truth is different. This branch of the legal system is understaffed, overburdened—and when cases do go to trial, judges are usually very complacent. That’s why lawyers often try to get their clients’ cases to be trialed by electoral courts rather than criminal ones.

Prosecutor General Raquel Dodge argues that cases should be split up into separate courts—with election-related crimes being under the scope of the Electoral Justice, and other federal crimes that usually follow (such as money laundering or corruption) going to criminal courts. The trial is not expected to end today.

Lingering questions on Marielle Franco assassination

Yesterday, two former cops were arrested in connection with the assassination of Rio City Councilor Marielle Franco, which has its one-year anniversary tomorrow. They are accused of being the gunman and the getaway car driver at the crime scene. However, investigators failed to answer the case’s two most pressing questions: who killed Marielle? And why?

In a case with all the signs of a premeditated political hit job, the police are now saying it was a hate crime, with heinous motivations. “To think that two militiamen decided, on their own, to kill a city councilor seems outlandish. OK, it could be possible, but it must be proved,” said former Public Safety Minister Raul Jungmann. Rio’s Governor Wilson Witzel said he hopes the two men will flip and collaborate with investigations.

The breakthrough in a case that remains unsolved after one year brought other shocking information. Like the fact that former cop Ronnie Lessa, the alleged gunman, lives in the same housing complex of President Jair Bolsonaro. And Mr. Lessa’s daughter dated one of the president’s sons. However, it would be irresponsible to draw any conclusions other than these facts at this point.

What else you should know today

• Inflation. At 0.42%, Brazil’s inflation exceeded nearly all expectations in February but remained comfortably below the official target. 12-month inflation accelerated to 3.89%, below the 4.25% target for 2019. The slightly higher-than-expected rate was pushed by temporary hikes in food prices. As new Central Bank President Roberto Campos Neto takes over, the bank’s monetary policy committee is expected to stick to its recent dovish tone when it meets next week.

• IPOs.Pedro Guimarães, the president of Caixa—Brazil’s biggest public bank—said the bank will promote IPOs of its more profitable areas: credit cards, insurance, lottery, and asset management. At least BRL 15bn should come from the operations, to be carried out in the U.S. Mr. Guimarães believes that the level of oversight in the American market will be a powerful deterrent of corruption practices.

• Diplomacy 1.In a lecture to newly-arrived students of Brazil’s official school of diplomats, Foreign Minister Ernesto Araújo said Brazilian diplomacy should be based on Christian values. He also defended closer ties with Israel, indicating he supports moving the Brazilian embassy in that country from Tel-Aviv to Jerusalem—which would anger Muslim-majority countries and could harm Brazil’s halal meat exports.

• Diplomacy 2.Brazilian generals have kept a communication channel with their Venezuelan counterparts, despite the souring relationship between both countries’ governments. Highly critical of Foreign Minister Ernesto Araújo, the military has tried to take the lead in Venezuela-related issues. Generals also fear that the new chairman of the House’s Foreign Affairs Committee, Congressman Eduardo Bolsonaro, one of the president’s sons, could raise tensions.

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