🏖️ Private beaches in Brazil?

Good morning! This week, a controversial land bill could alter Brazil’s coast. A land dispute between two Brazilian states. And how tax caps hampered states’ revenue. 

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Controversial land bill to move in the Senate

The Senate Constitution and Justice Committee will today hold a public hearing to discuss a controversial bill allowing the government to transfer control over coastal land to states, municipalities, or private interests. The legislation passed in the House in February 2022, during the former Jair Bolsonaro administration (which supported it). 

What it is. The proposal uses the term “marine land” to denote the areas that could be transferred to states, municipalities, or the private sector. Marine land is defined as an area that borders the sea and is 33 meters from the high tide-mean line of 1831. The high tide-mean line means the average high tide in a given period — the reference for marine land in Brazil was calculated in 1831.

• Therefore, everything located within this coastal strip — such as beaches, dunes, mangroves and coastal islands — are considered marine land.

 Why it matters. Environmentalists say the bill makes it possible for the creation of private beaches in Brazil and represents a risk to biodiversity in the country.

What they are saying. Ronaldo Christofoletti, a member of RECN — a network of experts in conservation research — and a professor at the Federal University of São Paulo, claims that the proposal is too broad and would allow for any piece of marine land to be privatized, regardless of environmental risk or historical value.

• The environment caucus has protested the bill, saying that while it may come across as a mere administrative act, it in fact represents “serious environmental threats to Brazilian beaches, islands, riverbanks, lagoons, and mangroves and is an endorsement for the real estate industry to degrade, in addition to expelling traditional communities from their territories.”

What the law says. The Constitution establishes that Brazil’s beaches are owned by the federal government and can be used by anyone. During the Bolsonaro years, former Economy Minister Paulo Guedes said that allowing for the sale of beachfront land would be a way to boost public finances.

Yes, but … Legal uncertainty around how to proceed with such deals hinder possible investors. In 2022, an auction for the concession of land usage rights over a picture-perfect island on the shores of São Paulo did not get a single bid.

State of play. Senator Flávio Bolsonaro, the eldest son of the former far-right president, is the bill’s rapporteur in the Senate — he has come out in favor of the proposal.

Border disputes in the Northeast

A 140-year long territorial dispute in Northeast Brazil is edging closer to a final resolution in the Supreme Court. The states of Piauí and Ceará are fighting over an area of approximately 3,000 square kilometers along the Ibiapaba mountain chain, on the boundary between the states.

 Why it matters. The area is considered an economic gem due to its potential for agribusiness, mining, and wind power production. The region has multiple mineral reserves, such as gold, copper, and manganese.

Context. Piauí was created in 1718, when Brazil was still divided in feudal-like areas known as “hereditary captaincies.” It was a dismemberment of the captaincy of Maranhão. Since the 1880s, Piauí and Ceará have fought over the area in court but no attempt of mediation has been successful. In 2011, the former filed a lawsuit against Ceará in the Supreme Court.

State of play. The main point of contention regards which geographical reference should be used to draw the boundary between the two states. Piauí contends that, based on a series of imperial decrees, maps, and licenses issued between the 1750s and the 1910s, the highest point of the Ibiapaba mountain chain should be the divider. 

• Ceará, in turn, claims that the geographic marker should be the foothills on the western side, where the lands of the neighboring state would begin.

• Depending on the outcome, areas in 13 municipalities in Ceará could be considered part of Piauí state instead. Residents fear the impact of the administrative change on the continuance of public policies.

• The Army was tasked in 2016 with analyzing historical documents and assessing the territory. After multiple delays, it has promised to deliver its findings within a month.

By the numbers. The state of Ceará argues that the disputed area accounts for roughly 30 percent of the state’s agricultural production and half of the state’s irrigated land. It claims to have spent billions in energy and transportation infrastructure.

Not the first. Border disputes between Brazilian states are fairly common. Piauí in 2020 obtained land from Tocantins, another neighboring state, thanks to a Supreme Court decision. In 2022, Bahia and Tocantins settled a territorial dispute of their own.

Markets

Airlines Azul and Gol announced a codeshare agreement for domestic routes in Brazil operated by one but not the other. The deal comes amid rumors that Azul is willing to take over Gol, as the latter is going through a Chapter 11 bankruptcy protection process. Precisely because of that, antitrust regulators have requested details on the deal to analyze possible implications for consumers.

Chart of the week: Fuel tax drop

States raked in 9.6 percent less revenue from the ICMS consumption tax on fuel and lubricants last year when compared to 2022. Consumption taxes on fuels comprised 13.7 percent of states’ revenue — since 2010, that rate had only been lower in 2020, when the pandemic saw millions practice social distancing and isolation, drastically reducing fuel sales.  

• Why it matters. The numbers are a result of laws enacted by the previous Jair Bolsonaro administration, which capped ICMS on essential goods such as diesel and gasoline.

Stories we’re following

Plastics producers have requested a meeting with President Lula to question the government’s decision to raise import tariffs on multiple inputs. 

The government needs a new climate exposure assessment study. The current one rated several of the cities ravaged by floods in Rio Grande do Sul as “highly capable” of withstanding extreme events. 

Formal job creation figures will be released on Tuesday. Private bank Bradesco expects the result to be around 150,000 net new jobs in the country. Two days later, the official unemployment rate will be known — markets expect the recent uptick to continue, with the joblessness rate reaching 8 percent. 

In case you missed it

Brazil’s antitrust watchdog announced a deal with state-controlled oil firm Petrobras, freeing the company from a previously signed commitment to sell off five refineries and its stake in the Brazil-Bolivia gas pipeline.

Supreme Court Justice Alexandre de Moraes once again urged Congress to adopt strong regulations on social media platforms. But if Congress doesn’t step up to the plate, he warned the Justice system could settle the issue by itself.

The federal government announced the extension of antidumping restrictions on steel products from China. The move comes after authorities observed an attempt by steel importers to circumvent previous restrictions.

A new Quaest poll among lawmakers suggests that Congress’s views on the Lula administration are becoming more negative. 

 The Superior Electoral Court unanimously upheld a lower court verdict acquitting Senator Sergio Moro from accusations of illegal campaign financing that could have led to his impeachment. 

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