🕵️ Neighborhood watch

Good morning! Tax on international purchases will get even more expensive today in 10 of Brazil’s 27 states. Bahia, Minas Gerais and others will now charge 20% of the ICMS state goods and services tax on shipments from abroad, as opposed to the previous rate of 17% — this, on top of the existing federal import tax rate. 

Brazil’s Foreign Minister Mauro Vieira scrambled to contain diplomatic fallout yesterday from a report alleging that the government of President Luiz Inácio Lula da Silva spied on Paraguay during negotiations over the Itaipu hydroelectric plant, a massive binational facility shared by the two countries.

👉 Why it matters. Brazil and Paraguay jointly operate the Itaipu dam, which is one of the world’s largest hydroelectric plants with an installed capacity of 14,000 megawatts. The plant has supplied nearly 10% of Brazil’s electricity and more than 85% of Paraguay’s. Any sign of espionage could strain relations between the neighbors.

The allegations. Brazilian news website UOL reported that a former employee of Brazil’s intelligence agency (ABIN) told the Federal Police the agency had hacked computers belonging to members of Paraguay’s Congress and presidential office.