By Gillian Tett/Financial Times

The Brazilian financial system has contained a striking local quirk in recent years. Unlike most other large economies, Brazil has insisted that any global bank that wanted to operate within its borders had to create subsidiaries, with their own capital, rather than branches of a head office.

This stance seemed unfashionable until quite recently. The dominant western theory before the credit bust was that capital markets were becoming increasingly globalised and integrated, which implied that banks should be able to move capital freely wherever they wanted, without worrying about national borders.

But Brazil’s stance is now stimulating a wider policy debate. Brazilian officials say one reason their financial system weathered the recent crisis relatively well was that the presence of subsidiaries enabled regulators to keep a close eye on banks – while also preventing any sudden capital flight. “This policy has served us well,” one Brazilian financial official told counterparts in Europe last week. Thus, the question now is whether other countries should follow suit and impose similar, local ring-fencing policies.

This is a suggestion that many bankers hate. Some big global banks, such as HSBC and Santander, do have a form of subsidiary structure. But most do not, and are apt to argue that national restrictions on banks would fly in the face of globalisation, while making the cost of capital much more expensive, since the use of capital would be less efficient.

However, at least two key reasons are enabling the concept to gain traction. First, the collapse of Lehman Brothers last year illustrated the problems that regulators face when trying to retrieve assets, if these can flit across a border without any control. In the case of Lehmans, billions of dollars left London just before its collapse. British lawyers are still trying to get it back.

Second, the debate on “living wills” – blueprints for how banks might dissolve themselves in a crisis – is threatening to shine a fresh light on global banking structures.

The idea of such wills was first mooted earlier this year, and British regulators have recently renamed them “recovery and resolution plans”. The Financial Services Authorityhas asked half a dozen UK-based banks to prepare such RRPs.

Paul Tucker, deputy governor of the Bank of England, is leading an international committee that will soon follow suit with 25 or so global banks.

Onecontentious issue is whether these reports will be kept confidential or not. But if the exercise gains momentum, it might produce a new level of transparency about where banks currently keep their assets, relative to their business and risks. That, in turn, might well prompt demands for more national ring-fencing of banks’ operations, as well as other forms of reorganisation.

Precisely for that reason, the emerging market members of the G20 are now backing the whole “living wills” idea. Some countries have spotted that if assets are ring-fenced, it makes it harder for global banks to flee if a crisis breaks.

Of course, as western bankers point out, such ring-fencing comes at a price – most notably, by making capital more expensive.

At a time when the world is still reeling from the cost of seemingly seamless global capital markets, however, that trade-off may yet appear more compelling.

Either way, it is worth keeping a close eye on what happens next to those living wills-cumRRPs – not just inside nations such as Brazil, but in the rest of the global financial system, too.

By Rhiannon Batten, from The Observer

With its colonial towns, spectacular landscape and New Age scene, the landlocked state of Goiás could be Brazil’s best-kept secret

A dip into one of the many waterfalls in Goiás is a highlight of a visit to the state. Photograph: Alamy

On a languid summer evening, the pavements of Rua do Rosário are packed with people drinking cold beer and caipirinhas. Music throbs from bar to bar and outside the street’s most expensive-looking house two armed guards stand solemnly looking on. From nowhere, a firework pops overhead.

Soon the carousing is interrupted again when three men on horseback appear, incongruously, at the top of the street. One of them, all manly thighs and black Stetson, draws catcalls from the intoxicated crowds as he fights to keep his skittish horse under control. It’s a battle between man and beast all the way downhill as the horse bucks and lurches but the rider wins, just – and then races back up for a victory lap. Welcome to a regular Saturday night in Pirenópolis.

With a name like something from a graphic novel and a claim to fame as home to more VW Beetles per capita than any other town in Brazil, you might think Pirenópolis would be better known. Yet, in a country as big as this one it is easy for places to go undiscovered, or whole states in the case of Goiás, where Pirenópolis is located. Without the beaches of Bahia, or the showy wildlife of the Amazon, Goiás doesn’t often feature on the tourist circuit. It should, though. With its vast inland plains and big skies spreading east from Brasilia, the region is characterised by pretty, cobbled colonial towns, hot springs, forests, waterfalls and wild, scented cerrado (tropical savannah). All of which have played a part in drawing the state’s other big signature feature: hippies.

Although the region is home to such counter-culture hubs as the Vale do Amanhecer (Sunrise Valley), a religious community started by a clairvoyant truck driver, and the Casa de Dom Inácio de Loyola, where a self-styled ‘psychic surgeon’ calling himself John of God claims to heal cancer, Aids, blindness, asthma, drug addiction, alcohol abuse and ‘spiritual desperation’ with invisible operations, a less extreme alternative scene can be found around the town of Alto Paraiso, in the far north of the state.

With its 40-odd mystical, philosophical and religious groups, locals like to call Alto Paraiso the Brazilian capital of the third millennium. Rumour also has it that latitude 14, which crosses Machu Picchu in Peru and zips through the town, is to blame for the high number of UFO sightings in the area. But travelling there by bus from Brasilia felt less like a mission to Mars than a journey to the centre of the earth. The 225km route carves a path through endless fields and red earth deep into the Brazilian interior, passing lonely farms, puddles the colour of sweet potato soup, and termite mounds as big as Stonehenge. That Alto Paraiso isn’t your average hilltop hangout quickly became clear when I got off the bus to be met by a man in dreadlocks playing a flute.

To his regret, though, I wasn’t there to buy beads or bongs but to visit the nearby Parque Nacional da Chapada dos Veadeiros. Created in 1961, this 65,000 hectare park (only a small part of which is open to the public) was listed as a Unesco world heritage site in 2001, in the hope of protecting the unique cerrado ecosystem from encroaching cattle, soy, and now biofuel farming; the rate of habitat loss here is said to be even greater than that in Amazonia.

What remains is an impressively rich biodiversity. Of the 10,000 plant species found here – including 25 different orchids, purple trumpet-bushes, copa trees, pepper trees, prickly ash, murity palms and babaçu palms – 44 per cent exist only in the cerrado. Though rarely spotted in the areas tourists are allowed into, the park also attracts some of Brazil’s most unusual – and in some cases endangered – animals. Pampa and swamp deers, jaguars, wolves, rheas, armadillos, anteaters, capybaras, tapirs, toucans and vultures all survive here.

The catch is that you can’t enter Chapada dos Veadeiros without an accredited guide. So the next day I met Marcelo from Travessia Tourism and what appeared to be the only two other tourists in town – Yaz from Australia and Maggie from Switzerland – for the drive to the park.

Access is via one of two trails – either ‘canyons and rocks’ or ‘waterfalls’ – and we opted for the waterfalls. Setting off for a five-hour hike past towering waterfalls, jagged canyons and natural swimming pools, it wasn’t long before the scrubby vegetation opened out and we were confronted by a spectacular view across a vast, ancient plateau.

From here, we picked our way down into a lush valley, criss-crossing a stream over natural stepping-stones. From feathery grasses to colour-splattered bushes, flowers that looked like exotic sweet peas, bright lichen-mottled driftwood and the region’s signature chuveirinho, or ‘shower flower’ (imagine a football-sized dandelion), the plants were so beautifully bizarre that it was like walking through a children’s storybook.

Eventually we came out at the largest waterfall, a 120m-high cascade that thundered so hard into the bottom of the adjacent canyon that it seemed to be falling in slow motion. Just as mesmerising was the multi-coloured quartz crystal in the park’s rocky ground. Once exported widely, it is now left to provide a glimmering carpet. ‘Look at this,’ said Yaz, crouching down to stroke the ground as we came to a particularly sparkly spot. ‘This is paradise, man.’

He didn’t feel quite as enthralled after lunch when, having nonchalantly stripped and dived into the nearest pool, Marcelo suddenly shouted across to him that he should get out of the water unless he wanted an athletic-sounding organism to swim up his penis.

I thought back to Yaz a few days later when I headed back south to Pirenópolis and went for a swim at Cachoeiras Bonsucesso, a series of waterfalls just outside town. Judging by the number of people taking a dip, I don’t think there could have been any underwater nasties there, though the family crowds might not have appreciated his casual approach to swimwear.

Near the falls is Fazenda Vagafogo, a farm surrounded by rolling green meadows and grazing horses that look so English that if it weren’t for the odd termite mound or palm tree you might think you were tramping through the grounds of a stately home. The forest trail that spools out from the back of the farm is more exotic. Full of giant jatobá trees, overgrown lianas and the sound of monkeys, if you’re lucky you may catch a glimpse of a morpho butterfly whose huge, electric-blue wings shimmer against the muddy background.

The Vagafogo brunch is an institution among tourists from Brasilia, an extravagant array of local fruits, cheeses, breads, chutneys, jams and meats. I spent an hour working my way through mangaba juice, starfruit chutney and sanclish (a tasty mix of curd cheese, onions, oil and tomatoes). I seemed to be the only non-Brazilian visitor.

But then Goiás has always been off the map. I was told the history of the Kalungas, a group of 4,000 people who live around 100km from Alto Paraiso. Until the 1960s, when the construction of Brasilia started opening up this region, the Kalungas had lived hidden from the outside world ever since their ancestors had run away from their colonial slave owners hundreds of years earlier. Apparently they stayed undetected only because this part of Goiás was so neglected. The lost world endures.

Associated Press
Speaking before Amazon summit, Lula calls on industrialised countries to provide financial help to halt deforestation.

Brazil’s president said today that “gringos” should pay Amazon nations to prevent deforestation, insisting rich western countries had caused much more environmental destruction than the loggers and farmers who cut and burn trees in the world’s largest tropical rainforest.

President Luiz Inácio Lula da Silva was speaking before an Amazon summit at which delegates signed a declaration calling for financial help from the industrialised world to halt deforestation, which contributes to global warming.

“I don’t want any gringo asking us to let an Amazon resident die of hunger under a tree,” Lula said. “We want to preserve, but they will have to pay the price for this preservation because we never destroyed our forest like they mowed theirs down a century ago.”

In Brazil, the word “gringo” generally refers to anyone from the northern hemisphere.

Lula convened the meeting to form a unified position on deforestation and climate change for seven Amazon countries before the Copenhagen climate summit. But the only leaders who attended were Guyana’s Bharrat Jagdeo and France’s Nicolas Sarkozy, representing French Guiana, leaving top Lula aides and environmentalists to admit the gathering will have a muted impact.

Other countries sent vice-presidents or ministers, and the presidents of Colombia and Venezuela embarrassed Brazil by cancelling at the last minute.

Sarkozy supported a recent proposal by Lula to create a financial transaction tax that would be used to build a fund to help developing countries protect their forests. Details will be discussed in Copenhagen.

Despite the lacklustre summit showing, Lula aides said it was important to drive home a message that the Amazon is home to 30 million people, most of whom depend on the forest’s natural riches to eke out a living. About 25 million live in Brazil’s portion.

“In Europe everyone has opinions about the Amazon, and there are people who think the Amazon is a zoo where you have to pay to enter,” said Marco Aurelio Garcia, Lula’s top foreign policy adviser. “They don’t know there are 30 million who work there.”

Brazil has managed to reduce Amazon destruction to about 7,000 square kilometres a year, the lowest level in decades. But that is still larger than the US state of Delaware.

The Brazilian Amazon is arguably the world’s biggest natural defence against global warming, acting as an absorber of carbon dioxide. But it is also a big contributor to warming because about 75% of Brazil’s emissions come from rainforest clearing, as vegetation burns and felled trees rot.

Brazil has an incentive to protect the Amazon because the new global climate agreement is expected to reward countries for “avoided deforestation” with cash or credits that can be traded on the global carbon market.

Norway will give Brazil $1bn (£600m) by 2015 to preserve the Amazon rainforest, as long as Latin America’s largest country keeps trying to stop deforestation.

Norway was the first to supply cash to an Amazon preservation fund which Brazilian officials hope will raise $21bn to protect nature reserves, persuade loggers and farmers to stop destroying trees, and finance scientific and technological projects.

Brazilian environment minister Carlos Minc has said Japan, Sweden, Germany, South Korea and Switzerland are considering donating to the fund.

We have already talked about “capoeira” on this blog (an Afro-Brazilian art form that combines elements of martial arts, music and dance). It’s very popular in the Northeast of Brazil, where it can often be seen on the streets of Bahia.

If you are interested to learn more about it, you may be excited to hear of a new Brazilian movie that has just been released called “Besouro” (Beetle in English). The story is set in Bahia in the 1920s, and is based on a legendary capoeira fighter called Besouro, who uses his skills to fight the harsh conditions which the black population in Brazil had to face even after the abolition of slavery. Besides showing part of Brazil’s history, the movie also presents some strong elements of the Brazilian culture, such as Candomblé – an Afro-Brazilian religion that uses the power of different saints to help people to achieve their goals.

Apparently, the production has cost millions of dollars and counts with the action director Huan-Chi Ku (from Kill Bill and Matrix). The soundtrack is one of the best features of the film, with important national bands, such as Mestre Ambrósio, S/A, Nação Zumbi, Eddie, Otto and Junio Barreto.

The film was directed by João Daniel Tikhomiroff, a veteran in the world of advertising who makes his directorial debut with “Besouro”.

Curious to know more? Then have a look at the trailer below:

By Andrew Downie, from Time.com

By Connection Consulting

After providing consulting for numerous business to start up in Brazil, we have learned that there are a few subjects related to bureaucracy and perceptions about Brazil that catch foreigners by surprise especially when they are planning to set up or already are in the process to open their business in the country.

Based on our experience we decided to write this guide to clarify 4 of the most usual misconceptions that people have when bringing their business to Brazil:

Salaries are Very Low in Brazil

It is easy to think of Brazil as a country with cheap workforce so this may be the most common misconception of all people planning to set up in Brazil. Just to give you an idea of the evolution of the salaries, the minimum wage increased at an astonishing pace in the past years practically doubling if compared to the figures from 2002.

Right now the minimum wage is BRL 465. It is worth to note however that the gap between different categories is huge so you will rarely find any employee with a bachelor degree in engineering that earn less than BRL 3000. Salaries vary a lot from state to state, but for experts the salary may double or even triple.

Top that with high social costs and an extra salary per year (the 13th salary) and will you have a idea of the annual cost of an employee for the company.

Companies can be Opened on a Blink of an Eye

Unlike the process in the US or in most European countries where opening a company is quick and usually require filling out a form or two, the Brazilian company formation process is far more complicated and time-consuming. Different authorities, licenses and taxes are involved depending on the type of company you are planning to open and it can take from one to six months before your company is operating. 

The fact that there is foreigner presence in the company also makes the process slower and more expensive due to extra translations costs.

Rio de Janeiro is the Only City to be

Some people tend to be fooled by the status that Rio de Janeiro has as a vacation destination thinking that such status also applies for business. We are not trying to say Rio de Janeiro is not a good place to establish your business, but you should be aware that there are other places in the country with great potential and that may even offer incentives such as free plots of land for you to build your business or tax reductions. 

São Paulo is still considered the business capital of Brazil and alone corresponds to 15% of the country’s GNP. Also three quarters of the all business events in Brazil happen in São Paulo. Manaus is also an interesting place for electronics manufacturing business due to its free trade zone regulations.

Get your Brazilian Documents in Brazil

Foreigners sometimes get overwhelmed by the amount of documents that are necessary to live in Brazil and the most natural perception is that it will be easier to obtain all documents once they are in Brazilian soil. That is not always true. 

Some documents, for example the CPF, can also be obtained in the Brazilian Consulate so it worth to check with them if they can assist you. You are little likely to get information in English from the authorities in Brazil, so besides of having help in your own language, the Consulate is more used to handle request from foreigners.

Photo: Elza Fiúza – Agência Brasil

By Juliet Eilperin, from The Washington Post

When international climate negotiators convene next month in Copenhagen, Brazilian politician Marina Silva will serve as the conference’s unofficial philosopher-activist. A native Amazonian who grew up in a community of rubber-tappers, Silva worked with murdered Amazonian activist Chico Mendes, won the prestigious Goldman Environmental Prize in 1996 and served as Brazil’s minister of the environment under President Luiz Inácio Lula da Silva from 2002 to 2008. She spoke with Washington Post environment reporter Juliet Eilperin during a recent visit to Washington; Stephan Schwartzman of the Environmental Defense Fund translated from the Portuguese. Excerpts:

What inspired you to do environmental work?

It was a combination of things. First, the sensibility I gained from living with the forest, from being born there and taking my sustenance from it until I was 16 years old. Second was my contact with liberation theology, with people like Chico Mendes, a connection that raised social and political consciousness about the actions of the Amazonian rubber-tappers and Indians who were being driven out of their lands because the old rubber estates were being sold into cattle ranches. These encounters made me become engaged with the struggle in defense of the forest. Later, I discovered that this was about “the environment” and the protection of ecosystems. It was an ethical commitment that these natural resources could not be simply destroyed.

How does your Amazon upbringing affect the way you see the issues at stake?

Without doubt, the experience of living in one of the most biologically and culturally diverse regions of the world has affected how I see the world. I see two time frames: forest time and city time. Forest time is slower; things have to be more fully processed; information takes a long time to get there, so people didn’t have access to new information. When a new idea arrived, you thought about it, elaborated on it, talked about it for a long time. So this way of thinking, reflecting on and developing ideas, helps me have a sense of the preservation of things, to not make rushed decisions.

In your view, how is the international community responding to climate change?

We are already extremely close, in terms of the maximum of what is permissible in emissions. It’s an effort that both developing and developed countries have to make. What has been agreed to so far in the meetings leading up to Copenhagen is not terribly promising. Society has to reflect this kind of urgency to leaders, and leaders need to assume responsibility for taking on the issue, not only in terms of present interests but in terms of future interests.

What they would like to do, or what they would feel comfortable to do with the short-term time horizons of their mandates, is not enough.

To what extent do you think avoided deforestation in places like the Amazon can succeed at curbing global warming, given that deforestation accounts for 15 percent of the world’s annual greenhouse gas emissions?

For this process to last, to be sustainable over time, we need to change the process of development. It’s not enough to say what people can’t do. You have to tell them what they can do, how they can do it and provide them with the means to do it. In the case of the Amazon, there are 25 million people living there, and they need alternatives. If there are not alternatives, there will once again be tremendous pressure on the forest. What’s needed is a change in the fundamental economics of the Amazon to create sustainable expectations to meet the needs of the people.

How do you view the United States’ current work on climate change?

We’re enthusiastic about what’s going on in the United States, the fact that there’s been a law passed by the House of Representatives. The fact that climate-change legislation is on the agenda of the United States is tremendously important. It’s a huge change, after being absent from the international negotiations for nearly 10 years, that the United States has returned.

For this process to last, to be sustainable over time, we need to change the process of development. It’s not enough to say what people can’t do. You have to tell them what they can do, how they can do it and provide them with the means to do it. In the case of the Amazon, there are 25 million people living there, and they need alternatives. If there are not alternatives, there will once again be tremendous pressure on the forest. What’s needed is a change in the fundamental economics of the Amazon to create sustainable expectations to meet the needs of the people.

How do you view the United States’ current work on climate change?

We’re enthusiastic about what’s going on in the United States, the fact that there’s been a law passed by the House of Representatives. The fact that climate-change legislation is on the agenda of the United States is tremendously important. It’s a huge change, after being absent from the international negotiations for nearly 10 years, that the United States has returned.

I recognize that the United States not having legislation [passed] in the Senate creates a problem. At the same time, the sentiment of the international community is going to demand that these [industrialized] countries take on a long-term target, an 80 percent reduction in emissions by midcentury. It’s important that there’s agreement around a long-term target. President Obama and the Congress are beginning a discussion that should have happened 10 years ago. But the fact that it has begun is very promising.

How optimistic are you that the world’s nations will take on binding commitments to curb greenhouse gas emissions?

We already have the greater part of the technical responses that we need to address these problems. What we need to do is to put these technical responses and methods at the service of ethics, and take into consideration the fate of future generations.

Do you still live in the Amazon part of the time?

In my mind, I’m always in the Amazon. I just have a job that requires me to work in Brasilia for a certain time. I’m increasingly called upon to travel to other states in Brazil and outside of Brazil, but my reference point is Amazonia; it’s the locus from which I enter into dialogue with other regions of Brazil and the outside world. I make a point of returning to the Amazon at least once a month.

What was it like working with Chico Mendes? What might he make of Brazil’s and the world’s efforts on the environment today?

I worked and lived with Chico Mendes. It was sharing friendship and apprenticeship. It was principally a political apprenticeship, not in the sense of party politics, but the politics of how to relate to different parts of society, in this case the rubber-tappers. Chico Mendes had an enormous capacity for dialogue — even with those who were against him, who opposed him in the extreme — and to not let himself be intimidated by the seeming impossibility of dialogue. He didn’t allow other people’s indifference to influence him. Even if someone was indifferent to his cause, this didn’t mean he had to be indifferent to them. I learned that first we should count on relationships, on persuasion rather than conflict, on processes of co-authorship.

With regard to the efforts Brazil and the world have made on environmental issues, if Chico were alive he would agree that they are far beyond the times he experienced, when he had to confront the fury of those who wanted to do the same thing in the Amazon as was done in Brazil’s Atlantic forest and other Brazilian biomes. But he would also certainly conclude that these efforts are much less than the planet needs.

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By ALEXEI BARRIONUEVO, from The New York Times

BRASÍLIA — Brazil’s ambitions to be a more important player on the global diplomatic stage are crashing headlong into the efforts of the United States and other Western powers to rein in Iran’s nuclear arms program.

President Luiz Inácio Lula da Silva said Monday that the world needed to engage, not isolate, Iran, and he defended Iran’s right to develop nuclear energy for peaceful purposes, so long as there was “clear respect for international agreements.”

Mr. da Silva made his comments as he hosted President Mahmoud Ahmadinejad of Iran in the first visit to Brazil by an Iranian leader since Shah Mohammad Reza Pahlavi visited in 1965.

 The visit is part of a larger push by Mr. da Silva to wade into the seemingly intractable world of Middle East politics, and follows visits in the last two weeks by Israel’s president, Shimon Peres, and Mahmoud Abbas, president of the Palestinian Authority.

But the visit is drawing criticism from lawmakers and former diplomats here and in the United States, who say it could undercut Western efforts to press Iran on its nuclear program, and consequently chill Brazil’s relations with the United States and damage its growing reputation as a global power.

Brazilian officials say the goal of the visit is to strengthen commercial ties between the two countries and help bring peace to the Middle East.

“This is part of Brazil projecting its role and strength as a global player,” said Michael Shifter, vice president of the Inter-American Dialogue, a policy research group in Washington. “And part of this has to do with Brazil sending a message to Washington that it will deal whomever it wants to deal with.”

And beyond the nuclear standoff, critics in Brazil and the United States say Mr. da Silva’s reception legitimizes Mr. Ahmadinejad just five months after what most of the world sees as his fraudulent re-election, followed by a brutal crackdown on dissent.

“This state visit is a gross error, a terrible mistake,” said Representative Eliot L. Engel, Democrat of New York, chairman of the House Subcommittee on the Western Hemisphere. “He is illegitimate with his own people, and Brazil is now going to give him the air of legitimacy at a time when the world is trying to figure out how to prevent Iran from having nuclear weapons. It makes no sense to me, and it tarnishes the image of Brazil, quite frankly.”

Relations between the United States and Brazil were already tense after Mr. da Silva’s government criticized the United States over its handling of the crisis in Honduras and increasing its military presence in Colombia.

But Mr. da Silva’s overture to Iran is consistent with President Obama’s policy of engagement, and the Obama administration says it is optimistic that the meeting will not damage and at best could reinforce the efforts already under way by Washington and European powers to deal with Iran.

“We would hope that all our friends and allies would understand that this is really a critical moment for Iran itself,” Ian C. Kelly, a State Department spokesman, said Thursday. “We would hope that Brazil would play a constructive role in trying to get Iran to do the right thing and fulfill its international obligations.”

Celso Amorim, Brazil’s foreign minister, said Mr. da Silva was encouraged by Western leaders, including President Obama, to seek a “direct and open dialogue” with Iran, in particular on the nuclear issue.

“It was said and reiterated that it was in the interest of Western nations that Brazil has a good interface with Iran,” Mr. Amorim said in an interview.

Brazilian officials said Mr. da Silva would try to sell Iran on the benefits of a Brazilian-style nuclear program, which is constitutionally limited to civilian use.

But Mr. Amorim made clear that Brazil did not see its role as carrying water for the proposed agreement for Iran to export most of its enriched uranium for processing into nuclear fuel.

“We are not here to convince Iran to accept some proposal,” he said. “Brazil is interested in peace.”

Since his election in 2002, Mr. da Silva has sought to cement Brazil’s dominance as Latin America’s economic and diplomatic leader, using its economic might to raise Brazil’s foreign-policy profile.

His government has also lobbied for a permanent seat on the United Nations Security Council and has become a respected voice in world climate change discussions. In recent months, he has added Middle Eastern diplomacy to his portfolio.

Brazil is no stranger to the region. Its national oil company, Petrobras, is helping Iran develop its oil fields and the two countries did about $2 billion in trade in 2007, mostly in Brazilian exports of food to Iran, Mr. Amorim said.

Brazil joined United Nations peacekeeping missions in Egypt after the 1956 Suez Crisis and has been involved in the Middle East ever since, said David Fleischer, a political science professor at the University of Brasília.

“Brazil is just starting to realize the weight it has,” Mr. Amorim said. “It wasn’t Brazil that went looking for the Middle East, it was the Middle East that went looking for Brazil.”

Brazilian officials say the holy grail of Mr. da Silva’s Middle Eastern initiative is to improve relations between Israel and the Palestinians, and they see Iran as a key player in resolving the conflict.

Success in this endeavor “would really put Brazil on the map and might put Lula in line for the Nobel Prize,” Mr. Fleischer said.

But it would have been difficult to have chosen a more formidable or polarizing quest. Many critics do not see Mr. Ahmadinejad — who has denied the Holocaust, called for Israel to be wiped off the map and backs anti-Israel militias — as a constructive force in the Middle East.

More than 1,500 people protested his visit this month in São Paulo, home to Brazil’s largest Jewish community, and a smaller protest took place on Sunday in Rio de Janeiro. Another is planned for Brasília on Monday.

It is not only the Israeli side that is leery of Mr. Ahmadinejad. Mr. Abbas, the Palestinian leader, said after meeting Mr. da Silva in Brazil on Friday that he had asked him to urge Iran to end its support for Hamas, the radical Islamist movement that controls Gaza.

But both Mr. Abbas and Mr. Peres urged Mr. da Silva to join the Middle East peace process. “Brazil, as an important country, and President Lula, as a respected leader, can play an important role,” Mr. Abbas told the newspaper Folha de São Paulo.

Some political analysts and American officials say that in his effort to burnish his credentials as a statesman, Mr. da Silva is marching to his own drummer rather than cooperating with allies to achieve larger geopolitical goals.

“As Brazil becomes more relevant on climate change and in world economic forums it is not going to be able to so openly criticize or be antagonistic with other major powers without paying a political price for it,” said Christopher Garman, an analyst with Eurasia Group, a political risk consultancy in New York. “Brazilian policy makers will no longer be able to have their cake and eat it too.”

But a diplomatic success would go a long way toward muting the criticism.

“Brazil should expect criticism for hosting Ahmadinejad to be sure,” said Julia E. Sweig, a Latin America expert at the Council on Foreign Relations. “But if it can play a moderating role — and clearly Washington is hoping as much — on the nuclear issue, it can surely deal with the critics.”

Mery Galanternick contributed reporting from Rio de Janeiro.

 

Photo by Pedro Kirilos/Riotur

By VICTORIA GOMELSKY, from The New York Times

 

Rio is expected to attract billions in public and private investment over the next few years.

RIO DE JANEIRO — On Alexandra Daly’s most recent visit here in May, she was booked into a hotel across the street from the most happening stretch of Ipanema beach. The perk, however, proved irrelevant. Ms. Daly had not bothered to pack a bikini.

“I had nine meetings in one day,” said Ms. Daly, a hedge fund marketer, whose London-based company, AA Advisors, works with about 35 major Brazilian investors. “I don’t even have days like that in New York. When you’re talking about Rio, people think of samba, Sugar Loaf mountain and the beach — not the billion-dollar investment industry.”

The conventional view of Brazil’s two largest cities is that São Paulo, with its banks, commerce and industry, got the brains, while Rio, with miles of crescent-shaped beaches, Carnival revelers and picturesque bay, got the looks. But the truth is that the “Marvelous City,” as Rio is known, is increasingly a serious destination for business travelers.

Brazil’s growing standing among global financiers is one explanation. Poised to become the world’s fifth-largest economy by 2016, the country has emerged from recession virtually unscathed, earning the envy of its Group of 20 cohorts.

São Paulo is the center of the boom. But Rio brings plenty of opportunities to the table, not only with its core oil and natural gas businesses, but also in financial services, technology and telecommunications.

An August 2009 study, “Decision: Rio Investments 2010-2012,” published by the Rio de Janeiro State Federation of Industries, predicted that public and private investment would pump $60.3 billion into the state over the next three years, not counting the additional $14.2 billion budgeted for the 2016 Olympic Games.

“I would dare to say that, probably, we have the biggest concentration of billion dollars in investment per square kilometer in the world,” said Cristiano Prado, the author of the industry federation’s study. “And more will come together with the Olympic Games in the next years.”

Not since 1808, when the Portuguese monarchy sailed into Guanabara Bay, fleeing Lisbon ahead of Napoleon’s army, has Rio seen such a spectacular influx of wealth. And not since 1960, when Rio ceded its capital status to Brasília, setting off an exodus of businesses and a half-century of urban decline, have Cariocas, as Rio’s residents are called, had a reason to believe the wealth would return.

“There is hope that with a government that is more pro-business, more things will happen in Rio,” said Ronaldo Veirano, founding partner of Veirano Advogados, a Rio-based law firm that worked on the federation’s study. “Hotel chains are now thinking seriously about their capacity and authorities are investing in infrastructure. I don’t think Rio will ever be another São Paulo but I think it could recover some of its glamour.”

The most conspicuous hurdle is an epic crime problem that has branded Rio one of the world’s most dangerous cities. On Oct. 17, for example, drug-trafficking gangs inside a favela, or slum, shot down a police helicopter in a series of clashes that left three police officers and at least 23 others dead.

Government leaders are eager to project a different image to the business community. “Clearly, the model we have is Barcelona,” said Felipe Góes, Mayor Eduardo Paes’s secretary of development.

Like the Spanish city, which cleaned up in time to be host for the 1992 Olympics, Rio hopes to reinvent itself for the Games. Presiding over the transformation is the billionaire Eike Batista, a mining magnate whose EBX Group has interests in real estate, energy, oil and tourism.

One of Batista’s pet projects is the deluxe restoration of the venerable Hotel Gloria, a 1920s landmark five minutes from the city center, where two of the largest corporate players in Brazil, Petrobras and Vale, still have their headquarters. The opening of the refurbished hotel is planned for 2011.

Other hoteliers have taken notice. Rio’s grandest property, the 86-year-old Copacabana Palace, introduced its sleek new Bar do Copa in March.

Meanwhile, the two-year-old Hotel Fasano in Ipanema boasts the stylish Baretto-Londra Bar designed by Philippe Starck.

Another newcomer is the year-old Hotel Santa Teresa, set in an acre of gardens in the artsy, hilltop enclave of the same name, just 10 minutes from downtown but far away in atmosphere.

“The advantage is we have only 44 rooms, 4,000 square meters and 150 tropical trees on the property,” the general manager, Mark Birchall, said. “You feel almost as if you’re in the mountains.”

In general, Rio’s accommodation capacity, currently 28,000 hotel rooms, is expanding at the rate of 1,000 rooms a year, said Paulo Senise, executive director of the Rio Convention & Visitors Bureau.

“The idea is to increase that to 1,500 to 2,000 per year for a total addition of 14,000 hotel rooms by the Olympics,” Mr. Senise said.

Overcoming its reputation as a parochial party town looks to be Rio’s biggest challenge domestically. In São Paulo, the locals, known as Paulistas, have long derided Rio for its supposed lack of sophistication. Many recent visitors, however, insist that Rio offers plenty of fashionable dining and nightlife options, from the baroque antiquarian bars and clubs of Lapa, near downtown, to the posh beach cafes of Ipanema, Leblon, and Barra da Tijuca.

“In terms of service, you are not lacking in Rio at all,” said Ted Rogers, a Washington-based venture capitalist who has done business in Rio since 2006 and blogs about it at www.vc-brazil.com. “I’d argue that the way the city is laid out, you have easier access to the places you want to go than in São Paulo.”

International access is set to improve Dec. 15, when US Airways begins direct service to Rio from its hub in Charlotte, North Carolina, the largest banking headquarters in the United States after New York City.

For all its current mojo, however, Rio faces one inescapable deterrent to sober-suited business development. Riotur, the government-owned tourist office, spells it out in its colorful introductory guide: “It is very difficult for anyone who visits Rio to resist the appeal of its 86 kilometers of beaches.”

That is more than 50 miles of beaches.

Mr. Rogers, for one, doesn’t even try. He said his best business days began with a run on the beach, followed by a quick swim. The routine, he said, puts him “in a relaxed but energized mind-set.”

“It’s hard to stress about business when on the beach in Rio,” he said, as he planned a return trip to the city at the end of October. “And by the end of the weekend, it is equally hard not to feel rejuvenated.”

By ROBERT P. WALZER from The New York Times

PhotoEPA Brazil will hold its first wind-only energy auction next month in a move to diversify its energy portfolio. Foreign companies are scrambling to take part.

 

Early this decade, a drought in Brazil that cut water to the country’s hydroelectric dams prompted severe energy shortages. The crisis, which ravaged the country’s economy and led to electricity rationing, underscored Brazil’s pressing need to diversify away from water power.

One result of that introspection will climax on Dec. 14, when the Brazilian government conducts its first wind-only energy auction. The bidding is expected to lead to the construction of two gigawatts of wind production with an investment of about $6 billion over the next two years.

The auction has attracted a number of international players, including the local units of Energias de Portugal, Electricité de France, Spain’s Iberdrola, EnerFin of the United States and several Brazilian companies, among others.

Interest has been so great, in fact, that the Ministry of Mines and Energy, which is conducting the auction, postponed it by three weeks to allow extra time to evaluate the preliminary bids.

“The number of projects proposed were much greater than expected by everyone,’’ said Pedro Perrelli, the executive director of ABEEólica, the Brazilian Wind Energy Association.

Industry and the government had anticipated proposals for 4.5 gigawatts to 6 gigawatts of projects, but “we came to the astonishing number of 13.3 gigawatts’’ from 441 proposals, Mr. Perrelli said. 

Within days, the government plans to release the auction’s technical manual, allowing participants to refine their bids. The winners will get a 20-year power-purchase agreement from the state.

Brazil counts on hydroelectricity for more than three-quarters of its electricity, but authorities are pushing biomass and wind as primary alternatives. Wind energy’s greatest potential in Brazil is during the dry season, so it is considered a hedge against low rainfall and the geographical spread of existing hydro resources.

“In Brazil, wind is very complimentary to hydro,” said João Carlos Mello, the chief executive of Andrade & Canellas, an energy consulting firm advising some bidders in the wind-power auction. “It’s clear that we need to open up our minds beyond hydro.”

Mr. Mello said Brazil’s technical potential for wind energy is 143 gigawatts due to the country’s blustery 4,600-mile coastline, where most projects are based. The Brazilian Wind Energy Association and the government have set a goal of achieving 10 gigawatts of wind energy capacity by 2020 from the current 605 megawatts, with another 450 megawatts under construction, said Mr. Perrelli.

The industry hopes the auction will help kick-start the wind-energy sector, which already accounts for 70 percent of the total in all of Latin America.

Brazil is already a renewable energy leader in the field of ethanol. Hydropower’s growth is increasingly held up over environmental concerns. And growing concerns about Brazil’s deforestation, the effects of climate change and pressure to reduce the country’s carbon emissions also work in wind’s favor.

But Keith Hays, the research director for wind energy at the Cambridge, Mass.-based Emerging Energy Research, a consultant firm to companies on renewable energy, said that uncertainty surrounding the financing and profitability of wind projects in Brazil raises doubts over whether the country can reach its goals.

He attributed the widespread interest in the wind auction to a desire among foreign companies to gain a foothold in Brazil, which is Latin America’s biggest market.

But Mr. Hays said that the lack of a floor on the price the government will pay for energy — as is customary in European countries that are leaders in wind energy, like Germany and Spain — could limit the industry’s growth because the winning projects may prove to be unprofitable.

“Their track record doesn’t speak to a huge success,’’ Mr. Hays said.