www.forbes.com Reuters, 03.14.03, 7:30 PM ET

BRASILIA, Brazil, March 14 (Reuters) - Brazil's Defense Minister Jose Viegas said on Friday the country's tender to purchase up to 12 supersonic fighter jets for $700 million will restart next year. One of the first decisions by the new centre-left government of President Luiz Inacio Lula da Silva when it was inaugurated in January was to suspend the purchase of the fighters in order to devote more funds to fighting poverty. But Viegas told Reuters in an interview on Friday that "next year the process will start again," to buy the fighters. There had been some speculation that the purchase could be shelved for a longer time than next year because of Brazil's tight public finances. Viegas said that the offers already made by heavyweight bidders such as Lockheed Martin Corp.(nyse: LMT - news - people), Sweden's Saab <SAABb.ST> and BAE Systems Plc <BA.L>, are still valid. "The things which were already presented are valid, the work already done is valid," Viegas said. "We will invite the participants to represent their offers. After a year there may be technological developments, there could be developments on off-sets." Viegas said just the companies that had passed through to the second stage of the bidding would be invited to make their offers again. They are Lockheed with its F-16 fighter, Sweden's Saab and BAE with Saab's Gripen jet and a joint offer by Brazil's Embraer <EMBR4.SA> (nyse: ERJ - news - people) and France's Dassault Aviation SA <AVMD.PA> with a special version of the Mirage strike plane. Russia's Sukhoi is bidding with its Su-35 "Super Flanker" fighter.

www.brazzil.com John Fitzgerald

Lula's party, the PT, cannot re-nationalize those areas and companies privatized during the Fernando Henrique Cardoso administrations, but it is determined to retain state control even if this means undermining them. The prime targets are the regulatory watchdogs set up to prevent abuse and formation of monopolies.

When the idea of setting up Petrobras was put forward in 1951 (it was called then Petrobrás, with an accent) the slogan "O petróleo é nosso" (the petrol is ours) was used by its proponents to persuade the Brazilian people that the state should have a monopoly on the right to explore and exploit Brazil's oil reserves. When the company was partially privatized in 2000 and lost its monopoly, the then director of the national petroleum agency (ANP) announced "o petróleo é vosso" (the petrol is yours).

This was a bit of an overstatement since the government had no intention of giving up its majority stake in a company, which is not only the biggest in Latin America but of strategic importance to the country. There is virtually no prospect of Petrobras being privatized in the near future. "O petróleo é deles" (the petrol is theirs) would have been more appropriate.

As events this week showed, the PT is still against privatization and sees Petrobras as an asset to be held onto at all costs. A row started after the ANP (Agência Nacional de Petróleo—National Oil Agency) issued an announcement on Tuesday March 11 stating that huge deposits of high quality oil, amounting to 1.9 billion barrels, had been discovered off the coast of Sergipe state.

This immediately triggered a run on Petrobras shares, with the common share jumping by almost 6.5 percent before falling back to end the day almost 4.5 percent higher. Although the PT radicals need no encouragement to see conspiracy behind any stock market activity they were secretly delighted when it subsequently emerged that, on the day before the announcement, there had been an unusually high amount of trading of Petrobras shares. According to the Estado de S. Paulo newspaper, US$22 million in business was done that day compared with a daily average of R$13 million in the previous three weeks. The Brazilian equivalent of the US Securities and Exchange Commission, the CVM, announced an investigation.

To make things more complicated, Petrobras itself issued a statement claiming that the ANP's statement had been "incorrect, confusing and wrong". The company said the ANP had based its statement on insufficient data and had given what could prove to be an exaggerated estimate of the oil reserves.

The PT leader in the Lower House of Congress said any announcement on the Petrobras find should have been left to the company. However, experts quoted in the press said the ANP had behaved correctly and wondered why Petrobras had not issued the information on Friday March 7, the day it provided the ANP with the information.

What a gift all this has proved to be, not just to the PT radicals but to the whole government, including President Luiz Inácio Lula da Silva, which likes neither the way Petrobras has been run recently nor the ANP. The mines and energy minister, Dilma Roussef, cleared her diary and headed off to Brasília for a meeting with Lula and his right-hand man, Jose Dirceu. We do not know what these three old comrades discussed, but we can be sure that their plans included ways of stripping the ANP's authority and further strengthening the government's hold on Petrobras.

Although the PT knows it cannot re-nationalize those areas and companies privatized during the Fernando Henrique Cardoso administrations, it is determined to retain state control even if this means undermining them. The prime targets are the regulatory watchdogs, which were set up to ensure that the newly privatized companies did not abuse their power and that monopolies did not emerge.

Eight such agencies were set up to regulate areas such as oil, energy, telecommunications, electricity etc. These bodies have the power to set tariffs and, more importantly, their members have fixed mandates. This means that the directors cannot be routinely fired when a new administration takes over. The PT does not like these agencies because it believes they have assumed powers which should be in the hands of the politicians.

The government has other priorities at the moment than changing the laws covering the regulatory bodies, so minister Roussef will have to grit her teeth and wait until the mandates run out before acting. In the case of the ANP director his mandate lasts until 2005. However, Mrs. Roussef was an arms quartermaster for left-wing guerrillas in her younger days and hardly seems the type to wait that long.

Pressure will start being applied not only to the ANP but the other regulators. ANATEL, the telecommunications watchdog has already been given notice by the communications minister, Miro Teixeira, that he and not it will assume responsibility for renewing concession contracts for fixed-line telephone services when the present contracts expire in 2006. The other agencies, such as ANEEL, which regulates the electrical energy sector, are also in the firing line.

As for Petrobras, one of the first moves by Lula's government was to change its board of directors and appoint a former PT senator as its chairman. Dirceu himself was even appointed a board member but stood down after the move was poorly received on the market place. For old-style nationalist types of the Left or Right Petrobras is still a symbol of the country and not just another oil company. One recalls the fuss in December 2000 when the company announced that it would change its name to Petrobrax. The hostility to such a minor change was such that Cardoso himself had to intervene and the name was dropped instantly.

Maybe the name will be changed again—this time to PTbras.

John Fitzpatrick is a Scottish journalist who first visited Brazil in 1987 and has lived in São Paulo since 1995. He writes on politics and finance and runs his own company, Celtic Comunicações—  www.celt.com.br, which specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at jf@celt.com.br

www.bernama.com.my March 15 , 2003 19:26PM
From Mokhtar Hussain

BRASILIA, March 15 (Bernama) -- Datuk Seri Dr Mahathir Mohamad will arrive in Brazil's capital city on Sunday for a four-day official visit to further enhance bilateral ties.

The Prime Minister, who is currently on two months' vacation abroad, will be arriving from the Manaus resort town in central Amazon with his wife Datin Seri Dr Siti Hasmah Mohd Ali.

Briefing Malaysian journalists, here, Deputy Foreign Minister Datuk Dr Leo Michael Toyad said Dr Mahathir's visit, his second since 1991, was at the invitation of the newly-elected President Luiz Inacio Lula da Silva.

Besides Dr Toyad, the 31-member delegation from Malaysia include Foreign Ministry Deputy Secretary-General Datuk Abd Aziz Mohammad, Malaysia's Ambassador to Brazil Ban Kat Meng and senior officials from the Prime Minister's Department and the Foreign Ministry.

According to Dr Toyad, Dr Mahathir and President Lula would discuss regional and international issues such as globalisation, terrorism, impending war on Iraq and bilateral trade between the two countries.

"It is also an opportunity to discuss with the new president issues relating to our relations with Brazil at international forums such as the World Trade Organisation (WTO) and the Group of 15 (G-15) developing countries.

"The two leaders may also talk on common issues such as Malaysia's experience in poverty eradication and tackling the financial crisis," he said.

Lula, 58, took office on Jan 1, 2003 after securing a 61 per cent vote in the presidential election in October last year. His victory had brought a new dream for the poor and marginalised as Lula himself was a former metal worker, who migrated from Brazil's impoverished northeast and worked as a shoeshine boy.

Dr Mahathir and Dr Siti Hasmah would also attend a luncheon hosted by the Brazilian President at his palace.

On bilateral trade, Malaysia is Brazil's biggest trading partner in Asean while Brazil is Malaysia's second largest in Latin America after Mexico.

Dr Toyad said the three main Malaysian investors in Brazil are Supemaxx Import Adora SA, which distributes rubber gloves and other rubber products, Abric SA, which manufactures seal for containers and trucks and Amaplac SA Ind. de Madires which is involved in the plywood industry, with a combined investment of about US$18.8 million.

Sugar, soyabean and recently military weapons make up about 50 per cent of Malaysia's total imports from Brazil, he said.

Malaysia purchased its Artillery Saturation Rocket System from Avibras Aerospacial in October last year.

He said Malaysia's major exports to Brazil include electronic, television and radio parts, semiconductors and computers together with its components.

On Tuesday, Dr Mahathir is expected to visit a commercial and military aircraft manufacturer and Avibras Aerospacial, the manufacturer of air-to- ground and surface weapon systems in San Jose, near Sao Paolo.

From there, Dr Mahathir will fly to Rio de Janeiro before leaving for Kuala Lumpur the next day.

Brazil, located in the central eastern of South America, is about 26 times bigger than Malaysia with an estimated population of 176 million.

-- BERNAMA

news.ft.com By Richard Lapper and Raymond Colitt in Brasília Published: March 14 2003 23:01 | Last Updated: March 14 2003 23:01

War in the Middle East could increase economic isolationism and set back free trade negotiations, Brazil's foreign minister has warned.

Celso Amorim told the Financial Times: "Once you have entered into a period of instability it becomes more difficult. People tend to become more defensive and more nationalistic. It doesn't augur well."

He suggested that the rift over Iraq between the US and some European countries would "inevitably affect trade negotiations", in reference to the current Doha round of World Trade Organisation talks.

Such a setback would be particularly damaging because President Luiz Inácio Lula da Silva has begun to abandon his longstanding opposition to the US-led Free Trade Area of the Americas.

The success of Brazil's trade negotiations with the US and Europe depends largely on progress at the WTO.

"In a politically unstable world it is more difficult to make political and economic concessions," said Mr Amorim. "There is no feeling of rejoicing about this. We need US leadership for many things we need to do in this world."

Brazil has offered to help Colombia's US-supported government to combat growing drug-fuelled violence. Mr Amorim said Brazil had proposed an arms embargo to be monitored by the United Nations Security Council, denying weapons to leftwing guerrillas and rightwing paramilitaries.

But Brazil would not accept Colombian requests to classify clandestine leftwing groups as "terrorists", suggesting this would end all possibilities for negotiation. Mr Amorim said it was important to keep communicating.

He welcomed US acceptance of a multilateral approach to the political crisis in Venezuela, where Brazil is leading a group of six "friends", along with the US, Spain, Chile, Mexico and Portugal. He said prospects for a negotiated settlement to the political crisis in Venezuela had improved since the end of the general strike.

www.enn.com 13 March 2003 By Reuters

BRASILIA, Brazil — Brazilian environmental authorities reinforced the fight against spreading forest fires in the Amazon state of Roraima Wednesday, which has prompted fears of a repeat of the damage caused by a devastating 1998 blaze.

The government's environmental agency Ibama said two more helicopters and 55 extra firefighters have been dispatched to the northern Amazon state, bringing the total number of firefighters in the state to 500.

Environment Minister Marina Silva met with environmental authorities from the Amazon region on Wednesday and said the government was working flat out to prevent a repeat of 1998, when 185 square miles of forest was destroyed.

About 23 square miles has been destroyed so far in the current fires. "We are working with about 500 men, 5 helicopters, and 15 vehicles to prevent that (1998) from happening," Silva said.

Up to 30 percent of the world's animal and plant life is found only in the Amazon, which is larger than western Europe.

Fires typically spread out across the remote northern state of Roraima — which borders on Venezuela — during this time of year as farmers burn their land in preparation for the sowing period. Fighting fires in the state is made harder by the fact that forest is interspersed with mountain savanna which burns more easily. An unusually dry period this year has led to more fires than normal burning out of control.

Paulo Cesar Mendes Ramos, head of Ibama's national fire prevention center, said, "If we have a prolonged period of drought things could become serious." Without rain soon, the fires could become as large as in 1998, he said.

In the last week, nearly 400 so-called "hot spots" were detected in the state, indicating danger of fires, including in special conservation and Indian areas. Two towns have been put on alert. Another huge forest fire blazed in recent weeks in Roraima's neighboring state, Amazonas.