Explaining Brazil

Humanity has entered what scientists are calling an “era of water bankruptcy.” According to the United Nations University, many critical water systems around the world are so overused — through depletion, overallocation, land and soil degradation, deforestation, and pollution, all compounded by climate change — that they can no longer be restored. 

At the same time, global warming and the spread of artificial intelligence promise to dramatically increase demand for water and clean energy across a wide range of countries.

In this complex scenario, Brazil is in a privileged position, being home to more than 12 percent of the world’s fresh water, and an electricity matrix that is more than 55 percent hydropower-based. But does an abundance of river basins truly translate into water security?

As it stands, Brazil is in a relatively comfortable position to ensure water supply for homes, industries, and crops, as well as the functioning of its hydropower plants. 

Water availability is also a crucial asset for the country on the international stage. When agribusiness exports dozens of millions of tons of soy each year, it is also indirectly exporting the water used in that process. Half of the water consumed in Brazil goes to irrigation.

When federal and local governments court foreign investment to host data centers, they are offering the water used in power generation and in the cooling systems those facilities require. Last week, the lower house even approved a bill granting tax incentives to the sector. The text will still be voted on in the Senate.

But experts warn of risks of chronic water shortages in several parts of Brazil over the coming decades, considering projections of economic and demographic growth, as well as the effects of climate change.
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Advances in oil exploration and the construction of railways and highways in recent years have shown that, when large infrastructure projects clash with matters of Amazon preservation, the Brazilian government of Luiz Inácio Lula da Silva tends to favor the former. 
Some call this progress; others see it as ultimately self-defeating in the face of the ongoing climate emergency. But this week, the usual script of Brazilian developmentalism trumping environmentalism was turned on its head, and on the Amazonian Tapajós River in Pará state, environmentalist forces prevailed.

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190,000 points. After a string of record highs that have been piling up since mid-January, the Ibovespa — the benchmark index of São Paulo’s stock exchange, the B3 — surpassed this historic threshold during Wednesday, February 11, closing the day just shy of it.

Financial trading volume totaled BRL 38.6 billion, or about USD 7.7 billion. With this result, and only six weeks into the year, Ibovespa has already posted gains of over 18% in 2026.

To give a sense of the scale, stock exchange data on foreign investor flows show a net inflow of BRL 26.3 billion in January alone — exceeding the surplus recorded for the entire year of 2025.

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Brasília is back to work — and the new legislative year has opened with all the familiar rituals: lofty speeches about stability, institutional balance, and dialogue, plus promises of an ambitious agenda ahead.
But this is no ordinary year.
Brazil is heading into a high-stakes election in October. Voters will choose a president, renew the entire House, elect two-thirds of the Senate, pick 27 governors, and decide the fate of hundreds of state legislators. From now on, everything in Brasília will be filtered through the election calendar — what Congress dares to vote on, what the government is willing to push forward, and even how and when Supreme Court justices make their moves.
And looming over all of it is a growing source of anxiety.
Hovering above the capital is the Banco Master case — an investigation lawmakers privately describe as unpredictable, corrosive, and potentially explosive. We touched on it last week, but its shadow is only getting longer.
Since Operation Car Wash erupted in 2014, Congress has not entered an election year under such a serious risk of being overwhelmed by corruption allegations — the kind that can torpedo campaigns, reshape alliances, and, in some cases, lead to criminal consequences.

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As the saying goes, the calm comes before the storm. In Brazil’s Supreme Court, the current crisis came after a period of glory and renown.
In September 2025, the Supreme Court made history and became a global reference. Breaking with Brazil’s long tradition of impunity for military interference in politics, the court analyzed a wealth of evidence and convicted former President Jair Bolsonaro and top-ranking military officers for attempting a coup after losing the 2022 election.
That same month, Edson Fachin took office as the Supreme Court Chief Justice and quickly expressed his desire to create a code of conduct for members of the top court. Apparent conflicts of interest involving justices are common — and preventing them is also a way to strengthen the rule of law.
In December, however, the court was pulled into the swirling scandal involving Banco Master — a mid-sized lender that was liquidated amid suspicions of fraud involving billions of reais. The bank’s owner, Daniel Vorcaro, has ties to state governors, lawmakers, high-ranking executive personnel and justices, putting many people under suspicion across the political spectrum.
Late last year, the press revealed that the wife of Justice Alexandre de Moraes had signed a three-year contract with Banco Master worth BRL 129 million (USD 25 million) to work as a lawyer for the bank. The contract's value raised eyebrows.
Soon after, it became public that Justice Dias Toffoli, the rapporteur of the Master case, had recently traveled on a private jet to a football match with the lawyer of one of the bank’s former executives. That alone would already be inappropriate. But from there, the problems only piled up.

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