Jul 4 2025| Nº. 173

Editorial

On Monday, June 30, President Luiz Inácio Lula da Silva’s government formally asked Brazil’s Supreme Court (STF) to reinstate a decree raising the financial transactions tax (IOF). The administration argues that Congress overstepped its constitutional bounds by repealing the decree last week, costing the Treasury R$10 billion this year and up to R$20 billion in 2026. Lula defended the move, saying in an interview that “if I don’t go to the Supreme Court, I can’t govern this country anymore,” and insisted the executive had acted within its rights. Finance Minister Fernando Haddad also maintains that the IOF hike is vital to balancing the budget and avoiding new spending cuts. Congress, however, has pushed back hard, accusing Lula of conspiring with the STF to bypass the legislature and opposing any new tax increases without spending reforms even as legislators themselves are loathe to give up their own ability to allocate billions in additional spending.

The result has been the apparent start to the 2026 presidential campaign, with Lula and Haddad framing the IOF adjustment not as a tax increase but as “tax justice,” aimed at making the rich pay their fair share to preserve funding for education and health. A flood of AI-produced videos on social media depicts Speaker of the House Hugo Motta as a defender of elite interests, underscoring what is the most contentious moment yet between the executive and legislative branches in Lula’s third term thus far. Gleisi Hoffmann, the Minister of Institutional Relations, sought to cool things down on Wednesday by calling on supporters to stop the “personal and unqualified attacks” on Motta. For their part, Lula and Haddad have publicly denied any permanent rupture with Congress, expressing their eagerness to resume negotiations despite lingering mistrust over the legislature’s ability to deliver on deal struck with the president’s office.

As tensions with Congress simmered at home, Lula traveled to Buenos Aires on Wednesday, July 2 to participate in the Mercosul summit, where Brazil officially took over the bloc’s rotating presidency. Lula met briefly with Argentina’s current president, Javier Milei—who has criticized him in harshly personal terms—and used the summit to highlight Mercosul’s importance in shielding member countries from global trade conflicts. On Thursday, July 3 after reportedly much debate among his inner circle, Lula met with former Argentine president Cristina Kirchner, who is under house arrest following a corruption conviction. Lula’s show of solidarity with a friendly former chief executive was, however, a footnote to the larger objectives of his trip, which included presenting a newly announced free trade agreement with the European Free Trade Association and advancing the long-delayed Mercosul-European Union pact, which faces opposition from commercial interests in some European countries, especially France. By advancing this regional agenda amid domestic political challenges, Lula seeks to strengthen Brazil’s leadership role in South America and project stability despite the heated struggles unfolding in Brasília.

Highlights

• Billion-dollar embezzlement. A hacker attack on the computer system in which the Brazilian Central Bank participates resulted in the embezzlement of R$1 billion (more than US$184 million) this Monday, June 30. The funds were in the system of the private company C&M Software, which manages the exchange of information between financial institutions linked to Pix, an express mode of virtual transactions used by all Brazilians who have bank accounts. The largest cyber theft in Brazilian history is being used by the far right as evidence that even robust information systems are vulnerable in the country, which could also apply to the electronic voting system used in elections. The voting machines, however, are not connected to the internet.

• Sick leave. Former President Jair Bolsonaro will be on “complete rest” until at least the end of July due to health problems. According to his relatives, he has been experiencing bouts of hiccups and vomiting, which are believed to be linked to the various surgeries he has undergone since he was attacked with a knife at one of his 2018 campaign rallies. The incident ended up blocking Bolsonaro’s entire public agenda at a time when he was trying to reorganize his support base to face the lawsuits he is facing at the Supreme Court, the main one of which concerns the failed coup attempt in 2022/2023.

• Audience failure. The cancellation of Bolsonaro’s public agenda was announced shortly after he had suffered a major failure: only 12,000 people attended a rally called by the far right, with the presence of Bolsonaro himself and other leaders from the sector that was held in São Paulo on Sunday, June 29 on Avenida Paulista. During the event, the former president asked his supporters to vote for far-right federal congressional representatives and senators in the 2026 elections, so that the sector can increase its power in the country and compete with the Presidency of the Republic and the Judiciary.

• Climate change. Participants in the June Climate Meetings in Bonn, Germany, decided to include references to the Afro-descendant population in two of their three documents. This is the first time that this has happened in a draft of a United Nations climate convention, especially in a preparatory meeting for COP30, which will take place in November in Brazil. The documents mention the special attention that should be given to Afro-descendants and Indigenous peoples, among other groups, in just transition policies.

News from ABO and social organizations and movements:

Decoration. The president of the WBO Board of Directors, James N. Green, received the Order of Rio Branco medal this week at the Itamaraty Palace in Brasília. The decoration, named after the patron saint of Brazilian diplomacy, was created in 1963 to “distinguish meritorious services and civic virtues, and to encourage the practice of actions and deeds worthy of honorable mention.” Green is professor emeritus of Brazilian history at Brown University in Providence, Rhode Island, and has written several books on Brazilian reality throughout a career marked by both academic research and activism in favor of human rights and the international defense of democracy.

Racism. The Europa Brazil Office, the arm of the Brazil Office Alliance in Europe, held a side event on racism in Brazil on Friday, June 27 at the United Nations headquarters in Geneva, together with partner organizations. The debate revolved around the conclusions of the visit to Brazil by the UN Special Rapporteur on Contemporary Forms of Racial Discrimination, Racism, Xenophobia and Related Intolerance. The rapporteur himself, Ashwini K.P., participated in the event, together with Amanda Pankará, UN Indigenous Fellow of the Office of the High Commissioner on Human Rights (OHCHR), and Luce Ahouangnimon, senior advisor to the Association for the Prevention of Torture. The panel was moderated by Paulo Lugon Arantes, coordinator of the ABO Europe Program.

BRICS. The Brazil Office is participating in the 3rd Cycle of Discussions “Democracy, Equity and Confronting Authoritarianism” in the Immersion Workshop “Crisis of Multilateralism and the Paths of the Global South” on July 4 and 5 in Rio de Janeiro. The activity will take place at the Ação da Cidadania Cultural Center, in the city center, parallel to the BRICS summit.

Gaza. The Dom Paulo Evaristo Arns Human Rights Defense Commission published a statement this week expressing “its strongest repudiation of all acts of violence committed by the extremist government of the State of Israel, which uses its security forces to harass defenseless civilian populations, seeking to suppress their means of subsistence” in the Gaza Strip. The Commission also says that “the cruel and violent acts that, according to decisions of the International Court of Justice, may constitute crimes against humanity, among other very serious violations of International Law, must cease immediately.”

Feature Article

Unlocking Climate Finance through Forests: Brazil, BRICS, and the Road to COP30 

By Lycia Brasil*

In a world shaped by geopolitical tensions, structural inequalities, and accelerating environmental degradation, the climate crisis is advancing, alongside the urgent need for effective solutions. While technical options are widely known, their global implementation is hindered by a persistent financing gap. One of the most critical shortfalls lies exactly where some of the most promising climate solutions exist: tropical forests.

The BRICS, currently composed of Brazil, Russia, India, China, South Africa, Indonesia, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, brings together many of the world’s most biodiverse countries. Collectively, they hold around 43% of global forests and 42.8% of forest growth stock. Despite internal diversity, the group faces shared challenges and opportunities in forest-related ecosystem conservation, sustainable land management, and strategic use of natural capital.

Although there is not yet a consolidated estimate for the expanded BRICS, global data already point to the group’s immense potential in advancing Natural Climate Solutions (NCS) and Nature-based Solutions (NbS). Brazil and Indonesia alone account for more than 40% of global NCS mitigation potential, equivalent to 2.7 billion tons of CO₂ per year. Brazil represents about 15% of this total, two-thirds of which stem from avoided deforestation. Indonesia offers a comparable share, with strong contributions from forest and wetland preservation. India accounts for about 4%, with notable efforts in forest restoration and regenerative agriculture. In recent years, China has also emerged as a major hub for afforestation solutions through initiatives like the Great Green Wall. 

Yet, forest finance remains woefully inadequate. Just USD 2.2 billion is invested annually in forest-related mitigation and adaptation, less than 1% of what is needed by 2050. This is striking, considering that each ton of CO₂ avoided or removed via forest action generates an estimated USD 100–250 in environmental and economic value.

In this context, recent BRICS initiatives under Brazil’s 2025 presidency have gained unprecedented relevance. For the first time, financing for forest conservation has been formally incorporated into the bloc’s  official documents. At the 11th Meeting of Environment Ministers, this year, BRICS formally endorsed the Tropical Forests Forever Facility (TFFF), a Brazilian-proposed mechanism designed to attract private investment through a financial model that rewards countries for preserving forests. The work plan, approved at the BRICS Disaster Management Ministerial meeting this year, outlined strategic goals to mainstream NbS into BRICS policy frameworks and develop scalable climate finance models. The foreign ministers’ declaration reinforced political support for the TFFF and the valuation of ecosystem services, stressing the need for accessible and effective financial instruments for the Global South. The initiative United for Our Forests, also led by Brazil, was highlighted as a platform for advancing global efforts related to conserving, managing, and restoring vital tropical ecosystems as well.

Complementary actions include the BRICS Partnership for Land Restoration, which promotes exchanges on recovery of degraded areas and sustainable agriculture. Additionally, the 9th BRICS Industry Ministers’ Meeting also held in 2025, pledged to improve resource efficiency and advance circular economy practices. While not exclusively about forests, these initiatives impact forest conservation by shaping production systems and supply chains.

Despite this progress, BRICS still lacks a robust institutional framework for forest governance. There is no permanent technical body, shared targets, or coordinated funding strategy. Existing efforts remain fragmented and vulnerable to political cycles.

Here, the New Development Bank (NDB) has the potential to play a transformative role. Although 40% of its current portfolio is classified as green, the bank still lacks dedicated instruments for forest conservation or the bioeconomy. Since 2015, it has allocated USD 2.4 billion to climate-related projects, more than any other multilateral bank to national development institutions. However, to expand its impact, the NDB must reposition itself as a mission-driven institution, focused on enabling ecological transitions across the Global South, including through promoting NbS.

This will involve boosting technical capacity, building local partnerships, and integrating tools like the TFFF into its architecture. Innovative financial instruments such as green and sustainable development bonds, debt-for-nature swaps, and payments for ecosystem services offer viable pathways. Institutions like the Inter-American Development Bank (IDB), through its Amazonia Forever initiative, have shown that conservation, finance, and sustainable development can work hand in hand.

The forest agenda presents a unique opportunity for political convergence within BRICS. It connects domestic priorities such as water, food, and energy security, with international commitments on climate and biodiversity, and does so with relatively low political polarization compared to issues like transition away from fossil fuels or alternative payment systems. It is an agenda focused on implementation, with strong potential for cooperation among member states.

COP30, to be held for the first time in the Amazon, offers a symbolic and strategic opportunity to elevate the role of nature in global climate negotiations and the role of both climate and nature within BRICS. Brazil’s COP30 presidency has consistently signaled its ambitions: across four official letters, it has emphasized forest protection, called for an end to deforestation by 2030, and positioned forest governance as a pillar of the COP30 Action Agenda. These messages reflect growing political ambition, portraying forests not just as environmental assets, but as foundations for international climate cooperation.

This vision aligns with Brazil’s current efforts at home to include the NbS and the bioeconomy (including forest-related) as a central pillar of its Ecological Transformation Plan, as well as with the country’s leadership of the BRICS in 2025, under the theme “Strengthening Global South Cooperation for More Inclusive and Sustainable Governance, through which  Brazil hopes to secure to a  more  coordinated and ambitious position at COP30, reaffirming its legitimacy as a collective voice of the Global South. In this dual role—as COP30 host and BRICS president—Brazil is uniquely positioned to help build consensus on climate finance, with tropical forests emerging as a powerful axis for cooperation.

By aligning national strategies with multilateral processes, Brazil can transform its natural capital into a diplomatic, economic, and climate leadership asset. Strengthening the forest agenda within BRICS and consolidating it at COP30 will be essential to turning commitments into action and to reaffirming the role of tropical forests as vital infrastructure for the planet’s future.

*Lycia Brasil works as an international cooperation advisor at the Igarapé Institute and holds a master’s in Environmental Management and Policy.

Feature articles express the opinions of the author and do not necessarily reflect the opinions of the editors or WBO.