A fire burns trees next to grazing land in the Amazon basin in Ze Doca, Brazil.(photo: Mario Tama/Getty)
30 August 19
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Brazilian firms owned by a top donor to President Donald Trump and
Senate Majority Leader Mitch McConnell are significantly responsible for
the ongoing destruction of the Amazon rainforest, carnage that has
developed into raging fires that have captivated global attention.
The companies have wrested control of land, deforested
it, and helped build a controversial highway to their new terminal in
the one-time jungle, all to facilitate the cultivation and export of
grain and soybeans. The shipping terminal at Miritituba, deep in the
Amazon in the Brazilian state of Pará, allows growers to load soybeans
on barges, which will then sail to a larger port before the cargo is
shipped around the world.
The Amazon terminal is run by Hidrovias do Brasil, a
company that is owned in large part by Blackstone, a major U.S.
investment firm. Another Blackstone company, Pátria Investimentos, owns
more than 50 percent of Hidrovias, while Blackstone itself directly owns
an additional roughly 10 percent stake. Blackstone co-founder and CEO
Stephen Schwarzman is a close ally of Trump and has donated millions of
dollars to McConnell in recent years.
“Blackstone is committed to responsible environmental
stewardship,” the company said in a statement. “This focus and
dedication is embedded in every investment decision we make and guides
how we conduct ourselves as operators. In this instance, while we do not
have operating control, we know the company has made a significant
reduction in overall carbon emissions through lower congestion and
allowed the more efficient flow of agricultural goods by Brazilian
farmers.”
The port and the highway have been deeply controversial in Brazil, and were subjects of a 2016 investigation by The Intercept Brasil. Hidrovias announced in early 2016
that it would soon begin exporting soybeans trucked from the state of
Mato Grosso along the B.R.-163 highway. The road was largely unpaved at
the time, but the company said it planned to continue improving and
developing it. In the spring of 2019, the government of Jair Bolsonaro,
elected in fall 2018, announced that Hidrovias would partner in the
privatization and development of hundreds of miles of the B.R.-163.
Developing the roadway itself causes deforestation, but, more
importantly, it helps make possible the broader transformation of the
Amazon from jungle to farmland.
The roadway, B.R. 163, has had a marked effect on
deforestation. After the devastation that began under the military
dictatorship and accelerated through the 1970s and ’80s, the rate of
deforestation slowed, as a coalition of Indigenous communities and other
advocates of sustaining the forest fought back against the
encroachment. The progress began turning back in 2014, as political
tides shifted right and global commodity prices climbed. Deforestation
began to truly spike again after the
soft coup that ousted President Dilma Rousseff of the Workers’ Party in
2016. The right-wing government that seized power named soy
mogul Blairo Maggi, a former governor of Mato Grosso, as minister of
agriculture.
Yet even as deforestation had been slowing prior to
the coup, the area around the highway was being destroyed. “Every year
between 2004 and 2013 — except 2005 — while deforestation in Amazonia as
a whole fell, it increased in the region around the B.R.-163,” the
Financial Times reported in September 2017.
That sparked pushback from Indigenous defenders of the Amazon. In
March, Hidrovias admitted that its business had been slowed by
increasing blockades on B.R. 163, as people put their bodies in front of
the destruction. Still, the company is pushing forward. Hidrovios
recently said that, thanks to heavy investment, it planned to double its grain shipping capacity to 13 million tons.
The Amazon, where a record number of fires have been
raging, is the world’s largest rainforest. It absorbs a significant
amount of carbon dioxide, a major contributor to the climate crisis. The
Amazon is so dense in vegetation that it produces something like a
fifth of the world’s oxygen supply. The moisture that evaporates from
the Amazon is important form farmlands not just in South America, but
also in the U.S. Midwest, where it falls to the earth as rain.
Protection of the Amazon, 60 percent of which is in Brazil, is crucial
to the continued existence of civilization as we know it.
The effort to transform the Amazon from a rainforest
into a source of agribusiness revenue is central to the conflict,
and linked to the fires raging out of control today. The leading edge of
the invasion of the jungle is being cut by grileiros, or
“land-grabbers,” who operate outside the law with chainsaws. The
grileiros then sell the newly cleared land to agribusiness concerns,
whose harvest is driven on the highway to the terminal, before being
exported. Bolsonaro has long called for the Amazon to be turned over to
agribusiness, and has rapidly defanged agencies responsible for
protecting it, and empowered agribusiness leaders intent on clearing the
forest. The land-grabbers have become emboldened.
“With Bolsonaro, the invasions are worse and will
continue to get worse,” Francisco Umanari, a 42-year-old Apurinã chief,
told Alexander Zaitchik, for a recent story in The Intercept.
“His project for the Amazon is agribusiness. Unless he is stopped,
he’ll run over our rights and allow a giant invasion of the forest. The
land grabs are not new, but it’s become a question of life and death.”
Fires in the Amazon have been producing devastation
described as unprecedented, many of them lit by farmers and others
looking to clear land for cultivation or grazing. Bolsonaro initially dismissed the fires as unworthy of serious attention. Several weeks ago, Bolsonaro fired a chief government scientist for
a report on the rapid escalation of deforestation under Bolsonaro’s
administration, claiming that the numbers were fabricated.
Beginning with the military dictatorship in Brazil,
when agribusiness was fully empowered, roughly a fifth of the jungle was
destroyed by the mid-2000s. If the Amazon loses another fifth of its
mass, it is at risk of a phenomenon known as dieback, where the forest becomes so dry that a vicious, cascading cycle takes over, and it becomes, as Zaitchik writes, “beyond the reach of any subsequent human intervention or regret.”
Schwarzman, a founder of Blackstone, owns roughly a
fifth of the company, making him one of the world’s richest men. In
2018, he was paid at least $568 million, which was, in fact, a drop from
the $786 million he made the year before. He has been generous toward
McConnell and Trump with that wealth. In 2016, he gave $2.5 million
to the Senate Leadership Fund, McConnell’s Super PAC and put Jim
Breyer, McConnell’s billionaire brother-in-law, on the board of Blackstone. Two years later, Schwarzman kicked in $8 million to McConnell’s Super PAC.
Blackstone employees have given well over $10 million
to McConnell and his Super PAC over the years, making them the biggest
source of direct financing over McConnell’s career. McConnell’s Senate campaign declined to comment.
Schwarzman is a close friend and adviser to Trump, and served as the chair of his Strategic and Policy Forum until it fell apart in the wake of the Charlottesville neo-Nazi rally, in which Trump famously praised
“very fine people, on both sides.” In December 2017, as the final
details of the GOP tax cut were being ironed out, Schwarzman hosted a $100,000-a-plate fundraiser for Trump.
Some of the president’s dinner companions complained about the tax
bill, and days later, Trump slashed the top percentage rate in the final
package from 39.6 to 37.
In recent months, the Sackler family, whose members
founded and own the pharmaceutical company Purdue Pharma, have become
pariahs for their role in facilitating the opioid crisis and the deaths
of tens of thousands of people.
Schwarzman’s contributions to the
destruction of the Amazon, which stands between humanity and an
uninhabitable planet, may ultimately render him as socially untouchable
as the Sacklers, given the scale of the fallout from the destruction of
the rainforest.
In defense of the project, a Blackstone spokesperson
noted that it had been approved by the International Finance
Corporation, an affiliate of the World Bank, and that the IFC had
determined that the project would, in fact, reduce carbon
emissions. Blackstone also forwarded a statement that it credited to
Hidrovias, which also emphasized the support of the IFC:
Hidrovias has always worked within the highest Environmental, Social and Governance (“ESG”) standards, constantly evaluated by audits from international multilateral agencies, such as the World Bank – IFC (International Finance Corporation). In addition, Hidrovias maintains all the environmental licenses required by the competent authorities.
The IFC has financed some of the world’s most environmentally destructive projects,
so its endorsement in itself is not particularly persuasive. But even
on its own terms, the IFC’s study of the Blackstone project calls the
project’s sustainability into question. Transporting soy or grain by
waterway is indeed a less carbon-intensive method of transport, the IFC correctly noted in its report.
But, it went on, that assessment doesn’t take into account the reality
that “the construction of the Miritituba port, close to still-intact
areas of the Amazon forest, is likely to lower transport costs for
farmers and thereby accelerate conversion of natural habitats into
agricultural areas, particularly for soy production.”
The project is OK, the bank argued, because Hidrovias
and its clients can be trusted to be responsible, and that “the
Miritituba port is being purpose-built to handle soy traded only by
responsible traders who are sensitive to the preservation of natural
habitats.” The bank assured that “100% of the company’s transport
capacity in the North System is contracted to large trading companies,
which observe high levels of governance and abide by the Amazon Soy
Moratorium. The Moratorium, which prohibits purchasing soy produced on
illegally deforested lands, was originally negotiated in 2006 between
the big traders, Greenpeace, and Brazilian authorities. It has been
renewed on a yearly basis since then.”
The moratorium, however, is only as strong as the
government’s ability to monitor it. Proving that soy was grown on
illegally deforested lands is highly difficult, as land-grabbers move
quickly to clear forest and sell the newly cleared land to ranchers or
agribusiness operators who quickly put it into cultivation and later
claim that they had no way of knowing it was illegally deforested. The
scheme also presumes that the government is interested in regulating
agribusiness; the Bolsonaro administration has been quite explicit that
it is not interested in doing so, putting top agribusiness officials in
key posts, while defunding regulatory agencies.
And even if it were somehow true that all of the soy
shipped from the Hidrovias port met all the requirements of the
moratorium, commodity markets are fluid. A new port for the big traders
eases congestion and lowers transportation costs elsewhere for smaller
traders, thereby encouraging more development and more cultivation. (The
IFC noted that Hidrovias promised to watch its soy clients closely:
“HDB will establish and maintain internal procedures to review clients’
compliance with all provisions of Amazon Soy Moratorium or any other
relevant legal requirements aimed at preventing trade in soy produced in
illegally deforested areas. If the purpose of the port or the mix of
HDB’s clients changes, the company will advise IFC of such changes and
may be required to undertake further due diligence to ensure that these
do not lead to undesirable indirect impacts.”)
The final justification the IFC made for the project
comes down to incrementalism. Other development is also happening, the
bank noted, so this single port can only cause so much harm. It
concluded that “the port’s incremental contribution to the overall
reduction of transport costs is judged to be marginal, given the myriad
other factors (paving of B.R.-163, installation of other ports in
Miritituba district, etc.) that are contributing to development in the
region.” Bolsonaro has plans to pave significantly more roads in the Amazon that have otherwise been impassable much of the year, a project made feasible by international financing.
Of course, Hidrovias is also involved in paving
B.R.-163 and other development projects in the region. Those projects,
such as the paving of the highway, have additional indirect — though
entirely predictable — consequences, as they spur side roads that make
previously difficult-to-reach areas of the Amazon accessible for mining,
logging, or further deforestation.
A Blackstone spokesperson noted that the fund only
owns 9.3 percent of Hidrovias. But that ignores the 55.8 percent of
Hidrovias that is owned by Pátria Investimentos. On Hidrovias’s website, Pátria
is described as a company “in partnership with Blackstone,” and it is
known in the financial industry to be a Blackstone company. A November
2018 article in Private Equity News about Bolsonaro’s election was headlined: “Blackstone’s Pátria: Brazilian Democracy is Not in Danger.”
It quoted the company’s chief economist assuring the
public that “descent into authoritarianism is exceedingly unlikely.”
That prediction has not borne out terribly well, but Blackstone appears
to remain a strong supporter of Bolsonaro. The Brazilian president
traveled to New York in May to be honored at a gala, which was sponsored
by Refinitiv — a company majority-owned by Blackstone.
or
plutocrats, this summer has gotten a bit scary. Two feared candidates
are rising. Trusted candidates are underperforming. The 2020
presidential election could turn out to be a real-life horror movie: A
Nightmare on Wall Street.
oe
Biden is ostensibly the candidate of the Democratic establishment. But
it was Elizabeth Warren—who’s built her career on trying to challenge
the status quo—who spent the weekend wowing party insiders.
