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Roberto Castello Branco to lead Brazil’s Petrobras

November 23, 2018

Brazilian President-elect Jair Bolsonaro’s transformation from economic nationalist to free-market champion came full circle this week when he picked free-market economist Roberto Castello Branco to head state-controlled oil giant Petrobras perhaps his most significant personnel choice beyond his immediate Cabinet.

The nomination of the University of Chicago-educated Mr. Castello Branco, announced Monday by Bolsonaro economic czar Paulo Guedes, seemingly paves the way for the privatization of Brazil’s largest corporation.

The future of the oil company is a burning political question both in Brazil and beyond, as Petrobras was at the center of a corruption and influence-buying scandal that has brought down politicians and government officials in countries across South America. Mr. Castello Branco will bring a distinct record and point of view to his new position.

At the height of a truckers’ strike over fuel prices that had threatened to cripple the country’s economy in early June, the economist had written in a Folha de S. Paulo op-ed that “one of the lessons of this crisis is the urgent need to privatize” Petrobras and other state-run companies.

“We need various private companies to compete in the fuel market,” Mr. Castello Branco insisted.

His comments proved popular with markets and many common Brazilians fed up with the oil giant’s role in the massive Car Wash corruption scandal, during which its officials admitted of having paid as much as $3 billion in bribes and kickbacks.

While he is skeptical about how realistic an all-out Petrobras privatization might be, less state control in the leading-edge natural-gas market would be beneficial to all sides, said William Clavijo Vitto of the Energy Economy Group at Rio de Janeiro Federal University.

“The problem is that Petrobras continues to exercise a monopoly, and that ends up discouraging investment decisions by multinational companies,” Mr. Clavijo Vitto told The Washington Times in an interview.

Nominated in 2015 by then-President Dilma Rousseff, who a year later was impeached and removed from office, Mr. Castello Branco had briefly served on the Petrobras board but left after leveling harsh criticism over the handling of the economy by the left-leaning Rousseff administration.

Market observers had largely expected current Petrobras head Ivan Monteiro would continue in the post even after Mr. Bolsonaro’s Jan. 1 inauguration, and the nomination adds to a number of unexpected personnel decisions by the incoming president.

Last week, he had announced Ernesto Araujo, a career diplomat largely unknown outside of Brasilia’s policy circles, as his foreign minister.

And in a surprise move after his Oct. 28 runoff victory, prominent judge and Car Wash investigator Sergio Moro had been among the first to join Mr. Bolsonaro’s Cabinet as justice minister.

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