The week's news from Brazil

Last week the government agreed to extend the top tax rate at 27.5% for the next two years without concessions to higher-rate tax payers. The move extends an earlier temporary amendment, first approved under the previous government, which shows signs of becoming more or less permanent.

Otherwise it's been a fairly quiet week on the political front, with Lula and his entourage making a tour of Middle Eastern states, the first such tour by a Brazilian leader since the 1870s (in the imperial era). Lula visited Syria, where he called on Israel to give back the Golan Heights and for progress on Palestinian statehood, followed by a stop in Lebanon. His visit then took him to the United Arab Emirates, then Egypt. He will call in on Libya on his way back to Brazil later this week. The object of the visit has been to increase Brazil's prominence on the world stage and to re-order world economic relations - an ambitious agenda, which was at least supported by the signing of some new bilateral trade deals in the region.

Brazil's industrial output shrank in October following three months of growth. The slowdown is attributed to the economy catching up with itself, and further growth is expected in the months to come as interest rates and inflation are forecast to continue their downward trend. A survey of Brazilians shows that 44% reckon unemployment is worse under Lula, while 52% of Brazilians are not expecting to receive their cherished "13th salary" this month. In spite of the unemployment figures and the lack of money, 73% believe that 2004 will be better for them. A good sign.

In Sуo Paulo this week, neo-nazi skinheads forced two youths to jump from a moving train. The two youths were dressed in punk clothing and wore mohawks. One remains in a profound coma at risk of losing his life, while the other had his arm amputated above the elbow.

And in central Rio, the continuing dispute between police and camelЇs (street vendors, often selling pirated CDs and software) claimed its first life, as a policeman was shot in the face while attempting to scatter the vendors on the street. In spite of the campaign, which is supported by established merchants, it seems pretty much 'business-as-usual' on the streets, from my own observations.

The Staheli case is still in the news, although the lack of new information has slowed down the reportage. A new study of the weapon found in the house - actually a kind of war axe (with no blade) - showed no evidence of blood, leading police to think it was not used. This axe was a souvenir the 10-year-old boy had bought in Scotland during a family holiday. It is curious that he had showed the axe to young friends of the family who had been over the night before, and that it was found in the daughter's room despite the boy saying it had been secured in his wardrobe the night before. The state Secretary of Public Safety said he found it strange that there were no signs of entrance or exit from the house and yet the weapon had not been found. It may be that the axe belonged to a "crossed-axe" display and that another axe is missing. Police are interested in interviewing more of the children's friends, including their daughter's "boyfriend", now reported as being 14 and having been present in the house the night before. Today police will be conducting a reconstruction at the crime scene. The older children are still prohibited from leaving Brazil.

Futebol - the race for the bottom continues hotly contested. By losing while the others tied for last position at least managed a draw, Bahia claimed the lanterna from Ponte Preta (who drew 1-1 with Flamengo at a match I attended). There are still five teams in contention for relegation, including local side Fluminense, who lost 5-2 to champions Cruzeiro in Belo Horizonte, much to the joy of the handful of Flamengo supporters in attendance at the cavernous Maracanу. Next weekend's matches will be decisive.