By Maria Carolina Marcello

BRASILIA (Reuters) – Brazilian President Luiz Inacio Lula da Silva has suffered a major defeat over important legislation protecting the Amazon rainforest and the Indigenous people who live in it, and he has had to cut his losses in a conservative Congress.

Lawmakers backed by the powerful farm lobby in this agricultural powerhouse voted 283-155 on Tuesday night to pass a bill that would limit the recognition of new Indigenous reservations, a decision seen by environmentalists and human rights advocates as a setback.

On Wednesday, the minority Lula government faces another key vote in the chamber that will reduce the powers of the ministries of the environment and of Indigenous affairs.

But this time, Lula decided to negotiate passage of the temporary decree to ensure its approval before it expires on Friday, which would undo the government reorganization that almost increased to 37 the number of ministries when he took office in January.

That would include the restructuring of the economy ministry, where trade and industry, and budget planning were split off into separate portfolios.

Lawmakers also removed land decisions from the Indigenous affairs ministry, while the registry of rural land, a vital tool to stop deforestation, will be managed by the agriculture and not the environment ministry.

Lula called an emergency cabinet meeting to discuss the dilemma, and called the speaker of the lower house, Arthur Lira, whom he plans to meet as well, to ensure the measure passes.

The main opposition party and the largest in Congress, the conservative Liberal Party, which former right-wing President Jair Bolsonaro belongs to, said it would vote against the restructuring decree.

INDIGENOUS ENVIRONMENTAL SETBACK

The law passed on Tuesday would set a cut-off date for recognizing Indigenous land claims, establishing that they had to be occupied before Brazil’s current Constitution was enacted in 1988.

The proposal set off protests by Indigenous groups. Outside Sao Paulo, Brazil’s largest city, demonstrators blocked a major motorway with flaming tires and used bows and arrows to confront police, who dispersed them with tear gas.

Bill 490 would not affect currently recognized reservations, but may impact hundreds of territories under evaluation. It was fast-tracked by the lower house to avoid committee debates.

Brazil’s 1 million Indigenous peoples are guaranteed by the Constitution the right to live on ancestral lands. Establishing a reservation gives their communities legal protections that can deter invasion by illegal loggers and wildcat gold miners.

Those surged under Bolsonaro, who called for commercial agriculture and mining even on recognized reservations.

After the bill passed, the minister of Indigenous peoples, Sonia Guajajara, said that the deputies who backed it would be “responsible for approving a bill that explicitly attacks the lives of Indigenous peoples in Brazil.”

The bill still needs approval in the Senate and signing by Lula. He could veto it but there might be enough support in Congress to override that.

(Reporting by Lisandra Paraguassu, Ricardo Brito and Maria Carolina Marcello in Brasilia; Writing by Anthony Boadle; Editing by Matthew Lewis)

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