Continental regionalism: Brazil’s prominent role in the Americas

Miriam Gomes Saraiva & Susanne Gratius – ISN, -6/04/2013

In these times of change in the shaping of a new world order, Brazil has begun to stand out for its assertive participation in international politics, where it has favoured anti-hegemonic,[1] multi-polar positions and its increasingly strong leadership in its own region. During the Lula administration from 2003 to 2010, Brazil gradually started step-by-step to shoulder the costs inherent in cooperation, governance and integration in the region.[2] At that time, the Brazilian Development Bank BNDES – with a total budget that exceeds that of the Inter-American Development Bank – began to finance infrastructure projects in South American. [3]

The election of Lula da Silva at the end of 2002 and the ensuing rise of an autonomy-oriented group in Brazil’s Ministry of Foreign Affairs cast the country’s foreign policy in a new light.[4] Diplomatic support for existing international regimes in the 1990s gave way to a proactive push towards modifying these regimes in favour of southern countries or Brazil’s particular interests, which was defined by Lima as soft revisionism.[5]

The idea of bringing other emerging or poorer southern countries on board to counterbalance the might of traditional Western powers served as the basis for the country’s international actions. While coalitions with emerging partners helped boost Brazil’s global pretensions, [6] its diplomatic efforts were geared towards bolstering its international standing independently of any other nation, with its role as a global player being firmly grounded in the ideas of autonomy and universalism that were the predominant diplomatic thinking at the time.

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Biden praises Brazil in speech, calls country ‘developed’

Taylor Barnes – The Miami Herald, 05/29/2013

U.S. Vice President Joe Biden praised Brazil’s “vibrancy and inclusive democracy” and strides made in social and economic development in a half-hour speech Wednesday in Rio de Janeiro.

“You can no longer claim ‘We are a developing nation.’ You have developed,” Biden said to a crowd that included Rio de Janeiro’s Mayor Eduardo Paes and local business leaders in a warehouse along the city’s bustling port zone. “What goes with that is worldwide responsibility to speak, to speak out.”

Biden’s speech touched on issues ranging from trade, potential cooperation in Brazil’s energy sector, educational exchanges and Brazil’s rising international prominence.

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Invite: A Conversation with Congressman Henrique Eduardo Alves, Speaker of Brazil’s House of Representatives

The Woodrow Wilson Center’s Brazil Institute and the Brazil – U.S. Business Council are pleased to invite to the following seminar on

 “A Conversation with Congressman Henrique Eduardo Alves, Speaker of Brazil’s House of Representatives”

Wednesday, May 22^nd

9:00 – 11:00 am

WoodrowWilsonInternationalCenter for Scholars

6^th Floor Flom Auditorium

Click here to RSVP

Welcoming

Remarks:         Ambassador Anthony Harrington, Chairman, Brazil Institute Advisory Board; President & CEO, Albright Stonebridge Group

 

Featuring:       Congressman Henrique Eduardo Alves, President, Brazil Chamber of Deputies

                       

Moderator:      Monique Fridell, Executive Director, Brazil – U.S. Business Council

EU and Brazil agree on a “speedy conclusion” of the trade pact with Mercosur

MecroPress, 01/25/2013

Brazilian and European leaders called on Thursday for the speedy conclusion of a free trade and cooperation agreement between the European Union and Mercosur. The call for action was made as Brazilian President Dilma Rousseff hosted European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso.

Both the EU and Mercosur “expressed the strong political will to reach an accord,” Van Rompuy told reporters.

Negotiations have so far stumbled over differences on agriculture, especially European farm subsidies, which are seen as hindering Mercosur efficient agriculture.

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Brazil’s FDI covers current account shortfalls in 2012

Reuters, 01/23/2013

Foreign direct investment in Brazil more than covered the country’s current account deficit in 2012, the central bank said on Wednesday, in a sign of continued confidence in Latin America’s largest economy despite sluggish growth.

Brazil attracted $65.272 billion in foreign direct investment in 2012, above a central bank estimate of $63 billion that was revised upward several times last year. The country drew $66.6 billion of FDI in 2011.

That investment fully covers a current account deficit of $54.246 billion last year — more than the bank’s forecast of $52.5 billion.

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Analysis: Rousseff’s bet – Brazil has atoned for economic sins

Brian Winters – Reuters, 01/04/2013

President Dilma Rousseff’s big bet in 2013 is that Brazil has matured enough to escape from a financial straitjacket that markets have imposed since the 1990s, when inflation soared beyond 2,000 percent and the state was virtually bankrupt.

Since that chaotic era, Brazil has played by a more conservative set of rules than most modern economies – with laws that tightly regulate government spending, interest rates exceeding 40 percent on consumer loans, and other rules and practices designed to reduce financial risks and ensure the bad times don’t return.

Now Rousseff, a left-leaning economist who likes to make key financial policy decisions herself, is boldly wagering that Brazil is ready to turn the page.

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Erosion of regulatory agencies becoming apparent

The Economist, 12/23/2012

Following dismal GDP figures for the third quarter, driven by the fifth consecutive contraction in investment, the question of what is hampering investment in Brazil has come to the forefront of the policy debate as its performance will be one of the key aspects shaping the country’s economic outlook in 2013 and beyond. The Economist Intelligence Unit has recently revised down its estimates for GDP growth for 2012 (to 1%) and 2013 (to 3.5%), on the back of Brazil’s lacklustre performance so far this year and a weaker outlook for both private and public investment.

There are several theories about the reasons for the fall in private investment in Brazil. Prominent among these are the structural problems facing the productive sector, such as the lack of infrastructure; the high burden of the tax system; costly and relatively unskilled labour, coupled with rigid labour legislation; and an overvalued exchange rate in recent years (although this has eased somewhat since March), with imported goods supplying a greater share of consumer demand than locally produced goods. There is also a growing view that the government’s hyperactivity—it has implemented a spate of apparently unrelated stimulus measures since mid-2011 (many of which have been announced shortly after the publication of disappointing data)—is increasing uncertainty and causing companies to hold off on their investment plans. Another factor is that Brazil’s macroeconomic policy mix is changing, and this is also creating uncertainty. Despite the authorities’ assertions to the contrary, there is mounting evidence that the exchange-rate regime is moving to a quasi-fix with an adjustable band, rather than the floating regime that has been pursued for over a decade. Uncertainty over exchange-rate policy is problematic as many companies need to import capital goods in order to invest. Last but not least, there are the concerns over the government’s protectionist stance, including the adoption of local-content requirements that affect major exporters such as Embraer, Brazil’s aviation company, which needs to import most of its production inputs.

One often overlooked issue in this list of factors that may have contributed to the recent fall in the investment rate (to below 19% of GDP, from 22% before the 2008 Lehman crisis) is the extent to which Brazil’s institutions have been eroded in the last few years. During the 1990s, the government of Fernando Henrique Cardoso (1995-2002) promoted a major overhaul of the economy, not only laying the foundations for macroeconomic stability, but also creating the institutional framework to sustain a favourable business environment following the ambitious privatisation programme undertaken at the time. The creation of regulatory agencies, staffed by technical rather than political appointees, was an important achievement. The appointment of managers and directors with extensive private-sector experience to head major public-sector financial institutions, such as Banco do Brasil, was also a step forward, following Brazil’s previous record of highly politicised public financing decisions, which had led to a series of losses and recapitalisations of the public banks.

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The Brazilian decade

Marc Margolis – Newsweek, 12/30/2012

About 15 years ago, on assignment in Bolivia, I met a pair of local drug-enforcement agents who were kicking back in a hotel bar. The conversation was light and easygoing, until I mentioned I was based in Brazil. “Ah, Braaaazil,” said one of the agents, peacocking for effect. “The land of ‘the biggest in the world.’” I wrote his comment off as Latino envy, that familiar jolt of resentment, which served as the subtext of many conversations about the giant of South America and the neighbors it dwarfed. The comment was also a telling expression of how people viewed the old Brazil, the hemisphere’s large underachiever, a nation that frequently waxed grandiose and then fell short of hype and expectations.

Much has changed in Latin America since then, nowhere more so than in Brazil. Stable, democratic, stylish, and self confident, this $2.5 trillion economy now has some backbone behind its swagger; it still stirs resentment among its neighbors—Brazilians are the new gringos—but not so many jokes these days. Instead, from inflation control to social welfare policies, from the campaign trail to the catwalk, the state of Latin America in 2013, and in years to come, will most likely be shaped by what happens in this restless country of 197 million. Welcome to Latin America’s Brazilian decade.

Brazil, of course, is not the only game in town. Peru leads the hemisphere in economic growth, with GDP set to expand by 6 percent this year, nearly twice the Latin American average. Under the deft leadership of Juan Manuel Santos, Colombia has strengthened trade with China, courted onetime mortal enemy Hugo Chávez of Venezuela, and even resurrected peace talks with guerrilla insurgents, turning the modest Andean nation into a magnet for investment. Chile—the stellar outlier—has practically decoupled from the continent with its established tradition of free-market policies and an aggressive export industry that long ago made the pivot to the Pacifi c. Even Mexico, while bloodied by a six-year, futile drug war, is showing signs of revival with population growth slowing, public spending under control, and a long-awaited boom in manufacturing exports finally kicking in.

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Brazil’s Challenging 2013 Outlook

Michael Darden – Brazil Institute , 12/18/2012

The following is a the event summary for the Brazil Institute event held on 11/20/2012

As the administration of President Dilma Rousseff struggles to reverse the trend of declining rates of economic growth in an adverse global scenario, Brazil’s domestic outlook in 2013 will be impacted by the consequences of two major political events – municipal elections that took place in October and the Federal Supreme Tribunal’s unprecedented hearings of the largest political corruption trial in the country’s history, which concluded with guilty verdicts for 25 of the 37 people indicted. On November 20^th, the Brazil Institute convened a panel of experts to analyze and give insight into the landmark events and assess political and social outcomes for the upcoming year.

David Fleischer, professor emeritus at the University of Brasilia, offered an overview of the elections of mayors and city council members in Brazil’s 5,568 municipalities and analyzed trends that emerged from the polls. In the first round of vote held on October 7 the turnout of over 140 million was 7.2 percent higher that of the previous elections held in 2008. The number of female candidates running for office also increased in the mayoral campaigns by 2.5 percent over a four year period, resulting in more women mayors in Brazil.  Compared to 503 females that were elected in 2008, 674 will take office on January 1, 2013, or 12.2 percent of all mayoral positions. However, there was a significant decline in the number of female city council members elected, falling from 8.9 percent of the total in 2008 to 5.2 percent in 2012.

Another trend noticed by Fleischer, as well by other speakers, is the continued electability of incumbents. A majority, 67.5 percent, of mayors running for reelection in the largest cities were given another term. Within parties, 75 percent of those elected belong to seven parties, six of which have dominated mayoral races since 1996. The rise of the Social Democratic Party (PSD), led by the outgoing mayor of São Paulo Gilberto Kassab, was seen as not significant politically, since most of its members came out of the Democrats, formerly the Party of the Liberal Front, which has declined.

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Brazil air force may buy F-18 jets from US

Firstpost, 12/10/2012

The Brazilian air force, awaiting the outcome of the selection process for purchasing 36 fighter jets, is leaning toward the F-18 Super Hornet of the US, which is competing against the French Rafale and the Swedish Gripen, Istoe magazine said.

The weekly magazine published a document it attributes to the commission in charge of analyzing the three aircraft, which concludes that the Boeing F-18 is best suited to air force requirements and notes several of its advantages in terms of price and benefits.

According to the document, the least costly of the three jets being tendered are the Gripen of the Swedish firm Saab, the entire fleet being offered for $4.3 billion.

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