Commentary and Analysis Archive

Given the new presidential election in Spain, it is time for Brazil and its Iberian partner to rethink their diplomatic relations after some turbulent couple of days due to deportations of Brazilians and Spaniards. According to Brazilian Ambassador to Spain José Viegas, Brazil seeks to have more open-door policies with Spain, not only to its citizens but also as a way to build on an institutional relationship with Spain. Some Spanish leading executives and political pundits have said that Spain should invest in Brazil, given its important economy in the global market.

Latin American nations and the Bush administration spent the past week loudly arguing over what censure, if any, Colombia should face for a bombing raid that killed one of the top leaders of the FARC terrorist group at a jungle camp in Ecuador. More quietly, they are just beginning to consider a far more serious and potentially explosive question: What to do about the revelation that Venezuelan President Hugo Chávez forged a strategic alliance with the FARC aimed at Colombia's democratic government.

When Ecuadorian President Rafael Correa left his meeting with the Brazilian president, it was clear by his facial expression that he did not get what he came for. Correa wanted the Brazilian government to pass a resolution--through the Organization of American States-- denouncing Colombia's military invasion of Ecuadorian territory to take down members of FARC (Revolutionary Armed Forces of Colombia). Had Brazil followed Correa's request, Colombia would have to face political and economic sanctions by the OAS members, which would have deepened the current crisis in the Southern Cone. Brazil, Argentina and Chile sought to cool down tensions between the two countries by giving Correa no option but to turn to his neighboring countries and accept the diplomatic terms the three countries were asking him to follow. So the Ecuadorian leader ended up accepting Colombian President Álvaro Uribe's apologies. The next step was to approve an OAS resolution declaring Colombian military forces in Ecuador a violation of sovereignty. However, nowhere in the resolution is there mention of Colombia as an aggressor. Venezuela was not part of the resolution after Venezuela's President Hugo Chavez, along with Nicaragua, severed his relations with Bogota. To Brazil, Chile and Argentina, isolating Chavez from the diplomatic talks was the most prudent thing to do, after all, the Venezuelan leader seeks to only deepen the crisis with Colombia.

As the United States searches for alternative ways to feed its addiction to petroleum, ethanol and other biofuels derived from organic material have been considered a miracle motor vehicle elixir. The energy bill signed by President Bush in December mandates that at least 36 billion gallons of biofuels a year be used by 2020. Yet separate studies released this month by Princeton University and the Nature Conservancy reveal that biofuels are not a silver bullet in the battle against global warming. In fact, they could make things worse.

Juan Bautista Alberdi, an Argentine constitutionalist and liberal, noted in 1837 that "Nations, like men, do not have wings; they make their journeys on foot, step by step." Latin America, long susceptible to the utopian mirages of revolutionaries and caudillos and still not immune to them, has struggled to absorb this truth. But, as Michael Reid observes in his new book, "Forgotten Continent," durable mass democracies have emerged across the region. In recent years, these democracies have rolled the dice with an extraordinary variety of leaders, including Michelle Bachelet in Chile; Luiz Inácio Lula da Silva, the metalworker who rose to govern Brazil; and Venezuela's barracks-bred Hugo Chávez.

This is a serious as well as a sensuous country with a stock market that rose more than 70 percent in 2007, burgeoning oil and ethanol industries, planes for export, iron ore to keep the Chinese happy and much else to buttress its rising-power status. But pleasure trumps sacrifice and there's a jeitinho — ingenious fix — for anything.

No wonder that Brazil's president, Luiz Inácio Lula da Silva, proclaimed 'God is Brazilian' after the discovery of massive oil reserves in his country earlier this month: The find could soon turn Brazil into a major oil exporter, and a big player in world affairs. But before I tell you why the find could also threaten to derail Brazil's slow but steady march into a successful economy, let's look at the facts. On Nov. 8, Brazil's state-controlled oil firm Petrobras confirmed the finding of huge oil reserves that could hold up to eight billion barrels of light crude in the Tupi fields, off Brazil's southeastern coast. Some experts say that Brazil's oil officials usually downplay the size of the country's oil findings, and the new reserves could be up to 10 billion barrels.

Despite a few economic crisis and hiccups, the global economy has been following a healthy path, growing significantly since 1990s. Several factors contributed to such growth; monetary stability, trade expansion and accessibility to capitals, technology, information and telecommunications. Another major factor that has resulted in such a historic moment is the insertion of dozens of former socialist countries into the global capitalist market. Capitals from all over the world found new horizons to invest in. However, there is one exclusive place in the world that is heading to the opposite way and becoming increasingly more socialist. And that place--to no surprise-- is Latin America. Only in Latin America, are people still thinking of socialist ideas seriously in theory and in practice. In Brazil, we have managed to escape certain experiences, but socialism is still a dominant theory taught in schools and colleges.

The best case scenario to maintaining Brazil's democracy and continuing the country's positive election outcomes is to have Brazil President Luis Inacio Lula da Silva pass down the president title to his popularly-elected successor on Jan. 1, 2011, when his second mandate ends. But now, there are talks about possibly circulating a legislative petition in Congress amending Brazil's constitution to allow Lula to run for a third consecutive term. So far, Lula has declared he has no plans to serve another term after the end of 2010 and added he may aspire to run in 2014. But to some skeptics, there is still a possibility of a third consecutive Lula mandate since the Workers' Party do not have any other strong candidate to challenge Jose Serra.

Brazil's Central Bank President Henrique Meirelles said foreign investors should not ignore this historic moment to invest in Brazil. During a radio interview to Agencia Estado no Ar, Meirelles said investors are switching their interests in Brazil from the credit market and government titles to private equity and venture capital. "This movement is very important because it shows investors are not only interested in solvency but also in the country's growth," said Meirelles.

How appropriate that the fate of global trade talks may be decided in Africa today when the leaders of Brazil, India and South Africa huddle in Pretoria. Developing countries stand to gain the most from the embattled Doha Round, which makes it all the more strange that these three regional economic powers are threatening to kill it.

While Brazil has a popular president and a positive economic outlook, the federal government has been facing skyrocketing expenditure on public contracts, high tax rates among other problems. How can Brazil harmonize the two strikingly different realities? The obvious political answer would be to reduce government spending, but we all know that capping spending power is a no-starter in the Brazilian Congress.

A newly released survey conducted by the Confederacao Nacional da Industria (CNI) found one of Brazil's biggest roadblocks is the lack of a qualified workforce. Without skilled workers, the country's business sector faces difficulties surviving in a competitive market, which has been increasingly reliant on the development of new technological products.

The recent closed-door voting decision by the Senate to clear its leader of bribery charges reemphasized how impunity is part of the country's "hereditary deformation." Brazil's return to a democracy has led the country to produce enough anti-bodies to fight against political corruption.

In a survey conducted by Ipsos Public Affairs, 45 percent of the respondents said they have a negative impression of the Venezuelan president whereas Brazilian President Luis Inacio Lula da Silva has a better reputation. Carlos Marchi writes Chavez's blunt rhetoric may have won him a lot of headlines in the media, but it did not help improve his public image in Latin America, especially in Brazil.

Folha de Sao Paulo columnist Clovis Rossi examines Brazil's President Luis Inacio Lula da Silva's challenges in meeting with Venezuela's President Hugo Chavez. The meeting is scheduled to take place tomorrow in Manaus, where Lula hopes to improve foreign relations between Brazil and Venezuela. Lula's agenda includes discussion on stalled efforts to implement a $2.5 billion oil refinery in Pernambuco through a partnership between Brazil's Petrobras and Venezuela's PDVSA. While Chavez blames Brazil for delaying the refinery project since the end of 2006, when an agreement between both nations were signed, Rossi was clear to reiterate his newspaper's editorial comment on Chavez's allegations: "It's a lie. It's their [Venezuelans] problem." Lula also intends to discuss a South America natural gas pipeline and a South American central bank project.

Cláudio Couto, a political science professor at Universidade Católica (PUC) of São Paulo weighs in on the political scandal involving Senate President Renan Calheiros, who faced corruption charges for allegedly accepting money from a lobbyist. By a 40-35 vote, including six decisive abstentions, the Senate decided not to oust Calheiros, a close ally to President Luiz Inacio Lula da Silva, clearing him of accepting bribery charges to pay for his own expenses. In an interview by journalist Moacir Assuncao, Couto said the Senate's secret ballot vote signified "a huge loss of the quality of democracy" and worsened the already vulnerable reputation of democratic institutions in the eyes of the Brazilian people. The political scientist also said the touted Workers Party's ethics banner "has long been lost" due to past political scandals.

Brazil announced Wednesday its gross domestic product grew by 5.4% in the second quarter. That's slower than many analysts had forecast but more than double the average growth rate of the past 15 years, and more in line with that of its "BRIC" (Brazil, Russia, India and China) brothers. Part of the higher growth story is the delayed impact of lower interest rates. Although interest rates are high, they are beginning to fall. Brazil's central bank has been cutting interest rates for the last two years, but last week it slowed the recent pace of cuts from .5% to .25%, bringing the benchmark rate to 11.25% annually, down from 19.75% in September 2005... As a country for investors, Brazil has a lot going for it. Inflation has been muted at only 3% in 2006. Last year, Brazil also recorded a trade surplus of $46 billion, and foreign exchange reserves are now almost $100 billion after Brazil paid off its nettlesome debt to the International Monetary Fund. Furthermore, Brazil is nearly energy independent.

President Luiz Inácio Lula da Silva defends Brazil's embrace of the "biofuels revolution", arguing that biofuels can be an important sustainable development strategy for developing countries. Here is an excerpt of his op-ed: Harmonising economic growth and environmental protection is particularly challenging to poor countries, which are most vulnerable to the impact of global warming. Energy conservation and, most importantly, the pressing need to reduce greenhouse gas emissions resulting from the burning of fossil fuels, are key elements in the growing international endeavor to reduce climate change. Brazil does not wish to shy away from its responsibilities. Our energy matrix is 45% renewable, against a worldwide average of 14%. We are dramatically reducing the pace of deforestation - there has been a 52% decrease since 2003.

Rubens Ricupero, former secretary-general of UNCTAD (United Nations Conference on Trade and Development), argues that one of Brazil's primary foreign policy strategies, South American integration, is falling apart. Ricupero claims the "never-ending misadventures" of Petrobras in Bolivia and Paraguay's desire to renegotiate the energy price of the Itaipu hydroelectric dam are the "final nails in the coffin of South American energy-integration" efforts – a key to greater regional interdependence, security and ultimately, unification. He criticizes the government for prioritizing ideological and political-diplomatic goals over pragmatic commercial policies as well as the complacency of the President in addressing these disputes, arguing that it "demoralized" Petrobras and encouraged its neighbors to act aggressively, despite Brazil's "Good Neighbor" policies. Ricupero concludes that, until its neighbors "grow out of this radical infantile phase", Brazil should act strictly in its own commercial interests.

Cuba's dictator has been writing on subjects that include the emerging U.S. biofuels policy, and the slow, pragmatic economic alliance being forged between the U.S. and Brazil, the most powerful nation in Latin America. The choice of issues Castro selected from his sick bed is neither random nor idiosyncratic. Irving Luis Horowitz analyzes the basis for Castro's hysteria and distinguishes the facts from fiction; arguing that there is much at stake for the West with the growing schism between the "totalitarian left" and the new "nationalist, social democratic" left.

Marcos Jank, an economist professor at USP and president of the research institute ICONE, discusses the most controversial topic debated at last week's World Forum on Agriculture: energy versus fuel dilemma. Jank explains that the surge for biofuels is mainly driven by consumer demand (based on environmental concerns) and governments (energy security and environmental concerns). He contrasts ethanol production in Brazil, which is derived from sugarcane, with that of the US (corn) and EU (beets). Jank claims that since sugarcane is not an important input for animal feed like corn is in the US and wheat, corn and other biodiesel sources are in the EU, Brazil's ethanol production does not strain food supplies. He also considers other factors like greater land availability, water usage, climate and higher energy yields of Brazilian sugarcane-based ethanol production as important distinguishing features.

Lately, Lula has been working to reassert Brazil's place as the regional leader of Latin America by setting out a "third way" vision of a strong, integrated Latin America to challenge Venezuela's cartoon socialism and anti-Americanisn. His ethanol-powered moderation is a healthy counterbalance to the ideological idiocy and energy diplomacy emanating out of Caracas. He has won the biofuel face-off between Chávez, forcing Caracas to revise his earlier statement and claim that he only meant to attack America's corn-based biofuel industry.

Eduardo Pereira de Carvalho, an economist and President of UNICA, the Brazilian Sugarcane Industry Union, dispels the myth that an ethanol boom will harm world food production. Carvalho claims that by defending food production, both Fidel Castro and Hugo Chávez have become disciples of Thomas Malthus, the father of demography and a "laisser-faire" apostle who warned of a catastrophic collision between a growing population and a limited capacity to produce food. The U.S. and Brazil – being the world's top food and ethanol producers – have been falsely attacked for creating a new food versus fuel predicament. Carvalho argues, among other contentions, that advances brought forth by the green revolution have drastically altered the calculus of the situation.

Brazilian president Luiz Inacio Lula Da Silva says this is his country's "momento mágico." Well, he has some reason for feeling so chuffed. Inflation has collapsed, foreign capital is gushing in and consumer confidence is running high. All this is rather impressive when compared with Brazil's economic track record of the previous two decades, but hardly the stuff of magic by global standards. It's one thing not to be the soft underbelly of the emerging-market universe anymore, and quite another to shoulder the BRIC mantle.

U.S. Senator, Richard Lugar discusses the benefits of the cooperative efforts led by President Bush and President Lula to promote ethanol production. Lugar states, "If the US-Brazil partnership is to become a transformational energy program for the Americas, the concerns regarding the consequences of increased the project must be directly addressed." He discusses the recent law presented to the U.S. congress titled, "The U.S.-Brazil Energy Cooperation Pact". He sees the pact as an opportunity to recommit to stronger relationships between the regional neighbors and promote a more secure energy future for both. Lugar also encourages the use of carbon credit trade to preserve the environment.

The leading editorial argues that at the recent South American energy summit Lula and his advisors accomplished their primary goal: neutralizing initiatives detrimental to Brazilian interests. In two days, the Brazilian delegation was able to deter the campaign against Brazil's biofuels program, halt the creation of the Banco do Sul and stop, at least for the time being, the formation of a "Opep of Gas". Argentine papers had declared Brazil the conference's victor; an interesting paradox, considering the purpose of the conference was to promote regional integration, not isolating winners and losers. As the editorial notes, most of the discussion highlighted diverging policies and conflicting economic objectives.

A few days before the Easter holiday, an upstart Brazilian discount airline called Gol said it would buy the relics of Varig, the country's once-emblematic national carrier destroyed by mismanagement. If that seemed like an example of the new-found entrepreneurial vitality of Brazil Inc, it was marred when passengers across the country found themselves grounded for several days by an air-traffic controllers' strike, the latest instalment of a dispute that the government has allowed to fester for six months. Once again, it seemed, Brazil's lumbering state is holding the country back.

22 years since the redemocratization of Brazil, politicians and the military still don't understand each other. This is the interpretation of José Murilo Carvalho, 67, professor at UFRJ, commenting on the current institutional crisis between the government and the Armed Forces which surfaced after this week's airport/aviation debacle that culminated with protests by air traffic controllers [who work under the auspices of the Armed Forces]. Prof. Carvalho discusses the crisis in detail, reflecting on the status of Brazil's democracy and what the event signals for the future of the country.

Lula is not a man in a hurry. Five months after he won a second term in a presidential election, he has finally put the finishing touches to a new cabinet. This massive 36-member contraption should guarantee him relatively tranquil relations with Congress and a safe if unspectacular passage through the rest of his four-year term. The second edition of Lula's government is likely to produce fewer rows between economic reformers and left-wing dissenters. The strongmen of the first term—the pro-reform finance minister Antonio Palocci and the chief of staff, José Dirceu, who largely supported him—were toppled by scandal.

Chávez confronts any ghost, except that of cheap alternative fuels. The president of Venezuela, Hugo Chávez, is the archenemy of the major Brazil-U.S. partnership. With other Latin American countries atoning for its economic and social woes, he bets that the worse the situation, the better, not only because he wants to displace Brazil as the regional economic and political leader – despite his coarse socialist discourse – but because he is frightened to see the U.S. realigned itself closer to his most preferred ally.

President Bush and Brazilian President Luiz Inácio Lula da Silva struck a blow last week against the forces of intolerance, obscurantism and parochialism. We refer to the U.S. farm lobby, not that amalgam of hostile states and Islamic crazies who presumably benefit from the U.S. oil "addiction." It would be feckless to tell ourselves that ethanol is a cure for terrorism or Islam's difficulties with modernity or the challenges of global interdependence. But as Churchill observed long ago, the best kind of energy security is a diversity of suppliers.

Anytime one discusses anti-Americanism in Brazil, there's a desire to counterattack with an apostrophe. Many people did not like George W. Bush's presence in the country, but this feeling is largely overtaken by our love for the apostrophe. The apostrophe in question, for the readers that have yet to realize, is that little symbol (‘) which in the English language you place before the "s" (‘s). So much charm in this little graphical symbol! Bush would feel consoled after witnessing the protests if he had had the chance to walk down a commercial street in Brazil to see how many businesses, which are first, in English and secondly, use the ‘s.

President Bush and Congress have promoted the increased use of biofuels such as ethanol as key to achieving American "energy independence." But breaking free of the U.S. reliance on imported oil will require diplomatic skill as well as homegrown solutions. The agreement that Bush will ink with Brazil this week is an excellent place to start. Together, Brazil and the United States produce more than 70 percent of the world's ethanol. Cooperation in developing and spreading technologies for ethanol production, setting common international standards and opening new markets for alternative fuels could pay big dividends for both economies while reducing greenhouse gas emissions.

The views and opinions expressed in the articles below are solely of the authors*

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