Brazzil
Nation
April 2003
Lula da Silva, Brazil's President, is a man of peace. Such resolve has never weakened his drive to fight for social change and justice. Fate has decided that his country would neither be a permanent nor a temporary member of the United Nations Security Council during these most trying times of political wheeling and dealing.
There is little consensus, however, over whether this is a blessing for Brazil. For no less than belligerence, pacifism may prove to have long term economic costs.
Taking both imports and exports together, Brazil's main trading partner is the US. In 2002, 24 percent of Brazil's production headed north, while 23 percent of its imports came from the US. Due to the debt it has contracted with the International Monetary Fund, Brazil's currency is hedged against the American dollar. Meanwhile, the European Union is Brazil's most consistent export market, covering close to 30 percent of output. With the dollar's recent slide in value, the Euro has become even more attractive or foreboding—depending on which side of the trade relation you sit. With respect to either of these zones, Brazil's trading activity amounts to only a sliver of its potential.
It is only a matter of course, then, for the country's new government, run by a labor conscious coalition of trade unionists, leftwing intellectuals and conservative businessmen to favor clearer trade regulations with both the US and EU. Yet last year, the US slapped bitter tariffs on steel imports in its different manufactured forms. Brazil is a leading exporter of high-grade iron-ore pellets and slabs, both central to manufacturing steel. US congressmen from trade-sensitive areas are well aware of Brazil's potential. Only congratulations greeted Bush's facile protectionist solution to the ailing American conventional steel sector, once a pillar of American industry.
Steel wasn't enough to snub the international free-trade disciplines of the Washington Consensus. The Bush administration also decided to ape what has been the common policy of the EU, led in that regard mainly by France, by applying massive subsidies on agricultural imports. With its God-given climate, Brazil's agriculture and livestock industry produce some of the most succulent fruit and vegetables to be found anywhere on the planet. Its orange juice has no need for Sunkist manufacturing techniques, as its citrus has been blessed by nature's over-abundant warmth. Brazil's cattle graze outdoors year-round and taste as close to famed Argentine beef as its own southern pampas allow. But neither oranges, juice, nor beef make it into North American Free Trade Zone (NAFTA) without tariffs hoisting prices a fifth higher—and straight out of the competitive range.
Were Free Trade and Open Markets actually to refer to a state of reality, instead of a Wolfowitzian ideological veil for democratic imperialism, few would be more faithful adherents to its principles than Brazilians. Supply and demand are the driving force of their traders and industrialists with national governments only too willing to leave the floor to business. So when there is international conflict, and where there is a real market, one may also find the Brazilian business class showing the smarts of circumvention.
Brazilian-Arab Trade
The Brazilian-Arab Chamber of Commerce (CCAB) delivered a study to the Minister of Development, Luiz Fernando Furlan, last month in which it claimed that exports to Arab countries could leap by 270 percent by 2006. In 2002, sales from Brazil to the 22 Arab countries registered at US$ 2 .6 billion. It was a 16 percent increase over 2001. According to the CCAB's study, this figure could reach US$ 7 billion within four years.
The sectors meant to profit most from the boost are machinery and equipment, aviation, services, defense material, banking, tourism, industry and agro-business. Crude oil is the commodity most in the spotlight. Over the last two decades, South America has grown to be a major oil producer. Venezuela, for instance, has been the second oil-supplier to the US after Saudi Arabia, and fourth largest in the world. By September 2002, Brazil's state oil company, Petrobras, had broken another monthly record, reaching the average of 1.59 million barrels a day. The country is Latin-America's third major oil-producer, after Venezuela and Mexico. In light of this progress, the CCAB is advocating the creation of a South American OPEC, which would work in partnership with Arab countries in the areas of production, refineries and petrochemistry.
A pacifist nation hedges its politics against trade especially when it slides as a world economic power. Brazil's GDP hovered 9th globally four years ago as it had for over a decade. Last year, after two slow years of growth and the slashing of its currency value by a half, Brazil now rests as the 12th economic power, falling below South Korea. According to the president of the CCAB, Paulo Sérgio Atallah, the perspective of a war between the US and Iraq is one of the main reasons for the increased partnership between Brazil and the Middle East. Most attractive in the Arab market is the region's low import tariffs, ranging at roughly 5 percent.
In a country as paradisiacal as Brazil, it is interesting to note that the Arab world holds the title for exoticism. Brazil's large "Syro-Lebanese" population is the silent fourth leaf to the national phenomenon of "miscegenation", or admixture of Indian, Portuguese and African peoples. The three-border region at the Falls of Iguaçu, between Brazil, Argentina and Paraguay, has moreover drawn the interest of the CIA and New York Times for the doings of its large and prominent Arab immigrant population. Still, Brazil remains one of the few countries in the world where the Jewish, Muslim and Christian descendants of the Middle East continue to practice harmonious relations. Dialogue and common public declarations are set on a tone familiar to the Middle East at least before the Six-Day War, or no later than the Nakbah.
Celebrating the Arab World
Indeed, during a time of fierce anti-Arab backlash in the mass media of the USA, often indistinguishable from explicit racism, Brazil's major television channel, Globo, celebrated the Maghreb in one of their famous novela soap-operas called The Clone in 2001-2002. As hundreds of innocent Arabs were imprisoned in the USA and stripped of their legal rights, Brazilians were awash in belly-dancing ecstasy, Muslim weddings, citations from the Koran, and the exotic scenery of Fez as Jade, the series' protagonist, sought to leave her husband, Said, in order to rejoin her teenage love, Lucas—or the clone made of his identical twin, Leo, to her utter ignorance. The series won not only ratings success, but it also reaped numerous prizes in recognition of its social role in fighting racism and discussing drug abuse.
The Moroccan veil, foreign music CD stalls replete with belly-dancing music, and common Arab words and expressions eerily brought back Portugal's own Muslim past, meshed in with the splendor of the Andalousian civilization until the 12th century.
Despite such cultural and climatic resemblance, Brazil's position regarding the American war on Iraq is becoming increasingly tested. Lula has clearly voiced his position against war in general, and any unilateral American-British attack and invasion. Brazil voted in favor of UN Resolution 1441. And one of its key international diplomats, now ambassador to the UK, had led the United Nations Agency for the Prohibition of Chemical Weapons, one of whose stated goals was to rally Iraq to become a full-fledged member—and abide by the Agency's inspections criteria.
Yet as the US has failed its bid to maintain allies, let alone to assemble a majority to carry a new resolution to wage war, Brazil's reasonable and rational calls for peace have begun to weigh heavily. Its international political analysts have begun putting the government on guard regarding the consequences of a too-vocal opposition. These voices lead all the way back to former president Fernando Henrique Cardoso. He is reported to have cautioned President Lula about forging too close an alliance with France on the conflict.
The country's economy has been buoyant despite massive speculation on the currency and outflow of capital in the uncertainty of the run-up to Lula's election. The export sector has been the one to bring in vitally needed foreign capital, helping companies reimbursed their private debt to government, and in turn allow the government to service its massive debt to the IMF, amounting to some 65 percent of GDP.
Development Minister Luiz Fernando Furlan estimates exports to grow by 10 percent this year, after setting a historical record for the country in 2002. The business sector is less optimistic. With high energy costs and costly technological imports, Brazilian industries are estimated to be working at only 85 percent capacity. For the time being, though, no one is contesting the record US$ 2.079 billion dollar trade surplus.
A weaker currency does have its drawing points for industry. What taxes Brazilian's economy from within, however, is the sky-high cost of borrowing money. The prime lending rate was increased two weeks ago to 26.5 percent, after Lula had vowed to dramatically lower it. He has allowed his Vice-President, José Alencar, to criticize the suffocating effects of the rate on local business, and Minister Furlan has projected a drop in interest rates in the second half of the year. In the meantime, the CCAB is clearly aiming at benefiting from the changing cultural tides affecting the Middle East as a whole. Neither Europe, nor the US should have a monopoly over the emerging markets when their macropolitical policies are so harmful to the developing world.
The days leading into a unilateral Anglo-American invasion of Iraq seem to be numbered. Secretary of State Colin Powell's potential opposition seems to have completely been undermined by the administration as it has made him into the leading spokesman for the doctrines of his rival, Paul Wolfowitz. On March 10, Lula reiterated his opposition to war on Iraq. He gave his most sincere position when speaking in the São Paulo automobile-industry heavy "ABC" region. To a crowd of thousands, whom he once led as a union leader, Lula declared himself against the war. "Common people and humanity care more about education, health, food and peace than a war that will only bring damage to the poorest part of the world."
One can rest assured that this is no minority view of a trade-union leader. Lula is the living voice of the Brazilian people and nation. And Brazil is just one among scores of nations solidly united against the aggression, and deeply wary of the harm it will bring to the region and to emerging markets the world over. It is also one of the rare governments in the world today—the democratic world—that represents the will of its people, at least on this matter.
Canadian philosopher, Norman Madarasz, holds a Ph.D. from the University of Paris. He currently lives in Rio de Janeiro, from where he writes on philosophy and international political and economic relations. He welcomes comments at normanmadarasz2@hotmail.com