The days leading into a unilateral Anglo-American invasion of Iraq
seem to be numbered. Brazil is just one among scores of nations
solidly united against the American aggression, and deeply
wary of the harm it will bring to the Middle East
and to emerging markets the world over.
by: Norman
Madarasz
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
