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The
Costs of Peace
Stronger Brazilian-Arab Ties?
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.
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Brazilian President Lula da Silva
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In
turbulent times, a pacifist nation hedges its politics
against trade. |
Fate
decided that Lula da Silva’s Brazil would neither be a permanent
nor a temporary member of the United Nations Security Council during
the 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% of Brazil’s production headed north, while
23% 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%
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.
Brazil’s
main trading partner is the US.
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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 oranges, juice, and beef do not
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.
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% of GDP.
Development Minister Furlan estimates exports to grow by 10% 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% capacity. For the time being, though, no one
is contesting the record $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%, 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.
A
South American OPEC could work in partnership with Arab
countries. |
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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% by
2006. In 2002, sales from Brazil to the 22 Arab countries registered
at $2.6 billion. It was a 16% increase over 2001. According to the
CCAB’s study, this figure could reach $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.
The
recent escalation was ground for strengthened Brazilian-Arab
ties.
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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. With the Arab region’s low import
tariffs, ranging at roughly 5%, the US assault on Iraq could be one
of the main reasons for an increased partnership between Brazil and
the Middle East.
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 Iguacu, between Brazil, Argentina and Paraguay, has moreover
drawn the interest of the CIA and the 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 (1948 war
in Palestine).
Brazil
held a strong stance against the war on Iraq.
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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 “novella” soap-operas called The Clone in
2001-2002.
The
Moroccan veil 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.
Before
the war, Lula 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.
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.
Brazil is now just one among scores of nations solidly united
against the occupation and deeply wary of the harm it will bring to
the region and to emerging markets the world over.
Norman
Madarasz is a Canadian philosopher residing in Rio de
Janeiro, Brazil. With a Ph.D. from the University of Paris, he
frequently writes on international North-South relations and on the
political economy and culture of Brazil. He is also a regular
contributor to Counterpunch and has published think pieces and
philosophical research extensively. You can reach him at nmphdiol@yahoo.ca
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