Brazil: Dilma wants “equal” relations between U.S. and Latin America

The president of Brazil, Dilma Rousseff, wants from her U.S. counterpart, Barack Obama, “closer and more equal” relations with Brazil and the rest of Latin America, remembering the ”negative models” of the past.

At the end of the Business Summit of the Americas, Dilma said that “in Latin America there is a huge space for partnerships, and that these partnerships should be beneficial for all parts involved”.

During the Summit, the Latin American countries demanded Cuba’s participation in the meeting, which the U.S. and Canada did not accept. Several of them stated that they expect this to be the last summit without Cuba.

Dilma also defended the measures adopted by the government to protect the country’s industry in face of the Eurozone’s expansionary monetary policy, and ensured that these measures are not equivalent to a protectionist plot.

Obama: The first hundred days and a new stance with Latin America

By Thiago de Aragão – thiago@arkoadvice.com.br

Elected in the crowning of a historical moment, President Barack Obama took many positive steps during his first one hundred days of administration. With a high approval rate (more than 60%), Obama has managed to obtain more than conveying confidence to the American people. He is also trying to change the global feeling towards the United States. The USA and the rest of the world have shown significant signs of recovery from the economic crisis. This has certainly played a crucial role in assuring that Obama’s charisma is still an efficient fuel for success in the countries and events to which the president is invited.

Regarding Latin America, Obama seems to have elected an efficient strategy, different from that practiced by his predecessor. The natural choice of Lula as Obama’s “partner” in the continent, widely recognized as a praiseworthy choice, was no surprise. The Department of State acknowledged that Latin America has been neglected by the USA as a low priority region throughout the decade of 2000. It is easy to understand why. September 11, and the USA’s many actions in the Middle East and Asia all greatly limited Latin American inclusion on the country’s foreign agenda. At the same time, Latin America has been experiencing a boom period in its regional geopolitics. Countries which used to only consider their domestic issues, working hard to solve problems like economic instability, lack of institutional solidity and serious crises of corruption have now managed to find a balance, giving way to a “rebirth of regional geopolitics”. This rebirth allowed Venezuela to use a new national energy policy to become a regional player in an attempt to create a realm of political influence. Most regional leaders have come to understand that their energy sources are the key to accessing neighbor countries.

Thus, Bolivia began to take advantage of its status as a natural gas supplier in order to renegotiate its international and domestic contracts, as well as its relation with Argentina and Brazil. Not only that, but highly important political matters in the country, such as the exit to the Pacific Ocean, may be considered null and void as a component of the energy supply strategy. Ironically, Chávez’ Venezuela benefited from the much criticized war in the Middle East, by seeing its oil reserves raise a good amount of capital, thereby allowing it to intervene in policies of other countries like Ecuador, Bolivia, Paraguay, Argentina and Nicaragua. Paraguay also realized that they could take advantage of the “energy geopolitics” trend and demanded a renegotiation of its Itaipu Treaty with Brazil. Chile, suffering from a lack of natural gas, sees in the Pacific Ocean a possible solution for its problems. And Argentina, with its industry almost ruined by a lack of energy infrastructure, is scrambling to find suppliers at any cost.

In this scenario, Brazil is a standout once again with its pre-salt discovery. Obama knows that in order for the United States to regain its respect and a certain degree of influence in Latin America, he must appoint a strong, well-respected “representative”. Approaching Lula is a strategic move, just like other decisions that the Department of State has made.

My remarks concerning the USA’s political behavior and these signs of change, as well as the USA’s understanding of the current moment, bring us to several conclusions:

1. Differently from what had been expected, Brazil’s relationship with the continent’s “radical” leftist countries did not evolve to a level of fraternity;

2. The Gasoduto do Sul (South Gas Pipeline), Unasul and other ideas of partnership involving strong political ties did not go forward, showing that Brazil is following its own agenda;

3. Anti-Americanism is concentrated in the Andean region. The oil production crisis and stagnation faced by Venezuela should be enough to prevent such feelings from thriving; Obama believes that it may be the right time to change this situation;

4. Brazil needs an ambassador who is more politically than commercially talented; Tom Shannon is one of the possible choices;

5. The USA government is intensifying its contacts with Brazilian analysts in an attempt to understand the scenario as a whole in time to design strategies, instead of acting only in matters in which the country is specifically involved;

6. Brazil can and must lead initiatives to help the USA to regain prestige in the region.

These remarks will lead to some short, middle and long term changes in the relation with Brazil and consequently with the region:

Short Term

1. Ambassador with specific political skills;

2. Visits from high ranking government officials to Brazil;

3. Implementation of a continuous prospective view in the Brazilian and Latin-American political environment (instead of a factual view);

4. Dialogue strategy with opinion makers outside the government sphere.

Medium Term

1. Technological cooperation (to generate solid ties for the development of technological research);

2. Better acceptance of certain Brazilian products in the USA (like ethanol);

3. Monitoring of a contact network in the Brazilian Congress, civil society and the press;

4. Development of a Positive Agenda with the Brazilian Government.

Long Term

1. Potential support to Latin America in trade battles against the European Union;

2. Acceptance of the role as a viable and profitable alternative for future LA-China and LA-India partnerships;

3. Constant dialogue following a Positive Agenda, solid since its implementation.

All of this follows a basic rationale: for many years Latin America depended on the US and European markets to serve as the backbone of its raw material export platform. This always gave Europe and the USA the advantage in negotiations. Today, stable growth in Brazil, Peru, Colombia, Chile and other countries has provided Latin Americans with the powerful alternative of the domestic market. Besides, China, India and Russia have become the customers LA has always asked for. Thus, Europe and USA will have to adapt to a different reality at the negotiation table, where they are no longer the only alternatives for the Latin-American export market.

The significance of Barack Obama’s victory for Latin America

The victory of Democrat Barack Obama for the presidency of the US has given indications of a change in America’s foreign policies in relation to Latin America. During the eight years of George W. Bush’s administration, and especially after 9/11, the US focus has been on the fight against terrorism in Afghanistan and Iraq. Due to this, Latin America was largely sidelined.

A change is expected with Obama, as historically Democrats view Latin America with more “care” than Republicans. However, the interventionist character of the Democratic government creates obstacles for free trade deals with the region.

According to the president-elect, a new chapter will be written on the relationship with the southern hemisphere. In interviews given throughout his campaign, Obama’s assistants spoke of working together across the continent.

If on one hand he shows signs of possible dialogue with his Latin American counterparts, on the other, his protectionist character is still apparent. For the Democrats, it is necessary to maintain the market open and dynamic, as long as it does not benefit only the rich and large companies.

The differences are clear in relation to George W. Bush. There may be gains in the region in terms of dialogue. However, Obama may give in to the agenda of American trade unions, which are against free trade agreements.

Besides the damaging of partnerships with strategic allies (Colombia and Mexico, for example), Latin Americans will have a harder time entering the American market due to the “more restricted” character of the economy, as expected to be conducted by the Democrats.

Venezuela: The impact of Obama`s victory

The biggest mystery is getting to know what the relationship will be like between Barack Obama and the president of Venezuela, Hugo Chávez, who stated his preference for the Democrat during Obama’s campaign.  Different to Republicans, who have a confrontational stance in relation to the Venezuelan Head of State, Obama talks of sending a message of democratic values to Caracas, not through interventionism, but through means of cooperation.

Democrats believe that the mistakes made by the George W. Bush in the region gave ground to anti-democratic views expressed by Hugo Chávez in Venezuela. 

Uruguay: The impact of Obama`s victory

The Democrats’ greater economic protectionism and Barack Obama’s dislike of FTAs (Free Trade Agreements) make the signing of this type of agreement with Uruguay improbable – a possibility raised in 2007 after the signing of a Trade and Investment Framework Agreement (TIFA).

In addition to this, the effects of the international financial crisis on the Uruguayan economy make the local market far less attractive to American companies, who are today more interested in protecting their businesses. 

Peru: The impact of Obama`s victory

Peru is one of the countries expected to undergo little change in its relationship with the US. As its FTA (Free Trade Agreement) has already been signed, it has the support of Barack Obama and the Democrats. However, the more interventionist policies of the new American government may cause a few trade barriers. 

Mexico: The impact of Obama`s victory

The relationship between Mexico and the US is expected to undergo changes during the future Barack Obama administration, in much the same way as Colombia. Within the Democratic vision of the market needing to continue open and dynamic – but while still favoring the working class – , NAFTA (the free trade agreement the USA has with Mexico and Canada) is expected to be brought back to the discussion table.

Obama’s opinion is that the free trade agreements with North America defend the interests of companies only. Besides, he sees the Merida Initiative (an anti drug trafficking project similar to the Plan Colombia) as the first step in solving the problem of organized crime. 

Cuba: The impact of Obama`s victory

With a regime in transition since Fidel Castro stepped down, Cuba will also feel the impact of new policies in the White House. In his speeches, president-elect Barack Obama talked of establishing a true policy in support of human freedom. One of his intentions is to send a message to Cubans about civil rights. However, for now, the island’s embargo will remain unchanged.

As contrary as it may seem, a policy of increased dialogue with Cuba will only damage Cuban president Raúl Castro. If this is to happen, the Castro regime will begin to lose their anti-American rhetoric as a way of maintaining unity among their allies. In this way, the transition can be accelerated. 

Colombia: The impact of Obama`s victory

Colombia is one the countries with the highest expectations in relation to the Barack Obama administration in the US, as it has an FTA (Free Trade Agreement) which is still awaiting approval by the US Congress.

Even though the success of the policies against the Farc (Revolutionary Armed Forces of Colombia) has been recognized, Democrats have criticized violence against trade union members and NGOs (Non-Governmental Organizations) in Colombia.  That’s why the Democratic majority in Congress has not allowed the agreement to be approved, in spite of numerous requests by President George W. Bush.

Obama is in favor of renegotiating the FTA so that it may be approved. Despite all the negativity, there are indications that the Democrats have a critical attitude in relation to free trade, one of the Republicans’ leading standpoints for the region. The center of the Democrats’ argument is that the economy should serve the “interests of the working class and not the rich and those of large companies”.

President Álvaro Uribe, is expected to suffer the most, as Bush currently sees Colombia as America’s leading ally in the region. 

Chile: The impact of Obama`s victory

Chile should be one of the countries harmed by the policies of social protection advocated by the new U.S. president, Barack Obama (to reduce taxes for the poorer and increase for the rich, more secure access to the health system, the unemployment insurance and improve the education of children). 

The crisis of the U.S. economy added to the interventionist policies that mark the Democrat governments must bring obstacles to FTA (Free Trade Agreeement) between the two countries since the U.S. economy will be more protected.