ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Brazil's External Policy

The Brazilian government's record in the realm of international relations has been remarkable, whether that of leading the south American countries in withstanding pressures from the US to sign into the Free Trade Area of the Americas, or requiring reciprocal fingerprinting and photographing for US citizens entering Brazil and imposing penalties on those brazen visitors who tried to challenge it.

Brazil’s External Policy

The Brazilian government’s record in the realm of international relations has been remarkable, whether that of leading the south American countries in withstanding pressures from the US to sign into the Free Trade Area of the Americas, or requiring reciprocal fingerprinting and photographing for US citizens entering Brazil and imposing penalties on those brazen visitors

who tried to challenge it.

R VISWANATHAN

A
lthough Brazil had got mired in vicious circles of political and economic instability in the past, it has now started putting its act together and is on its way to realise its potential of becoming a regional and global power. At the political level, there is no sharp polarisation or ideological conflict. Indeed, there seems to be a broad consensus on the strategic direction of domestic and external policies among the major political parties. Irrespective of who wins the coming presidential elections in October 2006, there may not be any radical departure from the pragmatic policies being pursued over the last 10 years.

Economically, Brazil has managed to overcome hyperinflation, currency volatility and the debt trap. Its real gross domestic product (GDP) grew by 2.5 per cent in 2005 and is projected to grow by 3 per cent in 2006. Inflation has been decisively controlled and kept at or around the single-digit level. Introduced in 1994, the real now floats freely on the open market. On December 13 last year, Brazil announced that it would prematurely repay US $ 15 billion of its debt to the IMF. The Lula administration however needs to tackle urgently the high interest rate (highest in the world), which is severely dampening investment.

Brazil has systematically and successfully been diversifying its trade and economic ties, thereby reducing dependence on any one market. It is significant to note that over 50 per cent of the country’s trade is with developing countries and that China has become its second-largest trading partner. Brazil’s exports increased to US $ 118 billion in 2005 from US $ 96 billion in 2004. The trade surplus reached a record US $ 44 billion in 2005 from US $ 33 billion in 2004. The foreign exchange reserves were US $ 55 billion at end-November 2005. FDI inflows in 2005 were US $ 15 billion. Brazil is the world’s third largest agroexporter (US $ 44 billion in 2005) after the EU and the US and is expected to emerge a formidable agro-powerhouse as and when the elaborate system of protection and subsidies is dismantled by the developed countries.

Emerging South American Leader

Brazil realises the value of collective strength in its external economic and political relations. It took the lead in the formation of Mercosur in 1991 with Argentina, Uruguay and Paraguay, which has come to stay as a successful customs union. More importantly, this has made Brazil and Argentina stakeholders in each other’s prosperity and has helped in the process of overcoming a legacy of mutual distrust. Brazil has become Argentina’s largest trading partner; in 2004, Argentina’s trade with Brazil (US $ 13 billion) was twice that with the US (US $ 6 billion). Mercosur has signed an agreement to form a free trade area (FTA) with the five countries of the Andean Community, Venezuela (which has already been admitted as a special member of Mercosur), Colombia, Bolivia, Peru and Ecuador. In December 2004, a new regional bloc, the South American Community of Nations (SCN) was launched with all the 12 countries of South America, including Chile, Guyana and Suriname, besides the Mercosur and Andean Community countries. As and when the SCN takes shape, it would become a formidable regional bloc, economically and politically, with Brazil leading the way forward.

One of the recent highlights of Brazil’s independent assertive foreign policy was the way in which it successfully withstood pressures to sign into the Free Trade Area of the Americas (FTAA). In the initial stages of FTAA negotiations, the US had laid down two conditions. One was that all the countries involved should negotiate individually and not as groups such as Mercosur. Secondly, as and when there is progress in some areas of negotiations, these should be implemented without waiting for agreement on other issues. Lead by Brazil, the Latin American countries said no to these conditions and US had to back down. This was a defining moment in the history of Latin America, when for the first time, they were able to successfully defy and reject the dictates of the North. Similarly, when the elected government of Venezuela was threatened with removal by undemocratic means in 2002-03, it was Brazil which put its weight behind president Chavez and ensured his survival in power, although he had to step down

Economic and Political Weekly February 25, 2006

EPW
for a brief 48 hours. The Brazilian govern- But what made it remarkable was that Brazil initiative of putting social needs ahead of
ment had issued a strong statement that was the only country to have taken such the profits of the TNCs has opened the eyes
it could not allow destabilisation of a step, earning popular admiration around of other governments of the region who
elected governments in the region. Earlier the world. are also inviting the Indian pharmaceutical
in 1997, Brazil along with its partners in The alliance of India, Brazil and South companies to supply affordable generic
Mercosur thwarted an attempted military Africa (IBSA), a partnership that has medicines.
takeover in Paraguay. It is in recognition caught the attention of the international Brazil spends a large sum of around 400
of this new profile that Brazil has been community, is yet another instance of million dollars a year in providing free
given the lead role in the UN peacekeeping Brazil’s strategy of networking for collec-anti-HIV/AIDS medicines and treatment
mission in Haiti. tive strength. The preferential trade agreeto over 1,00,000 patients. The Brazilian
During the last presidential elections of ment (PTA) concluded between Mercosur government publicly threatened to work
Brazil in 2002, the internal and external and India and another PTA being negothe patents on anti-retroviral medicines
critics of Lula predicted that if he were tiated between Mercosur and the South without the authorisation of the patent
elected, foreign investment would dry up African Custom’s Union (SACU) are also holders and succeeded in forcing the TNCs
and economy would go into a tailspin. part of Brazil’s strategy of building of to reduce their prices significantly. Brazil
Today, even IMF and the Wall Street have alliances in the collective interest. Brazil has become a pioneer and role model for
hailed his government’s macroeconomic took the initiative in organising an Arabthe developing world in the anti-HIV/AIDS
policies. The Lula administration has Latin America summit in Brasilia in 2005, strategy of guaranteeing universal access
been pursuing “inclusive development”, which was a pioneering attempt to bring to retroviral medication. In January this
while at the same time being market the two regions together. This dialogue year, Brazil organised a conference of Latin
friendly. Brazil is learning to manage the and interaction have been institutionalised American and Caribbean countries to
demands of Wall Street without compro and the next summit is going to be held coordinate the strategy of these countries
mising on the commitment to the needs of in Morocco. in universalising access to anti-HIV/AIDS
the ‘favelas’ (slums). This balance has Brazil has set an example to other devemedicines. As regards dealing with intel
come to influence elections across Latin loping countries in introducing generic lectual property rights related to computer
America. The election of leftist presidents medicines, challenging successfully the software, Brasilia is actively pushing
in Uruguay and Bolivia in 2005 was high-priced branded medicines of the government departments and public sector
possible partly because the electorates transnational corporations (TNCs). The organisations to use open-source software
there were impressed with the stability government passed a generics law in 1999 and avoid costly copyrighted ones. While
and success of the leftist government in that, among other factors, made medicines Brazil is committed to the protection of
Brasilia, especially its pragmatic and non affordable to millions of poor people, intellectual property rights as a matter of
confrontational approach to socio besides reducing the cost of the healthcare principle, it has shown its willingness and
economic development. The Brazilian programmes of the government. Indian determination to make exceptions in the
example may be a deciding factor in other pharmaceutical companies contributed in larger interests of the people.
elections too, including the one to be held this endeavour at the invitation of the
Mexico later this year. Brazilian government. This successful Email: rv@rviswanathan.com
On the Global Stage
Apart from cementing its leadership Madhya Pradesh Institute of Social Science Research
credentials in South America, Brazil is (An ICSSR Institute)
carefully establishing a global profile. It 19, Mahashweta Nagar, Ujjain – 456010 (M.P.) INDIA
has earned the attention and respect of Phone 0734-2510978 Fax 2512450 E-mail – mpissr@yahoo.co.in
developing countries through its leader
ship role in the World Trade Organisation REQUIRED
(WTO), the UN and other multilateral
forums. Here again, Brazil is following a MPISSR wishes to recruit two positions at Lecturer level in the UGC pay scales.
strategy of relying on collective strength. Minimum qualification is First class M. A. or equivalent degree in Economics
It worked through the G-20 to successfully with NET. Age should be below 35 years. Preference will be given to those
advance the case of developing countries having Ph.D. with outstanding academic record.
on the issue of agricultural subsidies Brazil chose to seek permanent membership in the UN Security Council through Candidate should have proven aptitude and inclination towards undertaking empirical research independently in the areas like Poverty, Rural Economics, Agriculture Economics, Natural Resource Economics, Environmental
the G-4 partnership. Economics, Decentralisation Governance and Finance, Rural Institutions
An interesting example of the assertive especially Land, Ground Water, Markets and Cooperative.
role played by Brazil is the reciprocal fingerprinting and photographing Candidates may submit their applications with detailed CV and copies of publications along with names of two referees within a month.
introduced for US citizens entering
Brazil, imposing penalties on those Professor D.C. Sah
brazen visitors who tried to challenge it. Of Director
course, this is just a symbolic move.

Economic and Political Weekly February 25, 2006

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