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Brazil - The South American Powerhouse
Emile Phaneuf



Introduction 
Brazil, the South American Powerhouse, has a GDP of 1.5 trillion, nearly three times the GDP of Argentina (South America's second richest country), and far more than any other country in South America (CIA World Factbook). In September 2004 Brazil and three other nations - Germany, India and Japan - started their self-promotion to be counted as permanent members of the United Nations Security Council (BBC News). If Brazil were allowed this status, what kind of role would it play internationally? More specifically, what would it have to offer the international community?

Leftist leader, Luiz Inácio Lula da Silva became president in 2002 and promised political and economic reforms and the eradication of hunger (BBC News). But, will this stand? Will he succeed in not only reforming his own country but also be able to bring Brazil together as the even bigger regional and world-wide leader that it seeks to be? Only time holds the answer. But needless to say, Brazil is already off to a very good start. This paper intends to look at Brazil's history, structure, and international relations in a few major areas, then predict Brazil's future role in international relations.

Brazil's History/Structure 
Brazil had its first visit by Europeans in the year 1500 by Portuguese explorer Pedro Alvares Cabral. In 1808, the King of Portugal relocated the capital temporarily to Brazil in order to escape Napoleon's Army (The History Channel). Brazil received its independence from Portugal in 1822 when the King's son declared himself the emperor of Brazil. Slavery was officially abolished in Brazil in 1888, twenty-three years after the Thirteenth Amendment to the United States Constitution abolished slavery in the United States. The very next year, Brazil became a new type of government: a federative republic - thus the new title: The Federative Republic of Brazil (or in Portuguese long-form, Republica Federativa do Brasil) (CIA World Factbook).

During World War II, Brazil claimed its neutrality, but eventually sided with the allies (BBC News). President Juscelino Kubitschek moved the capital from Rio de Janeiro to Brasília in 1960, where it remains today. The military took power in 1964 until finally peacefully rendering to civilian rule in 1985. The 1970's spawned a new era as Brazil became the industrial power of Latin America because of its "vast natural resources and... huge labor force" (The History Channel). Foreign debt payments were stopped by both Brazil and Mexico in 1982, which were among the highest debts owed - anywhere (BBC News). In 2001, a new civil code was drafted which granted equal rights to women. On 27 October, 2002 Luiz Inácio Lula da Silva became Brazil's first leftist president - winning the elections by 61% - and was reelected for another four year term in 2006 (The History Channel).

Today Brazil is comprised of twenty-six states (some of the more commonly recognized state names by non-Brazilians include: Amazonas, Bahia, Rio de Janeiro, São Paulo). Brazil declares Portuguese as its official language, and has a population of 188 million people (73.6% of which are Roman Catholic). It is home to two of the world's twenty current mega-cities (mega-city = population of 10 million or more): São Paulo (18.3 million) and Rio de Janeiro (11.5 million). These two cities are the 4th and 14th most populated cities in the world (United Nations). It borders every South American country except Chile and Ecuador. It is also the largest country in area in South America and 5th largest in the world.

Brazil participates in well-known international organizations such as G-15, G-24, IAEA, IMF, Interpol, Mercosur, UN, UN Security Council (temporary), UNESCO, WHO, WTO and many others. The country has a 9.8% unemployment rate and 22% of Brazil's population lives below the national poverty line. Currently, 8.4% of its GDP comes from agriculture, 40% from industry and 51.6% from services (CIA World Factbook). The name of the national currency is the Real (BRL) - called Reais in the plural form. As of 26 November 2006 1.00 USD = 2.164 BRL (XE.com's Universal Currency Converter estimate).

Brazil's economic industries include textiles, shoes, chemicals, cement, lumber, iron ore, steel, aircraft, motor vehicles and parts. Its Chief crops are coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, and citrus. National resources include bauxite, gold, iron ore, magnesium, nickel, phosphates, platinum, tin, uranium, oil, hydropower, and timber (The History Channel). Brazil produces 2.01 million bbl/day of oil and consumes 1.61 million bbl/day. It exports 241,700 bbl/day of oil and imports 572,600 bbl/day. Export partners include The United States (19.6%), China (7.5%), Argentina (6.9%), Germany (5.3%) and Mexico (4.3%). Import partners include The United States (19.7%), Germany (8.7%), Argentina (8.2%), China (6.2%), and Nigeria (6.1%) (CIA World Factbook). By these statistics, it is apparent that the US is Brazil's major trade partner. However, The European Union proudly brags that after trade, investment and cooperation partnership are all included, the EU itself is Brazil's biggest cash-flow partner (approximately €35 (EUR) billion in 2004) - "absorbing around a quarter of Brazil's exports" (European Union). Yet the EU, of course, is a collection of countries. The United States is only one.

Brazil/US Relations 
Brazil's relations with the US are of two fold. Positive points of the relations include a common keen interest in a strong space exploration and technology program, the joint cooperation of sharing health research, and the mutual effort in maintaining a strong and steady trade partnership for the most part. On the other hand is Brazil's accusation that certain US import tariffs are targeted specifically at Brazil's agriculture market - the market in which Brazil feels it has a competitive edge, President Lula's opposition to the war in Iraq (not to mention a strong regional opposition throughout South America), and Brazil's traditional practice of non-intervention in the affairs of others - which tends to be the dominant critique on US foreign policy not only by South American states but all over Latin America as well (Brazilian Embassy in Washington [DC], The Economist).

1994 marked a new era between the two countries in the field of Science and Technology. The joint operation "Guará 94 was conducted with the launching of 33 American-manufactured sounding rockets from the Alcântara Launch Center. The transfer to Brazil of these rockets, some of which are included in the Category I of the MTCR [Missile Technology Control Regime], represented the concrete recognition by the American Government of the evolution of Brazilian policy to control the export of sensitive goods." In 1996 President Bill Clinton visited Brazil and signed an agreement between the Brazilian Space Agency and NASA. That same year, NASA formally invited Brazil to take part in the International Space Station project (Brazilian Embassy in Washington).

The Brazilian Ministry of Health and the US National Institutes of Health have an active relationship by exchanging research for both medicine and public health. In an attempt to better Brazil's health efforts, the US is helping Brazil with guidelines in order for the creation of an FDA-like agency (Brazilian Embassy in Washington).

In March 2006, the Brazilian Embassy in Washington DC released its newest annual Report on U.S. Trade Barriers. This report focused on a WTO Secretariat report released in November 2004 that has raised heavy concerns in Brasília. The report, entitled Trade Policy Review, stated the "average import tariff applied by the United States under Most Favored Nation... rules was 9.7% for agricultural products." Yet the November 2004 WTO report stated that for Brazil, the respective average MFN tariff rate was 10.2% for agricultural products - .5% higher for Brazil than other countries, on average (Brazilian Embassy in Washington).

Aside from tariff protections, the embassy's Report on U.S. Trade Barriers sums up Brazil's major critiques of the US trade policies in three main points: 

  • the over-active use of trade remedy measures in ways that frequently are incompatible with WTO rules,
  • the indirect trade "barrier" of high subsidies paid to U.S. farmers (a distortion of its relative competitiveness not only in the United States, but also in other markets), and
  • specific situation related to the application of sanitary and phytosanitary standards 
    Despite these serious critiques, Brazil's embassy in Washington reaffirms the 
    positive: 
    American investment, which represents 33 percent of the foreign investment in Brazil, has played an important part in Brazil's rapid growth. The United States is Brazil's largest individual trading partner. Brazil and the U.S. have bilateral treaties covering almost every aspect of international relations including extradition, a joint participation agreement on communication satellites and scientific cooperation, civil aviation, and maritime agreements (Brazilian Embassy in Washington).

Brazil/EU Relations 
The European Union and Brazil greatly value their molded strategic partnership. For Brazil, the EU is another key player to aid in Brazil's economic growth and expansion of Brazilian influence around the globe. The EU considers Brazil as its "go-to" country to get the ball moving on the negotiations for the bi-regional agreements. The joint relations between the two are founded on the 1992 EC-Brazil Framework Co-operation Agreement. Three years later, the EU-Mercosul Framework Co-operation Agreement was drafted in order to achieve the common goal of creating "an Inter-Regional Association between the EU and Mercosul. Negotiations have been taking place since 1999 to establish such an association, including the creation of a free trade area" (European Union).

The EU has a total of €80 billion invested in Brazilian stock. Brazil is the EU's 11th biggest trade partner (2004 estimate), totalling 1.8% of all EU trade worldwide. The European Union claims that "agricultural exports to the EU increased by 29% during the period of 2002-2004 on a yearly average". Total EU imports from Brazil totalled €17.9 billion in 2004 (17.1% of total) and €13.5 billion for exports from EU to Brazil (24.7% of total) (European Union).

The EU also helps Brazil a great deal with economic reform, social development, and the environment. Currently, €180 million worth of projects are being conducted in Brazil between the two categories. These funds are responsible for such projects as preservation of Brazilian Tropical Forests, the fight against poverty, aiding in Brazil's maximum use of its own natural resources, and even the urban development of São Paulo (European Union).

Brazil/Japan Relations 
In recent times, the United States has pushed its Hybrid cars in an attempt to save money and provide a more environmentally friendly fuel for its cars. Meanwhile, Brazil has used one of its vast natural resources, sugarcane, to make ethanol fuel since at least the 1970's. Ethanol is perfect for Brazil because the country is rich in sugarcane. And the fact that sugarcane is a crop makes it 100% renewable. In other words, Brazil has an endless supply.

In the 1990's, ethanol production was decreased, but lately the market has picked back up again, mainly for two reasons. The first reason is new Flex-fuel cars have hit the market (called Flex-fuel due to their flexibility to run on both gasoline and ethanol - even at the same time). The second reason is that ethanol is a less pollutant fuel source than oil (Foreign Exchange with Fareed Zakaria).

Brazil is the number one producer of ethanol in the entire world. The Renewable Fuels Association reported in 2004 that Brazil produced 3989 million gallons. Next on the list was the US with 3535m, China with 964m, India with 462m, France with 219m and Russia with 198m. Financially, this sets up Brazil very well for a global export market.

How does all this tie to Japan? Petrobras, the dominant oil company in Brazil - over 55% of which is owned by the government - is stretching its boundaries far outside the continent. In December 2005, Petrobras and Japanese Nippon Alcohol Hanbai joined hands in the forming of a new company: Brazil-Japan Ethanol. The two parties intend to strengthen their relations and maximize equitable gain by importing ethanol to Japan from Brazil. Petrobras Internacional Braspetro BV, a Petrobras subsidiary based in The Netherlands, represents Petrobras' interests internationally. The two companies split shares 50/50 (Petrobras).

Petrobras reminds the international community that the formation its new joint company is in the best interest of the environment: "The new company will seek technical and commercial solutions to introduce ethanol in the Japanese energy matrix, substituting fossil fuels, to reduce the emissions of greenhouse effect-producing gases, such as carbon dioxide (CO2), and to contribute to the Kyoto protocol's success. In effect since February 16th, 2005, the protocol foresees the reduction of the emissions, in industrialized nations, of the six gases that cause environmental heating. It is considered the most promising of the some 200 United Nations environmental agreements" (Petrobras).

Brazil/South American Relations 
Brazil's relations with South American states build everyday due to the common interest to unite South American trade resources in order to compete outside the continent. The most prominent of South American trade unions, the Mercosur (or Mercosul in Brazil; stands for Southern Common Market ("Mercado Comum do Sul" in Portuguese)), proves to be the future of South America's major trade ability in a competitive world. The Mercosur "was established by the Treaty of Asuncion signed on March 26, 1991. It is now a Customs Union and its ultimate objective is to evolve into a Common Market" (Ministry of Exterior Relations). The union stations its headquarters in Montevideo, Uruguay and has four members: Brazil, Argentina, Uruguay, and Paraguay (Mercosur).

Brazil's Ministry of Exterior Relations, or Ministério das Relações Exteriores - also known as Itamaraty - claims that the Mercosur is "one of the world's major poles for attracting investment" and "represents a potential market of 200 million people and an aggregate GDP of over US$1 trillion, which ranks it as one of the four major economies in the world, right after NAFTA, the European Union, and Japan". Article 34 of the Ouro Preto Protocol made the Mercosur a legal entity under international law (Ministry of Exterior Relations). All four parties of the Mercosur have the same rights and obligations. In addition, every member has the right to leave the union at any time without penalty. Although there has been talk to eventually form a common currency among member states, no plan is currently in place to develop such a currency (Ministry of Exterior Relations).

Mercosur members enjoy the freedom to trade amongst one another tariff-free, but a "Common External Tariff... is applied to trade with third countries" (Ministry of Exterior Relations). Associate members of the Mercosur include Bolivia (member since 1997), Chile (since 1996), Colombia (2004), Ecuador (since 2004), Perú (since 2003), and Venezuela (since 2004) (Mercosur).

In early 2006 Bolivian President Evo Morales "nationalized the energy industry and ordered the army to take control of installations and other foreign companies" (Associated Press). Brazil has a vested interest in Bolivian oil through Petrobras, its state-owned company and was, needless to say, far from impressed.

During an interview with Democracy Now!, President Morales claimed that he sat down in a closed door meeting with Brazil's Lula and two other South American Presidents after the nationalization. Lula, Morales said, was very firm and offended that he was not consulted before the nationalization. Morales views Lula as an older brother. Morales claims that due to his indigenous culture, he looks up to Lula. He says this is because of Lula's background as a union leader and because indigenous culture emphasizes respect for elders.

Morales went on to say that despite the nationalization, the oil companies are staying. "[Lula] understood very well because we're [Bolivia] neither expropriating nor kicking out Petrobras". The companies have begun to understand the government's perspective for making the decision and are beginning to work things out.

Global Role 
Brazil's global role has two faces in particular. On one side of the spectrum is Brazil's reputation of non-intervention in which it allows those around it to do as they please as long as their actions do not interfere with Brazil's own. On the other side of the spectrum is Brazil's new stance to become a spokesman for common South American interests and a global leader. Many could argue Brazil in fact deserves this leadership role. Brazil has a very peaceful history compared to many and has the size, populations and resources to be such a leader.

In mid-1994, Brazil led a UN peacekeeping mission in Haiti. This was Brazil's "biggest foreign military deployment since the second world war". This mission involved 6,700 troops and 1600 police officers. In the 1990s, Brazil was involved with "UN missions in East Timor and Angola. In 1996, Brazil acted with Argentina and the United States to forestall a coup in Paraguay" (The Economist).

For one to fully understand international relations, it is important to remember that state-actors conduct their actions from the inside out. How a state conducts its actions internationally is (among other factors) a direct reflection of its internal laws (among many others). Examining Article 4 of Brazil's 1998 Constitution helps us better understand much of the reasoning behind key aspects of Brazilian foreign policy. The article prioritizes the following core values: "national independence, non-intervention, equality among states, defense of peace, peaceful settlements of conflicts, repudiation of terrorism and racism, cooperation among peoples for the progress of mankind, and granting of political asylum: in addition, the Federative Republic of Brazil shall seek the economic, political, social and cultural integration of the peoples of Latin America, viewing the formation of a Latin American community of nations" (Brazilian Embassy in Washington).

Let's look at Brazil's 2004 mission to Haiti and see how it coincides to Brazil's Constitution. On one hand, it could be argued that the mission was anti-constitutional because it required Brazil to intervene with the affairs of others - something the non-intervention core value of Article 4 strictly forbids. On the other hand, it could be argued that since the Haiti mission was a peacekeeping mission, the mission was very constitutional because Article 4 also emphasizes defense of peace and the peaceful settlement of conflicts - even possibly, the repudiation of terrorism and racism. Having these additional aspects hard wired into the Constitution allows Brazilian leaders a good bit of liberty when it comes to foreign policy. Brazil can claim neutrality when it serves its own interest (covered by its non-intervention factor) or it can deploy its military in an effort to participate in UN-type missions - therefore building its global leadership role (covered by its defense of peace, peaceful resolution of settlement of conflicts and repudiation of terrorism and racism factors).

Next, let us move on from analyzing Brazil's Constitution. Let us now expand on the subject by allowing Brazilian diplomacy to speak for itself. The Brazilian Embassy in Washington outlines Brazil's foreign policy attributes on the website. The Embassy claims that Brazil's foreign policy is: 

"aimed at supporting the attainment of national objectives such as development, political 
stability and social justice, helping the sustained growth of the Brazilian economy, supporting abroad economic and commercial measures taken internally to consolidate the Real currency programme, and opening Brazil's access to markets, investments and technology flows. Brazil has been engaged in the consolidation of Mercosul, maintains frequent bilateral dialogues with its major partners all over the world, is a member of the Community of the Community of Portuguese-Speaking Countries, and supports the international organisations and multilateral institutions committed to promote better world conditions for rich and poor countries alike. The Brazilian Government appreciates and supports the efforts of the United Nations for the strengthening of peace, development and justice, towards the establishment of an international order that leads to the realization of the aspirations and values shared by all of humanity. In the South American context in particular, Brazil has been able to develop solid friendships that are an essential factor for the tranquility in the region and in the community of nations. Fostering regional integration, Mercosul seeks to strengthen the historical ties that Brazil has maintained both within and outside of the Americas, thus contributing more significantly to the development of the world trade system" (Brazilian Embassy in Washington).

Nuclear Technology 
Brazil began to enrich uranium in 2004 as a means to begin a new source of energy for its own local use. When the International Atomic Energy Agency announced that they wanted to inspect the centrifuge facility in the state of Rio de Janeiro, Brazil put up a fuss. Brazil argued that allowing inspectors into the facility could lead to the "disclosure of its technological secrets". Former US Secretary of State Colin Powell backed Brazil's claim that its development of nuclear technology was not for the purpose of building nuclear weapons. Powell furthermore advised Brazil that its denial of access to the facility by the IAEA was bad timing as the world kept a close eye on countries such as Iran and North Korea. The IAEA argued to be granted entrance to the facility (BBC News). The end result: Brazil and the IAEA reached a compromise: 

"During the October inspections, IAEA officials were reportedly allowed to view pipes and valves of the centrifuges but were still restricted from viewing other centrifuge components. Inspectors then returned Nov. 16 to confirm information supplied by Brazil concerning the next steps that would be necessary to begin enrichment at the plant... A full-scale enrichment program at Resende would allow Brazil to become self-sufficient in the development of nuclear energy, relying less on foreign governments for supplies of enriched uranium to fuel its two nuclear reactors" (Arms Control Association).

To further back Brazil's claim for peaceful intentions of nuclear technology is its reputation as a relatively peaceful state actor. It is true that Brazil has been involved in past wars with its neighbors over border issues, etc., but for the most part Brazil tends to take the role of the "gentle and introverted giant" (The Economist). It would seem that the international scrutiny Brazil would receive by development of nuclear weapons would not be worth the loss of its peaceful reputation. Loss of a reputation such as this could result in foreign investors afraid to invest in Brazil due to instability, the undoing of the trust Brazil has built within the UN, and even heavy internal scrutiny that the government would receive from its own citizens. This loss of reputation would result in much to lose and little to gain for the state.

To justify Brazil's need for this new energy source, remember that this country's population is 188 million strong. Nuclear energy is not the only alternate source of power that Brazil pursues. Even to power its automobiles, the country is shifting to the use of ethanol. With instabilities in the relations with Bolivia, where Brazil gets much of its oil, it seems that the search for alternative sources of energy is definitely in the state's best interest.

Conclusion 
It can be said that this South American Powerhouse is somewhat uncertain of the stance that it wishes to portray for itself internationally. It wishes to stand tall as a role model by showing the world that allowing state actors to work out their own problems without intervention by third parties is the best way to conduct business. Yet from time to time Brazil contradicts itself as it seeks expansion of its interests internationally. It is slowly learning that being a global leader means sometimes having to intervene in the affairs of others.

Brazil is stuck between traditions of the past and the higher aspirations it has for itself. Critics always look to those with the ability to stop atrocities such as genocide, starvation or terrorism to step up to the plate and take a stand - just as much of the West, particularly the United States and Western Europe are heavily critiqued for not putting a stop to problems such as starvation, genocide, and HIV in Africa. Being a leader means accepting these responsibilities and many times, the criticisms that come along with the job. As Brazil continues to push for its economic expansion and greater roles within the United Nations, GOs and NGOs, the responsibilities and critiques grow more and more.

Of all the aspects that affect Brazil's international affairs, one of the most common reoccurring visible trends is the use of peaceful means in which the country accomplishes its tasks internationally (at least in the past two decades). Brazil has serious critiques of the way the United States conducts trade, yet Brazil uses peaceful and legal channels to make formal complaints of these policies. The same can be said for Brazil's practice of trade and business relations with the EU and Japan. The nationalization of the energy industry in Bolivia greatly offended Lula and even Brazil as a whole, yet Brazil once again proved itself responsible enough to play by the rules of democracy as it showed patience of Bolivia's internal politics, which unfortunately, set back Brazil economically. Although Brazil used the UN mission in Haiti in 2004 as an opportunity to prove to the world its ability to act as a global leader, one thing was on Brazil's mind: the preservation of peace. Through the Mercosur/Mercosul, Brazil and its neighbors use peaceful means to improve their own relations, equitable gain, and quality of life for their citizens. And as this nation continues its use and development of nuclear technology, it chooses to stay away from the development of nuclear weapons - once again reaffirming its stance as a peaceful state actor.

Will the Brazil be able to use its role in organizations such as the Mercosur and the UN to grow into an even greater giant? And, if so, what difficulties will it have as it struggles between its past international role and the new role it has lined out for itself in the future? Even if Brazil is able to grow to be the greater giant it wishes to be, will Brazil's immense foreign debt and trade tariffs on key competitive export markets be responsible for a significant stunt of its growth? Only time will tell.

** For a complete list of the works cited in this document, please see the following URL: ** 
http://www.travelersunite.com/Ezine/Brazil-South_American_Powerhouse-Works_Cited.doc