Aecio Neves, presidential candidate for the Brazilian Social Democracy Party, known as PSDB, right, waves to supporters during a campaign rally in Rio de Janeiro, Brazil, on Oct. 19, 2014. Photographer: Dado Galdieri/Bloomberg The election of Aecio Neves as Brazil’s president would end a 12-year alliance uniting leaders from Venezuela to Bolivia on regional development and state intervention in the economy. Neves, who came from behind to make the second round vote on Oct. 26 against President Dilma Rousseff, has pledged to restore investor confidence in the economy, end “ideological” political alliances and negotiate new trade deals with or without the Mercosur trade bloc Brazil founded with Argentina in 1991. Polls show the two statistically tied. Former President Luiz Inacio Lula da Silva, once a union leader who lost national elections three times before taking office in 2003, brokered deals and soothed tensions with leaders including Venezuela’s Hugo Chavez, Argentina’s Nestor Kirchner and Bolivia’s Evo Morales. Together, they promoted regional bodies such as Mercosur and the Union of South American Nations, while Mexico, Chile, Peru and Colombia created the Pacific Alliance, a trade bloc designed to boost ties with Asia. “We’ll leave this ideological orientation that benefited nobody in Brazil,” Neves said in an August interview with G1 website. “While neighbors like Chile, Peru and Colombia made numerous trade accords to benefit their economies, Brazil in these 11 years signed only three accords with Egypt, Palestine and Israel.” Trade Deals When a U.S.-led attempt to create a hemisphere-wide free trade agreement died in 2005 after Venezuelan, Brazilian and Argentine leaders scuttled the project, countries on the Pacific coast of South America began working on their own trade bloc. The $2.1 trillion Pacific Alliance has since negotiated free-trade deals with the U.S. and is seeking to expand into Asia. Venezuela and Argentina will contract this year and Brazil will expand 0.3 percent, according to economists surveyed by Bloomberg. Pacific Alliance members Chile, Peru, Colombia and Mexico will average about 3.4 percent. Seeking to kick-start growth in the world’s biggest emerging market outside China, Neves will try to build links with the Pacific Alliance, said Peter Schechter, director of the Atlantic Council’s Latin America Center. “Relations with Venezuela, Cuba, Ecuador and Nicaragua are going to go under review,” Schechter said by phone from Washington. “Neves has said he’s interested in building bridges to the Pacific Alliance, which has always been viewed by the foreign office and the more ideological practitioners as antithetical to Brazil’s interests.” Bolivia Takeover Brazil’s alliance has helped the country negotiate political and economic turbulence in its partner nations. When Bolivian President Morales in 2006 nationalized the country’s energy industry, including refineries owned by Petroleo Brasileiro SA, Lula worked with Morales to get compensation for the company and maintain critical natural gas supplies. As Venezuela’s economy has contracted and a currency crisis caused delays in foreign companies getting paid, Brazilian food companies have earned a priority status, said Fernando Portela, director of the Brazilian-Venezuelan Chamber of Commerce. “For Brazilian food companies there isn’t that much delay in getting paid,” Portela said, adding that exports to Venezuela will total about $4.8 billion this year. “A big chunk of the imports is even paid in advance. Only about 15 percent of importers have payment arrears of over a year.” Neves criticized Rousseff’s Venezuela policy, saying she ignored “flagrant repression” by President Nicolas Maduro’s government during street protests earlier this year that left at least 43 people dead. Brazil’s Place Rousseff, who was Lula’s chief of staff and personal choice to succeed him in elections in 2010, said at the time it wasn’t Brazil’s place to involve itself in Venezuela’s affairs. Marco Aurelio Garcia, Rousseff’s special adviser on foreign affairs, told Agencia Brasil that international media were exaggerating the gravity of the protests. Brazil’s economy entered a recession in the first half of 2014, while inflation has remained above the midpoint of the central bank’s target for 49 consecutive months. The 12-month current account deficit has remained near record levels, exacerbated by plunging commerce with Argentina, Brazil’s third biggest trade partner, as President Cristina Fernandez de Kirchner’s government restricts imports in the face of shrinking reserves. ‘Greater Pressure’ “An Aecio triumph would mark the end of Brazil’s patience with Argentina,” said Dante Sica, director of Buenos Aires-based research firm Abeceb and a former industry secretary. “There will be greater pressure on matters relating to Argentina’s restrictions and discretionality.” It’s natural for Brazil’s “intense and varied” relationship with Argentina to have some difficulties, the press office for Rousseff’s campaign said in an e-mailed response to questions. The two nations have a “solid” alliance and treat their differences with maturity, according to the press office. A Neves government would probably seek to extend ties with the European Union at the expense of Argentina and would seek to rekindle relations with the U.S. that have soured under the current government, said Christopher Sabatini, policy director at the Council of the Americas in New York. Neves wouldn’t allow relations with Venezuela and Argentina to prevent Brazil from signing deals with other regions, his press office said in an e-mailed response to questions, adding he would maintain a good relationship with neighbors and bolster Mercosur. Brazil in recent years missed an opportunity to advance on a trade deal with the EU, according to the press office. “Brazil has become the representative of the regional bloc and its distancing from market economies and the U.S.,” Sabatini said. “Brazil will always be an independent actor in foreign relations but the very sharp, aggressive anti-Americanism and ideological projects will go with Dilma’s administration.” To contact the reporters on this story: Charlie Devereux in Buenos Aires at [email protected]; Anatoly Kurmanaev in Caracas at [email protected] To contact the editors responsible for this story: Andre Soliani at [email protected] Bill Faries, Randall Woods
Posted on: Wed, 22 Oct 2014 19:56:56 +0000
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