President Dilma Rousseff joined Barack Obama at the White House yesterday with the cool confidence of a pragmatic leader whose country has earned a first-of-its-kind esteem with its northern neighbor.
The Brazilian president arrived for her first state visit to the United States with a strong hand of cards to play. Brazil casually edged out the United Kingdom last year to become the world’s sixth largest economy. Further, a growing middle class—touted as half the 200 million-strong population—recent oil finds, and infrastructure projects for the 2014 World Cup and 2016 Olympic Games are increasingly in the eye of international investors. Brazil is now the third largest purchaser of U.S. bonds, and the U.S., along with France, has vied for years for an intended $4 billion-plus purchase contract for the Brazilian military to replenish its fighter jets. In a January announcement at Disney World, Obama specifically asked Brazilian tourists to come and spend money in the United States.
But after meetings in Washington DC, Brazil, like the U.S., seems to have come out largely holding its own, rather than with any new gains.
Still, it was an opportunity to showcase why the U.S. and Brazil should forge an even closer relationship. Rousseff lauded growing trade and investment ties, saying Brazil’s foreign direct investment (FDI) in the U.S. has already reached 40 percent of U.S. FDI in Brazil. The Brazilian president hailed the recent U.S. decision to lower barriers for Brazilian ethanol to reach the world’s largest fuel-consumption market and an aeronautical accord to address aviation sector needs in Brazil. Still, Rousseff noted from the White House that Brazil and the U.S. have “strategic areas” where “we can further deepen our existing cooperation.” Later, at the U.S. Chamber of Commerce she emphasized that the two countries “are increasingly partners in a dialogue between equal nations.”
Few trade relationships offer the U.S. as much promise as a more profound one with Brazil, said Moisés Naím in a Financial Times op-ed in prior to the Brazilian president’s visit. According to Naím, a U.S. government official called Brazil the “France of Latin America.” Still, although the two-way trade relationship continues to favor the U.S., things are changing quickly. In the first quarter of this year, Brazil’s trade deficit with the U.S. reached $770 million—a sizable drop from the $2.3 billion recorded over the same period last year. Brazilian authorities increasingly draw attention to the rise of exports to the U.S., from petroleum to manufactured goods.
Although the U.S. is still a major trade partner, it has lost ground in Brazil, with China becoming the country’s largest trading partner in 2009. At the same time, Brazil has managed to benefit from Chinese demand for imports—with a record $44 billion in Chinese-bound exports last year—and maintain a diverse economy to stabilize growth. Even with the 43 percent increase in exports to China, the Asian giant still only consumed 17 percent of Brazil’s trade basket last year.
Despite her satisfaction with Brazil's growing upper hand in trade, Rousseff loudly repeated at the U.S. Chamber of Commerce yesterday her complaint that the low interest rates and expansionist monetary policies of wealthy countries trying to recover from recession have created a “monetary tsunami” in developing nations. “We in Brazil experienced this in the 1980s. We know how painful it is,” she said.
At the BRICs summit last month in India, Rousseff used harsher words for what she called the “new and perverse forms of protectionism in the world.” BRIC leaders threatened to withhold extra funds requested for Europe’s recovery by the International Monetary Fund if they were not granted greater voting power in institution.
In the realm of diplomacy, Rousseff surprisingly did not repeat her request that the U.S.—as it did for India—endorse its long-standing bid for a permanent seat on the UN Security Council. As a rotating member Brazil has often abstained or voted against U.S.-backed positions on the Council. This was especially evident under Rousseff’s predecessor, Luiz Inácio Lula da Silva, who had welcomed Iranian President Mahmoud Ahmedinejad on a state visit and attempted to stave off sanctions against Iran, in addition to recognizing Palestinian statehood. While Rousseff has reversed course on some of the more controversial aspects of Lula’s foreign policy, the new Brazil would still hardly follow the U.S. lead if it became a permanent member of the Council.
While diplomacy and trade leave something to be desired between the U.S. and Brazil, the two countries are making unprecedented strides in the area of cultural exchange. Obama’s Disney World announcement was a more-than-welcome gesture to travel-hungry Brazilians, famous as big-spending tourists. Brazilians, long irked by the intense interview process and frequent denial of tourist visas to the U.S., are seeing a change in policy: The U.S. gave 62 percent more visas to Brazilians in March 2012 than it did in the same month last year. The move is popular with Brazil’s new middle class. With an overvalued real, international travel is affordable for them for the first time.
But in addition to tourism, the U.S. and Brazil have begun what promises to be the start of a more long-term, mutually beneficial program: Science Without Borders, Rousseff’s answer to Brazil’s gaping science and math gap. Some 100,000 students will spend a year studying abroad on largely Brazilian government-sponsored scholarships, and up to half are expected to go to the United States.
The program shows a long-term commitment to strike at emerging Brazil’s Achilles’ heel: education. In the most recent OECD Programme for International Student Assessment, Brazil ranked far behind its economic peers, scoring lower than countries like Romania and Trinidad and Tobago in math and science. This is one reason why Rousseff called the new initiative “so very important” during her White House comments.
Clearly, the U.S.-Brazil relationship has continued to prosper under President Rousseff with her U.S. visit yet again showing the dynamic gains in cooperation. But much more remains to be done, and hopefully this visit, like Obama’s trip to Brazil last year, will be the start of a new series of working-level initiatives to further enhance that relationship.