Promoting India Latin America Collaboration

Brazil elects its first female president

November 1st, 2010 Posted in Brazil, Politics
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Congratulations to Dilma Rousseff, the first female president of Brazil! Ms. Rousseff is widely expected to continue the economic policies of her predecessor, Lula da Silva. From MercoPress:

President Lula da Silva’s handpicked candidate Dilma Rousseff won Brazil’s Sunday run-off becoming the first woman president to lead Latinamerica’s largest economy. Ms Rousseff promised to stick to policies that have lifted millions from poverty and made Brazil one of the world’s hottest economies.

Rousseff had 55.2% of valid votes compared to 44.8% for opposition candidate Jose Serra, with 91% of votes tallied, according to Brazil’s election authority.

An economist and former energy minister who leans left but has become more pragmatic over time, Rousseff had never run for elected office. Yet she received decisive support from Brazil’s wildly popular President Lula da Silva, who plucked her from relative obscurity to succeed him.

During Lula’s eight years in office, his stable fiscal policies and social programs helped lift 20 million Brazilians, or more than 10% of the population, out of poverty and another 25 million to join the ranks of lower middle class.

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Rousseff who as a student was involved in guerrilla activities, vows to build on Lujla da Silva’s successes by upgrading Brazil’s roads system, schools and other infrastructure as the country prepares to host the 2014 World Cup and 2016 Olympic Games.

She also seeks to exploit the country’s newfound offshore oil wealth and expand the state’s role in the energy sector while continuing to court private investment.

“Her government will focus primarily on solving Brazil’s bottlenecks,” Fernando Pimentel, a close adviser to her campaign, said in a recent interview.

Rousseff lacks Lula da Silva’s charisma, and she has shown limited interest in passing major economic reforms, such as an overhaul of Brazil’s onerous tax code, that many investors say are necessary to reduce the high cost of doing business.

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Lula has acknowledged Rousseff lacks political experience but chose her because of her skill as a technocrat and administrator. He says those qualities will be critical over the next four years as Brazil tries to bring its infrastructure in line with its ambitions as an emerging world power.

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Latin America’s new promise…and why India should pay attention

September 15th, 2010 Posted in Economics - Indicators, Policy and Trends, Latin America, Politics, Public Policy
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Nobody’s backyard | The Economist

look beyond the headlines, and, as our special report shows, something remarkable is happening in Latin America. In the five years to 2008 the region’s economies grew at an annual average rate of 5.5%, while inflation was in single digits. The financial crisis briefly interrupted this growth, but it was the first in living memory in which Latin America was an innocent bystander, not a protagonist. This year the region’s economy will again expand by more than 5%. Economic growth is going hand in hand with social progress. Tens of millions of Latin Americans have climbed out of poverty and joined a swelling lower-middle class. Although income distribution remains more unequal than anywhere else in the world, it is at least getting less so in most countries. While Latin American squabbling politicians blather on about integration, the region’s businesses are quietly getting on with the job—witness the emerging cohort of multilatinas.

Brazil, the region’s powerhouse, is the cause of much of the excitement. But Chile, Colombia and Peru are growing as handsomely and even Mexican society is forging ahead, despite the drug violence and the deeper recession visited on it by its ties to the more sickly economy in the United States.

Two things lie behind Latin America’s renaissance. The first is the appetite of China and India for the raw materials with which the continent is richly endowed. But the second is the improvement in economic management that has brought stability to a region long hobbled by inflation and has fostered a rapid, and so far sustainable, expansion of credit from well-regulated banking systems. Between them, these two things have created a virtuous circle in which rising exports are balanced by a growing domestic market.

Latin America Tourism

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Brazil’s growing international presence

May 27th, 2010 Posted in Brazil, BRICs, Economics - Indicators, Policy and Trends, Latin America, Politics
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The BBC recently had an optimistic profile of Brazil’s position on the world stage. The article argues that Brazil has been largely successful at putting its own house in order, and is increasingly seen as a strong force in the international arena as well.

Democracy and democratic institutions have been strengthened. At the same time, Brazil has enjoyed high levels of economic growth, the result of continuity in economic policy that saw inflation remain low and stable, the fiscal situation under control and a floating exchange rate.

Poverty has been significantly reduced, and 31 million Brazilians lifted into the middle class, which in turn has brought about a rapid expansion of the domestic consumer market.

Commercial liberalisation and the globalisation of Brazilian companies are indicative of how Brazil’s economy has modernised. Diversification in the industrial and service sectors has gone hand in hand with the growth of the agricultural sector, highly competitive and with a strong presence in international markets. Brazil today sees itself as a global trader.

Brazil’s nascent position of power in global politics is due in large part to its credibility on issues that affect the developing world, and its status as a leader with the BRIC countries.

Brazil’s voice cannot be ignored on issues of importance to the developed world, such as foreign trade, climate change, energy (biofuels and oil), food, water and human rights.

Then there is the emergence of the BRIC countries, as Brazil, Russia India and China are known, a grouping that has become one of the new players on the international scene in recent years.

Brazil’s traditional diplomatic involvement in multinational organisations has reinforced the image of the country as a builder of consensus, an “honest broker”.

International attention has also focused on Brazil’s ethnic and religious harmony and the role it plays as mediator in more troubled parts of South America.

The article ends on this positive note:

For these reasons, Brazil today, confident and assertive, is seeking to carve a role for itself outside South America as a regional power able to act well beyond its immediate borders…

What is clear is that Brazil’s voice is set to be heard ever louder on the world stage.

IndusLatin has long shared this optimistic view of Brazil and its potential as a world power.

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Venezuela’s bid to join Mercosur

May 18th, 2010 Posted in Brazil, Economics - Indicators, Policy and Trends, Latin America, Paraguay, Politics
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For those who might be unaware, Mercosur is a regional trade agreement between Brazil, Argentina, Uruguay, and Paraguay. It is somewhat comparable to NAFTA, though there are some significant differences. Recently, Venezuela has been actively trying to join Mercosur, but before it can, all four member countries have to give their approval. So far the all have given their approval except Paraguay, though there has been some controversy in other countries over admitting Venezuela while Chavez is still in charge. In Paraguay, criticism of Chavez’s action against opposition parties has delayed the approval process.

Now, the leading candidate for the Brazilian Presidency, José Serra, has expressed some of his own concerns over Venezuela’s entry. From MercoPress:

“I want to say something, I think it’s great, very good for me that (Hugo) Chávez should support Ms. (Dilma) Rousseff [Serra's opponent in the presidential elections],” said José Serra talking to Brazilian reporters in Rio Grande do Sul, but warned that this is not positive for Mercosur “because his incorporation would only weaken and discredit Mercosur.”

Serra said that “as we all know, this gentleman likes to persecute and shut down all media that does not support him. Let us not forget also that Mr. Chavez could have won many elections but his debut in politics was as leader of a bloody military coup,” underlined Serra. “Only later was he elected”.

The opposition candidate that leads in public opinion polls went further and said that “not reforming or reviewing Mercosur endangers its very existence. To admit a new full member in Mercosur for political reasons is simply not believable and not acceptable”.

Serra also insisted that the voting system inside Mercosur had to be reviewed. “In the European Union, with a long experience of integration, the country with the largest GDP and most population has a greater participation in the voting scheme; on the contrary in Mercosur all members have the same vote.” This limits Brazil’s international trade policies and “must be reviewed.” Imagine “if Venezuela finally makes it into Mercosur—which is madness—it would have the same vote as Brazil; it’s quite senseless,” said Serra.

The former governor of São Paulo said that Mercosur should aim to become a free trade zone, (instead of a common market) but gave to timetable to achieve such a goal.

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Chile learns how trust its military, 20 years after Pinochet

March 5th, 2010 Posted in Chile, history, Latin America, Politics
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Chile has made great strides since the end of the Pinochet dictatorship in 1990. Under Pinochet there was extreme political repression, including at least 3,000 people who were “disappeared” and murdered because of their political opposition to the regime. In the last 20 years Chile has enjoyed rapid improvements in its economy and society, but mistrust of the military has remained strong.

With the recent earthquake and ongoing aftershocks, however, the Chilean military has begun to redeem itself in the eyes of the citizenry. Outgoing Chilean President Michelle Bachelet has deployed thousands of troops to the hardest hit areas, and they are doing a commendable job of orchestrating search and rescue missions and maintaing security. It is revealing, however, that distrust of the military was strong enough that it took two days of widespread looting and crumpled infrastructure after the quake before President Bachelet was willing to call upon the military for help.

The military’s history might be one of oppression and fear, but residents seem to be thankful for a military presence in this crisis. From the NY Times:

In Chile, the military clearly evokes mixed emotions because of the role it played in the torture and disappearance of some 3,000 Chileans during this country’s bloody 19-year dictatorship.

But in the five days since Chile was shaken by a magnitude 8.8 earthquake, one of the worst natural disasters in its history, the military’s relationship with the country’s people was turning a new page.

Tanks were stationed outside supermarkets that had been looted and vandalized for two days before the troops arrived. Soldiers organized lines for residents to enter banks, pharmacies and gasoline stations. And for the most part, emotional and exhausted residents like Mr. Ramírez embraced them.

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“The military arrived so late here,” said Mrs. Henríquez, 49. “The looters took everything in this city, even the lights in the supermarkets. It was dreadful. And all because the president was worried about what happened in 1973. We don’t care about that now. We want order, not chaos.”

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Venezuela strays from its policy of nationalization

February 12th, 2010 Posted in Energy, Investing, Latin America, Politics, United States
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Venezuela has been particularly hard hit by the global recession over the last few years. Last year alone, the country experienced 27% inflation and a 2.9 percent decline in economic output. Times are tough enough, in fact, that famed “anti-capitalist and Marxist” Hugo Chávez has declared that, “Investment and experience from foreign oil firms is necessary in Venezuela. We need it.”

Venezuela has long been criticized by the US and others for its policy of nationalization, which it has pursued with vigor in industries like telecommunications and oil. Chávez actually nationalized the entire oil industry in 2007, but recently, that trend has begun to change; Chevron inked a deal worth multi-billions of dollars to drill in Venezuela after it submitted the winning bid for some oil blocks in the first oil auction since Chávez took office 11 years ago. A second group of companies, previously highlighted on this blog, won a different set of oil blocks.

According to the NY Times, this deal signals a significant shift in strategy for Venezuela and Chávez.

After clashing with foreign oil companies in recent years, President Hugo Chávez of Venezuela has shifted strategy and awarded contracts to Western oil companies, hoping to increase his nation’s flagging oil production and pull the country out of a sharp economic downturn.

Chevron, the American oil giant, led a group of companies that won one of the concessions on Wednesday night…

Furthermore, this shift in oil policy may indicate that Venezuela will be seeking warmer relations in general with the United States and other countries that Chávez has been prone to demonizing.

In an unusual display of warmth given his friction with Washington, Mr. Chávez happily greeted a senior Chevron executive in attendance, Ali Moshiri, the company’s president of African and Latin American operations. Mr. Chávez conceded that differences remained with the Obama administration, but he also extended an invitation for President Obama to visit Venezuela’s southern oil region, telling Mr. Moshiri, “You bring him here.”

This latest development in Venezuela may be part of a general shift in Latin America from the left to the center. Other indications of this current centralist trend include the election of a right-wing billionaire in Chile’s presidential election, the strong success of Brazilian President Lula who governed from the center-left, and an overall decline in combative left-right discourse throughout South and Central America.

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Look to Brasilia, Not Beijing

April 9th, 2009 Posted in Brazil, India, Politics, Public Policy
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 WSJ.com

a more compelling challenge to the current world order may be emerging from an unlikely trio of countries that boast both impeccable democratic credentials and serious global throw weight. They are India, Brazil and South Africa and their little-noticed experiment in foreign policy coordination since 2003 to promote subtle but potentially far-reaching changes to the international system has the potential to leave fears of a rising China in the dustbin of history.

The quasi-alliance of these three powers has serious implications for the international system, and its major underwriter, the U.S., depending on how the challenge is handled. But an equally important, and quite unintended implication, is the sabotage of China’s great power ambitions. By robbing China of its claims to represent developing countries, this new cooperative trio could sideline China from the major debates in international affairs. That may be good news for domestic reform in China, which has long been stunted by the country’s great power ambitions.

The origins of the India-Brazil-South Africa Dialogue Forum (IBSA) lie in South Africa’s quest for a new allies more consonant with its interests and ideas following the end of apartheid in 1994. The immediate impetus came from Brazilian president Luiz Inácio Lula da Silva, who floated a formal cooperation scheme in early 2003. In June of that year, the foreign ministers of the three countries inaugurated the group in Brasilia, calling for a strengthening of international institutions to address the concerns of developing countries in areas like poverty, the environment and technology. Since then, according to Sarah-Lea John de Sousa of Madrid’s FRIDE think tank, the trio has been gaining support as “spokesmen for developing countries at the global level.”

IBSA members note that they are “vibrant democracies” and Daniel Flemes of Hamburg-based German Institute for Global and Area Studies noted in a 2007 paper that “IBSA’s common identity is based on values such as democracy, personal freedoms and human rights.” Human rights, civil society, social empowerment and “gender mainstreaming” are central to their moral capital.

Indian and Brazilian diplomats in particular, already among the world’s best, can advance the IBSA agenda because they share common ideals.

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Popularity: 7% [?]

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Mr. Lula goes to Washington

March 15th, 2009 Posted in Brazil, Politics, Public Policy, United States
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Lula is not only a political and diplomatic pro, but also a statesman. Amazingly, he comes off as more prepared than Obama with solid answers to reporter questions, with a sense of humor as well. Political leadership of this sort inspires business confidence in a country. Must watch link -
CSPAN Video- Pres. Obama & Brazilian President Lula’s press conference

What is brought up by a Brazilian reporter is the thorny trade issue of the US tariff on imported ethanol from Brazil. A policy that is not only bad economics, but bad morality – promoting corn-based ethanol in deference to the US domestic farm lobby that results in higher global food prices for corn-based foods.

Two other videos of Lula being interviewed that show his considerable skills no doubt honed from years as a union leader dealing with tough opponents. His incredible life story – going from a shoe-shine boy to Brazil’s president, is one that needs more press coverage outside Latin America.

Frost Over The World – President Lula – 08 Jun 07

Soundbite Central: President Luiz Inacio Lula da Silva
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A free lunch for you is a painful cost for someone else

November 23rd, 2008 Posted in India, Politics, Public Policy
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Special interest groups lobby politicians to receive benefits from the governmental treasury while diffusing costs on societies. Politicians are happy to comply since their elections and re-elections usually depend on funding from these groups.

In rich countries or regions, they can get away with economically unsound policies. (EU’s CAP) But, in countries like India and others in LatAm these types of policies have disastrous social consequences. In India, many farmers have access to free electricity. So, they leave irrigation pumps pumps on all the time draining the water table and depriving others in the same region of water.

Also, special interests like farmers can quickly rally their members say by blockading roads and driving their tractors around the state and country capitals if there is any hint of reducing subsidies to their cause. This makes for compelling TV and governments typically recant on any reduction or elimination of the subsidy. Fish do not vote for sushi bars.

This quote attributed to Alex Tytler is telling: “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”
Times Online

Children live in a fantastical world where Barbie dolls and trips to the zoo can be delivered without depriving their parents of something they might have enjoyed, such as a bottle of wine or a few extra hours off work.

Learning that cost-free transfers are impossible is an important part of growing up, and parents usually make sure it happens quickly. Most of us learn that there is no such thing as a free lunch long before we have ever picked up a bill.

Except when it comes to public policy. Encouraged by politicians, many adults indulge the infantile fantasy that the Government can bestow gifts on us while imposing costs on no one.

When it comes to bearing costs, there are no companies or markets or other aggregations of people. Costs are always borne by individuals.

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A World Led By India And China

November 17th, 2008 Posted in China, India, Philosophy and Culture, Politics
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Forbes.com

As many have observed, the global order that is emerging has a distinct Asian tilt because of the rise of China and India as geopolitical forces. The two countries’ growing power may stimulate an “Eastphalian” order that challenges the Western-led approaches that dominated the Age of Imperialism, the Cold War and the post-Cold War period.

The term “Eastphalian” plays off the description of the international system as “Westphalian,” a moniker traced back to the Peace of Westphalia in 1648 that established the modern state system. Through Western imperialism, populations in the Americas, Africa and Asia were incorporated into the Westphalian system, a brutal process that labeled non-European societies as “uncivilized” as long as they had societies that did not resemble what prevailed in Europe and North America.

The idea of “Eastphalia” communicates that conditions have emerged in which Asian countries have a say in world affairs not dictated by, or subordinated to, Western ideas and interests.

In the post-Cold War period, from Asia has come emphasis on the principles of sovereignty and non-intervention in the domestic affairs of states. These principles oppose broad notions of the right to use force in self-defense, favor pluralism in political and economic regimes and reject the homogenizing zeal of democracy promotion; prioritizing civil and political rights.

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