Monthly Archives: April 2013

Analysis — News Limited’s Steve Lewis missed half of Gillard’s Brazil story

Steve Lewis’s story today on the News Limited website bemoans the AUD$900,000 that Prime Minister Julia Gillard ‘wasted’ by taking a substantial delegation to last year’s Rio environment summit in Brazil. While he’s right to question the ultimate impact of the summit itself, he completely misses the larger foreign policy gains that Gillard’s attendance won for Australia.

To put it bluntly, Brazil is very important for Australia. Trade is relatively small, but there are major Australian foreign direct investments in Brazil, not least of which is the rapidly growing presence of Pacific Hydro. More to the point, thanks to its leadership position in the global South and large domestic economy, Brazil has a much weightier voice than Australia in global governance forums, including groupings such as the UN, WTO and G20. Good ties and positive working relationships with Brazil are going to be critical if Australia wants to successfully advance its international agenda in the future. This will matter tremendously when it comes to issues such as environmental standards, agricultural trade rules, and innovations in international legal frameworks.

Brazil’s government and foreign ministry were in a great state of concern immediately before the summit that they would hold a party and nobody would come. The large delegation that Gillard took to the 2012 environmental summit in Rio de Janeiro thus stands as more of an investment in what will hopefully become an important strategic partnership than the immediately obvious search for global climate conventions. In this context Australia’s active participation became an important statement of confidence in the summit’s emerging power host.

The importance of Australia’s recognition of Brazil was effectively codified by the signing of the Brazil-Australia Strategic Partnership on the margins of the environment summit. Brazil has a long line of suitors and has become adept at politely, but firmly deflecting efforts for such agreements from many of those would-be partners. Simply put, if it cost Australia $900,000 to secure a regularly scheduled opportunity to consult, plan and coordinate positions that will be taken to the various global governance bodies, then it was cheap at the price — much cheaper than purchasing squadrons of latest generation advanced fighter jets, for example.

To be fair to Lewis, it is not entirely surprising that he missed this critical element of the story. Just as some Australian government officials (like those in a number of other OECD countries) are still working to come to terms with the rise of Brazil in the global system, the media is also playing a game of catch-up. More detailed contextual knowledge is needed. Indeed, if Lewis had this knowledge he might not have been quite so disgusted at the cost of the accommodations for the Australian delegation. (You should hear what staff from the Brazilian Senate have to say about the cost of their deeply sub-standard accommodation at the Summit.)

What is the bottom line? Matters of State operate on multiple levels, which requires a sophisticated analysis that goes past sensationalist rhetoric and cheap point scoring. A lot happens on the margins of a Summit such as the Rio+20 meeting, which is why such large delegations are sent by participating countries. Despite a general benign neglect of Brazil and Latin America,  Australia nevertheless came away from Rio with some fairly substantial and concrete deliverables that will serve the country well over the medium and long term. Not a bad achievement at the price.

–Sean Burges

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Is a new ‘Superbloc’ emerging in Latin America?

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By Carmen Robledo-Lopez

The Pacific Alliance was established in April 2011 by four like-minded Latin-American economies: Chile, Colombia, Peru and Mexico. The grouping aims to promote economic integration in Latin America and to establish a platform to enhance links with Asian partners.

The bloc is relatively new but the members have already taken steps to integrate their economies. The four countries have started strategies to facilitate free circulation of goods, services and people, such as, abolition of visa requirements and tariffs in 90% of merchandises. Furthermore, Chile, Colombia and Peru have integrated their stock exchange markets and created MILA (Mercado Integrado Lationamericano); it is expected that Mexico will eventually join MILA too.

Several other countries have already expressed their interest in the Alliance and requested to be accepted either as full members or as observers. Costa Rica, Guatemala Panamá and Uruguay, as well, as non-Latin American countries such as Australia, Canada, Japan, New Zealand and Spain are observers of the Alliance.

Why has a small four-country alliance created such expectations? In 2012, the trade between the four members was equivalent to 48% of total Latin-American trade, while their combined GDP (gross domestic product) represented 39% of total of the region; both larger than Brazil’s. Additionally, the four countries have sound macroeconomic performances, healthy public finances and large young skilled populations. The Alliance seems to differentiate itself from other integration mechanisms, by the fact that the four members strongly oppose protectionism; as a result, they all have established many free trade agreements not only with Latin American neighbours, but also with other countries around the World.

The Pacific Alliance has real chances to rival the TransPacific Partnership (TPP) and create solid links in the Pacific Rim; the lack of a dominant self-driven economy might be one of the bigger virtues of the group. The Alliance is not wasting any time; the first contacts with members of ASEAN (Association of South East Asia Nations) have already been started.

The VII Summit of the Pacific Alliance will take place in Cali, Colombia, this coming May.

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And another quirky story on Venezuela from El Pais… be concerned

Apparently Hugo Chávez has risen and is talking to Nicolas Maduro. Or at least this is what the Spanish daily El Pais (never a chavista fan) is reporting. The latest incarnation of the former president, according to Maduro is “en forma de pajarito chiquito or as a little bird that speaks to the presidential candidate. Not even in his wildest moments did Chávez engage in such magic realist (or is it realist magic) flights of fancy.

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From bad to the bizarre in Venezuela

If you thought that Hugo Chávez’s heart as in the right place even if the execution of his policies in Venezuela was deeply flawed, a recent piece in Foreign Policy is not going to make you change your mind. Juan Nagel catalogs the bizarre and, frankly, frightening tenor of the presidential election campaign being run by Chávez’s anointed successor, Nicolas Maduro. Hopefully this is just a fit of panicked populist performances and not a harbinger of the policy style his government will take if successful in the April 14th ballot.

–Sean Burges

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What does middle class mean in Brazil?

The story in Brazil is the “rise of the middle class”, but as Folha de São Paulo blog entry by Vincent Bevins explains, this might not mean the same thing in Brazil as it would in a country like Australia. Definitely worth a read to get a sense of what is really going on both in terms of the classification of income groups and changing social dynamics in Brazil.

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