Article published in MAP 6, written by Prof Alexander Zhebit
PhD in History of international relations and foreign policy, professor of international relations, Universidade Federal do Rio de Janeiro
Prospects of a EuroBRICS strategic cooperation: a view from Brazil
A prospect of an economic and political union between the BRICS and the Euroland may be an illu- sion, although not at all impossible. Instead, a road map to a Euroland-BRICS strategic cooperation or even partnership may and should be traced, if we adhere to the LEAP declared purpose and if agree with some conclusions that are made on the basis of an empirical evidence.
Those who view Europe nowadays as a scourge or a plague in terms of a risk aversion and a contagious influence on business and monetary issue in other parts of the world, mostly in growing and transitional economies, may come to an understanding that this is an inevitable and probably normal stage of the ongo- ing crisis of the developed world, that must be redressing itself along some reform lines. There are those who argue that the overall scene is more general and complex and the crisis is a systemic one and that is why the financial, economic and the international political order should be reformed.
There some points that should be focused on if we try to consider, at this background, the reaction by Brazil to :
- = A lack of credible reforms of international financial and political institutions that would give the country a stronger support to bargain for a better future
- = Changing trade patterns
- = The recent currency devaluation in the developing countries and the US dollar timid recovery at the times of the present worldcrisisIn what degree do these developments hamper a better and closer relationship between Brazil and Europe and a consequent BRICS – Europe entente? What political or spin-off measures could be taken to boost the interregional rapprochement?Among some important things in this respect one must consider a few of quite obvious trends. First, the BRICS are organizing themselves not only as an alternative political and ideational entity, perceived to represent the entire developing world which hopes for a better living, but also as an executive political force, initially coming out with emerging financial and monetary institutions. If in Sanya, only about a year ago, there was a timid talk about the use of SDRs as a means of boosting the intra-BRICs trade and mutual cooperation, then in Delhi the BRICS leaders signed the Master Agreement on Extending Credit Facility in Local Currency under BRICS Interbank Cooperation Mechanism and the
Multilateral Letter of Credit Confirmation Facility Agreement between their EXIM/Development Banks, and resolutely spoke in favor of setting up a new Development Bank, a joint financial institution for the deepening of cooperation. If in Sanya the IMF reform was presented as a dire wish, the Delhi Declaration is a text of grunting dissatisfaction about a slow motion of this reform, and an expression of the need for the redistribution of power in the World Bank and even in the G-20, as it can be perceived in the suggestion to back Russia for the G20 presidency in 2013. The BRICS push forward to the world financial reform may not be a sure deal, but a courageous step forward towards strengthening their role at the times of the Euro-zone crisis and of the United States decline in macroeconomic and trade issues.
Second. If the Chinese economic engine and the Asian rise have been driving motors of the world economy since 2000, then why the world trade, including the intra-BRICS-trade, should not follow this major drive1 . The fact is the Brazil-BRICS trade has been developing much faster: from US$ 3.79 bi in 2000 to US$ 93,55 bi in 2011. Not evident in trade in services, the merchandise trade was much ahead of the global mer- chandise trade rise in this respect2. Except for the China factor, there was a boost in trade among Brazil, Russia, India and South Africa. The Brazilian – EU trade has been slowly decreasing since 2000, but continued to be very significant for the Brazilian economy, as well as a quite stable volume of the Brazilian – US trade. Nevertheless, there was a redistribution of the Brazilian structure of merchandise exports from the Atlantic axis to the pivotal Asia-Pacific region. At the same time the Brazilian dependence on the imports based on technology and services and a small share of its high technology exports are still significant factors of its close and sustained trade relations with its major partners – the European Union and the USA.
Third. The so-called “financial tsunami”, or “the war of currencies”, which reached Brazil by virtue of the US and European monetary injections, amounted to US$ 366,8 bi of its foreign currency reserves, by the first quarter of 2012, and US$660,5 bi of the accumulated FDI as of December, 2011, together with growing speculative swaps, caused the adoption of various financial protection measures by the Brazilian govern- ment to sooth the effect of the currency onslaught on its economy and on those of the
BRICS and other developing countries. Brazilian interest rates are among the highest in the world and also among the BRICS – 9% as com- pared to India (8,5%), Russia (8%), China (6,56%) and South Africa (5,50%) and they are gradually decreasing. Its prospects of development (PAC – Program of Speeding Growth), the huge estimated oil reserves, a favorable investment climate and a potential for a green economy attract serious investors and easy money as well.
What are the ways to build a bridge between the BRICS and the Euroland, using a Brazilian pillar?
First of all, political mechanisms must reoccupy the scene, such as the Mercosur – European Union talks on commercial agreement, severed in 2004 and resumed in 2010. Non of Nicolas Sarkozy to a interregional trade agreement, a would-be biggest in the world trade system, and the Cristina Kirchner protectionist and interventionist policies would constitute the most difficult obstacles to overcome, but Brazil will also have to make sacrifices, regarding a broader openness of its industries and services. Instead, the Brazil – European Union strategic partnership, dated back to 2007, may be of great help in terms of political influence over uncompromising attitudes of some more conservative leaders in the negotiations. The European Parliament, favorable to the interregional process, is much more than only an important ally in this respect.
Third. The G-20 platform may well serve for the European Union in order to compromise
The roadmap to the BRICS – European Union strategic partnership through a strategic cooperation may and must be traced to configure one of the means to restructure an old governance
with the BRICS on the issues of the IMF reform and the IBRD redistribution of power, though it should naturally mean concessions. The same behavior is tenable in discussing the United Nations reform.
Last but not least. The South-South movement and the European Union politics towards the developing world should come closer one to an- other, so that a better mutual understanding help overcome a post-colonial critique of the developed world.
The roadmap to the BRICS – European Union strategic partnership through a strategic cooperation may and must be traced to configure one of the means to restructure an old governance. Brazil is a major player in this effort, considering its traditional closeness to Europe, its democratic essence, its industrial and agricultural development and its pedegree influence over the developing world.
* Balança Comercial Brasileira. Dados Consolidados. 2011. Ministério do Desenvolvimento, Indústria e Comércio Exterior. Brasília, 2012 * Censo de capitais estrangeiros no país 2011 – Abi-Base 2010, Brasília, Banco Central do Brasil, 2011
* Relatório de estabilidade financeira, Volume 11, N°1, Banco Central do Brasil, 03.2011
* What agenda for a Euro-BRICS Summit by 2015?, LEAP/E2020