An emerging alliance

Print edition : March 12, 2004

Brazilian President Luis Inacio Lula Da Silva with Prime Minister Atal Bihari Vajpayee in New Delhi on January 25. - MANISH SWARUP/AP

Brazilian President Luis Inacio Lula da Silva's visit to India strengthens the efforts to build a trilateral partnership involving India, Brazil and South Africa.

THE visit of Brazilian President Luis Inacio Lula da Silva to India in the last week of January is hailed as a milestone in Indo-Brazilian relations. He was the chief guest at the Republic Day parade. The visit provided further impetus to the efforts to consolidate a trilateral alliance, the Group of Three or G-3, involving three important nations of the developing world - Brazil, India and South Africa. The South African President Thabo Mbeki was in India late last year to strengthen the emerging alliance.

The Foreign Ministers of the three countries had met in Brasilia in the middle of last year and issued the "Brasilia Declaration". They announced the formation of "the India, Brazil and South Africa Dialogue Forum" (IBSA) at the meeting. The Brasilia Declaration, while welcoming the expansion of economic growth and the accompanying rise in the standard of living in several developing countries in recent years, emphasised their concern "that large parts of the world have not benefited from globalisation". A "Trilateral Joint Commission" was set up to hold regular political consultations on issues of common interest. The next meeting of the Commission is scheduled to be held in New Delhi in early March.

Since he assumed office in January 2003, Lula has made 20 trips abroad, trying to rally developing countries into taking united positions on trade and economic issues. The G-3 is likely to be expanded to include China. President Lula will visit China soon to expedite the move. Russia too is keen to join the group.

Wide-ranging discussions were held between India and Brazil during Lula's visit when India signed a Preferential Trade Agreement (PTA) with Mercosur (the Latin American trade bloc consisting of Brazil, Argentina, Paraguay and Uruguay). The market access agreement with Mercosur will enable the two sides to select the products that will have reduced tariffs in bilateral trade. Lula described the accord as the first step towards future free trade and as the inauguration of a "new era in South-South cooperation". He said it would give India access not only to the four Mercosur countries but also to the rest of Latin America, which has a combined population of over 220 million and a gross domestic product (GDP) of almost $1 trillion, and is the fourth largest market in the world.

Five other agreements were signed during the Brazilian President's visit, including one on cooperation in space research. This agreement, according to the Brazilian Ambassador to India, Vera Barroin Machado, is a "novel one". Brazilian micro-satellites will be launched by Indian space rockets from Brazil. The two countries will also exchange satellite pictures. Brazil, like India, has an ambitious space programme.

Accompanying Lula was the former President of Argentina, Eduardo Dualde, who currently heads Mercosur; the Foreign Minister of Paraguay; and senior officials from Argentina and Paraguay. The high-powered Brazilian delegation included the Ministers of Planning, Foreign Affairs, Tourism and Development and Trade and the Governors of the States of Parana and Mato Grosso. More than a hundred leading Brazilian businessmen accompanied Lula.

The Brazilian Ambassador told Frontline that President Lula was "very pleased" with the outcome of the visit. Lula has met Prime Minster Atal Bihari Vajpayee three times in the past seven months. According to Machado, the two countries are closely coordinating in multilateral forums. She pointed out that even before Lula assumed the Presidency, he argued for closer relations with countries like India, Russia and China. Machado said that Lula was very much aware that the people of India knew about his role in Brazilian politics on behalf of the working class and the landless. Lula has toned down his rhetoric, but from available indications he still holds fast to his core ideological values. He remains close to the progressive leaders of Latin America like Fidel Castro of Cuba and Hugo Chavez of Venezuela. The Brazilian government has been critical of the American invasion of Iraq. When the Bush administration unilaterally imposed humiliating immigration rules on foreign visitors, only the Brazilian government had the courage to react by applying the same measures to Americans visiting Brazil. Americans are fingerprinted and their pictures taken on arrival at Brazilian airports.

Some in the West view Lula's initiative to reinforce South-South cooperation in the age of globalisation with suspicion. The stated goal of Lula's visit to India was to construct a "new trade geography" in the world. Lula told the media in Brasilia that this did not mean that the countries involved in the initiative did not recognise the "fundamental" importance of trade and commerce with rich countries. He explained that the focus was on creating new alternatives. Trade diplomacy is going to play an important role in Lula's efforts at strengthening the Brazilian economy and firming up new geopolitical alliances. Brazil, even under the right-wing military dictatorship of the 1960s and the 1970s, followed an independent foreign policy, unlike many of its Latin American neighbours.

India and Brazil have a long history of cooperation in the diplomatic arena. The creation of the United Nations Conference of Trade and Development (UNCTAD) was mainly because of the initiatives of Brazilian and Indian diplomats. Brazil will host the UNCTAD meeting in June this year. Lula's idea is to launch during the meet his plan based on the System of Trade Preferences Among Developing Countries. The plan, calling for a further intensification of trade between developing countries, was first articulated in the 1980s but could not be implemented in the face of open hostility from developed countries. Lula is of the opinion that the expansion of trade ties among developing countries will help democratise international relations and curtail hegemonism in international politics.

Lula said in New Delhi that his country was in favour of free trade as long as it was genuinely free. "Our products are the victims of subsidies, especially in agriculture. So, we want to negotiate with all the countries on equal terms." He emphasised that trade relations should be based on mutual respect. "That is why the G-20 and the G-3 are so important," he said. The G-20 is also Lula's brainchild - it is a grouping formed ahead of last year's WTO meeting in Cancun. Brazil, India and South Africa are also of the view that the United Nations Security Council has to be expanded so that it reflects global realities. The G-3 is being viewed as an attempt by India, Brazil and South Africa to advertise their claim for a permanent seat in the Security Council.

As of now, the scale of trade between India and Brazil is very modest - it was worth only $1.04 billion last year. Lula said in New Delhi that though bilateral links with India were on a strong footing there was considerable scope for further expansion of political and economic ties. He said that the Brazil-India economic partnership would be mutually beneficial. "Brazil wants to be a real partner; we are here to make investments and get investments," Lula told the Indian media. He said that he was leaving India "convinced that we have consolidated an exceptional partnership". Brazil's trade is mainly with the United States and countries of the European Union, which account for more than half of its exports. The third and fourth biggest trading partners of Brazil are Argentina and China. The Brazilian Minister of Development, Industry and Trade, Luiz Fernando Furlan, said that bilateral trade between India and Brazil had the potential to grow up to $5 billion a year, considering the size of the two markets. He pointed out that there was considerable scope for the joint production of "gasohol" (alcohol fuel made from sugarcane). Brazil has pioneered an intensive programme for the substitution of petrol with ethanol. The two countries are the biggest producers of sugarcane. Contracts have been signed for the setting up of around 15 fuel alcohol plants in India in the next two years.

Indian pharmaceutical products have already captured a big slice of the Brazilian market. Every three months, Brazilian Federal Drug inspectors come to India to certify the quality of the products. The Brazilian Ambassador said that her government was committed to promoting projects in the "trilateral context". A fund has been created for this purpose. The Brazilian private sector has pledged $100 million and already committed $1 million to the Fund.

Cooperation between India and Brazil is increasing in the defence sector too. A Defence agreement was signed in December 2003. The two countries will join hands in the training of air force pilots. Joint military exercises will also be held shortly. The aviation industry in Brazil, which is among the most advanced in the world, has sold five passenger planes, four of them to be used for VIP transport. Indian aviation companies have expressed strong interest in the purchase of Brazilian passenger planes. Cooperation in the field of biotechnology, Information Technology, tourism and railways is also bound to grow.

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