Walter Russell Mead writes in The American Interest that the relationship between the U.S. and Brazil have changed, for the better.
The new US-Brazilian relationship does not quite live up to [the US-India relationship], but the ramifications of the changing relations between the two dominant powers in the western hemisphere will nevertheless make waves. It is likely in the 21st century that Brazil will join the group of countries Americans listen to and rely on the most, and the countries whose interests Americans take the greatest care to address.
With the fall of the Soviety Union, Mead argues, the U.S. no longer has a reason to meddle in South American affairs. And for Brazil?
On the Brazilian side, something even more important has happened: Brazil has begun to believe that the world economic system might just work to Brazil’s advantage. . . . Brazil’s success in a range of industries, like aviation, and the success of Brazilian companies that have become fully-fledged multinational players (a Brazilian firm now owns Anheuser-Busch, for example) make more and more Brazilians feel that on a level playing field, Brazil can win.
That’s certainly the feeling I get as I read the Brazilian press. That was the feeling I had yesterday when I spoke to Roberto Garibe, Special Advisor of the Executive Office of the Presidency of Brazil. I was calling to interview him for an article I’m writing about foreign investment in Brazil in preparation for the upcoming World Cup and Olympics. I asked him about the Reuter’s story I posted about the other day, the one critical about PAC, Brazil’s accelerated growth program. He acknowledge that they might not meet the people’s expectations, but thought those expectations might not have been realistic to begin with. That said, he reminded me, PAC is much more than the Word Cup and the Olympics. Long after those sporting events have turned off the lights, Brazil would be busy improving its infrastructure and the standard of living of its people. He sounded like someone intent on making sure that would happen. And if my experience with him is indicative of the work ethic of the people working with him, Brazil will meet its development goals.
According to O Globo, Brazil’s Civil Aviation Secretary, Walter Bittencourt, guarantees that his people are working so that the nation’s airports can handle the influx of people attending the World Cup in 2014.
We’re discussing the exact strategies we can use to accelerate the work on the airports . . .
Of course, promising that you’re working hard is different than promising that the airports will be ready. I’m hoping they will be.
Nine of the 12 airport projects underway in Brazil won’t be ready until the World Cup in 2014. In other words, they won’t be ready until after the last goal has been scored and the last fan has flown out of the yet-unfinished airports.
The movie “Fast and Furious 5 Paints a Corrupt Image of Rio.”
Alexandre Tombini, president of Brazil’s central bank, said today that the country’s stock and credit markets weren’t up to financing all the projects planned for the country, including projects important to the 2014 World Cup and the 2016 Olympics. Those markets “don’t have the capacity, by themselves, to handle the demand for investment,” he said. “Other sources of funds will be necessary.” That other source will be a new market for corporate bonds announced today by Anbima, the Brazilian Association of Institutional Finance and Capital.
At least at Fitch, Brazil is no longer sitting at the bottom of the ratings. Today, the U.S. based rating agency, upped Brazil’s credit rating from BBB- to BBB in part, says the Brazilian business magazine EXAME, because the country “has signaled that it’s serious about improving its fiscal position,” signals that include spending cuts, a modest increase in the minimum wage, and a steady reduction in loans from Treasury to Brazil’s development bank BNDES.
At yesterday’s speech at the U.S. Chamber of Commerce, Sergio Cabral, the governor of the state of Rio de Janeiro claimed that
“não há nenhum atraso” em relação à Copa do Mundo de 2014 no Brasil [“there are no delays” in relation to the World Cup of 2014 in Brazil]
according to the Jornal do Brazil.
I hope he’s right, but I fear he needs to read Reuters.
The governor of the state of Rio de Janeiro (where the Cidade Maravilhosa is located) is in the U.S. Today he spoke at the United States Chamber of Commerce in Washington D.C. where, according to the Jornal do Brasil, he spoke of the huge amount of investment his state is attracting, claiming that more than $111 billion will be invested in the state of Rio over the next three years, some he says is more investment money per “square kilometer” than in any place in the world.
Sounds pretty good, right?
Well, then there’s that story at Reuters:
Indeed, scenes like this are supposed to become a thing of the past here. Brazil plans more than $1 trillion in construction projects this decade to bring its woeful airports, roads and other infrastructure up to date — an ambitious building boom that will prepare the country to host the 2014 World Cup and 2016 Olympics, provide a bonanza of opportunities for foreign investors, and secure Brazil’s place among the world’s most dynamic emerging economies.
That’s the dream, anyway.
In reality, expectations are coming unraveled — fast. Brazil’s grand infrastructure plans now seem likely to fall well short of President Dilma Rousseff’s ambitions, according to a Reuters investigation of major building projects and interviews with nearly two dozen senior political leaders, investors, government watchdog groups and others.
I’m a big fan of Brazil in general and Rio in particular. I hope the Governor is right, but that Reuter’s story is disturbing.
Jason Mitchell has an interesting story in Institutional Investor about the role of private equity in Brazil’s resurgence. It caught my eye because I served a two-year mission for my church in Brazil many years ago and fell in love with the country. My wife and I returned for a visit in February 2008 and hope to return again soon. In fact, my mission president has invited us to serve with him and his wife in the Campinas Temple.
Whether we’ll be able depends on a lot of things happening. We’ll see.
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