Expert opinion: India has high stakes in Brazil; here’s what election of new President, a former military officer, means for the world and us

Updated: November 8, 2018 4:27 PM

After the 2016 impeachment of President Dilma Rousseff, indictment of dozens of members of parliament for corruption, imprisonment of former President Lula, one thought Brazil had seen it all.

India Brazil ties, Rio de Janeiro, india brazil bilateral trade, global recessionBrazil has been the cornerstone of India’s relations with Latin America. (Photo source: MEA)

By Deepak Bhojwani

After the 2016 impeachment of President Dilma Rousseff, indictment of dozens of members of parliament for corruption, imprisonment of former President Lula, one thought Brazil had seen it all. On 28 October, the aftershocks of that political earthquake led to the election of Jair Bolsonaro as President 2019-22.

A former military officer and staunch evangelist, Bolsonaro has represented Rio de Janeiro in Brazil’s Congress (parliament) since 1991. His meteoric rise this year was fuelled by public disgust over corruption, deteriorating living conditions and law and order. His left-wing challenger, Fernando Haddad, of the Workers Party (PT) did better in the second round with 45 percent to Bolsonaro’s 55. He labored under the shadow of his imprisoned patron, Lula, who may well have won had he been allowed to contest.

Brazil, 2.6 times the size of India and endowed with massive natural resources, is an agricultural powerhouse. Thirteen years of PT rule (2003-16) saw 40 million emerge from poverty and peak GDP growth of 7.5 percent (2010). The discovery in 2007 of offshore oil made it an energy superpower, producing 3.3 million barrels of oil equivalent per day. Every litre of petrol in Brazil has at least 25 percent ethanol (India stagnates below 5 percent). The global recession and fall in commodity prices took their toll. In 2015 and 2016 Brazil went through a recession but growth should be over 2 percent in 2018. The number of people in extreme poverty rose by 11.2 percent between 2016 and 2017. Oxfam claims the fortunes of the country’s super-rich rose 13 percent, or 549 billion Reals ($1.5 billion).

Brazil’s energy became its curse. The national oil company Petrobras – partially privatized years ago – was the target of the Lava Jato corruption scandal incriminating politicians involved with overpriced projects. Bolsonaro is untainted and has vowed to roll back this tide. He has promised to loosen gun laws, abolish legal abortion and give the military more powers. His Vice President is a recently retired army general. He has nominated as his Justice Minister Sergio Moro, the renowned judge behind the Lava Jato campaign – and Lula’s imprisonment.

Brazil’s political polarization owes much to its social and economic divides. The contradictions between a society that boasts the third highest population of helicopters worldwide (in Sao Paulo), and blames leftist politics for the slide back into poverty, cannot be ignored. The racial divide implies more votes for the right in prosperous – and white – southern Brazil, while the more coloured north and north-east traditionally prefer the left. At issue is also the future of the vast Amazon forest that may be subjected to more ‘liberal’ policies of deforestation and infrastructure projects. Bolsonaro, labelled by his critics the ‘Trump of the Tropics’ has been ambivalent on the climate change agreements Brazil signed up to. On the other hand, his tough rhetoric on crime, drugs, etc. resonates strongly even with Brazil’s middle class.

He won the presidency convincingly but his Social Liberal Party (PSL)’s 52 members share Congress with representatives from 29 other parties, including the PT with 56. Political fragmentation may lead to more deal-making of the sort that has tainted Brazilian politics. The reaction from the markets however has been positive. The stock market is up and the currency has appreciated. Foreign investors are expected to return with more deregulation under his market-friendly Finance Minister Paulo Guedes. Regional alliances with other right-wing and business-friendly regimes such as Chile may lead Brazil out of its rut within the relatively protectionist Southern Common Market (MERCOSUR).

On the international stage, Bolsonaro has criticized China, wants to move the Brazilian embassy from Tel Aviv to Jerusalem, and will get tougher on Venezuela. Bolsonaro’s open admiration for Trump’s USA implies closer economic cooperation, distancing Brazil from earlier autarchic policies. His attitude on Brazil’s erstwhile South-South cooperation policy is still to crystallise. India will be watching Brazil’s moves on IBSA, the trilateral arrangement with South Africa inaugurated in Brazil in 2003, and on BRICS, which Brazil is to host mid 2019.

Brazil has been the cornerstone of India’s relations with Latin America. With bilateral trade dipping below $7 billion annually, it has ceded commercial primacy to Mexico. It still boasts the highest Indian investment and corporate presence in the region, with billions of dollars invested in Brazil’s hydrocarbon reserves and crude imports. There could be more if this sector is further deregulated. ONGC and Bharat Petroleum are poised to exploit offshore discoveries along with a hitherto sluggish Petrobras. Other major Indian ventures include sugar, aluminium, chemicals, pharmaceuticals, automobiles, and the ubiquitous presence of Indian IT majors.

India has high stakes in Brazil. Though the strategic visions may be calibrated afresh with the regime that takes office on 1 January, Brazil’s economic success and stability are vital for our relations with this friendly strategic partner across the southern Atlantic.

The author is Former Ambassador of India to Colombia,  Venezuela,  Cuba; Consultant Latin America

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