Dr Christopher Sabatini
Good morning, good afternoon, depending on where you are, in which time zone. Thank you for joining us for the webinar Lula 2.0. This, act – the occasion, sort of, marks two things. One is the approaching 200 day anniversary of Lula’s term, having been inaugurated on January 1st of this year. It also is being held on the eve of the CELAC-EU Summit to be held in Brussels. So, I’m delighted to be able to have a series of experts to discuss both Lula’s foreign policy vision across a range of issues, both economic, diplomatic, environmental, as well as talk about the domestic conditions under which Lula has returned to Planalto, which are considerably different.
Domestically speaking, of course, the country has been marked by polarisation, a series four years under Jair Bolsonaro of regressive international policies and regressive environmental policies, as well as a, sort of, sharpening of the debate and discourse around issues such as social inclusion, such as the environment and deforestation, and also as well as isolationism.
So, I’m honoured and ex – particularly excited to have here with our panellists. We’ll open up with Minister Celso Amorim, who is currently the Senior Advisor to the Presidency on matters of Foreign Affairs. Celso is well known to all of you. He is a former Foreign Minister, former Defence Minister, but most importantly, I would argue he is one of the leading intellectuals on, sort of, the new international relations in the hemisphere. He’s been honoured by Foreign Policy magazine, and by a number of others for his vision and his action, if you will, on trying to give voice to Brazil’s view and vision and action on foreign policy, as well as trying to recast a more multilateral world order.
So, we’ll open up with Celso Amorim. After that, we’ll hear from Dr Elena Lazarou, who’s an Associate Fellow at Chatham House, and is also at the EU Parliament as a Chief Researcher for international relations. And next, Luis Fernando E Lopes, who is the Chief – he’s the Partner and Chief Economist for Patria Investments, and then Ana Yang, a colleague of mine, as well as the Director of the Sustainability Accelerator here in Chatham House. So, without further ado, Minister Amorim, please, what are your visions? What are your thoughts?
Minister Celso Amorim
Well, thank you, Chris. Thank all of you, and thank the Chatham House for invitation. It’s a pleasure to be with you. I have been several times, even in presence, on live in Chatham House, in government and outside of government also, I think, which was in a way probably more fun. But anyway, very quickly to try to give an idea of – with this mixture, let us say, of being a kind of, Foreign Policy Analyst, but now an Agent, again, of government, and I’ll try to make a summary of how we see things.
You know, when I was invited by President Lula for the first time in 2003, I speak for myself, I had a very clear view of what was necessary to do. I’m not saying that necessarily I was right or wrong, but I had a very clear view. In a way, this is summarised in Lula’s own speech, inauguration speech, and it’s about, let us say five minutes he devoted to – five to seven minutes he devoted to foreign policy. And it’s an – some – to some extent to myself, a bit impressive how much similar what happened corresponded to what he had in his speech. So, there was an agenda and the agenda was implemented.
Of course, there were unforeseen things, like the Iranian Nuclear Programme, the failure of the Doha round. I mean, so, of course we can’t foresee, but generally speaking, we follow the agenda that was there. And I think that has to do with one aspect, in my opinion, that the world was relatively simple, at least as I saw it, maybe from – with a big difficulty, in my own view. But I don’t know, it was relatively simple. Whatever I had seen as Foreign Minister before, I had worked with Itamar Franco and as Ambassador to the UN and to Geneva, that’s what – it was clear.
From my point of view, we had to – so much so that I defined, and these later on, became a, almost a current expression, whether people agree or not. But I – when I – my first speech, even before coming to the government, was to say, when I had to define the foreign policy that Lula would follow, and I think I could not take a whole time defining with all regions and so on. So, we – I just said that we have to have an assertive foreign policy, ‘ativa and altiva’, that was the terms I used. And that has one significance. We are not changing for – we are not looking for a radical change in the foreign policy of Brazil.
The principles were the same since at least the Democratic government will not change the basic problems. Maybe the emphasis would change from – for instance, on Africa or an integration of South America, but it was above all, the attitude. What I felt as an Ambassador to the UN and Ambassador to Geneva, it is very often the suggestions I gave or some other ideas were approved, but they were not pursued in a systematic way. There was always too much caution in relation to what would be the reaction of the United States or the reaction of European Union. So, that’s why I only said, “Well, we’ll have an active and a,” how should I say, “assertive foreign policy.” We’ll not be – we’ll be not afraid of our own shadow, and we’ll not be – so, this was basically, the idea.
And in a relatively simple world, a world that was moving from unipolarity to a, kind of, benign multipolarity, which was not really contested. Later on, not then, but later on, even President Obama referred to the multipolar world, to the displeasure of the new [counsel – 08:07] in the United States. But so, our policy was going into that direction. That meant not being too much subject to any other project of another country or another group, and trying to have relations with all sides. We’re accentuating of course, our relation in Latin America, very especially in South America, and also our relation with Africa and other big developing countries.
It’s curious. I mean, we did it – once I – just briefly, once I had a conversation with – I had several times, but once when I was no longer Minister, I had a conversation with Jim O’Neill, and I said, “Well, you invented BRICs, right?” And he said, “Oh, yes.” And so, I said that, “But we created it,” because, actually when we speak – when President Lula speaks of the – his priorities he mentioned exactly the countries that were later came to form the BRICS with an S, which included South Africa, which was not in the broad definition of Jim O’Neill.
So, anyway, so, it was there. What happens now? I think our broad view has not changed in any radical way, but there are two factors that have – at least two factors that have to be understood. One is, of course, that Brazil went through a traumatic third period during the Bolsonaro years. So much so, that, for instance, I was able to sign an article together with my coll – my former colleagues, Cardoso, who was President, but who had been Foreign Minister, [inaudible – 09:56], who was just a social actor. We did – even the Ministers of [inaudible – 10:05] signed it. We all – all of us signed the same article because Bolsonaro – everyone that was on the top of foreign policy analysis or action go – in government since the democratisation, and who were still alive signed that up because Bolsonaro was really something totally abnormal.
And one of the dangers, of course, is that the abnormal may become normal after a time. And so, that’s not a tendency only in Brazil, it’s outside. So, that was an aspect that has to be taken into account when we think of Brazil today. The other thing is, of course, that the world has changed, and I would only signal two aspects of this change because there are, of course, many changes, but two aspects is – which are especially – or three aspects. Let me put that way. One, of course, is the emergency of climate chan – created by climate change. It was obvious, maybe, there for many people, but not for the public at large, and certainly not for – for governments we had already important action in Copenhagen, I think, but it was not yet so clear that it should be central in our foreign policy.
Now, this was – another aspect, of course, was the spectacular intuition of not putting any values on the growth of China. That, of course, affects the equilibrium even within BRICS, and of course, now it’s changing this – we cannot speak so easily between the option between unipolarity and multipolarity because there is also in the middle, some kind of bipolarity or new Cold War or whatever you can call it. So, that’s also a big change that had to be taken into account.
And third, just to be very brief, is that peace, at least peace in a global way, was a presumption. We should not be – we were not worried with that in a persistent way. Of course, it’s – I normally say peace, freedom, these things are like air. You – like air, you only perceive their importance when it lacks, when it’s not there. So, people who have asthma knows very well what I’m saying, but people who don’t have asthma don’t think it’s so important.
But – so, now we have the emergence of climate, we have this threat of a new bipolar world, and we have – I mean, even with forecasts or analyses, like the Graham Allison one, The Thucydides Trap and all that, and we have actual war. War in the – not in the territory of the planet or of the international system, but in the centre, in the geopolitical centre of the world. So, these are changes, which of course, don’t allow us to be, let us say – and that creates new challenges, I would say.
Everything we did in the past – of course, we had conflicts on ORR and the FTAA, how it was in other areas. How, for instance, in the question of the nuclear programme of Iran, we – there was this conflict with the United States because we were asked to do one thing and then criticised for doing exactly what was asked from us. And I even told a colleague of mine, American colleague of mine, a North American colleague of mine, about a letter of President Obama to President Lula. I said, “You wrote that letter.” He didn’t say anything, but I’m not going to say his name either, and I said, “I – and I know why you wrote it. You wrote it because you think we would not be able to get there.” So, you would’ve – and our only mistake was to succeed.” Anyway.
But anyway, so – but in a way, it was a simple world and now it’s a much more complex world. We have to save the world from a global war. It’s not – well, we cannot take as normal the situation in a country, in a – like Ru – between Russia and Ukraine. I don’t want to go into the details and – but we have to, of course, condemn actions that are against international law. But of course, we have also to think of peace. You cannot play with the risk of a nuclear war and the new – what happened in Russia recently, I don’t know, even. You know, if you want to be too Machiavellian, you might think it was intentional. I don’t think it was intentional, but even if it’s not intentional, it shows that even if there is no purpose of, for instance, the Russians, which was the largest nuclear power, maybe together with the United States, depending how you look at it, even if it is not their purpose, nuclear war might appear.
I mean, if there is a rebellion of a – I don’t know, how far was the capacity of this Wagner Group to get armament, certainly not nuclear armament, but we don’t know. We hear that they have many followers, apart from their professional people. So, I’m just think that – and the importance of that is shown even by the fact that China, who has – which has, of course – whose leader, Xi Jinping with Putin, have signed a document speaking of a friendship without limits, but gives warnings about not – the not – non-admissibility of nuclear weapons. So, this is a very dangerous world, dangerous in a very serious way.
And the other day I was here with a Journalist, I speak with many Journalists in the United States that never reproduce what I say. So, I don’t know if I should go on speaking or not, but I speak – I spoke to her. She was very nice, very kind, and so on, and say, “Well, but we all thought that we would concentrate on climate, and then you’re concentrated” – we are saying about the pronouncement of President Lula, “on the question of peace and the war in Ukraine and so on.” And I say, “Well, because there – if there is a nuclear war, there will be no Ukraine, there will be no Amazon.” I’m sorry, “There will be no Amazon, and there will be – or at least there will be no people to enjoy from the benefits of the party.”
So, the two things that are important. Of course, we just came from a meeting from – with the President of Colombia, President Petro, as a preparation for a broader Amazon meeting. So, we are very – and of course, we are already treating our COP 30. So, we are very, very keen on that, but we can’t forget we – Brazil is part of the international system, and we cannot just take for granted peace, as people take for granted air. I mean, sometimes it may – you may – it may lack. You may find that you should have done more to keep that – to keep – to be sure that we would have a peaceful world. So, I would say that now, looking at these things we have – it’s very difficult to speak of one, this or that priority, because if I say something, people, “And what about Africa?” Of course, Africa is very important and we intend to continue our African relations. The people may ask, “And what about relations between Mercosur and [inaudible – 17:39]?” Well, that’s important.
But let me just mention three lines, which are really crucial and I have to do. One is integration, an integration of South America, integration in Latin America, but with different levels of – differing degrees of real integrations. South Amer – Mercosur, South America and Latin America all have problems, but these are – this is one area and I can illustrate that with the fact that President Lula, after many years in which that never happened, was able, in spite of differences that showed up, which was natural, had a meeting with all the Presidents of South America. This is one important, and now we have this – well, in the climate and then you have also the regional element there. Of course, the meeting of Amazon Presidents and all the effort in broader planetary level, all the meetings in which President Lula have been involved, even before the inauguration and also our project of having COP 30 in Brazil.
But the other is peace. So, we have these three, the integration, the climate, the climate crisis and the risk of a broader war, which we never had in such a – I’m old enough to have lived at the moment. I was not a Diplomat yet, but I – actually, I was a Diplomat. I was in the Diplomatic Academy then when there was the Cuban crisis, and since the Cuban crisis, we have not seen anything similar to what is happening now. It’s surprising in a way because coming back to Graham Allison, he has in mind, of course, the conflict between China and the US. And now it’s a conflict between – well, you can’t say it is Ukraine, but you have to be – if you want to be honest about it in real geopolitical terms, it’s a conflict between Russia and the West.
And I would just to mention – to see how much the classics are important. I – in my – I was recently in a meeting – and I’ll finish with this comment, because of course, I could go on and on. I was recently in a meeting in Denmark called by Ukraine, actually by Mr Yermak, who is the Head of Staff of President Zelenskyy, of course, by the Danish Government. And I – in the end when we were seeing the comments, well, you have to take into account, of course, this is a war between Russia and Ukraine, and Russia has committed an invasion, and this is not admissible. All that it’s true, but it’s also a conflict between Russia and the West.
And that made me think – that makes me think – so, I told them in the meeting, “That makes me think of a lecture,” and I recommend to those who have not seen that, “by Arnold Toynbee in 1952 in BBC, actually, you know, with the – well, I won’t – I can’t say the greatest British Historian, because now there is Hobsbawm, there are others. But anyway, one of the greatest at time when I was a young man, he was the greatest British, or maybe the most famous Historian in the world. And he has – this lecture is precisely called “Russia and the West,” and that was in the beginning of the Cold War. Toynbee had no sympathy for Stalin or for Russia in general, but he says, “When Russia speaks about its security interest in relation to the West, they have a point. They have a point.” And then he’ll remind the – all there about the Teutonic Knights and then the Polish-Lithuanian Confederation and later on, of course, Napoleon and then Hitler. So, the world today is much more complicated.
I mean, having a meeting of BRICS is a complication in itself because of the reasons that you know. So, ever – the world is – every gesture – sorry, and I’ll tell you one of the – maybe I’ll add this comment. One of the, say – one of the points that Lula has been emphasising is that “Brazil is back.” So, of course, these are several dimensions, I won’t dwell on those very long, but his first trip was to the United States, to Argentina, as usual, then to the United States, then to China, and now is going to Europe, officially to Europe as such. So, it’s – that’s – that shows how broad our purposes at least are, and
Dr Christopher Sabatini
Let’s hold off there.
Minister Celso Amorim
But we have a…
Dr Christopher Sabatini
Sorry, go ahead, finish your thought, please.
Minister Celso Amorim
Okay.
Dr Christopher Sabatini
Finish your thought and then we’ll – I do want to open it up for…
Minister Celso Amorim
No, no, that’s it. No, just saying that every gesture, for instance, when we created BRICS, that was not a problem. That was not – actually the – Russia and the US were more or less at the time of the reset button. So, it was in a way a benign and a benevolent world, moving from unipolarity to multipolarity. Now, it’s a more difficult world. So, that’s the only thing that we have to be aware.
Dr Christopher Sabatini
Very good. I have a number of questions, but I’m going to hold on them. I want this to be a discussion among all of us and comment on your – so, I’m going to pass to Elena Lazarou, who can give us a view, now that she is no longer with Getúlio Vargas. She’s now on the other side of the Atlantic in Brussels. Your view on Brazil’s foreign policy, the complications, and of course, the upcoming summit. Elena.
Dr Elena Lazarou
Thank you, Chris, and just to say, if you’ve ever been Brazilian, you’re always Brazilian. So, I am – you know, my heart is still on that side of the Atlantic, half of it. But anyway, thank you very much for having me here today, and it was really a pleasure to listen to you, Minister Amorim, or Ambassador Amorim. I’m going to be short. Maybe I’m going to start – I’m going to pick up on Toynbee because I liked your reference. I like the simplicity of things, and my sense of the current environment, and this is going to link up in a minute to how Brazil is behaving, is we’re seeing, again, something that interestingly, we saw at the last years of Lula’s first couple of presidencies.
Because in some ways, if we take a step back, what we’re seeing today and what’s feeding into the foreign policy of a lot of actors is that there is a crisis which is affecting what is generally defined or referred to as the West disproportionately than it is affecting what is generally defined as the Global South. I’m being super generic here. I do not like these terms, but, you know, for the sake of simplicity. If one takes a step back and remembers the ends of the 2010s, that was the Global Financial Crises. We had the, sort of, stepping up of the role of the G20, so, an important moment of multilateralism. And at the same time, we had, I mean, a disproportionate effect of the financial crisis on the United States and the EU, different types of effects and a bit later in South America, Africa, and parts of Asia. And what we saw at this moment, essentially was Brazil as part of those G20 that were non-West plus of the then relatively new BRICS leaders format, seeking its place in the world and stepping up its foreign policy act. And the same, of course, at the time was true of other BRICS countries.
So, it was a moment when that whole discussion about, you know, the West and the Global South, again, I use these terms, as I said, was there, but of course, a very different type of conversation, because then we were talking about economics. We were talking about international financial institutions, a redistribution of power, and new, sort of, emerging power corporation, and how the US and the EU would face that in their foreign policy. What was the pro, what was the con? And in some ways we were also in the early stage of these themes that we see today, much more pronounced in foreign policy, as Minister Amorim said, such as the green issues and the digital infrastructure issues, which of course, got a bit hampered by the situation, the financial.
And now, of course, being roughly 15 years later, what we see now is a peace and security issue, which again, is disproportionately affecting the West and the Global South, which is again, feeding into what kinds of alliances and partnerships there will be there. Which is creating types of hybrid threats, if I may call them that way, especially on supply chains and on the economy, that require new thinking from various countries on who they’re working with, who they’re importing from, who they are in projects with, and it’s open space. It opens space for those so-called emerging powers to again, claim new leverage in international relations and again, talk about a new redistribution of power and multilateralism.
Very different issues. I don’t want to draw broad conclusions, but I think it’s interesting because I – if anyone who’s following these regions will notice that in the recent year, in the last year, we’re talking about Global South and emerging powers in much the same way as we were to – 15 years ago. And somewhere in the middle that conversation was not being had in the middle of the 2010s. It was more China and that was about it.
So, I think it’s very interesting to have that as a background because interestingly, Lula has come back at a moment where a lot has changed, but some remains quite similar. And I think that’s why what we see in Brazilian foreign policy today is something I like to refer to as “variation of the same theme,” you know, inspired by music. So, we’re seeing a lot of the same type of thinking about engagement, mediation, regional integration, internal/external projections. So, what does Brazil do good in Brazil? Climate, social, policy, eventually. If these things happen internally, can it be some kind of Brazilian soft power? So, I think the agenda is similar.
So, in my remaining three minutes, just three things that I think I want to draw the audience’s attention and definitely open, sort of, as ideas for the Q&A on the basis of this, sort of, broader background that I just outlined. One is, as Chris said, the relationship with the EU. I mean, obviously the relation with the US is extremely important for Brazil, and we’ve seen movement there as well, but I think it’s interesting this week to talk about the EU. We have the first EU-CELAC commit – Summit after eight years take place, which is quite a long time. Spanish Presidency, we’ve always seen that under Spanish or Portuguese Presidencies, the EU moves its relations with Latin America a step forward.
And also the environment I described, which has led to, sort of, some pinpointing of the themes that we expect to see in the summit that are quite easy to link with the current environment and which are the trade, corporation in critical raw materials, social issues and social infrastructure and financing global gateway for the EU and, of course, climate and sustainability, and all of these I think are issues. And then again, drugs – drug trafficking and security, which are always part of those summits. So, these are the broader themes that we expect to see, and they come on the back of a recently released strategy of the EU for the region, which in itself, is something that we don’t have that often. So, I think it’s a good momentum moment for Brazil in the region.
But then, you know, the devil in that detail of those very broad themes is, of course, that everyone is wondering what’s going to happen with the trade agreements in the region, Chile, Mexico, but also most importantly, the Mercosur agreement and the back and forth tennis that there is being played with the additional instrument the EU has proposed, with more climate and sustainability commitments. And that Brazil and Mercosur are – we are expecting them to respond and has not been received tremendously well.
And I think, this is going to be a big issue to follow going forward, because on both sides, there is – there were – on the Brazilian side, there is concern for the EUs trade, due diligence legislation, deforestation legislation, etc. And I’m sure Anna will talk about this more, but also about public procurement issues and other conditionalities for trade. But also on the EU side there is concern for Brazil complying with aligning, I would say, because Brazil is viewed really as a partner in this, with these kind of standards. So, this is the one big theme.
Ukraine, I think another big theme. I think it’s, kind of, been, sort of, eased out with the visit of Lula – with the visit of von der Leyen in Brazil. And we’ve seen some, kind of, sort of, easing out of some initial tensions that was seen in the way that was – Brazil was – Lula particularly was responding to the crisis rhetorically. But I think if one looks at the UN voting patterns, for example, it should be noted that Brazil is the BRICS country that has voted most closely to the EU and to the US. And I think that is, kind of, in line with Brazil’s traditional foreign policy approach, which is really international law and multilateralism.
This leads me to my other point, which I think is, discussing multilateralism is a question that will come up and that Lula will and maybe Minister Amorim will confirm have, as part of his agenda, going forward for the whole term. Why? Because I think Russia’s behaviour is challenging a lot of what we know about multilateralism and that discussion will need to be had, including what in the G20 – was interesting that Lula attended the G7. I think the OECD question may come up again, but also reform of the Security Council because it’s the Russia question.
And then finally, two things that I think are very interesting is that – well, one main thing, which I think the role of climate as part of Brazil’s foreign policy. Not only the COP in Belém next year, but also the way in which reversal of previous legislation has become part of Brazil’s move towards becoming, again, a climate champion, but also how that’s going to play into internal Brazil politics. And then there’s also, of course, the issue of – and that, I think, is very interesting is, kind of, the question of indigenous rights and things like fighting illegal mining, where actually, the EU legislation would actually help. So, I’m just going to stop here because I can see…
Dr Christopher Sabatini
Okay.
Dr Elena Lazarou
…Chris’s face, but I hope I introduced some themes here that might be useful for the conversation.
Dr Christopher Sabatini
Minister Amorim, we’ll return to you. I also have questions to add. I want to turn to Luis Fernando, in part because obviously, you know, in – during the Lula era, or the PT era in the first instance, obviously a number of Brazilian companies really expanded and gained a global footprint, and I think you’re part of that generation. So, your thoughts on the economic reforms within Brazil and its implications for Brazil’s image, if you will, economically.
Luis Fernando
Okay. So, perhaps the best point to start my contribution here is to illustrate how different is the economic environment in Brazil compared to what we’re seeing outside Brazil, especially in this discussion on Europe or Asia, etc. Brazil is now in a long stretch that’s probably eight/nine years back to back of continuous economic reforms. It started towards the end of the President Lula’s term, and then it was not discontinued, even with all the political turmoil that took place in Brazil. We are in about to approve or to pass a very comprehensive tax reform in Brazil, the first one in 60 years. So, it’s a very comprehensive change towards moving all the taxation to a VAT system and there will be changes also in the corporate tax and income tax, etc.
So, this perception that the political ups and downs did not translate into an institutional breakdown, or it’s that’s – even under President Bolsonaro is very important. Very few people realise that. For example, under President Bolsonaro, we had a very decent pension reform that was passed and then enacted already. What are the implication of that? So, we have some interesting developments for – one of these institutional developments we had was basically independent monetary policy. We had independent Central Bank that start to raise interest rates when inflation start to creep up in Brazil year and a half before the US. So, actually, we anticipated the traditional things that the developed Central Banks they moved first because they are smarter, or they got the best information or – Brazil moved first.
Now interest rates peaked, they’re about to start going down next month. The discussion in Brazil is whether there is going to be a 25 dips/ cut, or it’s going to be a 50, and then we only have probably a year/a year and a half of interest rate cuts. Just to give an intuition, consumer inflation is Brazil is less than a third than what is in the UK. So, I – probably nobody here have ever heard about this, but that’s the reality.
And then we start to bring interest rates down. Actually, what we are seeing is an asset repricing in Brazil. So, anything, coming from very traditional real estate up to venture capital, for example, VC is being priced up. So, there is a capital boom in Brazil taking place. And then if we move this pretty much bridge of domestic developments into the external arena, the other interesting things to notice here, or to highlight, is that this very challenging global environment did not translate into a major hurdle for Brazil, actually the other way around. If you look at Brazil external accounts, probably as better as it could be. So, we have a very, very robust trade surplus, getting to record highs. You’re talking about 48/49 billion US dollar trade surplus first six months of the month. So, we are signalling something close to a 100 billion over 12 months, which means that basically Brazil is benefiting from this crisis in Russia, Ukraine, etc.
In addition to that very robust foreign direct investments moving into the region. We and our company are part of this foreign direct investment, and this has to do with things that probably you are familiar with. So, this is the nearshoring, friendly shoring, green energy thing, because Brazil is a privileged location for anything that is generating clean energy, going to produce the, for example, non-carbon steel, thing like this. So, we are seeing actually, there is an economic boom for Brazil and it’s a perk, it’s not a challenge at all.
And then the question that is therefore, going into the more – a more difficult things perhaps, now, given that Brazil has these now high – higher profile coming from what’s happening on the economic terms, there are some implications about Brazil’s position vis-a-vis the rest of the world. And then I’m going to come back to these things here. So, Brazil should trade more and have more investor relationships around the world. And then we have these issues what – to what extent the negotiations, or actually, the focus or the preference towards, starting with the Mercosur, and exactly a break or restrict this broader move into more integration with the rest of the world.
So, there are some issues within the Mercosur. We know, for example, Uruguay is very, very critical of this, the way the negotiations are taking place with China, for example, etc. We know, and I’m probably going to discuss here, the negotiations between Mercosur and the European Union are not easy. From the European point of side, there is the – agribusiness and then the environment thing, and then from the Brazilian side, there is the procurement discussion of what the government should privilege or not local producers in terms of there is these local auctions to buy goods and services.
But then I would add and emphasise the OECD. So, Brazil could be playing a much more relevant role international forums. If you had, for example, in addition to everything that is being part of OECD would enlarge the audience, and that seems to be some ideological problems in moving into OECD. But just to give one point of view from our corner, if Brazil moves into OECD, major institutional investors that have some restrictions in investing in no OECD countries, and there’s res – the restrictions being removed, you’re talking about foreign direct investment or long-term capital exposure to Brazil that could increase 50, 60% overnight. Because it’s OECD country, that means that several things. You don’t need to do any complicated due diligence. Because it’s OECD country, of course, being part of OECD means that Brazil will have a voice in a very important group of nations, but we don’t – we’re not seeing much of a progress in that direction. So, that would be my two cents wisdom, my first five minutes here.
Dr Christopher Sabatini
Great. Thank you. Let me add a question or comment to Luis Fernandez [means Fernando] on the OECD and the opening up on investment. And this is a pointed question to you, Minister Amorim, that you can get to in – when – in the response period. But again, there was a negotiated bilateral tax treaty between the UK and Brazil, and it’s – now it’s waiting to go to Congress. So, I’m curious your thoughts on – that’s one of those simple fixes that could be easily addressed. I’m just curious your thoughts on one that could be, sort of, dusted off and placed in Parliament.
But, Anna, please, we went from Brazil being the bad boy in the environment to now being the good student, encouraging news on deforestation. Your thoughts on Brazil’s role as a Diplomatic Leader on climate.
Ana Yang
Yeah, so, just picking up on Minister Amorim’s point about mainstreaming of climate change and environmental issues. I think when – during Lula’s – I mean, there are some similarities in terms of, you know, the state of deforestation and environmental issues in Brazil when Lula took over in the first Presidency and also when he took over now. Right through the last decade almost, we had, like, a consistent increase, and it obviously got worse during the previous federal government. We’re – as you have said, Chris, that we have, you know – the last week, the federal government reported some initial positive sign, which is the – in terms of the – this period, six month compares to same January to June last year, there is a decrease of 30% in terms of deforestation in the Brazilian For – in the Amazon Forest. It’s still too early to tell whether it’s a trend. I think it’s a signal. But we also – there are also other signals, as in there’s more forest fires in the region of savanna, and it’s caused by agricultural activities and there also increase of deforestation in other – in savanna, as well. So, it’s really too early to say that we are actually seeing, sort of, the trend, downward trend.
And the context of, you know, the – of the Brazilian Amazon is more complex, I would say. I think during the last couple of years, there is – there are a couple of things. One is there’s a coupling between illicit criminal activities, such as organised crime, with environmental crime, which we didn’t have before. So, it’s more similar, even much more similar to the deforestation pattern and coupling of these illicit activities like in Colombia that – Colombia is much better. Now, they have resolve – are starting to resolve that, Brazil’s still grappling with it now. So, it’s just – it’s not only an environmental protection problem, right? The majority of the state governors in the Brazilian Amazon are not necessarily aligned with the federal government in terms of some of the – whether they’re from the same political party or not.
And then also just, you know, looking at – there was a recent polemic in May las – just two months ago, about the exploration of a license of oil in the mouth of the Amazon River. And I think the question is really, yes, the current – you know, the team that, Marina Silva, sort of, assembled will – we hope that they can deliver, you know, the commitments on slowing down deforestation. But I think the bigger challenge is how do you convert from, sort of, command and control policing activities to solutions?
I think that’s where we didn’t manage to achieve. I mean, I was part of the environmental movement. I’m still part of the environmental movement, and I think that’s where we failed last time. We did a lot of that, “You can’t do this, you can’t do that, you can’t explore it.” And I think the question is then, what can you do, right? What is the transition pathway and what can we learn from, sort of, the global climate transition, which is like the – like in the energy system, is like, “Okay, we don’t like car – sort of, coal or oil and all of that,” but you have transition pathways to renewables. I think on the agricultural transition, that pathway is not very clear, right? And I think that’s one of the biggest challenges that we have ahead of us, especially because agribusiness, you know, as everybody knows, is 20% – 25% of Brazil’s GDP.
And I think there is – just to add a little bit of international relations layer, and the discussion with the EU, is China is Brazil’s biggest agricultural commodity partner. It’s no longer the EU, right? So, what kind of pressure these regulations can you put in – on the supply chain? And this is not to say the traceability and supply chain control is not important. It absolutely is. It does send a signal, but it doesn’t capture all the layers of complexity in terms of the effectiveness of a pressure and whether you’re catching, you know, the small and medium holders that are part of this, you know, transition process that the agricultural economic system needs to go through.
And just looking ahead and, you know, as a – as somebody who works in climate and sustainability, I always need to be a pragmatic optimist, right? I always need to think that forward looking should be better than what we were before, and I do think that Brazil has a great opportunity ahead, right? We have G20, there is COP in Brazil. I mean, I’m slightly worried about – I love Belém, my favourite city in the Brazilian Amazon, but I worry about the infrastructure capability to host 50/70,000 people, you know, everybody excited to discuss about, you know, Paris +10. I worry about that a little bit, you know.
And then, so, it is this like we can – we – Brazil can seize this opportunity. It will need to be shifting from pressure into solution, build more partnership, build more bridges. ‘Cause I think this environment where Brazil’s coming out from, of this extreme polarisation, right, that we cannot have more polarisation, right? It’s just, like, if the new – if the future of Brazil of low carbon transition, it’s one that you have to bring the entire society, and I think that’s the biggest challenge is to, sort of, bring people along in this journey of transition. I’ll stop there for now.
Dr Christopher Sabatini
So…
Ana Yang
And then we can…
Dr Christopher Sabatini
Thank you, Anna. The – we have a number of questions online, which I’ll read. But I want to – so, you don’t need to – and this is not a question and answer or grill, Minister Amorim, I think – but I think, you know, I think the picture that most people have presented is very positive and very helpful, and so, I’m interested in your reactions. I’ve got one other question which I do want to add before we get to the questions online, but you should have a chance to respond and reflect on this a little, is it’s a question of regional integration, which you mentioned. And I think the era of regional integration with unison unfortunately has ended.
Now, as you mentioned, that there are differences globally. There are also differences in the region, and I think many people had great hopes for a Lula initiative, especially when it came on the issue of Venezuela. And I’m curious on your thoughts now, without revealing too much, your thoughts on, you know, as seem – things seem to slip, but also the debate seems to shift very much to, again, a very polarised debate, what your thoughts are on elections. What your thoughts are on how to help Venezuelans get out of this very polarised stalemate. But please give us your thoughts on, well, everything you’ve just heard, please [pause]. There, it’s re – anyway.
Minister Celso Amorim
Thank you. Well, these are many different questions. I will not even try to respond most of them. But I’ll just comment, I mean, try to comment on some of the comments that were made, and let me try to do that in the most practical way. On the – let me say, on the question of climate and all the limitations and challenges that were presented by Ana Yang, who of course, I agree with her there. These are the difficulties, but that’s part of history. Whenever you remove a problem, there are new problems which appear, and of course, the challenges are even bigger. And I totally agree with her that it should be forward looking and always see – for instance, we used to say that our objective was to eliminate illegal deforestation.
Now, if you pay attention to Lula’s speech in Leticia, he speaks eliminating deforestation. So, I think this is a big, big step forward, which was not, actually, maybe we can achieve or don’t achieve. Maybe it’ll not be 90 – 2030, it’s maybe 31, because we don’t dominate all the conditions. Of course, some of them are natural, some are social, some are economic, but this is already a change in terms of looking at the problem. So, I think somehow linked to this question of climate change and environment is the question of empowerment of indigenous people.
Well, I can’t say everything is perfect. There are limitations in the Brazilian law. Sometimes the judiciary may disagree with what the government is trying to do, but in any – and we have also to look at that as in any democratic country you have to do. But you can see by the fact that you have – actually, it’s very important that – to know that in Leticia meeting, apart from the Foreign Minister, the two Ministers who were there were the Environment Minister, which now, the Minister is now called Environment and Climate Change, and the Minister for Indigenous Population.
So, I think that shows the intention. If we can make true all our dreams is something that I can’t say. I mean, how much fake news and how much other kinds of – I would say even some kind of hybrid war, if I can use that expression, are still used. And how much this will interfere with our plan, it’s difficult to say. But we are aware and we have to be aware to these challenges. And we are – we have tried to face them. Nothing was said for reason for the – about the effect of fake news and how the fake news and how all these laws there had an impact. It had in the United States, actually, as is some of you know, certainly, until the President – ex-Presi – former President Trump is still being tried because of the influence he tried to use in Georgia, where the same thing was done in Brazilian in a larger scale.
So we don’t know if we’ll be able to. We have to be optimistic in our thoughts, and of course, pragmatic in our actions. But that’s what we try to do. I – so, I won’t be – I think the diminution in 30%, of course, is not everything we want, but it’s also already a very expressive signal of the direction things are going, I think. I mean, it’s not common for a President, as President Lula – it was a surprise even for me, I will say, that on the eve of the – his trip to Argentina for the first meeting of CELAC, he went all the way to Roraima to see the problems of the Yanomami, to the crisis of the Yanomami Indians.
So, that shows the degree – this is not just around the corner in Brazil, you know how big it is. This is a four-hour, four/five – four-hour trip by plane, and then the next day he had a meeting in CELAC. So, just to show how deeply we are, and we spoke of Ana Toni, and of course we can have Marina Silva. These are international symbols of commitment with environmental questions. And President Lula recent speech in Leticia, I would ask you to pay a lot of attention to that and to see how committed he is.
On the economic matters, really, I don’t want to comment. I’ll just make one or two comments. We are not against OECD, but I don’t think we shall have to be on a hurry. It’s difficult, I mean, to go – you have to think about the questions of a developing country, and I would say, I was Foreign Minister during the eight years of Lula, and I saw Brazil becoming a much – the country that was number three in attracting foreign investment, number three in the world, not among developing countries. It was after China and the US only, the third was Brazil, and Brazil was not in the OECD. And of course, Mexico was in the OECD, and it was not number three or number four. It was – no, I’m not – nothing against – I mean, conditions are different in different countries, but what business likes to do is the opportunities, growth, it’s consumer power, all consumer of the middle classes, and all that went in a negative way.
So, I think that the tax reform – I agree with Mr Lopes that the tax reform is a great step forward, but I would not be so sanguine, I would’ve say that, anyway, on the question of the OECD. We can take it, but, you know, there are questions that relate to intellectual property in relation to medicines that we have to be very careful. There are questions of – about the freedom. And let me say one thing, and this has shed some light, also, on some of the trade agreements on how we see them. It’s – well, the world has changed quite a lot. You know, I was involved in the first launch of the European Union, at that time it was the European Community, Mercosur Agreement. And that was in the Itamar Franco government. The agreement came later on with Cardoso, but the first protocol, it was in Itamar Franco’s government. This was a totally different world.
I mean, the United States were speaking about pre-trade. This was the Washington Consensus. Now you read the speech of – which I admire very much. I think it’s a very good speech, for instance, of Biden and of his Senior Advisor, my colleague, Jake Sullivan, recently in Brookings Institution, and what does he say? “Well, we cannot only rely on pre-trade. The state must be a lever for development.” Well, that I – that’s true for the United States. That’s also true for Brazil. Actually, it’s true, also, for the European Union, which is also creating new programmes of incentive in which state actors are involved. So, I think you have to see on that light.
The other comment I would make on the European Union, Mercosur Agreement. I was saying that I was there personally in the start of that, and President Lula has said and repeated that he’s committed to the European Union, but this side letter that the European Union sent to us is an absurd, is totally – I mean, an agreement like that has to be based on trust, not on mistrust. So, if you put already an agreement that I accept to be sanctioned if I don’t commit – if I don’t comply with the Paris Agreement, or whatever other commitment that was taken, these are totally absurd. That’s not the way that partners should be with each – deal with each other. I mean, I – so, I – what could I say about the European agricultural subsidies in that question? And so, if they augment, what should we do? I mean, that’s not the way.
So, we want to have an agreement, but this is an agreement that must be based on trust and not be based on the presumption of mistrust, of non-compliance. So, I don’t think that’s a good faith proposal. So, I’m not going – even going into the content, but the way of presenting it, it’s totally inappropriate, I think, from the European Union. So, I – what I said about these changes in the United States policy by Biden, by [inaudible – 56:50], explained theoretically by Jake Sullivan, very good presentation by the way in Brookings. That also explained our preoccupation with government procurement.
I mean, if you take – in the United States, the great advances in science and technology were made with money of The Pentagon and you’ve got money off [NADA – 57:07]. They have been changed by – so, I – you know, if you want to have a vaccine, and that’s a very concrete question because – which happens in Brazil, which is avail – which might be available in case – we have to have a pharmaceutical industry. And that will only happen if there is a support of the state, and it has to be located here, there’s no doubt about that, and that happened. Even the ones that had – that had nothing of the ideological. The Argentinians, for instance, had an agreement with the Russian and the Russians gave the vaccine, but of course, they only gave the vaccine after they gave to all their people, which is natural. So, you know, one has to understand that there other things beyond the world of – maybe as Hamlet would said to Russia, “There are more things between heaven and Earth than the financial market.”
Dr Christopher Sabatini
Elena, do you want to comment on the EU? I do want to say, as you’re preparing, as is – and I want to point out that there’s an intellectual consistency in Minister Amorim’s question of agricultural subsidies. That was in Cancún and the Doha round of negotiations, of course, that was a sticking point. So, this is not a new theme for you and it’s one that, sort of, gets to the heart of truly opening up developed markets for agricultural exporters. Elena.
Dr Elena Lazarou
Thank you. I actually, I was listening in very – I was very interested in what Minister Amorim was saying. And I had a question. It’s for my own thinking, but perhaps – I mean, a lot of what is in the proposal – you are right, first of all, that, you know, we are not at the time of ten years ago and – where everyone believed the WTO and plurilateral agreements. I think it’s clear now that trade is different and to a degree, every major power is, sort of, having its own strategic autonomy, if you will, pursuit. Brazil so, now uses the terms in terms of trade. I won’t go to the extent to call it protectionist, but we have the IRA in the US.
But my question is the following. Isn’t there a degree or a level at which it’s actually beneficial for Brazil that the EU move ahead with its trade in a way that, for example, bans products that result from deforestation, which is one of the conditions, or where there is a, sort of, values-based approach to supply chain due diligence so that, you know, labour standards are upheld, that there is no carbon foot – major footprint? Because Brazil is very much in the same line of thinking. So, Brazil is, as you have said, trying to get to zero deforestation. It’s trying to have – decrease carbon emissions. So, in the long-term, wouldn’t that benefit both Brazil and the EU, that the EU has such regulations that then increasingly, can be embedded in trade agreements around the world? Because I – that’s the thing, is there is a like-mindedness there.
Minister Celso Amorim
No, there is not a like-mindedness there because it’s not based on trust. That’s the question. We agree with those questions. We agree – we might have – for instance, it could be – I have not been negotiating the trade agreement itself much, so, I don’t – I cannot go into the detail. But I mean, I had nothing against, for instance, references to the labour standards, to environmental standards, to climate change and other things, provided, and this can be part of a preamble or a general objectives, and you could even say that these standards are not being complied with that you would review the trade agreement. That’s a possibility, but not to put sanctions in it automatically in which you have to self-inflict yourself. It’s totally unacceptable.
You can – imagine, I am committed to the rules of traffic, but I cannot write down already that I agree with every sanction that will be put on me if I don’t respect them, because my intention is to respect it, and I think the position is that we respect and not that we disrespect. And if you do the respect, you have – you may have a dispute settlement mechanism and so on, and even if that doesn’t work, well, we’ll review the agreement, actually. But I mean, you cannot – I mean, it’s like bombing a country into democracy. That’s what, for instance, some – one country did into Iraq, for instance, another country did to – other countries did it to Libya.
And you cannot bomb Brazil into – we don’t need that. We are committed to environment and we’re saying that, repeating that, and nothing is stronger than public opinion. And we are inviting the public opinion to Brazil to see in Belém, in spite of all the logistical difficulties that Ana Yang is referring to, and now I hope she doesn’t refer very much to that, because we hope to have a lot of people to see there and to see what we are doing and to see what we’re – because this is real. The real sanction is the opinion of the population on Brazil and of the world.
Dr Christopher Sabatini
Thank you. Unfortunately, our time is up. We had questions online, but I wanted to take advantage of our excellent panel and your patience and time, Minister Amorim, for this. And it’s been a very good debate and I think, you know, your willingness to come here and just discuss these issues openly, with passion, with commitment, with intellectual integrity, is I think a demonstration of how and why Brazil is beginning to play a larger role or returning to its global role in these very difficult times. And I think we all recognise that and appreciate that.
And I’d like to also point out that Arnold Toynbee actually was affiliated with Chatham House. I can only speak for myself. I don’t claim to be the intellectual heir of Toynbee. I can’t speak for Anna or…
Minister Celso Amorim
I am a fan of Toynbee. Nobody cites Toynbee nowadays. I have quoted him very often.
Dr Christopher Sabatini
Well, I hope to welcome you here in person very soon, and you always have – and I know this is as I was told before by Luis and by you, among Cariocas saying the house is open is always a little bit of empty invitation. This is sincere. You’re welcome here anytime. You’re a friend of the UK, obviously from your time here, but a friend also of Europe’s and Chatham House’s. So, please, thank you very much. Thank you, Luis Fernando, thank you Elena, thank you Anna, for your patience. Thank you everyone, I appreciate it and we look forward to hearing more. Bye-bye, everyone.
Minister Celso Amorim
Bye.
