São Paulo – Since 2003, when the Brazil-Arab News Agency (ANBA) was founded, the price of the Brent oil barrel has risen by 380%, Brazil became self-sufficient in oil production and then ceased to be, Dubai experienced a debt crisis, staple foods’ prices peaked, the United States invaded Iraq, and the Arab Spring overthrew dictatorships. All of these events have influenced Brazil’s relations with Arab countries in the past ten years.
The consequences of these crises include rising income in Arab countries – due to the oil price hike – and in Brazil, which gained from government policies and bullish commodities’ prices. As a result, exports from both sides increased.
A professor of Economics and Politics at college Faculdades Integradas Rio Branco, Carlos Stempniewski claims that the oil price surge created windfalls in Arab oil exporting countries, causing them to step up their imports. “The oil price ensures these countries’ revenues, and as a result they start buying more. The product Brazil is able to place on their markets is foodstuffs, whose exports have increased,” he says. According to him, Arab countries’ food imports, especially meats, have been positive to Brazil for two reasons: one is the actual sales, and the other is production chain improvement.
“Rising exports forced meat packers and industry companies to enforce phytosanitary inspection of meat, to handle the animals with greater care, and to prevent diseases in order to meet these countries’ standards. This has led to improved product quality, which in turn has caused sales to other countries to increase as well,” says Stempniewski. On the other hand, according to the professor, Brazil has become more dependent on Arab oil. “Brazil is an oil importing country. We have run a deficit (in oil production) for the past three years.
Stempnievski notes that Brazilian trade with Arab countries dates back a long time. In the 1980s, for instance, the country exported weapons to Saddam Hussein’s Iraq, and since 2003, when the former president Luiz Inácio Lula da Silva took office, Brazil started seeking out new trade partners in Africa and the Middle East.
Eye on the future
The regional representative for Latin America at the National Bank of Abu Dhabi (NBAD), Angela Martins, also claims that the closer ties championed by former president Lula’s administration led trade with Arab countries to increase and opened doors for Brazilian companies to invest in the region, as well as attracting Arabs to Brazil.
During Lula’s administration, the Summit of South American-Arab Countries (ASPA) was founded, aiming to bring together the leaders and civil societies from those regions. The first edition of ASPA was held in 2005 in Brasília. Doha, in Qatar, hosted the second ASPA, in 2009. Lima, in Peru, hosted the third summit last year.
The NBAD executive notes, however, that new doors may open in the future, because there is a vast potential for business between Latin American and Arab countries, in her opinion.
The Arab Spring may alter the political scenario in the Middle East and North Africa. The succession of revolutions in the region began in December 2010, when the salesman Mohamed Bouazizi set himself on fire in Tunisia. His action led to protests that ultimately drove president Zine El Abidine Ben Ali to step down.
Other Arab leaders resigned following Ben Ali. In Egypt, Hosni Mubarak stepped down in February 2011, and Mohamed Morsi was overthrown in July this year. In Libya, the dictator Muammar Gaddafi was killed in October 2011. A month later, Saleh Abdullah Saleh abdicated his power in Yemen. In Syria, president Bashar al Assad has been fighting opposing militants for two years, and so is the Bahraini government. Even the Gulf countries have granted their populations additional benefits in a bid to avert crises.
“The Gulf has a very strong economy. Qatar, the United Arab Emirates, Oman, and Kuwait are stable and boast comfortable (political and economic) situations. In North Africa, the Arab Spring overthrew dictators, and the region is at a different historical moment, but the countries still have the potential to grow, as is the case with oil-rich Libya, and Egypt, which has a diverse economy. I am optimistic about the (Middle East and North Africa), bar the Levant (which comprises Iraq, Lebanon, Syria and Jordan),” says the executive, who has been working on Brazilian-Arab projects for nearly 20 years.
Martins believes there are further potential gains to be made by Arab and Brazilian economies. She says some of the Gulf countries are working to diversify their economy. Qatar is investing in education. Abu Dhabi will house a branch of the Louvre Museum; it also hosts a Formula 1 Grand Prix, and it has built Masdar City, a sustainable city in the desert.
The capital of the United Arab Emirates also has a project called “Abu Dhabi Economic Vision 2030,” designed to diversify the economy and reduce the emirate’s dependency on oil revenues. In 2005, 59% of Abu Dhabi’s Gross Domestic Product (GDP) originated from oil. The emirate’s target is to have the non-oil sector generate 64% of its GDP.
“The Gulf countries used to be more closed off; now they are opening up. One example is the Abu Dhabi 2030 project. This is proof that they realize they cannot depend on just one product. So does Qatar (which amasses 57% of its GDP from gas). These countries could live off of oil and gas, and yet they are diversifying their economies,” says Martins.
Both Martins and Stempniewski warn, however, that Brazil must be prepared in order to profit from these economic and political changes. The professor says Brazil needs to increase its presence in international trade. Martins warns of the dearth of infrastructure in Brazil. “Brazil grows and then comes to a halt due to these limitations. Infrastructure investment is needed in order to support growth,” she says.
*Translated by Gabriel Pomerancblum
