São Paulo – This Monday (26) in São Paulo, the Brazilian minister of Development, industry and Foreign Trade stated that promoting relations with the Arab world is a priority to president Dilma Rousseff’s administration. “We have been instructed to always give precedence to relations with the Arab countries,” he said in an interview at the Arab Brazilian Chamber of Commerce, after luncheon and a talk hosted by the organization.
At the event, the Arab Brazilian Chamber president, Salim Taufic Schahin, called on the minister to “not miss the moment” and take advantage of the work done to establish closer ties during former president Luiz Inácio Lula da Silva’s administration (2003-2010). He claimed that in spite of the wave of Arab protests, which has already caused the Egyptian, Tunisian and Libyan regimes to be overthrown, Brazilian exports to the region grew by 31.6% from January to August when compared with the same period of 2010.
During the interview, Pimentel said Dilma made it clear that the Arabs are a priority while speaking for the recognition of the Palestinian State at the UN’s General Assembly last week, and regretting that the organization has not done so yet.
With regard to commerce, the minister said the trade balance with the Arabs shows a surplus on the Brazilian side and is always growing. He added that the government plans on maintaining its actions to foster business with the region and cited the example of the Big 5, a building industry fair held in November in Dubai, in the United Arab Emirates. The fair will once again feature a Brazilian booth, organized by the Brazilian Export Promotion Agency (Apex), which is affiliated to the ministry, and by the Arab Brazilian Chamber. Another example cited was a trade mission to the Middle East, organized by the Ministry, due March 2012. “There is much room for expansion [of trade],” he said.
In his address to businessmen, Pimentel spoke on the current international economic scenario. He said the crisis that is befalling the world derives from the one that broke in 2008, though more focused on the European Union now, but that it is also “the external manifestation of deeper phenomena” that have been taking place for longer.
The minister mentioned four “shifts that constitute the deep-set foundation of the crisis.” Firstly, the “industrial paradigm shift” seen at the turn of the 21st century with the rise of Asian industries, especially China’s, which are able to manufacture products at a cheaper cost than anywhere else in the world. To him, Asia dominates a large share of international trade of manufactured goods, and only agricultural and mineral commodities escape its control. “All economies struggle with this phenomenon, and Brazil is no exception,” he said.
Exchange rate
Secondly, he spoke on the “shift in monetary standard,” as the United States dollar became weaker as a currency for exchange in international trade. “The globalized economy is unable to accommodate what once was the standard, in the 20th century,” he said. Pimentel added that the US government’s policy of devaluing its own currency to render its economy more competitive “causes a terrible disturbance on exchange rates around the world.”
To Pimentel, it is just a matter of time until the dollar standard is replaced by another, which might either be a basket of currencies or “some new way.” He believes that by the end of the 21st the dollar will no longer be the monetary standard, but stressed that the process of change “will be complicated,” because countries still have their foreign exchange reserves in United States currency.
On that same note, the minister commented the significant appreciation of the dollar against the Brazilian real that was seen recently as the European crisis worsened. He believes that by the end of the year, one US dollar should be equivalent to roughly 1.70 real, not as high a rate as to put pressure on inflation, and yet high enough to “give exporters some comfort.” As of today, one dollar is equivalent to around 1.84 real, but early this month it reached 1.60 real.
Thirdly, Pimentel mentioned a “shift in consumer market standard,” as the United States’ and European markets are saturated and emerging nations are growing at higher rates. “Dynamism has left the North and headed towards the South,” he said. He claimed that consumer markets in developing countries are only beginning to be tapped into, and there is much room for progress. “We have a potential that has already been depleted in the US and Europe,” he said.
In the long run, he believes that these geoeconomic shifts will also take place in the geopolitical sphere.
Model
To that end, the minister stated that the model of leading nation in the 21st century will be one that combines a large territory and natural resource availability; a large population “understood as market,” that is, “citizens”; industry and technological production; and a stable, legally safe democratic regime. “Few are the countries that boast all of these features, and we (Brazil) do,” he said.
He emphasized, however, that “it is not written in the book of destiny that Brazil will be successful.” “It is up to us to write that, but we do have the conditions for it,” he said. And he added: “The country is capable of setting examples.” He mentioned Dilma’s address at the UN, where she spoke on peaceful coexistence between Brazilians of Arab and Jewish origins.
*Translated by Gabriel Pomerancblum
