São Paulo – Optimistic, though moderate. Such is the vision for the future of the world and Brazilian economies, according to Antonio Delfim Netto, Luiz Gonzaga Belluzzo and Luiz Carlos Mendonça de Barros, three of the most respected economists in Brazil, who participated this Wednesday in São Paulo (17th) in the seminar “Perspectives in economic relations between Brazil and the Arab countries – 60 years of the Arab Brazilian Chamber of Commerce,” promoted by the Arab Brazilian Chamber of Commerce and newspaper Valor Econômico.
“The good news is the world isn’t going to end. Despite the insistence of some,” said Delfim, the former minister of Finance, during the panel “The world financial crisis and the state of the economy.” To him, despite the uncertainty surrounding the European debt crisis, authorities in the continent will tend to reach an agreement to prevent the Eurozone from disintegrating. “It is no use to say the Greeks had too much to eat, because they have no way of ‘uneating’,” he said.
The statement is based on the assumption that the political will of governments must prevail over the cold analysis of figures. Tax increases in countries such as Spain, Greece and Portugal caused the economic situation to worsen and triggered a wave of protests. Germany, the largest economy in the continent, is resisting loosening its tax policy. “The mechanisms imposed are cruel and will not produce results,” said Netto.
“Germany must act as a ‘hegemonic power’ in the sense of being responsible for those it ‘hegemonizes’ over,” said Belluzzo. “The Greek were eating, but they were meeting their needs through imports [of products] from Germany, which was the main beneficiary [of the indebtment process of European countries which led to the crisis],” he added.
Mendonça de Barros, the former minister of Telecommunications, said some time will pass before European leaders reach a consensus, but said: “The collapse of the euro would trigger a second crisis wave.”
He said that, in a scenario completely reverse to that of the crisis of the 1990s, Brazil could be able to export its experience in debt control. At that time the country was a major debtor and no one imagined that developed nations could attain the level of indebtedness that they have attained. As examples, the economists mentioned the renegotiation of debts of Brazilian states with the Federal Government, and the approval of the Fiscal Responsibility Act.
At the European Union, however, there is a complicating factor: the bloc has monetary unity but no fiscal unity, and that hampers consensus on the actions to be taken in this respect.
That is where political action enters the scene. “Capitalism is not going to end,” said Netto. “But no market economy exists without a strong state which is capable of regulating economic activity, particularly financial activity,” he said.
To the economists, the 1929 crisis and the New Deal of the United States president Franklin Delano Roosevelt, which boosted the world out of recession, had already proved that, but human memory is short-lived. “That confirms the bankers’ temptation to return to the crime scene,” Delfim said ironically.
“It seems as though people have had a mental regression in terms of ideology and politics, I who knows!,” agreed Belluzzo, citing the German prime minister Angela Merkel resistance in allowing the European Central Bank to implement deeper actions to fight the crisis.
With regard to the US, the view is more moderate. “I look at the US economy and I see a healing process,” said Mendonça de Barros. Netto added, however, that the presidential elections in the country, in November, add uncertainty to the scenario. “The world may suffer a serious blow in case [Mitt] Romney wins, because he manifests very complicated prejudices which may cause the crisis to increase,” he said.
For Brazil, Mendonça de Barros said he has an “optimistic, but realistic” growth estimate of 3% to 3.5% for the next few years. “I believe that 2013 will be marked by a a rebound in investment, especially in countries like ours, which are isolated from the centre of the crisis,” he said.
Arabs
The economists also reviewed the potential for business with Arab countries. Mendonça de Barros said his company, Quest, has Abu Dhabi funds among its clients, and that after a period in which business contacts were frozen due to the crisis, they are interested in opportunities in Brazil again.
According to Netto, there is “ample room” for increasing business. He said vice president Michel Temer, who is of Lebanese origin, is especially keen on fostering trade with the Arabs.
Belluzzo said Brazilian diplomacy plays an important role in that respect because of its conciliatory stance, which paves the way for relations to grow. “Relations tend to increase for mutual benefit,” he said.
The Arab Brazilian Chamber president, Salim Taufic Schahin, said the seminar was “a success.” The event was attended by 326 people, including businessmen, consultants, students and diplomats. Schahin said there are still questions to be answered regarding the potential of relations between Brazil and the Arab world, which may serve as a hook for another meeting of the type in the future.
*Translated by Gabriel Pomerancblum
