Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 16 - Evidence, February 17, 2011
OTTAWA, Thursday, February 17, 2011
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:31 a.m. to study the political and economic developments in Brazil and the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: This is the Standing Senate Committee on Foreign Affairs and International Trade. My name is Senator Andreychuk, and I am the chair of the committee. The committee is continuing its special study on the political and economic developments in Brazil and the implications for Canadian policy and interests in the region, and other related matters. This is our tenth meeting on this particular study.
Senators, we welcome our witnesses this morning via video conference from Washington, D.C. From the Woodrow Wilson International Center for Scholars, we have Paulo Sotero, Director, Brazil Institute, Latin American Program; Mr. Leslie Bethell, Senior Scholar, Brazil Institute, Latin American Program; and from the Council of the Americas/ Americas Society, Mr. Eric Farnsworth, Vice President.
The Woodrow Wilson International Center for Scholars was established by an act of Congress in 1968 to carry out non-partisan research in the social sciences and humanities. It hosts scholars and pre-eminent thinkers from a variety of backgrounds and disciplines for an extended period to interact with policy-makers and carry out projects. Its numerous programs are regional and thematic in focus, and the Brazil Institute is housed in the Latin American program of the center. Its activities include regular policy forums on Brazilian trade and development, international relations, science, the environment and public policy, and the appointment of Brazilian academics and Brazil experts to conduct research, among others.
Mr. Paulo Sotero is a former Washington correspondent for O Estado de S. Paulo. He is adjunct lecturer of Brazilian politics and the media at Georgetown University, and writes on Brazilian and Latin American affairs and Brazil-U.S. relations.
Mr. Leslie Bethell is Emeritus Professor of Latin American history and an honorary research fellow of the Institute for the Study of the Americas at the University of London. He is a former director of the Institute of Latin American Studies at the University of London and a former director of the Centre for Brazilian Studies at the University of Oxford.
The Council of the Americas was established in 1965 as an international business organization whose members share a common commitment to economic and social development, open markets, the rule of law, and democracy throughout the Western hemisphere. Its members include many corporations of a range of sizes that do business in Latin America, including Canadian and Caribbean companies.
Mr. Farnsworth has been vice-president of the Council of the Americas since early 2003. He holds a MPA in international relations from Princeton's Woodrow Wilson School of Public and International Affairs. From 1995 to 1998, Mr. Farnsworth served in the White House Office of the Special Envoy for the Americas.
Welcome, gentlemen, to the committee, and to Canada via the video conference. You certainly come well endowed with history and a background of the issues that we wish to study.
Eric Farnsworth, Vice President, Council of the Americas/Americas Society: Thank you for your very generous introduction and for welcoming us and indulging us by video conference today. We appreciate this opportunity very much.
I congratulate you for your leadership on these important issues, and I am pleased to have the opportunity to share this table with others of such prominence and stature.
As you mentioned, the Council of the Americas was founded in 1965, and since that time, we have seen dramatic, positive changes in the hemisphere. Perhaps no nation in the region better exemplifies these changes than Brazil, which, in our view, is a nation on the move, a strong democracy with a growing economy, finding its voice internationally as it seeks a bigger role on the global stage.
In my view, Brazil has been on a tear, if you will, since President Fernando Henrique Cardoso conquered inflation in the 1990s. His successor, Luiz Inacio Lula da Silva, effectively built on this solid foundation over the past eight years to grow the economy, expand the middle class dramatically, reduce poverty, which nonetheless at a quarter of the population still remains too high, and expand Brazil's international influence. Now, as Brazil's first female president, the January 1 inauguration of Dilma Rousseff was both a manifestation of Brazil's social strides as well as a strong reaffirmation of the outgoing Lula's established path.
We anticipate much policy continuity in Brazil with an even greater focus on domestic development issues. President Rousseff has said that domestic issues, including poverty alleviation and needed economic reforms, will be at the top of her agenda.
With an economy the size of the rest the region put together and rapid growth, 7.5 per cent in 2010, with 5.5 per cent projected by the central bank through 2014, Brazil is leading Latin America's conscious and confident outreach to partners beyond North America, notably in Asia, to diversify relations. In fact, many of you probably already know this, but China is now Brazil's top trade partner, a relationship that is primarily built on Brazilian agriculture and mining exports.
The global community has taken notice of these many changes. A member of the G20, Brazil has been awarded the World Cup in 2014 and the Olympic Games in 2016. There is much here to celebrate.
Additionally, Brazil is taking an expanding cooperative role on many issues where Canada is also active; including peacekeeping in Haiti, as well as Africa; counterterrorism and law enforcement; regional economic development; and clean energy and global climate change mitigation.
Further cooperation with Brazil can and, in my view, should be pursued, which will be particularly important from a strategic perspective as Brazil determines over time how to use the leadership that it is appropriately now acquiring.
Much of this depends on how Brazil defines its international interests under President Rousseff, for example, whether Brazil will seek to be primarily a Western nation, a member of the BRIC, a leader of a developing world, a leader of South America or, more likely, some combination of all of the above.
With this in mind, several issues present themselves for additional consideration in the Canada-Brazil relationship and I would like to list several of these to perhaps lay the groundwork for further conversation.
In the first instance, Canada's stated foreign policy priority of enhanced engagement with the Americas and promoting security, democracy and prosperity in the region simply cannot be achieved without a robust bilateral relationship with Brazil. Although differences have been apparent in the past, particularly in the commercial relationship, nonetheless, the areas for cooperation would seem to outweigh any potential differences by far.
For example, agri-business is one of the most technologically advanced industries in Brazil and Brazil is, indeed, globally competitive in agriculture as is, of course, Canada. Rather than seeing this as a competitive issue, there are opportunities to work together with different growing seasons, of course, in areas such as agricultural research and development, emphatically including clean energy research, where both countries lead. There are opportunities on the trade side in working together in forums such as the WTO to reduce global agriculture price supports. Other opportunities recommend themselves for cooperation.
Active cooperation on global climate change mitigation issues should be considered. Brazil's Amazon is well known as the ``lungs of the earth,'' while Canada's oil sands production is seen by some as environmentally costly. Perhaps with some creative thinking, the two nations might work together on global carbon issues and also new technologies to address shared environmental concerns.
The two nations might also consider enhanced defence cooperation activities, even perhaps joint exercises that would assist peacekeeping and humanitarian operations both in the hemisphere and elsewhere, where both nations are active. At that same time, it must be said that sub-regional groupings such as UNASUR, the Union of South American Nations, and related defence groupings that purposefully exclude both Canada and the United States, in my view are not necessarily conducive to this joint approach.
Brazil is also a natural partner in global financial issues, particularly through the G20. Both Canada and Brazil have a strong story to tell coming out of the global financial crisis of 2008-09, a story written by sound policies, particularly in your respective banking sectors. As further regulations are written and implemented, the potential for collaboration on these issues is vast. At the same time, coordination of efforts to address difficult issues such as the value of China's currency, which Brazilian leaders have spoken out publicly against, could also be mutually rewarding.
Trade and investment is another area for increased attention. Companies like Vale have already seen the opportunities, as all of you know. In one of your previous sessions, Senator Wallin asked for the ``elevator speech'', if you will, on a free trade agreement between Canada and Brazil. Here it is: Brazil is a large, rapidly expanding market with increasing purchasing power and an affinity for products from North America. As Canada looks abroad to diversify its own trade relations beyond the United States, so as to be less dependent on the U.S. economy and our economic cycle, Brazil offers one of the best opportunities to expand Canadian exports significantly, from high tech and manufactured products to energy services, to finance and almost everything in between.
Brazil is Latin America's largest democracy, with a stable and growing economy. If Canada moves first, like it did with both the Chile and Colombia agreements, it will steal a march on the United States and build market share for Canadian products well in advance of the United States. The advantages, in my view, of such an approach are self- evident.
That is not to say all is perfect on the commercial side in Brazil; it is not. Brazil remains in many ways a difficult place to do business, but as a target of opportunity for Canada in trade, investment and across the board, Brazil should be right at the top of the list.
Madam Chair, thank you again for this opportunity to address you this morning and I look forward to the contributions of my colleagues, as well as the questions from the committee.
Paulo Sotero, Director, Brazil Institute, Latin American Program, Woodrow Wilson Center: It is an honour to be speaking before this committee to share some thoughts about Brazil's international strategy and the country's standing in a fast-changing global balance of power.
From a domestic perspective, Brazil's current rise is rooted in political democracy and economic stability achieved, as Mr. Farnsworth mentioned, in 1994 and maintained by two administrations. This continuity has allowed the country to confront successfully the poverty and inequality that have historically been a drain on the nation's development and growth.
Today, a majority of the 195 million Brazilians are part of an expanding consumer middle class that has become the main driver of the country's sustained economic growth. Ending absolute poverty, which still afflicts some 15 million Brazilians, has become a realistic goal and one that President Dilma Rousseff has vowed to achieve in the next four years.
President Lula's extraordinary popularity at home and abroad certainly contributed to energize a more assertive foreign policy at a moment of rapid change in the international landscape. However, the story of Brazil's growing visibility and presence in the world remains essentially an economic story of a nation with an expanding domestic market that is also home to a growing number of global companies. Brazil has emerged as an important producer of food, energy primary and manufactured products, including airplanes, as you are well aware, and services.
Brazil's position and role in the world has been a topic of intense domestic debate, as it should be in a vibrant democracy. On the positive side, Brazilians recognize and celebrate the fact that today the country exhibits a new international self-confidence reflective of not only its domestic achievements but also of the considerable political influence it gained in global affairs despite some frustrations.
One of the frustrations is obviously the incomplete Doha Round at the World Trade Organization. Another was the unsuccessful attempt the country made last year, along with Turkey, to mediate a dispute between Iran and the international community over Tehran's nuclear program, which is also seen as an unfortunate detour. Even before her inauguration last month, President Dilma Rousseff signalled a clear distancing from the miscalculations that led to that episode. President Rousseff's foreign policy will certainly be one of continuity, but in a new framework that seeks to include more voices that reflect the values of Brazil's democracy starting with respect for human rights and to rebuild a national consensus on foreign policy. As Foreign Minister Antonio Patriota recently stated, continuation is not repetition.
The search for closer relations with neighbours in South America will remain a key focus of Brazil's foreign policy. The growing asymmetries between Brazil's GDP and that of its neighbours represents a major challenge and will severely test Brazil's capacity as a regional power and regional leader in the coming years.
Minister Patriota has stated that relations with neighbours will not be pursued to the detriment of Brazil's closer ties with the developed world and other nations in the south. President Dilma Rousseff's invitation to President Barack Obama to visit Brazil next month is a clear illustration of her government's desire to revalue relations with the United States.
Expect Brazil to continue the strategy of close ties with Africa initiated by President Lula. This effort reflects not only Brazil's sense of solidarity with the continent to which it feels it is historically attached, it is also reflective of the role that Brazil has as an emerging donor; a subject, by the way, studied very well by a Canadian scholar. Brazil is starting to provide international assistance to Africa and to Latin America. Also important, obviously, are the growing business interest that Brazil has in both regions.
In global affairs, Brazil will remain an active participant in the G20, and in efforts to make international institutions more representative of global realities, more effective in the promotion of peace and development. Expect, however, the Government of President Rousseff to calibrate carefully Brazil's international goals and ambitions to its position in this changing international balance of power and to the country's capacity to effect change. This capacity is determined first by the country's domestic realities and its success in tackling challenges it faces to sustain economic growth, continue to reduce poverty and inequality, and add quality to what it produces.
I agree with the opportunities that Mr. Farnsworth described in terms of possible Brazil-Canada ventures. Obviously, Canada has a presence in Brazil that is a century old or more. Dilma Rousseff clearly understands the connections between the challenges of foreign policy and the challenges she faces as president domestically. She has set clear objectives to reduce Brazil's domestic vulnerabilities. This is a period of consolidation in Brazil, consolidation in terms of foreign policy and domestic objectives.
A leader that is first a manager, President Rousseff has placed the continuation of economic stability at the top of her government priorities. Yesterday, by the way, she passed her first major political test as president by approving in Congress a raise of the minimum wage that does not compromise the fight to contain a recent surge in inflation and to preserve the real value in purchasing power of wages in Brazil.
Other priorities include improving the quality of public expenditure in the country and improving dramatically the country's education, which is essential for Brazil's economy to gain international competitiveness. Another priority is to develop the nation's energy resources and expand its clearly insufficient infrastructure. This is a major issue, very clear, very present to all Brazilians.
This effort will require the continued participation — the one with infrastructure especially — of foreign capital for productive investment and is likely to function as a powerful incentive for the government to remain focused on its priorities and positively engage internationally.
Leslie Bethell, Senior Scholar, Brazil Institute, Latin American Program, Woodrow Wilson Center: Good morning, senators, and thank you for the invitation to join your discussion on Brazil this morning.
I am a British historian of Latin America, especially Brazil. I spent 10 years as director at the Centre for Brazilian Studies at the University Oxford. Since I retired three years ago, I have been living in Brazil, attached to one of the Brazil's leading think tanks. I spend two or three months at the Brazil Institute at the Woodrow Wilson Center each year, and I have begun to focus more on contemporary Brazil, mainly politics and international relations.
I am happy to talk about the Brazilian political system and domestic politics in Brazil, but my understanding is that the focus of the meeting today is the emergence of Brazil in the last 10 or 15 years as a significant player in both regional and global affairs.
For almost 200 years, since independence from Portugal in 1822, Brazilian politicians and intellectuals, supported by many foreigners, have believed Brazil has the potential to become a major, perhaps a great, country. They have this belief based on Brazil's continental size; its unchallenged territorial and political unity; and because, despite slavery and a post- slavery race problem, the absence of any linguistic, religious, ethnic and regional conflicts; and not least because of its huge natural resources.
From a historian's point of view, what is interesting is how relatively peripheral Brazil has been since independence in both regional and global affairs. In regional affairs, a great deal depends on how you define the region, whether it is the western hemisphere, or Latin America, or simply South America. Brazil never felt itself part of Latin America and never joined in any attempts at Latin American unity. In fact, it has been much closer to the United States in the 20th century, but that has been a very complicated relationship, which we might talk about later.
It has been even more peripheral in global affairs. Brazil usually stands with the United States, and only on two earlier occasions, in the early 1960s and the mid-1970s, attempted what was called an independent foreign policy, which usually meant leaning towards Africa and Asia, not significantly Latin America, Spanish America. Brazil has been mostly inward looking, concerned with its own economic development, state building, how to govern this huge and until relatively recently under populated country, defining its own national identity.
Why have things changed in the last 10 to 15 years? The answer is obvious to us all. Brazil has changed with a fully- fledged consolidated democracy, with economic stability and the restoration of economic growth, with the beginnings of an attempt to deal with its major social problems. There has also been a good deal of political will by the Cardoso administration and the Lula administration to play a greater role, commensurate with its size, population and economy, to shape and influence regional and global institutions, to have a greater prestige, influence, power maybe.
In addition, the world has changed in the post-Cold War era. The multipolar system has allowed space for intermediate rising powers like Brazil; the relative decline of the prestige and influence of the United States; and the emergence of many new global issues for which Brazil is an important player, not least climate change, energy, food, water security, poverty alleviation, nuclear non-proliferation.
The region has also changed. The United States is going through one of its periodic attempts to neglect Latin America. It is looking elsewhere in the world. Argentina is in serious decline. Mexico has joined North America and has its own domestic difficulties, and at the same time, Brazil has continued to grow and to seek greater trade and investment in the region.
As a result, in global affairs we have seen Brazil somewhat neglecting its relationship with the United States and Europe, and concentrating on South-South relationships. All the acronyms we have are BRIC, IBSA — India, Brazil, South Africa — the Community of Portuguese Language Countries, CPLP, and recently, of course, in the Middle East. It is also engaged much more effectively in multilateral institutions. If it punched below its weight throughout most of its history, it is perhaps punching above its weight somewhat in recent years. Remember, Brazil is the only major country of its size with no significant hard power. A national defence strategy announced by President Lula in 2008 is attempting to deal with this issue, at least to the extent of modernizing the Brazilian armed forces.
Brazil is mainly concerned in security terms with the Amazon, of course, and with what it calls the blue Amazon, the Atlantic coast, where oil is now becoming a major issue.
In regional affairs, Brazil has continued to play a role in the Organization of American States, attending all five Summits of the Americas, but is not much interested in Western Hemisphere affairs; certainly it has been opposed to the free trade area of the Americas.
Regarding Latin America, Brazil attends the Rio Group meetings and has committed itself it to the community of Latin American and Caribbean states that will be consolidated later this year. However, the focus in recent years has been firmly on MERCOSUR and particularly South America, what has become now the Union of South American Nations, UNASUR.
There is an asymmetry of power in South America, even in Latin America given Mexico's current problems. Brazil is ambivalent about its leadership role, about the responsibilities and the costs of leadership in the region, whatever the region. There is a good deal of opposition to what is thought of in many Spanish-American countries as Brazilian imperialism.
There are alternative projects for South American-Latin American unity, not least the one led by Chavez, and some Spanish American countries still very much prefer relationships with the United States compared to relationships with the other Latin American countries.
The whole issue of Brazil's identity — that is, is it west, north or south, is it Latin American or South American, and, in particular, what is Brazil's relationship with the United States — is an extremely complicated subject. What does Brazil want and what role does it wish to play in regional and global affairs? This is, as Mr. Sotero said, an extremely intense debate. For the first time in Brazilian history, Brazilians debate foreign policy. It has become politicized and increasingly polemic.
Finally, do we expect continuity or change under President Dilma Rousseff? She is, after all, a creation of President Lula. During the election campaign, when asked what her policies were on anything, she simply said: To continue the policies of President Lula. Is this Lula's third mandate? Is she keeping the seat warm for Lula in 2014 or is she her own woman? We have had six weeks to make a preliminary assessment. Clearly, there is a different style — less personal, less grandiose and more pragmatic. President Rousseff faces immediate domestic challenges, both political, because of the Brazilian political system, and the need to put together a multi-party government and to deal with a multi-party Congress and economic issues. Lula's legacy is not quite as good as Lula and his admirers would like us to believe, and President Rousseff has to deal with major problems arising from fiscal irresponsibility and the beginnings of inflation.
Regarding international relations, there are some signs of change. In global affairs, President Rousseff has already said she disagrees with the policy on Iran. We are waiting to see what her policy on China is, but there are some indications that she stands more with the United States on some issues relating to China. On regional affairs, she says she wants a more constructive relationship with the United States than was the case during the Lula administration.
There is also continuity. The first visit abroad by President Rousseff was to Argentina. In Argentina, she made very strong statements about Brazil's commitment to Latin America. At the same time, her international adviser, who was Lula's international adviser, Marco Aurélio Garcia, has written in Le Monde Diplomatique that his focus is entirely on South America. We still have the conflicting identity that Brazil has of whether it is part of Latin America or of South America, or whether it wishes to be part of the hemisphere.
Frankly, as a foreigner living in Brazil, I rarely hear any discussion about Canada. I rarely hear any discussion about Canadian-Brazilian relations. If Brazil does move to a more constructive relationship with the United States and emphasizes its western hemisphere relationships, then surely the three biggest states, the three biggest economies, the three greatest democracies in the western hemisphere must have various reasons, as we have heard from my colleagues, for cooperation.
However, if Brazil continues to focus much more on South America and even on Latin America, excluding the United States and Canada from many of its discussions, then at least Canada can say it is not the United States, and it still has possibilities for bilateral relationships and cooperation throughout the rest of the world and through multilateral institutions.
The Chair: Thank you very much to our three presenters. You have certainly covered the area of foreign policy with a little look into the future.
Senator D. Smith: Mr. Bethell, I am intrigued. You get the sense of rivalry between Portuguese-speaking Brazil and the Spanish-speaking countries.
The relationship with Argentina intrigues me. About 100 years ago, Argentina was almost like another European country, with great world architecture and a famous opera house. There is an opera house on the river in Manaus in Brazil, too. However, you used the phrase ``serious decline'' when you referred to Argentina. When you think of how powerful it is, the tango and the colourful Argentina of many years ago, what went wrong that Brazil seems to be getting right?
Mr. Bethell: You have raised some big issues. There always has been a difference between Portuguese America and Spanish America, clearly, from the colonial period. In the 19th century, Spanish America had very little relationship with Brazil and did not think of Brazil as part of Spanish America or Latin America. The Brazilian empire, the Brazilian monarchy, felt itself superior to most Spanish American republics, so there was a stand-off between imperial Brazil and the Spanish American republics them at the beginning.
Gradually, there had to be some engagement. Brazil engaged in three wars in the Rio de la Plata. As Argentina emerged as the most important country in Latin America, it began to feel itself much superior to Brazil. The rivalry goes back to the late 19th century.
There is an opera house in Rio de Janeiro and another in São Paulo that is equal to the Teatro Colón in Buenos Aires. In the 20th century, certainly since 1930, the position of Argentina has declined and the position of Brazil has enormously improved; the balance has shifted dramatically. That shift is partly because of Brazil's size and natural resources, although Argentina is rich in natural resources. It also is because of Brazil's economic development model during the period from 1930 onwards. Brazil became a much more diverse economy with a much stronger industrial base. Brazil began to gradually solve many of its political problems, whereas Argentina began a long period of economic decline and a long period of political instability.
Mr. Sotero: If you are a Brazilian, I think it is easy to understand that Argentina, with its brilliant past, deals today with the memory of prosperity that is problematic for a country facing the types of problems that Argentina is facing.
You spoke about possible rivalries between Brazil and the Spanish-speaking countries. Actually, there is not much of that. One of the challenges that I believe we face in Brazil is to pay more attention to our neighbours. We completely ignore our neighbours, particularly Argentina because of historical reasons.
In the 1970s, I was only the third journalist in Brazil to specialist in Latin America. We did not pay attention to the region. However, we now must do so because we are becoming increasingly more important. We have some 50,000 illegal immigrants from Bolivia in São Paulo. We will have to grow and prosper in an intelligent way. We have to share our prosperity with our neighbours. We have to lead. We have to behave in a way that makes other countries feel included. This is the biggest challenge to Brazilian leaders, not only for President Rousseff but also for those coming in the next generations. There is no sense in Brazil of rivalry with our neighbours.
Senator D. Smith: My final question relates to the booming relationship with China.
Our committee was in China a year ago. The first time I was in China, Mao was still living. The differences today are unbelievably dramatic. Regarding the currency, you literally hear a primal scream from the Americans on occasion on the value of the Chinese currency, but they just cannot seem to deal with it.
What does Brazil think they can do that can maybe start chipping away at the real issue?
Mr. Farnsworth: I do not think Brazil can do a lot with reference to Chinese currency on the bilateral basis. The United States, as you correctly point out, has not been able to do a whole lot, other than to put this on the international agenda. This is where Brazil becomes important. I was in China in November, at the time when the U.S. quantitative easing package was announced. The reaction in China was extremely negative, as it was in other parts of world. On a bilateral basis, this allows the Chinese to say: Those Americans are just trying to keep us from global leadership. They can be usefully put in a separate category and the rest of the world is a friend of China.
When it becomes more socialized in the global community, for example, in the G20, where Canada and Brazil are both members, to have the currency issue as a broader global issue that the Chinese have to face and recognize it is not just impacting the United States, then it becomes qualitatively different. The Chinese are then not able to dismiss it as the primal scream, as you say, of the United States. This is an important point.
I think the Brazilians recognize that their own trade relations with China are unbalanced at this point. I think they recognize that it must change over time. You are seeing a debate arising in Brazil, slowly at first, but it is starting to gather momentum, questioning the type of relationship that Brazil has with China. The relationship is based primarily on commodities, which goes back to the old model that Latin America used to be and has been trying to move away from. The model is that of the provider of primary commodities for other countries to develop and reap the value- added reward. This is an active debate and discussion in Brazil and we anticipate this debate will continue.
On Argentina, I have nothing to add to the astute comments of my colleagues. However, I did serve for a time in the U.S. government and in the White House. There is an important difference between now and the 1990s with the Brazil- Argentina relationship that is affecting what Brazil is able to do in some cases internationally. Let me offer an example. Brazil is actively pursuing, and has for many years, and rightfully so, a seat on the United Nations Security Council. However, when those conversations came up, Buenos Aires would contact the United States and other countries and ask why Brazil should get a seat and not Argentina. Mexico would say the same thing, and then there would be inter- regional rivalry. You do not hear that so much anymore because Argentina does not have the same prominence that Brazil clearly has. There was that moderating function between the two countries, which, remember, had an active nuclear program designed to counter each other in the 1970s. That does not exist now, but that history is instructive because, now unshackled by inter-regional rivalries, Brazil is able to move forward in the international sphere.
Mr. Sotero: On the China relations, the government in Brazil had entertained the idea of China as a major strategic ally. President Lula's first three or four years in government were centred on the idea of developing major strategic relations with China. This idea is no longer present. After China blocked discussions at the UN Security Council about reforming that body — for reasons absolutely unrelated to Brazil — and, more recently, because of the impact of the Chinese undervalued currency for Brazilian industries, the Brazilian government is under severe pressure from industries in São Paulo, all over Brazil, to do something about the currency issue. As Mr. Farnsworth mentioned, and Mr. Bethell would agree, what can you do about it, really? There is not a clear answer.
On the political side, regarding the relationship with China, because we have become an exporter of primary products, you will see senior Brazilian diplomats and commentators saying that this is a new colonial type of relationship. That is what Mr. Farnsworth just said. This is an important consideration for President Rousseff and for the policy-makers in Brazil going forward.
Mr. Bethell: I have nothing to add on China, but one last word on the issue of Spanish America, Brazil and particularly Argentina. I think Mr. Sotero is right. There is no rivalry now. Brazil is overwhelmingly the dominant power in South America and in Latin America. One of the problems the United States has is that for the first time in its history there is another country that to some extent challenges its own hegemony in the Western Hemisphere, another major power coming out of Latin America.
I think there still is a sense that Brazil is different from Spanish America. There is still a sense that Brazil is not sure whether it wishes to lead, how it wishes to lead, and what its responsibilities would be if it were to lead, at least in South America. Within South America, there is, as I said, a certain amount of resistance. There are groups that welcome Brazilian leadership of the region and there are still groups that resist Brazilian leadership.
I hear, in Washington, frequently, from Spanish-American representatives, this resentment of Brazil's position and some concern about the possibility that Brazil could now dominant the region.
Mr. Farnsworth: Quite right.
[Translation]
Senator Fortin-Duplessis: I would like to thank the three of you for agreeing to tell us about Brazil. I have two questions for you about different topics. The first one has to do with clean energy and the other, with Brazil's foreign policy.
At the beginning of the month, northeastern Brazil was plunged into darkness, from Thursday night to Friday morning at dawn, because of a power outage at an electric substation, which affected millions of Brazilians. Eight of the nine northeastern states were affected by the blackout.
A witness, who came to meet with us earlier, told us that part of Brazil's electricity comes from ethanol. Brazil is constantly affected by power outages, and one of the major blackouts hit the southeast, which is the industrial and economic heartland of the country. That happened in November 2009, affecting 70 million Brazilians.
What do you think about Brazil's electrical grid? Do you think that Canadian experts could do something about this in the future to help Brazil?
[English]
Mr. Sotero: I am not an expert on the electrical grid in Brazil. It is one major grid. We do use ethanol. In the process of producing sugar cane ethanol, we produce a lot of electricity. This goes to the grid. This is one system. From what we understand, a major issue occurred concerning the management of those power stations. It was not for lack of supply. The discussion is ongoing.
A few weeks ago, there was another problem in the northeast. That points to the need for Brazil to continue to expend its production and transmission lines. The vulnerability here is more on the transmission lines than on the capacity to produce.
As you probably know, 80 per cent of all electricity produced in Brazil comes from clean energy in the form of hydro power, and add to that the production from sugar cane ethanol. As far as concerns electricity, fossil fuels play a minor role in Brazil. As with most issues in Brazil today, it is an issue of quality. In this case, it is the quality of managing those networks. President Rousseff is particularly attentive to that, I believe, and politically vulnerable on that issue because she was the Minister of Mines and Energy, which led to a reconfiguration of the regulatory framework of that sector.
Mr. Farnsworth: If I could add a brief comment, I agree with Mr. Sotero. This is a huge opportunity, in my view, for Canadian expertise. As Brazil grows, the need for energy will grow. Presently, Brazilian infrastructure is inadequate to the task of energy and many other activities. It is not to say the resources do not exist; they do exist, but the infrastructure needs to be developed. As the population increases and economic growth increases, the demand for energy will similarly increase.
Mr. Sotero referred to the idea that much of Brazil's electricity comes from clean energy. Most of that is actually hydro. If you have a hydro-based economy, then you are dependent on things like rainfall, which generally is plentiful in Brazil, but sometimes it is not. Some of these blackouts have been because of shortfalls in the hydroelectricity sector. As Brazil is developing that additional infrastructure, it is a huge opportunity to bring online clean energy alternatives, for example, the sugar-based ethanol that Brazil has in such abundance and is clearly leading the world in producing.
One activity we have not mentioned is also in the energy sector, but not what we would consider the clean energy sector, namely, the massive finds of oil and gas in the deep water off the coast of Rio de Janeiro, which Brazil is moving forward aggressively on. Canada has interesting expertise on investment models that work. Canada reserves the commodity to the state and yet still encourages the investment that is necessary to get the product out of the ground and into the commercial sector. That is another area of expertise that Canada could lend in a useful and cooperative way.
Mr. Bethell: I am also not a specialist on energy, obviously, but I would underline what Mr. Sotero and Mr. Farnsworth said, namely, that 70 per cent to 80 per cent of Brazil's electricity comes from hydro. Brazil is developing huge dams on the tributaries of the Amazon. One, in particular, on the Xingu River in South America, will be the biggest dam in South America, apart from Itaipu. Although there are huge environmental issues and issues to do with indigenous populations, these major dams are clearly going ahead on the Amazon.
The second factor is nuclear energy. Brazil has two nuclear power stations and is about to begin a third, I think in 2015; and has plans for three or four more. Nuclear energy is very much on the agenda. There are the oil discoveries off the coast of Rio de Janeiro and Santos. All these will considerably change the profile of energy and deal with the problem of energy supply in Brazil, but they need huge investments. Everyone agrees that much of the infrastructure of Brazil — that is, the roads, the railways, the airports and the ports — are in desperate need of massive investments, together with hydro and nuclear power.
Brazil does have a major problem of investing in all these areas, which have huge potential, but also present difficulties.
[Translation]
Senator Fortin-Duplessis: Here is my question on Brazil's foreign policy. I know that former President Lula and his Chilean counterpart, Michelle Bachelet, will be in Algiers, Algeria, next May for a major international meeting with economic and social councils.
This has to do with integrating the Association of Economic and Social Councils into the United Nations system, the objective being to stand up to the so-called neo-liberal economic vision. In addition, Brazil's actions on Iran's nuclear program and the Honduran constitutional crisis, its sudden recognition of Palestine as an independent state and other initiatives have often left international observers wondering.
In your view, can Brazil's actions be justified by its desire to have a trade advantage and to expand its export markets?
[English]
Mr. Sotero: I would like to begin by reminding you that President Lula is the former president of Brazil. Brazil only has one president at a time. Whatever President Lula did, obviously, we have respect for him. I think he was a good president for Brazil. What he does as a former president is his own business and the business of the party he represents. I do not see President Dilma Rousseff supportive or engaged in a set of policies that would undermine our main effort to keep the economy stable, to keep it growing and attracting foreign investment for productive uses in Brazil.
With regard to other issues, we have dealt with Iran. The issue of Honduras was an unfortunate episode where the countries were all initially together and then, because of pressures here in Washington that led to the nominations of two senior important officials here, became hostage to a particular view here in the United States. The United States was forced to make some concessions. You know about the episode. This is still under review. Brazil and Mexico, for instance, have not yet recognized the government of President Lobo in Honduras, but this should be happening.
President Lula, again, is a popular leader. He may or may not come back as president. If President Dilma Rousseff is successful, as we all expect she will be, she will run for re-election, probably with President Lula's support. In the meantime, I think President Lula will carry on with his plans to help in development issues. If he does that in the context of the United Nations, I think it will be a good effort. As I said, he contributed a lot to Brazil. However, he is now a former president of Brazil. The president is Dilma Rousseff.
[Translation]
Senator Fortin-Duplessis: I would like to point out that I did say that Mr. Lula was the former president because I am well aware that Ms. Rousseff is the president now. I am waiting for Mr. Farnsworth's answer.
[English]
Mr. Farnsworth: I think that question encapsulates what many observers are trying to understand about Brazil. As Mr. Bethell mentioned, that is: How does Brazil see itself and portray itself in its international activities? Some of the things Mr. Bethell referred to about the previous activities are consistent with a certain view of Brazil in the world. The world sees Brazil as a leader of what we used to call the Third World, or perhaps the non-aligned nations, but certainly with a South-South type attitude; perhaps as a leader of the BRICs; perhaps less consistent with a view of a ``Western'' nation, particularly with reference to the Iran and Palestinian episodes to which you referred.
However, that is not to say that we would anticipate these activities to continue. Dr. Sotero mentioned an active dialogue in his comments. That dialogue is about where Brazil should position itself in the global economy as it seeks greater prominence. That is a good question and an open question as well.
There is a commercial rationale for Brazil's outreach to the Middle East. Brazil has had a long relationship with the Middle East on a commercial basis, agriculture products, energy relationships, et cetera. It is not inconsiderable. As well, Brazil does have a rather large Middle Eastern population within its borders. That is not to say they are anything other than fully assimilated into Brazilian society, but there is a connection and it is historic, positive and strong, so there is that aspect of commerce.
I do not believe that is a full explanation of what Brazil has done concerning the Middle East, but I do think that is an aspect of what Brazil engaged in over the past several months.
Mr. Bethell: I would like to repeat that of course the episodes to which you refer are all episodes now in the past and they were all controversial in Brazil. They were controversial internationally but in Brazil as well. Brazil's position in the Honduras crisis raised many questions about Brazil's attitude to democracy in Latin America. Similarly, of course, Brazil's relationship with Venezuela and with Bolivia raised many questions in Brazil about Brazil's position in South America, its attitudes to human rights, and to democracy.
In the Middle East, however, that was the most controversial of all, both internationally and in Brazil. It is still not clear to me — I think one day we will have the story — why did Brazil get involved in this particular episode with Turkey? As Mr. Farnsworth said, Brazil has commercial and financial interests in the Middle East and Iran. Brazil constantly seeks partners and support for its bid for a seat in the United Nations Security Council. This explains much of Mr. Lula's travelling around Africa and in the Middle East — a search for support for the UN seat. Brazil was looking to exercise its influence in the Middle East, and Iran is clearly a very important country.
Behind that, of course, was a certain amount of anti-Americanism in the Lula administration. There is no denying this. It comes from the left in the 1960s and 1970s. There is opposition to U.S. imperialism and U.S. hegemony throughout the world, and Brazil has wished to challenge this from time to time in certain areas.
Finally, and we simply cannot answer this question, to what extent was Brazil concerned with the whole issue of nuclear proliferation when it dealt with Iran? Is it thinking of other countries; is it thinking of itself? What is Brazil's attitude toward nuclear proliferation? Those questions have not really been answered, but they all relate to the last two or three years of the Lula administration. As we pointed out already, there are signs that President Rousseff wishes to change some of this. We will have to wait to see how much she wishes to change.
Senator Di Nino: Welcome, gentlemen. This is very informative. I obviously am totally enjoying this meeting. Our general theme is better understanding this country, with which we have had a long-standing relationship but not particularly wide or deep. It was much larger some years back but it has fallen by the wayside.
I was not surprised to hear Mr. Bethell say that Canada is not on the radar screen in Brazil. The purpose of these inquiries is to educate ourselves about this country, and particularly to see if we can find some areas to increase our trade and investment with this emerging powerhouse.
If I can continue on that line a little bit and talk about the information, knowledge and wisdom that you gentlemen have that you can share with us, I would like to first ask about the non-tariff impediments that Brazil has established, in effect creating roadblocks to trade and investment with other countries. Do you have any thoughts on that?
Mr. Farnsworth: Despite all of what we have said about Brazil's economy and growing global prominence and all these things, which are true, nonetheless there are things that restrict Brazilian growth. I referred in my initial comments to 7.5 per cent growth rate last year with a projected rate of 5.5 per cent over the next three to four years. To be perfectly frank, that growth rate could be several percentage points higher if Brazil made internal reforms to its economy that would do things such as draw the foreign investment that you refer to, I believe, in your question.
I will give a couple of examples. Almost any foreign investor in Brazil, and frankly any domestic investor, would say that Brazil's tax regime, even for the most well-meaning and upstanding corporate entity is horribly complex and difficult to comply with. As we all know, if things are difficult to comply with, many times people do not. Tax reform is a long-standing issue in Brazil that has limited investment below where it might otherwise be; that is number one.
Issues of basic education in Brazil continue to be a problem. There have been dramatic increases and improvements, but in a globalized environment companies are looking for workforces that are not just inexpensive, like might have been in previous generations and might still be driving lots of investment into Asia. Companies are also looking for talented workforces that are trained and able to be globally competitive on some of the things that companies are trying to build and produce. This committee is familiar with the story of aircraft between Canada and Brazil. Companies also want employees to produce high tech agriculture products or pharmaceuticals, or things that require a lot of value-added and a lot of input in terms of human capital.
The Brazilian banking sector is an engine of growth in Brazil; however, the interest rates that Brazil currently maintains are also a drag on investment. We know why the interest rates are a little higher, which is to try to contain inflationary pressures that do exist and frankly are increasing in Brazil in the current environment. As the interest rate is increased, obviously that makes cost of living more expensive and therefore investment decreases. There are a number of things. I could give additional examples.
In terms of tariff barriers, yes, obviously those exist and the problem with Canada-Brazil trade to this point is that both countries are actually competitive in many of the same products. To increase dramatically that relationship on a commercial basis, one would have to seek either cooperation in those sectors or pursue additional sectors, for example, energy and infrastructure, which we have discussed.
Mr. Sotero: I would observe, to add to the list, that customs procedures in Brazil are cumbersome. Brazilian consumers are not happy with that. Specifically for Canada and Brazil, I would say something that may interest you. In the private sector in Brazil there is growing interest in getting closer to Mexico; the private sector to private sector, Mexican investments in Brazil, telecom and some Brazilian investments in Mexico. Obviously that has to do with the North American market. I see that the same sort of model could be explored with Canada.
With Canada and the United States, we have one major issue relating to agriculture. We are all big agricultural producers, efficient ones, and this issue will bring us at some point to the World Trade Organization. In a world where we move towards an agreement at the WTO on agriculture and other issues, obviously the Brazilian government and Brazilian businesses that depend on protectionism would be under pressure to face this issue of what we call the cost of doing business in Brazil that is paid primarily by Brazilians. This issue remains an important issue and one issue that is part of the current government's agenda in Brazil.
Mr. Bethell: We should not become over-excited about the Brazilian boom in the last say, eight or ten years, during the Lula administration. Of course, compared with the 1980s and the 1990s, these years are boom years, but the average growth in Brazil during this period has been only a little over 4 per cent. It is below the Latin American average. Growth was 7.5 per cent in 2010 mainly because it was only less than 1 per cent in 2009. Argentina grew faster. If we compare Brazil's growth with the growth of Russia, and certainly India and China, India grew over 8 per cent and China grew over 11 per cent a year over an eight-year period. Angola was the fastest growing economy in the world, and several African countries grew much faster than Brazil.
We have to keep a sense of proportion here. There are many reasons for this situation and they have been outlined by my colleagues. There are many reasons why Brazil, with all the advantages that we have discussed, has not grown any faster because of the Brazil cost, because of all the things that we have mentioned.
There is some concern. Of course Brazil will continue to grow over the next 5 to 10 years, assuming there is no major international crisis and a second major recession. How fast? I think Brazil is already reducing the expectation of growth over the next few years and there is a serious question about Brazilian competitiveness in the new global economy.
The issue of de-industrialization is on the agenda. It is debated by economists in Brazil. Competition from China is a serious issue. There are many problems and challenges, and Brazil has done well in the last 10 years compared with the previous 20, but not as well as many of its competitors.
Senator Di Nino: I agree with the comment that there are a lot of similarities in our economies, and that leads also to what I think was insinuated — potential joint ventures. What are the issues in Brazil on foreign ownership restrictions?
Mr. Farnsworth: I will confess off the top of my head I do not have specifics on that issue. That is generally a sector- by-sector analysis, and we will need to return to you with the information.
Mr. Sotero: The economy is open in that sense. One establishes a company, a Canadian company, that opens up for business in Brazil and is a national company in Brazil. There have been many, so we do not discriminate against international companies in Brazil. We treat Brazilian companies and international companies the same, and businessmen in Brazil will tell you that we treat them both badly because of those Brazil costs. Whatever we do that you do not like, we do it to ourselves first. That is the challenge. People are aware of it and this is a subject of intense daily debate in Brazil in business newspapers, on television, et cetera.
Senator Mahovlich: You mentioned Portugal broke off with Brazil in 1822. What kind of relationship does Brazil have with Portugal today? Does Portugal still have immigrants to Brazil?
Mr. Bethell: Senator, there is some immigration, but it is modest. Brazil received Portuguese, Italian and Spanish immigrants, then Japanese and then Middle Eastern immigrants numbering millions between say the 1850s, 1860s and the 1930s. Since then, the stream of immigration to Brazil has been modest. Brazil is not receiving large numbers of immigrants. It has immigrants from Paraguay and Bolivia — legal and illegal — but this inflow of immigrants is not major.
I first went to Brazil on a ship in 1960, which was full of Portuguese immigrants, third class steerage, and there were still immigrants being picked up in Lisbon to go to Brazil. Since the 1960s, and particularly after Portugal joined the European Union, most Portuguese immigrants have gone to other European countries such as Britain, Germany and France.
There is a large community in Brazil with origins in Portuguese immigration from the 1850s to the 1920s, particularly in Rio de Janeiro, but it is being fed by no more than a few hundred a year in recent decades.
Mr. Sotero: Portugal gave us our DNA and that is who we are. It is our soul. Now, in terms of immigration, starting in the late 1980s, there was reverse immigration, especially economic immigration, from Brazil to Portugal. Some of that emigration was also to Canada.
As a journalist, I remember writing about that emigration at the same time that Brazilians were coming to the United States. Sometimes it posed problems because the Brazilian immigrants to Portugal were not highly educated and there was even resentment and reaction. I was a correspondent for a Brazilian national magazine in Lisbon after the democratic revolution there. At that time, Brazilians were well treated, but Portugal is the mother country. Portugal has an eternal presence. It is our language. It is a different language, a different accent and much more dynamic in Brazil, but it is a positive relationship and especially on the business side, in telecom and banking. In supermarkets and things like that we are close.
Mr. Bethell: To add, there is also a close intellectual and cultural relationship ongoing between Brazil and Portugal. For many decades, Portuguese intellectuals, writers, ignored Brazil, and rarely visited Brazil. This situation has changed dramatically in the last 10 to 15 years. There has been a stream of Portuguese writers and academics who are published in Brazil, read in Brazil and like to visit Brazil. There is a strong relationship between universities.
One other thing I will add, since we have not had an opportunity to discuss this point, Brazil has this close relationship with Portugal for historic, cultural and linguistic reasons, but also Portugal for Brazil is a particularly good way into the EU. There is a special relationship with Portugal, but even more important with the community of Portuguese-speaking countries.
Remember, Portuguese is spoken by 25 per cent of the population of the southern hemisphere. Portuguese is a major language. There are now, I believe, 8 or 9 members of the community of Portuguese-speaking countries, of course dominated by Brazil. Of the population of these countries, Brazil represents over 80 per cent or 85 per cent. Let us not forget the growing importance in the world of Angola and Mozambique and, through them, a special relationship with South Africa. Brazil, particularly President Lula, has given a great deal of attention to Africa through the Portuguese- speaking African countries and South Africa. I have no doubt that this relationship will be continued into the future.
Senator Mahovlich: I have one more question. You are talking about modernizing your military. Here, in Canada, we are looking at an investment of $20 billion to $35 billion for our air force to protect our borders. Do you feel that your investment in your military will reach the billions of dollars?
Mr. Sotero: There are a few projects. The current project in the headlines is updating the air force in Brazil. Obviously, there is a need to patrol our borders better, especially in the big, open space of the Amazon. A bid was recently reopened by President Dilma Rousseff. Initially, we are supposed to buy about 24 jet fighters, for a total order that could reach 107 fighters over 25 or 30 years.
At the same time, there is an effort to re-equip the navy of Brazil. The pre-salt oil and gas discoveries have given substance to that effort. The army is the largest of the three forces. We have a total of around 300,000 people in the armed forces in Brazil. We have mandatory service that mobilizes about 70,000 conscripts per year, I believe.
Yes, the limitation to modernizing the army, the air force and the navy is the budget. I think the fiscal issue is holding back the fighter plane right now because we do not have an immediate need. We are not involved in any conflict. We are involved in peacekeeping in Haiti; we may be involved in other peacekeeping missions.
A more urgent concern and something that may become subject to political pressure over the years, is to control the traffic of narcotics better from the Andean nations because this traffic comes through Brazil and Brazil has now become maybe the second largest consumer of those things.
With drug trafficking comes the trafficking of weapons and, with that trafficking, a lot of crime. This is an issue that people know about, particularly because of what happened in Rio, but it trafficking is broken in Rio now. The authorities seem to have found a strategy to approach this trafficking in Rio. We have a deadline to control that trafficking, which is the challenge to organize serious international events in Brazil, culminating with the 2016 Olympics in Rio.
However, there is a connection there with the need to strengthen the patrol at the borders for that purpose. A country the continental size of Brazil, which has armed forces, obviously must have armed forces that are equipped properly to do what we want them to do, which is to protect the borders and to preserve national sovereignty.
Currently, we have not given our military the tools to protect the borders, although we have requested them to do that. This is the issue. It will cost a lot of money.
I think there is a political decision to spend the money, but this money will have to be spent carefully because of fiscal circumstances in Brazil.
Mr. Bethell: We were talking about change or continuity between the Lula administration and the Rousseff administration. I mentioned that Mr. Garcia was the international adviser to both. There is continuity in South American policies.
It is interesting to know that the Minister of Defence, Mr. Nelson Jobim, also kept his job. He was one of the authors, maybe the main author, of the national defence strategy in 2008, I believe, which put this whole issue of the condition of the Brazilian armed forces on the agenda. As Mr. Sotero said, the strategy is mainly concerned with borders and the Amazon, and also what the military calls the blue Amazon, the increasing importance of the great south oil discoveries offshore.
This importance explains the French nuclear submarine that the Brazilians are buying. The general sense is that the Brazilian armed forces, with no significant enemy in sight, are simply not up to the task of defending national sovereignty, both in the Amazon and in the Atlantic. Maybe behind this strategy also there is the sense that, as Brazil becomes a much more important regional and global power, it is the regional and global power with probably the weakest armed forces. Maybe little bit more hard power will be helpful in exercising Brazil's soft power.
Senator Robichaud: In your answer to Senator Di Nino's question about the cost of doing business in Brazil, you said that Brazil treats foreign countries, or the people who come to do business, the same way Brazil treats its own people. Local businesses complain; they are not happy with that treatment.
Are the authorities listening? Is there any sign that this situation might change?
Mr. Sotero: Believe it or not, there is always ongoing reform. Sometimes it is irritatingly slow. It is frustrating. The number of steps one has to follow to fulfil certain procedures in Brazil is irritating, but I can give you examples. For instance, there is a wonderful company in Brazil called Natura, a cosmetics company in São Paulo. I heard from their chief executive officer that they have 23 people in their legal department in their modern headquarters near São Paulo. They have to follow the changes in tax policy in Brazil; that is, the federal district, 26 states and 5,500 municipalities. There are, on average, about 18 to 20 changes in tax rules in Brazil every month.
This gentleman told me, ``I would rather have eight people in the legal department than hire and employ 15 more in the research and development department.'' This is the type of frustration there is.
As Brazil integrates itself more in the world economy, the challenge of competitiveness puts Brazil face to face with this problem. A new generation of Brazilians is coming to positions of power, and understanding this challenge better. The idea is not to isolate Brazil but to integrate Brazil.
As I said, there is a certain sense of self-confidence in Brazil that, yes, we can compete; we can be competitive. We have to do this integration. This issue concerns the fundamental question about Brazil — that is, the quality of our own people and the investment in education. These issues are all tied together. It is frustrating, but it is being debated, and changes are happening all the time. Sometimes they are small, sometimes they are bigger, but the problems are being tackled.
Mr. Farnsworth: I completely agree with Mr. Sotero. Traditionally in Brazil, even though it was not a closed economy, nonetheless the trade and investment linkages between Brazil and other parts of the world were not as high as they would be in Europe or in North America, or what have you, because of the physical size and also the broader way to measure Brazil as a country and economy — that is, the large domestic market that Brazilian producers often focus on. As a percentage of the economy, trade links were a lot smaller than one might expect in a country the size of Brazil.
However, as Brazil moves into the global economic space, and as they are faced with competition from China and India — not only competition from North America or from other Latin American countries, but other non-traditional producers — Brazil is faced with the need to move forward and address some of these issues. It is not that the issues have been unknown for a long time or that the government has callously disregarded them, but there was no urgency to address them.
In every capital, when issues are politically sensitive, they tend not to be addressed as rapidly as others. As Mr. Sotero mentioned, with a new generation of leadership and a new generation of business class in Brazil, we are seeing people exposed to other ways of doing business and the need to find ways to generate economic growth for Brazil and to take away those shackles on Brazilian growth that have existed in the past. We will see an emphasis on this need.
When President Rousseff came into office, she focused on poverty alleviation and social development, as is appropriate, but quietly she is also beginning to address economic reform more broadly, which is equally important. Frankly, this reform probably will have a longer term perspective for the growth of the Brazilian economy.
Mr. Bethell: I do not have anything to add on this subject. It is not a field on which I am familiar.
I will make a point that has not been emphasized much this morning. Canada, the United States and Brazil are all federal states, and it is interesting that significant change is taking place at the state level within Brazil, as I am sure it is taking place in the United States and I imagine in Canada. Of course, one thinks mainly of the most important state, São Paulo, but Rio de Janeiro is now going through a good phase. Some states in the northeast are growing faster than other states in Brazil, like Pernambuco and Ceara. We are talking about a country with 200 million people, so an individual state can have a large population, and can have its own economic and international policy.
I notice that one or two Brazilian states now have international assessors, advisers and staff that are looking for closer relations with other countries and states in other countries. The federal nature of the two countries we are discussing is probably worth emphasizing.
Mr. Sotero: Along the same lines, let me add something that we are engaged in at the Wilson Center. President Rousseff stated that we have assembled the highest technology perhaps ever in Brazil. We have a leading climatologist in Brazil, Carlos Nobre, leading the policy and research side of that technology. We have one of the leading experts on innovation in Brazil, a student of innovation in Brazil, leading the federal agency for innovation, and investing in innovation policies. The science foundation in the state of São Paulo is led by a former foreign minister, Celso Lafer.
We have a critical mass of knowledge and people who are engaged politically. To use the metaphor that President Obama used about the United States, this is a Sputnik moment for Brazil also. This opportunity is huge. This country can become a major force. Brazil's population will not continue to grow. It is now projected to stabilize at 220 million in about 15 to 20 years. These elements can grow together as a great nation, a great nation that can be a positive force in international affairs.
Some of the best talents are in Brazil, especially in this area of science and technology, a clear understanding of this science and technology and a clear desire to engage. This area is another where Canada and Brazil could engage.
I remember that the first two sets of domestic satellites that Brazil had, communication satellites, were built in Canada, near Ottawa. The first group of Brazilian aerospace engineers to deal with those satellites were trained by Canadians. We have an increasing number of Brazilian university students and graduate students in Canada. We should have Canadian students in Brazil for those types of exchanges. They are people-to-people engagement. Politicians in both nations should pay attention to this area.
For instance, we will host, here in Washington, a group of senators and congressmen who are coming for a study mission on innovation. There is a great curiosity about that area. Although there may not be much knowledge about Canada in Brazil, I guarantee you that there is a basic sympathy for Canada in Brazil, and I think the moment is right for engagement.
Mr. Bethell: Since we have moved into this area of Brazil-Canada relations, and following on Mr. Sotero's comments, I underline that — you would expect me to say this as an academic — I believe in the importance of knowledge and understanding. I believe in the importance of the media, of think tanks and of universities in deepening knowledge and understanding of other nations and cultures.
If Brazil is to be better known in Canada, and Canada better known in Brazil, the media, and particularly the think tanks and the universities, have an important role to play. There is a long way to go in Brazil. I am not sure what the situation is in Canada in terms of institutions dedicated to the study of Brazil, South America or Latin America. I imagine the United States is well served.
In Brazil, there is a long way to go. I do not think there is a single serious institute for the study of the United States anywhere in Brazil. There is, I think, the first small centre for the study of Latin America — imagine, the first centre for the study of Latin America in a Brazilian university, in the last year or so.
For Canada to be better known in Brazil, and Brazil to be better known in Canada, there is a role to be played by the media, think tanks and universities.
The Chair: Gentlemen, we have run out of time. Normally, we go a little longer, but other issues have caused us to end the meeting at this time. The note we left on was one that I wanted to explore — we have explored it with other witnesses — and that is of education, the sharing of technologies.
Our statistics are outdated, but, in 2008, 17,000 students came to Canada from Brazil. This area seems to be one that we have not tapped into before. The point of whether there are centres of study of Canada, we have those centres around the world. I am not sure we have one in Brazil. I am beginning to think we do not. There are valuable opportunities here.
I do not know if it is neglect or inattention from Brazil to Canada, or Canada to Brazil. This area is one we are exploring now to determine what the opportunities are, what are the necessities if we are sharing a hemisphere, and what are the opportunities for partnership of the two countries in dealing with many of the global issues? As everyone else, I think we, along with everyone else, are awakening to those opportunities.
Canada also works strongly with partners in Africa, as you know, and the growing involvement of Brazil, not only in the lusophone countries, like Angola, but elsewhere in the African union, are issues we need to explore, because we need to adjust our policies to take Brazil into account.
You have given us new perspectives today of new ways we can factor in our relationship with Brazil, bilaterally, regionally and internationally. No doubt, we will be back to you as we complete our study. However, in the meantime, if there are other issues, comments, or papers that you wish to provide us, please do so.
For the Woodrow Wilson Center, I understand you now have a new chair or president. I am not sure of the title. Is that correct?
Mr. Sotero: Yes, it is.
The Chair: Can you pass on our regards to her?
Mr. Sotero: Yes; it is Jane Harman, a former Democratic congresswoman from California. She will join us on February 28, and I will tell her what you said. I thank you for that.
The Chair: Thank you, gentlemen.
Senators, we are adjourned now.
(The committee adjourned.)