Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 4 - Evidence - Meeting of October 26, 2011
OTTAWA, Wednesday, October 26, 2011
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:15 p.m. to examine and report on 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: We are to continuing to examine and report on the political and economic developments in Brazil, the implications for Canadian policy and interests in the region and other related matters.
We have with us, by video conference, F. W. Orde Morton. Mr. Morton is retired from the Bank of Montreal, where he served as vice-president from 1996 to 2000. He was previously with Brascan Limited, which we all know is now Brookfield Asset Management. He taught Latin American history at the University of Calgary and at the Universidade Federal Fluminense, Rio de Janeiro, and was a member of the Canadian Diplomatic Corps, with service to Rio de Janeiro as well as assignments in Ottawa.
We have before the committee, in person, João Augusto de Castro Neves, Independant Political Consultant - Brazil Politics, who is the political editor of The Brazilian Economy, a journal published by the Getulio Vargas Foundation, in Brazil, and the political analyst for BrazilPolitics, based in Washington, D.C. Welcome to both our witnesses.
F. W. Orde Morton, as an individual: Thank you. My statement will be very short. As you know, I provided a written submission about three months ago, and that essentially contains what I have to say.
I would like to make a comment, if I may, though, on testimony before your committee last week. I have read the transcripts. I have to say I was greatly encouraged by the realism and knowledge of Brazil that your witnesses displayed. It makes some things in my written comments slightly out of date because there used to be an attitude that we here in developed Canada were doing the Brazilians a favour by taking notice of them. That was unfortunate and counterproductive, and I am very glad to see that it seems to have gone.
I would take issue with one thing that was said last week, if I may. One of the witnesses from the immigration service stated that there are 100 million desperately poor people in Brazil. That is an enormous overstatement. The official estimate, as Madam Fortin said the next day, is 60 million. While that may be a little optimistic, it is certainly a great deal closer than 100 million. Perhaps the single most important thing about Brazil today is that the majority of the population is, arguably, middle class. They are not destitute. Both from my own experience and from what I have read, I think that most of the Brazilians coming, or wanting to come, to Canada are overwhelmingly middle class.
I would also like to associate myself with something Mr. Haynal said, which was that Brazil is not only a large country but an extremely self-sufficient one. In fact, I think you could make a case that Brazil is the most self-sufficient country in the world. It does not really need to import anything now that it has its own supplies of oil, grows its own wheat and can manufacture just about anything any other country can. In other words, Brazil is not an easy country to sell things to, and that is made more so by a long tradition of seeking self-sufficiency. For many years, that was not only government policy but also made intellectually respectable by the United Nations Economic Commission for Latin America, which was dominated by people who believed in doing things for yourself. That has changed somewhat in the last 20 to 25 years, but it has by no means gone away. It is not easy to explain to Brazilians why they should buy something abroad when they can easily make it for themselves. Again, in the testimony last week, I was pleased to see that people realized that and that you really have to have a good product to sell anything to Brazilians, and something with a clear value-added.
I think those are the only things that come to my mind, and I would be happy to take any questions.
The Chair: Thank you, Mr. Morton.
João Augusto de Castro Neves, Independent Political Consultant, Brazil Politics, as an individual: It is a pleasure to be here, and it is also a challenge to talk about Brazil and try to explain a bit about what is going on in Brazil in five minutes. I will give a brief overview of Brazil's recent past and try to explain the drivers behind Brazil's rise as an emerging power, as everyone seems to be talking today about, not only Brazil but also countries like Russia, India, China, and South Africa, the famous BRICS.
In the case of Brazil, it is important when you study international relations to remember that the terms ``emerging powers'' and ``regional powers'' come and go. In the early 1970s, there was talk not only in the international relations community but also inside Brazil of Brazil as an emerging power. This was in the early 1970s. Brazil was going through a period they called an economic miracle, with the economy growing 15 per cent a year throughout a period of five or six years. Then two oil crises came along, the Vietnam War, the debt crisis in the 1980s, and all the talk about emerging power had submerged. It is very important when talking about emerging powers to take it with a grain of salt. How sustainable is Brazil's rise? I argue that there are some more consistent pillars behind Brazil's rise at this juncture. I will just focus on two main sets of pillars.
The first one is political stability. Over the past 25 years, Brazil has treaded a path to democracy. Brazil was under a military regime from 1964 to 1985 and, from 1985 onwards, it has been a vibrant democracy. Not only that, with a new Constitution, we had an impeachment of the first popularly elected president in decades without institutional breakdown. Everything was by the rule of law. We also had a re-election approved. When President Lula was elected in 2002, it was very symbolic because it was the last major political force in Brazil that went to power. It ended a cycle. Every major political force in Brazil has been in the government at one point or another for the past 25 years. Therefore, there are not any radical groups with any kind of significant representation in Brazil. That, in a nutshell, is a sign of political stability and partially explains the political maturity or the political strength that Brazil has been enduring as of late.
The other set of factors are economic. Brazil, from the 1990s, in this case, started to open up to the world. Brazil had a very closed economy. The gradual process of liberalization of the economy began in the 1990s. In the mid 1990s, we also had a major macro stabilization plan. Brazil was not only a champion of soccer but also hyper-inflation for decades. That ended in the 1990s with the real plan and a change of currency.
With respect to public reform and privatization, the state was very large and became more efficient with the reform that began under President Cardoso. Lula, despite a different rhetoric, maintained most of this set of sound economic policies. Today and for the past 15 years or so, there is quite a degree of political consensus on key economic issues, mainly to fight inflation, for example.
These factors combined with a favourable international environment until 2008 and also combined with sound social policies in Brazil that also began during the previous Cardoso administration in the 1990s and early 2000s but enhanced by President Lula, such as bolsa familia, with a major cash transfer program.
As was mentioned in the previous presentation, Brazil's largest class today for the first time in history is the Brazilian middle class. They are 100 million people out of a total of 190 million. For a very unequal country, that is a major feat. That creates a very important consumer market in Brazil. It is a driver of the economic growth in Brazil. Brazil depends quite a lot on China, as do many other countries. China today is Brazil's main economic partner, but Brazil also has this thriving middle class that helps drive economic expansion in the country.
We also see the internationalization in Brazilian companies like Embraer, Vale and other major companies in the world. That is also partially a result of these two simultaneous political and economic processes of the past 15 or 20 years.
This is just a brief overview of Brazil's recent past in trying to focus on the consistent drivers or pillars of Brazil's rise. I will stop there to answer questions.
The Chair: Thank you, Mr. de Castro Neves.
[Translation]
Senator Fortin-Duplessis: Mr. Morton, I was really impressed by the depth of the submission you made to us three months ago. It was very articulate. Your spirit of analysis does you credit.
Brazil has resumed strong growth in the past two years, thanks to its performances in the export sector and the reawakening of domestic demand. The downside, however, when we talk about the influx of foreign capital, is that it has contributed to a credit boom, which in turn has given rise to inflationary pressure. The central bank activist went ahead with hikes in interest rates and an increase in the required reserves ratio, but nothing has succeeded in restraining domestic credit on account of the low cost of imported capital. The growth of domestic demand has finally been curbed, but credit continues to expand.
In your opinion, in this inflationary environment, has the central bank taken a gamble by reducing its key interest rate on the basis of a weakening of world economic growth and the prices of raw materials?
[English]
Mr. Morton: I would say yes. Like many people, I was very surprised when they lowered the interest rate about a month ago, I think. The reasons you suggest, senator, are simply the most obvious, that they expect lower growth in both Brazil and internationally.
I might also mention that the real, the Brazilian currency, after rising against the dollar for a long time, began to fall a few months ago, and it is still slowly falling against the dollar, so that there is a certain slacking of the inflationary pressures.
The Brazilian government is in a very difficult position on this, and I am glad I do not have to take the decisions. This is a government that is deeply committed to improving the condition of the great majority of Brazilians. To use a very loose term, it is a left-wing government that has actually done a great deal to improve the condition of most Brazilians, which inevitably involves spending money and encouraging a certain amount of availability of credit. At the same time, of course, there are very powerful arguments in favour of restricting demand. If I knew how to resolve that dilemma, I would probably be doing something else.
To answer your question, senator, you are probably quite right that that is what the central bank would have given as reasons for what they did. It is always possible that there was heavy political pressure on them to keep money supplies relatively loose. In fact, I would be very surprised if they were adopting. Does that answer your question?
[Translation]
Senator Fortin-Duplessis: Yes.
I have another question for you, a shorter one this time.
Is this decline the beginning of a downward trend and might we also see other declines by the end of the year?
[English]
Mr. Morton: I am sorry, senator, I do not think I can answer that either way. Obviously, if the world economic situation becomes more perilous than it is, it is likely that the central bank would feel free to lower interest rates since there will be much less danger of Brazil importing inflation.
Against that, going a bit beyond your question, I would like to stress that inflationary pressures are almost built into Brazilian society and politics. Politics are democratic, but this is a country with a patronage-based society and a congressional democratic regime, neither of which favours public restraint and public spending. Every congressional majority has to be put together by means that certainly never include cutting costs.
Therefore, there is permanent pressure on the central bank to maintain what, by world standards, are high interest rates; and I suspect that will continue for a long time.
The Chair: Mr. de Castro Neves, do you want to comment on either question?
Mr. de Castro Neves: I could build on the previous answer, with which I agree. The central bank lowered interest rates twice. The last time the market was betting that the central bank was going to lower the rate more than it did. The central bank's latest figures show that inflation is beginning to converge toward the top of the margin of the established inflation target of 4.5 per cent to 6.5 per cent. Today, the inflation rate in Brazil is around 7 per cent. There is a belief that the central bank under the Rousseff administration is betting on a slow growth in the economy. During the beginning of the crisis in 2008, it was perceived that the central bank did not lower the interest rates enough. They are now trying to fix that.
As was mentioned before, inflationary pressures and pressures on the central bank in Brazil are constant. The central bank is not autonomous in Brazil. Autonomy is not legal, although for the past 10 years or so central bank governors have enjoyed support from the president. Today in Brazil, for the first time, central bank governors do not have as much political strength as previous central bank governors had. That is one of the differences, and people are not sure what will happen in the next few months.
I believe there is a limit to the risk that the central bank in Brazil will take. In the end, that will determine the president's popularity and whether she will be re-elected.
Senator Johnson: I would like to ask Mr. de Castro Neves a question relating to the president, who has been there for less than a year. Ms. Rousseff has had to confront numerous challenges domestically with inflation, currency appreciation and high profile political resignations due to corruption allegations. In foreign policy, she made state visits to Argentina and China, has addressed the UN in September, announced support for Palestine and supported the U.S. proposal at the UN Human Rights Council to monitor human rights in Iran.
My first question relates to the assessment you can give of her administration in terms of these political, economic and foreign policies, which helps us to lay the ground work in our study for a trip to Brazil.
Mr. de Castro Neves: Yes. This morning the sixth cabinet member of her administration resigned. The member was in charge of sports, including world cup events and the Olympics.
Senator Johnson: That is big.
Mr. de Castro Neves: Yes. Brazil is a presidential regime, but it operates very similar to a parliamentary regime. It is a coalition presidency. There are 10 plus parties in the government coalition, and they have to share power. There are 40 cabinet positions in Brazil's administration. President Rousseff must share those cabinet positions with 10 plus parties, not counting other positions.
However, that tension has been the norm in Brazilian politics from the 1980s to this day — this coalition to deal with large overarching coalitions. Yes, the fact that she was hand-picked by her predecessor as a candidate and does not have the political experience that the two previous presidents had creates more doubts or uncertainties about how she will deal with this coalition. Will she be able to shield her administration from these scandals, as her predecessor did quite brilliantly? Former President Lula went through very serious scandals and accusations during 2005 of vote buying. Yet, he ended his administration as the most popular president in Brazil's history. Therefore, anything is possible.
Regarding foreign policy, her personal history has been very important in this area because she was persecuted by the military regime. One of the main clouds over former President Lula's foreign policy was his close relationships with dictators. From the beginning, Rousseff sent positive gestures in that area. For example, she decided to give her first interview to a U.S. newspaper, the Washington Post. She emphasized human rights in her speech. Her presidency has been almost 11 months. Not a lot has changed beyond the rhetoric because there are many structural constraints over Brazil's foreign policy. Even if you changed the characters, you cannot easily change the policies. For example, Brazil likes to project an image of itself as a benevolent leader of South America. Given that Brazil has trade surpluses with every neighbour in South America for the past 10 years or so, except Bolivia, the benevolent rhetoric seems slightly hypocritical.
Even if Rousseff wants to make changes in foreign policy, changes take time.
Presidential diplomacy was so common during Lula's administration. Some would say it was a hyper active presidential diplomacy. The fact that President Rousseff does not like diplomacy very much, that she is not hands on in foreign affairs, gives the foreign ministry more autonomy to deal with these issues. Brazil's foreign ministry is, traditionally, more conservative. It is very adverse to risk taking. This was not the case in the recent past because they had a very popular president who shielded Brazil from international and domestic criticisms.
Usually, if you look at the history of Brazil's diplomatic institutions, they are very competent, very conservative and very adverse to taking risks.
Senator Johnson: This will impact their regional and global role and aspirations, then, will it not? Is it too early to judge this?
Mr. de Castro Neves: I believe it is too early to judge this. Intentionally or not, Brazil's economic growth reverberates in the region. Whether or not it wants to be a leader, Brazil is exerting more influence over its neighbours because of its sheer size. The asymmetry between Brazil and the rest of South America, even Latin America, some would say, has been growing for the past 20 years. Even in the past 10 years, Brazil's growth has been quite amazing.
Even if it is not leadership by design, it is in fact. However, I believe that Brazil needs to explain to its neighbours what it wants. Does Brazil want to lead? Does Brazil want to pool sovereignty to strengthen regional institutions and delegate sovereignty and power to these institutions? Does Brazil want to define or control the regional agenda? That is not clear, I believe.
Senator Johnson: Those are very good comments.
What do you think the opportunities or challenges for the future of Canada-Brazil relations might be in light of what is going on there now?
Mr. de Castro Neves: I am always surprised how two of the largest countries in the hemisphere seem somewhat distant from each other. They are very similar in many ways, in size and natural resources. Trends of the 1990s put these countries further apart. Brazil was, at that time, creating Mercosur, the southern market customs union, while Canada was part of NAFTA. Brazil had, from the 1990s into the early 2000s, enormous resistance to negotiating a free trade deal with the United States, believing there was going to be an expansion of NAFTA. Also, the series of free trade agreements launched by the Bush administration with Chile, Colombia — which has been recently ratified — Peru and Central America is seen as a threat by Brazil. ``Threat'' is too strong a word, but Brazil is quite cautious regarding those free trade initiatives by the U.S.
I am not sure, but I think that might explain why Brazil and Canada were not looking at each other more directly. I think that may change because, for example, one of Canada's goals is to become one of the main providers of energy resources to the U.S. I think Brazil could do that too. Brazil and the U.S. have a memorandum of understanding on ethanol, and Brazil has discovered offshore oil.
These two countries have a lot of potential, mainly in the energy sector, to improve their relations.
The Chair: Mr. Morton, is there anything you wish to add?
Mr. Morton: Just a comment on Lula's foreign policy. I thought it was very clever. Lula's coalition, which Dilma has inherited, is based around his own party, the Labour Party. That was a fairly inclusive group of opinion on the left of politics, including some people who were very far left indeed. It also includes the Brazilian Communist Party, which, of course, has lost a lot of its old fire but is still very definitely on the left-wing of the spectrum.
I thought by identifying so much with Cuba and, to a lesser extent, with Chavez in Venezuela, Lula was throwing a bone, if you like, to left-wing opinion in Brazil. They were gestures. They did not affect the essence of Brazilian foreign or economic policy. When it came to the punch, Brazil continued to import capital, export dividends and generally behave like a responsible, paid-up member of the global economy.
However, as I say, he had a left-wing base he had to think about. I am afraid it is as true in Brazil as it is in many countries that doing something that annoys the United States is a fairly reliable way of becoming popular at home.
The Chair: We started to notice Brazil in international fora where we had not seen them, partly because they have, as you said, a professional, career diplomacy that seemed to be under the radar. It came to the fore, but it also changed. They became pervasive on many international issues, to the extent that it is now very difficult to do anything in the world, in my opinion, without factoring in Brazil in coalition with South Africa, India, Russia and China. They are not always together, but they find their own coalitions. They have their own fora, and they are expanding. For example, Brazil is opening many more foreign missions in Africa, utilizing its former colonies opportunistically now that Angola is more settled and Mozambique is moving forward.
I guess you are saying it was Lula's force of personality. This trend seems to be more than a force of personality. It seems to be a wish of Brazil's to look out and to be taken into account because of it size and because of the opportunities it can have now. That creates a totally different environment. Before, if you looked north, you looked to the United States and how to fend off the United States. Now they seem less preoccupied with the United States and more preoccupied with being significantly factored in everywhere else in the world. There seems to be an international response, from many countries, to look to Brazil, and not just in the region. Does anyone agree or disagree with me?
Mr. de Castro Neves: I agree with your analysis, but I think it is much more than force of personality. I think President Lula had a part in this. However, as I mentioned before, Brazil was, in the 1980s, in the process of transitioning to democracy and in economic chaos. In the 1990s, Brazil was basically looking inwards in looking after and stabilizing its economy. All this work that was done paved the way for Brazil to rise over the past decade. If there had been someone other than Lula as president, I believe Brazil would have still risen as an emerging power. That is looking specifically at Brazil.
When you look at these emerging countries like BRICS or any other acronym that you may have, like IBSA — India, Brazil, South Africa — or BASIC — that is, without Russia in the climate change negotiations — the rise of these countries also has to do with the decline of the others as well, and the financial meltdown of the past three years sped up that process. The process became much faster in the past three or four years. Therefore, the game is slightly more balanced today.
However, to say that BRICS or these emerging powers want a more just global order, whatever that means, does not necessarily mean that these countries share the same idea of what this order should look like. What I am trying to say is that there is some common ground among Brazil, China, India, South Africa and other emerging powers, but it is limited as well. If you look at Brazil, it has one of the major initiatives with India and South Africa on the basis of being the three largest developing democracies in the world, and that is the emphasis, but then when you bring BRICS together, it kind of undermines that previous rhetoric.
I think the fact is that Brazil historically has always been averted to close itself into deal or alliances. Brazil is an observer to the non-aligned movement. Brazil was non-aligned to the non-aligned movement during the Cold War. Brazil was able to do that when no one was paying attention to it but, as Brazil rises and has more international visibility, these ambiguities may become a sign of contradiction or of a lack of position on very controversial issues. That could create a problem.
Mr. Morton: I agree with what that implied, that the BRICS phenomenon is essentially defined by what they do not have rather by what they do have, which is a capacity to act independently of any larger group and, in particular, of any group headed by the United States.
If you go even a little deeper, you can see that, in many ways, they are very different, and they have very different national interests. That does not mean they cannot act together when their common interests dictate. They have, and I am sure they will go on doing so. This is a guess, of course, but I suspect that 10 years from now we will be hearing rather less about the BRICS. They are a phenomenon of our time.
I would like to make another point, if I may, about the Brazilian foreign service. The Brazilian foreign ministry is an elite body, if ever there has been one. It has very high entrance standards and very high quality members. It has a long tradition of wide coverage of the world, with many more posts abroad than Canada does. It has a very strong esprit de corps and a great tradition behind it. It is, as Mr. de Castro Neves implied, while not exactly perhaps a conservative, certainly a stabilizing force in Brazilian foreign policy. Any wild or even new ideas are likely to have to pass through the foreign ministry and emerge in a less radical form. It is a very professional body, I would say, in quality equal to any in the world. It will probably be taking most of the decisions in Brazilian foreign policy for the foreseeable future.
Senator Nolin: I want to go back to a different angle and the internal politics of Brazil. Almost two years ago, then President Lula initiated this so-called Truth and Reconciliation Commission. I just want to hear from both of you your take on that commission. What are the results and the status of that?
Mr. de Castro Neves: The commission was announced, as you mentioned, two years ago, but it had not begun its work yet. It is scheduled to begin this year. It was officially established in congress, I think, last month or two months ago. It is a very controversial issue in Brazil. If you compare Brazil's history with that of some of its neighbours, like Chile and Argentina, Brazil's transition to democracy was very different from those other two countries. There is this overall process of amnesty in Brazil, and not only amnesty, but they simply buried all the documents on the military dictatorship. Some say these documents do not even exist to this day.
The discussion is tainted. People think that if you try to research these documents, open these documents of the military regime, that the amnesty will no longer be in place, which is a mistake. That is why it is generating this enormous controversy in Brazil. President Lula did not want to tackle it directly, so he left the decision on the Truth Commission to President Rousseff. Everyone thought she would be very clear on this because she was persecuted by the military regime. The commission will begin its work now, and so far it has not shown any results. It will be interesting to see because of the very extreme positions in Brazil with this issue, from the military regime that are afraid that it may harm their position and that people will point fingers, and from the left-wing movements that were tortured, many of them, during the military regime and that want to penalize or punish these torturers.
Senator Nolin: Mr. Morton, what prompted President Lula to start that 30 years after amnesty legislation? What was behind all of that?
Mr. Morton: Senator, I wish I knew. I was astonished when he did that. It seems to me to be, from the government's point of view, almost totally downside, no upside. I was not aware of any overwhelming public demand for this. As my colleague has said, there was, in fact, an agreement that the military would yield place to the civilians in 1985 if the civilians did not look for every skeleton in the military closet.
Senator Nolin: They probably did not want it.
Mr. Morton: I am sure they did not. Terrible things happened under the military, particularly in the early 1970s. From the point of view of truth and justice, it would certainly be a good thing to have them brought into the light of day and have those responsible punished if they are still alive. It is almost 40 years ago. I find it very difficult to imagine the military cooperating with this. It is arguably a pity to upset them, because, for the first time in 100 years or more, Brazil has established good civilian-military relations, with the civilians firmly in charge. If the commission were to upset that, I am not sure it would be in any way a net gain to Brazil or Brazilian democracy.
As has been suggested, in effect, Lula has left his successor with a very hot potato, and I do not know how she will handle it and I do not know how the commission will act, but I predict there will be very severe difficulties placed in its way. Indeed, Mr. de Castro Neves has mentioned some of them in that so many records have been destroyed. Those are my thoughts.
Mr. de Castro Neves: One of the pressures came from abroad, from the inter-American court, saying there could be no amnesty for crimes of torture. The Brazilian Supreme Court was asked to see if the Brazilian amnesty law could be revised, and this was one of the issues that created an incentive for this to be discussed. The Brazilian Supreme Court said, no, the amnesty cannot be revised.
Then the pressure shifted to the documents, so let us study the history of what happened during the military regime. That was some of what was happening.
Yesterday, the Brazilian Senate approved a new law to disclose public documents because Brazil had no legislation on that. You could basically keep a document confidential forever in Brazil. Last night the Senate approved the change; I think it is 25 or 30 years.
Senator Nolin: My question was quite timely.
The Chair: I understand that Brazil was one of the first countries in South America, if not the first, to sign on to the International Criminal Court. There was great public debate as to whether they should do that. They went on to ratify something that talks about no amnesty and the impunity issues. There was a healthy debate not only in Congress but also elsewhere about the whole issue. I can understand former President Lula saying that they would have a truth and reconciliation to get it off the table. He pointed out that the ICC was only a future document and had nothing to do with the past, and that the only way to address the past was through a truth and reconciliation of some sort.
Do you not think they can air some of the grievances and keep the process going, very much in a South African style, without raising issues of holding the military directly accountable through a criminal process?
Mr. de Castro Neves: It is a very thin line to maintain that balance since the military kept all those documents to this day. There were three or four military ministries, each with its own archives. Researchers have been complaining they have seen people burning documents related to the military regime. I do not know how much information you can dig up 30-plus years later.
The South African and Italian cases were much graver than the Brazilian case, as grave as it was. It will be a difficult balance to maintain — learning about the past without creating pressure to punish for what happened.
The Chair: Mr. Morton, do you have something to add?
Mr. Morton: Certainly, there is no possibility of keeping the role of the military separate because one thing is absolutely clear about the time of repression: It was largely run by the military. That being said, of all three services, the navy had a particularly bad reputation; but it was hard on them all. It is simply unrealistic that the commission can find significant data while at the same time ignoring the role of the military. It just could not be done; that is all.
Senator Downe: You mentioned the role of China with Brazil. Are they trying to be excluded from the influence of the United States in looking for other strong allies? How are the levels of cooperation between the U.S.A and Brazil and China and Brazil?
Mr. de Castro Neves: Historically, Brazil always tried to project an image of itself as a global trader not dependant on one major partner. There is a balance among Brazil's main trading partners. Ten years ago, 20 per cent to 25 per cent of trade was with the U.S., 25 per cent with the European Union, 25 per cent with Latin America, and 25 per cent with the rest of the world. Over the last decade, there has been the rise of China, which for the first time last year became Brazil's main economic trading partner surpassing the United States and Argentina.
To some, Lula's Labour Party government, now President Rousseff's government, was the only party in Brazil with a clear and more left-wing foreign policy. Yes, the Labour Party government has some links with the Chinese Communist Party and the Cuban Communist Party. Some saw the alliance with China as anti-American, but it was exaggerated rhetoric in Brazil and kept to a minimum inside the governing coalition.
To the other extreme, industries of Sao Paulo are complaining about the increase in competition from China, similar to the complaints heard in the United States and Europe. Brazil is trying to play with China, not with the idea of a triangle like the United States, China and Brazil. The growing influence in Latin America does not necessarily mean a decrease in the influence of the United States. That view tends to tell the world that Latin America is naturally a bad carrot of United States foreign policy. It may have been true during the Cold War in some aspects. Basically after 9/11, the U.S. administration had no Latin American policy, which created a vacuum. Although President Bush signed some bilateral free trade agreements in the region, it had no overarching foreign policy. It would be difficult to have one because Latin America does not exist as it did 20 years ago. There is not one Latin America, but there is a North America, a Central America and a South America with different rationales and interests behind them.
I do not think Brazil seeks in China a balance of its relations with the United States, although some people tried to play that idea. I think Brazil is trying to maintain a balanced relationship with China. Although Brazil likes to say that Brazil-China and BRIC relations are a south-south cooperation of two emerging countries, the trade between the two countries is actually north-south. In fact, 90 per cent of Brazil's exports to China are primary goods, such as oil, soya and iron ore; and 90 per cent of Brazil imports from China are manufactured goods. It is a very unbalanced trade relationship. To say that Brazil has much more in common with China than it has with the United States is difficult to defend.
Our relationship with the United States over the past 10 years has been described as benign indifference. Brazil complains when under U.S. radar as well as when on U.S. radar. There has been no major policy issue on the table between these two countries for past 10 years. There has been no major trade negotiation between Brazil and the United States and no major defence deal. Of the BRIC countries, Brazil is closest to the United States geographically but very distant politically on many issues because of lack of interest on the part of both.
It is difficult to imagine Brazil trying to balance between the two. Then, you have to put the European Union in the equation because historically, Brazil tries to avoid dependence on one major power. Throughout the 20th century, Brazil's diplomatic history can be summarized as trying to balance relations with the United States and hedging it with the European Union. In the 1990s, while negotiating free trade with the Americans, we were also negotiating Mercosur and a European Union trade deal to show the United States that we did not depend solely on the United States.
With China there are some differences, but down the road Brazil could play at that.
There are many issues that could put us distant from China, such as human rights and climate change. As relations intensify between these two countries, I think these contradictions will become clear.
The Chair: Mr. Morton, do you have anything to add?
Mr. Morton: No, essentially I agree. I do not think it is right to say Brazilian foreign policy is being directed against, or being hostile toward, the United States. They simply want to feel free to take their own decisions in their own best interests.
I think the great change in the last 10 years is they do feel that they have, at long last, escaped the shadow of the United States. Having done that, there are, as my colleague said, no real outstanding issues, no things to be resolved and no points of debate. They simply want to be free to go their own way without being seen as a satellite of the United States.
Senator Johnson: On a completely different note, there was an educational consultancy, called Quacquarelli Symonds, that came out with a ranking of the universities in Latin America. The University of Sao Paulo, the USP, was at the top of the 200 that they surveyed. They were also given a good ranking in the Times Higher Education supplement, out of England. They are attributing this improvement to private funding, international cooperation and recognition. They are becoming a world leader — which I had no idea about — in tropical medicine, parasitology and biofuels. How is this a reflection of Brazil's overall education system? Are they really moving to educate their people and to move them along in the higher education field?
Mr. de Castro Neves: There are islands of excellence in Brazil. The foreign service is one such island, as is the education system. I got my Ph.D. at USP, so I will not argue for it that much, as I am arguing for myself. There are some areas where Brazil has evolved so much in technology, like biotechnology and agriculture. There is not only USP, but, as I mentioned before this hearing, there is a state research company called EMBRAPA that works with agriculture and adapts crops to many regions of the country. It is also exporting the technology to other Latin American countries and African countries.
There are islands of excellence in Brazil in terms of higher education and applied sciences, but, overall, there is a major problem in the country in the quality of the education. I would not say that higher education would be the greatest cause of concern. The base of the pyramid would be. In Brazil, most people, from the middle class upwards, have to pay for elementary school and high school. Once you go to university, it is free. The best universities in Brazil are free.
Senator Johnson: It is a turnaround from our system.
Mr. de Castro Neves: Exactly. It is quite an unfair system. The University of Sao Paulo is a public university. It is free.
Senator Johnson: How many people are attending there now?
Mr. de Castro Neves: They have many campuses in Sao Paulo and scattered throughout the state. It is a state university, not a federal university. I would say there are 30,000 or 50,000 students. It was one of the largest public universities in Brazil.
There are 50 or 60 federal universities in Brazil, one in Brasilia and three or four in Rio, including UFF, where my fellow witness taught. The best universities in Brazil are the public sector universities.
It is a very unfair system because the people who reach the university level are the ones who have been able to pay for 20 years of education. That issue has not been tackled, but, yes, there are islands of excellence in Brazil, such as the fact that USP is the thirty-third or thirty-second best university.
Senator Johnson: In the research I was doing, having to pay for elementary and high school education was not highlighted, and it is an issue.
Mr. de Castro Neves: We have public schools in Brazil, but people who rely on public education from the start find it very difficult to get into the best universities. For them, it is the opposite; they get in for free, and then they have to get into a private university that is worse than the public universities.
Mr. Morton: What has just been said is absolutely correct. What needs to be done about education in Brazil is to greatly increase the funding and the quality of public primary and secondary education.
A witness last week said that there are now 345 federal institutes of learning. I am not sure that is undiluted good news. I suspect the money could be much better spent at a lower level, particularly because, as has been correctly said, the federal universities are, in effect, an enormous subsidy for the middle class. You pay to send your child to a good private secondary school, and, from then on, it is free. This is obviously a major factor in perpetuating Brazil's notorious inequality of income and status. In my opinion, whether or not she actually does something about this issue will make a major point about Dilma's government. She should start at the ground level, as near to kindergarten as possible.
The Chair: Mr. de Castro Neves and Mr. Morton, you have added much information for our report and studies, and you have also indicated some of the complexities of Brazil. That is to be noted. I think, when we started, we talked about how there are many Brazils and many layers of Brazils, and there is a history that needs to be noted also.
Thank you for your contributions today. Hopefully some of that will resonate in our report, and, perhaps, we will call on you again at a future date.
Honourable senators, during the course of our discussions and previous witnesses, there was some interest in hearing from the Department of National Defence on security issues, both internally in Brazil and in the region, and implications for Canada in this hemisphere. We have before us Ms. Jill Sinclair, Assistant Deputy Minister (Policy).
There was also some interest in our activity in South America, in particular Brazil as it was is now changed. We need to know the impact on CIDA in the region, how you have changed your programs, strategically whether you work regionally and how CIDA cooperates with Brazil and works in the region. We have before us Mr. Tobias Nussbaum, Director General, Strategic Policy Directorate, Strategic Policy and Performance Branch, and Ms. Hélène Giroux, Director General, Human Development Directorate.
Welcome to the committee. I understand that you have agreed that Ms. Sinclair will start, followed by Mr. Nussbaum, with Ms. Giroux coming in on any questions or specific areas. I have indicated that we would like short statements on some of the key points. We have some papers circulated. Then we would like to turn to questions. I am already gaining a growing list. Welcome to the committee.
Jill Sinclair, Assistant Deputy Minister (Policy), Department of National Defence: Thank you. First, let me apologize for having delayed for so long coming to the committee. It was a force of health that kept me away from you. I am delighted to be here and, in the spirit of your request, I will not use my talking points at all. You have them there.
I will say a couple of things. First, our engagement with Brazil obviously fits into the Americas strategy. I think you have a lot of background on that, so I will not go into it.
Brazil is a fairly new partner for defence cooperation with Canada. The issues that we look at together include hemispheric issues and security challenges that range from sort of the Arctic to the Amazon. This is done against a backdrop for us of our priority on continuing a sustainable process of democratic development and governance in the region. In our engagement with the Brazilians, by chance, we happened to have our last round of talks yesterday and the day before. A lot of it is about civilian control of the military, and there is a genuine interest by the Brazilians in learning from Canada in that regard.
In terms of our priorities in the region writ large and that also embed themselves in our engagement with Brazil, it is contributing to democratic development and all that encompasses — regional security, capacity building and training and defence governance issues. Those are the big pieces on which we have been focusing.
In the course of our discussion, I can tell you in some detail what we are doing. It is an extensive engagement against the backdrop of real changes in the Brazilian military structure that took place around the 2008 white paper, part of the democratization movement in Brazil where the Brazilian military was finally put under civilian control in the person of a civilian defence minister.
It is very much a work in progress. It is a new relationship. I am happy to take your questions.
Tobias Nussbaum, Director General, Strategic Policy Directorate, Strategic Policy and Performance Branch, Canadian International Development Agency (CIDA): Let me say a few words in a similar spirit to highlight some of the key points we wanted to make. I think senators have copies of a longer statement that you are welcome to read through.
Madam Chair talked in her opening statement about the evolution of the relationship CIDA has had with Brazil, and that is an apt way to describe it. I would say there have been three stages, with the first being Brazil as aid recipient. Right from the beginnings of CIDA in 1968, we started a program with the country. In the subsequent 40 years, we have disbursed about $188 million. We made the decision to end the program in 2004.
During those years, we had an active program in health, governance and labour market issues, working at the state, regional and municipal levels. One example was a health immunization campaign that we know reached 420,000 children under five over this period. We also worked closely with Brazil's public service institutes to train civil servants, and we can talk more about that programming later.
In 2004, we ended the program based on our assessment of the position of the country in economic and political terms. That said, although the program call was made in 2004, the last remaining parts of our bilateral program were dispersed earlier this year.
Separately, under our Partnership with Canadians program, we have small amounts from which Brazilians still benefit — about $1.7 million in 2009-10 — and that is through the funding that CIDA provides to Canadian partners such as universities, church groups, development organizations, et cetera.
Third, Canada makes a contribution that Brazil benefits from through our funding of multilateral organizations such as the World Bank group, the UN group, the global funds to fight AIDS, tuberculosis, malaria and a couple of others.
While Canada's program has wound down, the one point I would note is that, in terms of the overall ODA, or official development assistance, picture, Brazil is the recipient of $338 million of ODA. Those are figures from 2009.
Let me turn to the second feature, which is the emergence of the country as an aid donor. This is important because the country is one of a group that has emerged over the last number of years to be major aid donors in their own right, and this is important for us for a couple of reasons. First is the increased influence they have as aid donors and second, it gives us in Canada an opportunity to both influence their approaches and learn from their successes. This is a little difficult to gauge, and they range, but recent figures suggest that Brazil's contribution in terms of a donor in its own right is in the range of about 400 million a year, most of which is delivered through multilateral channels.
Lastly, let me say a word about what I would say is the last stage of the relationship we have with the Brazilians, and that is as development partners. That was manifested this past summer when the Prime Minister travelled there and we signed a memorandum of understanding between CIDA and the Brazilian development agency. This is going to be an important framework for future cooperation through expanded dialogue on development policy, increased policy research initiatives, enhanced institutional relationships and looking at the possibility of cooperation in third countries.
We are very excited about this last stage. We are thinking now about how that will be manifested. We will likely have bilateral meetings with our counterparts in the next four or five months to put meat on the bones of this memorandum of understanding.
In conclusion, it has been an evolving relationship from one of donor and recipient to one of development partner. I welcome your questions.
The Chair: Thank you. Despite your short interventions, it is great that you are here.
Senator Nolin: Ms. Sinclair, you mentioned the word ``Arctic'' in the same sentence as ``cooperation with Brazil.'' I am quite curious to hear in more detail about how Brazil can help us with our effort on Arctic sovereignty.
Ms. Sinclair: They cannot help us with our sovereign responsibilities in the Arctic. Putting them in the same sentence may have led to that conclusion.
Interesting for the Brazilians is that the Amazon covers 45 per cent of their country. It is a totally remote area that cause them a lot of sovereignty issues and concerns. They are quite interested in learning from Canada about how we manage to project sovereignty in our vast Arctic. They are very interested in our ranger program, for example, how we have managed to work with our Aboriginal peoples, et cetera. We are not looking for their help and they are not offering their help, but I have to say that some of our Canadian Forces officers have benefited from the Amazon by going to Brazil for jungle warfare training. I apologize for misconstruing the issue.
Senator Nolin: Now I understand. Both heads of government met and issued a press release in August. I quote:
They took note of progress in the bilateral dialogue and cooperation on defence issues. In this context, they welcomed the realization of the next Political-Military Talks, to take place later this year, as well as the current negotiation of a legal instrument to provide a framework for the Brazilian-Canadian cooperation on Defence.
That was one long sentence. We can split it into many sub questions. Let us explore the outcome of political military talks.
Ms. Sinclair: The political military talks were established two years ago, interestingly enough. Brazil had not wanted much to speak to us in any detail about political military issues before that. This reflects, as I was mentioning, this change we have seen since 2008 when they had a new defence white paper and the decision of the government to put the military under civilian control. One of the first places they turned to was Canada, interestingly enough, because we have an integrated civilian military headquarters and a tremendous reputation for a very professional military.
We are now in our third tranche of political military talks. As it happens, we just finished the talks over the last two days. We had a delegation headed by a four-star Brazilian general along with an admiral and a senior member of their department of foreign relations, which is a new development. They are joining up their defence dialogues with their foreign ministry. This is an evolution from the way they used to do things where the military only would have its discussions.
The agenda went from practical areas of cooperation to discussing the dynamics in the hemisphere, our work together in the Inter-American Defense Board, where Brazil has been quite supportive of the reform agenda we put forward and is encouraging the links to the Organization of American States. We asked them about their southern defence arrangements that they have been doing with countries of the southern cone. We basically discussed everything we wanted to, including a lot about governance, Canadian women in the military, our legal system and where we can find practical areas of operation going forward.
Senator Downe: In your statement you indicated that CIDA decided to phase out the system program in 2004, but the funds continued to flow for seven more years. Why did it take so long to wrap up? Were there long-term commitments?
Hélène Giroux, Director General, Human Development Directorate, (PWCB), Canadian International Development Agency (CIDA): I am here in the capacity of my previous position, which was Director General, South America Division, Bilateral Programs.
When the decision was made to close the bilateral program with Brazil, it could not be done quickly. Analogies have been made for development that liken it to a big ship that is hard to turn around quickly. There was a transition phase prior to terminating all of our bilateral activities with Brazil. That transition phase consisted of our bilateral KEEP program — Knowledge Exchange for Equity Promotion — with Brazil, with a budget of $20 million until 2010-11. It supported Canadian-Brazilian partnerships under the themes of work, governance and health. When the decision was made, it was understood that there would still be this final transitional period.
Senator Downe: The government announced in 2004 that they were ending the assistance program. Your note indicates that between 1968 and 2011 there was a total of $188 million in assistance given. How much of that $188 million was from 2004, when the government announced the termination, to 2011? If you do not have the figures, you could send them to us.
Ms. Giroux: As I noted, the KEEP program was about $20 million. We have to be very clear that our bilateral program was terminated with Brazil. The Partnerships with Canadians Branch programming, as Mr. Nussbaum highlighted, continues, as well as some multilateral contributions.
As I indicated, the KEEP program was about $20 million. Funding under the Partnership with Canadians Branch has been a little over $1 million per year, so only a small percentage of the $188 million was disbursed in the final years.
Senator Downe: You also mentioned the targeted cooperation of $1.7 million in 2009-2010. What were the criteria for the targets?
Mr. Nussbaum: It is best to talk not so much about criteria but about the nature of the programming. Most of the organizations funded from the $1.7 million would include programs across Latin America for which there would be a Brazilian component. It is not necessarily that a group was getting funding for programming exclusively in that country. Let me give you one example.
Part of the $1.7 million funded the AUCC, which was an educational exchange program whereby students in Canada were given work opportunities in Latin America and similarly opportunities for students in Latin America to come to Canada. Brazil was one portion of that program but not the only location for it. In evaluating the criteria, I do not know what they were in terms of the project criteria, but it would not have been focused solely on the Brazilian element. It would have been looking at the integrity and effectiveness of the proposed objectives and accomplishments, writ large.
Senator Downe: Will you provide the committee with a breakdown of the $1.7 million so we know how much was spent only in Brazil?
Mr. Nussbaum: That was the total amount spent in country. I can give you one example. The AUCC had a program over five years, I believe, that totalled $7 million dispersed over a number of different countries. Of that $7 million over the five-year period, $1.4 million was spent in Brazil. That is an example to show that roughly one quarter of that program was in Brazil. The figure I am giving you is the amount that was spent in country.
Senator Downe: The figure for 2009-10 was $1.7 million spent in Brazil.
Mr. Nussbaum: Correct.
Senator Downe: What is it for the current fiscal year?
Mr. Nussbaum: For 2010-2011 I have updated figures of $1.9 million. I do not have the 2011-12 figures.
Senator Mahovlich: While Canada's bilateral assistance program with Russia ended in 2010, are there any plans to close Canada's bilateral assistance programs with China and India?
Mr. Nussbaum: Senator, I am not really in a position to talk too much about other bilateral programs at this stage. I just do not have enough information on the type of programming we do. The fact that we have programming in India is actually news to me. I know we are involved with the Chinese, but I just do not have with me today information either about the future of those programs or the actual details.
Madam Chair, we could certainly provide that information to the committee.
The Chair: Yes. I think we heard in previous testimony on some of our previous studies that we still had some programs in China, but we were phasing out there too. You could provide information on those at a later date.
Senator Wallin: I have a couple of questions for Ms. Sinclair. I will pose them and then you can deal with all of them.
Because we are involved in training, negotiations and discussions and that we are seen as an example, does Canada have a view on compulsory service? Do you sense they are moving away from that and that there might be action?
Second, we know about the global economic situation. The Brazilian military is huge. The 1.3 million reservists would make people gasp here, and more than 300,000 active personnel; large but underfunded. Is there some sense that that might change?
Perhaps by way of example, a little bit of explanation on Brazil's role in Haiti. Much was made of the speed with which they went in and their ability. Is this something new and different? They have been involved in peacekeeping ops over the years. Was it that they did something different or did they arrive quickly? What was the surprise about it?
Ms. Sinclair: On compulsory service, obviously we do not tend to have a view on how people structure their Armed Forces, but we think the voluntary approach works pretty well, we have a great record to see and we are not abashed in showing that off. Leading by example is not lost on the Brazilian military and certainly they are extremely interested in what I would call defence governance issues. That is everything from the military justice system to how do you recruit, how do you retain and how do you take care of your folks. They are obviously thinking this through a little bit beyond my direct remit but, given the work of this committee, you can see the economic challenges, the employment challenges and the youth population as they consider what they do with their military. As you say, senator, it is about 320,000 plus another 1.3 million in the reserves. It becomes an employment generation kind of thing for them as well. They are thinking of a lot of different dimensions and obviously the cost of moving to a full-on voluntary force. As I say, we offer them good example and we are here for good advice whenever they fancy.
On the global economic situation, interestingly Brazil's defence budget last year was $34 billion. It sounds like a considerable amount. In terms of global military spending, I believe they are at about 50 or so as a percentage of GDP, but the fact is that in 2011 they are told they are taking an 8 per cent cut. Global fiscal realities are coming to bear and I do not think the military and the defence establishment yet knows how they will play that out. However, there is no question that their budget is retracting even as they try to modernize. They still have modernization. They want to replace their fighters and there is a whole bunch of stuff they are doing. I think they will have to take another good hard look at how they do their defence spending against one of their real priorities, which is the Amazon, which I spoke about earlier.
Interestingly, they are deploying much more into those remote areas to deal with all sorts of challenges, from lawlessness to transnational organized crime. Brazil is an interesting country, you all know this, but the only neighbours it does not have in Latin America are Chile and Ecuador. They are kind of surrounded by a lot of issues.
To your final question on Haiti, what was new and different? This is a good example of where Brazil is trying to go from a security taker to a security provider. Since 2004 they have had the force commander position in Haiti. They have 2,200 troops on the ground, which enabled them to respond quickly, given they were already in situ. It also meant they took some terrible blows too because a lot of their folks were killed in the earthquake. I have to say that I think we were still the first in from a remote location, so I have to do a little advertisement there for what Canada did in the CF because we were fast to the task, we were immediately deployed. We helped the Brazilians, frankly.
What is new and different? They want to show regional leadership. They did an extraordinary job. If you remember a number of years back, you could not go into Cité Soleil. It was the Brazilian MINUSTAH forces that went in and in their way brought some order to that place.
Brazil is playing out a role of regional power but also responsible regional power. They never deploy abroad except under a UN Security Council mandate. What they did differently I think also has to do with what Mr. Nussbaum was talking about. There is also a development kind of arm to things too. It a little bit more of a comprehensive approach. I just see a more sophisticated joined up approach to what they are doing with their military in Haiti.
[Translation]
Senator Fortin-Duplessis: Welcome to our witnesses. My question is for Mr. Nussbaum. The Brazilian Development Bank in 10 years has increased its loans to neighbouring countries in Latin America sevenfold. I think this is a way of extending its influence in the region and ensuring new opportunities for Brazilian exports. As for the funds granted by the Brazilian Development Bank to Latin America, 80 per cent of them were for infrastructures and 20 per cent for importers of Brazilian products. This year, such loans will be seven times greater than in 2002.
The condition placed on its loans by the bank is the participation of Brazilian companies in construction work or the export of goods and services.
We see that the Brazilian Development Bank is gaining ground over other financial institutions in Latin America. In 2011, it will have made $1.5 billion available in the region, or 20 per cent more than in 2010, while the Inter-American Development Bank — which was the traditional creditor — is going to make $2.2 billion available, that is, 28 per cent less than in 2010.
In your opinion, is Brazil, now regarded as a donor country — you mentioned this earlier in your intervention — seeking to obtain a monopoly over Latin-American markets and access to the natural resources of those countries? And do you think that this strategy will be good for the receiving countries? Are they going to gain from this? What is your opinion on this?
Mr. Nussbaum: Thank you very much for your question.
[English]
It is difficult for me to opine on the details of these projects without having the information in front of me. I will answer by making a couple of general comments, both about development and about infrastructure specifically. If Ms. Giroux wants to add based on her experience, she should feel free.
We welcome the role Brazil is playing as an active development player and donor in the region. That is very important. We talk a lot about global burden sharing, and that includes welcoming the participation of emerging actors in these types of roles and responsibilities. As a general point, this type of inclusion, participation, involvement in the region should be welcome.
The second point, if you look at some of the work that has come out of the G20 development working group over the past year, there has been a great focus both on infrastructure and on encouraging the participation of private sector actors. Everyone in the development field will tell you that you will not achieve success and poverty eradication through ODA alone. It is important to catalyze other players, such as banks and private sector actors. Loans are very important.
What you are seeing is this complexity, this multiplication of partners who are engaged in the economic development of the developing world, and I think it is fair to say that is to be welcomed. It is about recognizing that trade, investment and infrastructure play a huge role and that ODA cannot do it alone. Again, I make that statement merely to respond to what you have said about the type of engagement they are doing, it sounds very much along the trend lines of what we are seeing globally.
I will stop there. I do not know if Ms. Giroux has anything to add based on her experience in Latin America. It is absolutely true that the Brazilians are playing a very major role as a regional power.
[Translation]
Ms. Giroux: The only thing I would add is that, in the context of trilateral cooperation, the previous question asked what is new and what is different. Among other things, Brazil has been very active in launching this concept of trilateral collaboration in Haiti, in immunization, for example, in order to revitalize certain very poor and marginalized communities.
I mention this example to demonstrate how Brazil is a country that really wants to contribute to the economic and social development of the region. According to my own personal experience, it does so, I believe, with great respect and sensitivity for the sovereignty of these countries. That is all I wanted to add.
Senator Fortin-Duplessis: Thank you very much. I like to hear you say it because I saw earlier that you may be reducing funding.
Now that Brazil is a donor country, I imagine that Canada no longer needs to be a donor country but are its relations with Brazil evolving towards an equal partnership?
[English]
Mr. Nussbaum: Absolutely. I agree with that statement.
[Translation]
Ms. Giroux: And I think that what Mr. Nussbaum said about the MOU signed between the Prime Minister of Canada and the President of Brazil this summer is evidence of this new equal partnership.
Senator Fortin-Duplessis: Thank you.
[English]
Senator Johnson: In August, our Prime Minister and President Rousseff signed this MOU for international development cooperation. Can you tell us about the nature of the consultations and meetings between CIDA and ABC that led to this MOU? Also, what are the parameters?
Mr. Nussbaum: I would be happy to answer that.
In many ways, the MOU should be viewed as the beginning of the relationship; it describes the type of cooperation that the two countries may wish to explore which is, just to repeat briefly, expanding dialogue on development policy; looking at increasing policy research initiatives; enhancing institutional relationships, things like staff exchanges; and exploring cooperation activities in third countries, what we call trilateral cooperation.
In fact, the MOU negotiations were facilitated by our embassy in Brasilia. There were no former talks that led to them. We had exchanges in which we used our good offices there. In fact, we are in the midst of planning a trip down that I am likely to take in a couple of months to attempt to, as I said, put some flesh on the bones of this agreement.
ABC, Brazil's CIDA equivalent, is a relatively new agency, and they are literally, as we speak, building up, staffing up and establishing itself. These are early days for it. They are keen to engage with us and have expressed great enthusiasm about moving towards the next step. As I said, I expect that to take place over the next two or three months.
Senator Johnson: Your trip will be the beginning of the implementation?
Mr. Nussbaum: Yes. Execution of the MOU is perhaps the best way to describe it.
Senator Johnson: Is the goal for us to just be development partners? Will we still be spending money on programs in Brazil? Why would we do that any longer?
Mr. Nussbaum: Through the MOU, that will not be a vehicle through which we will provide funding to the Brazilians. That is clear.
Senator Johnson: Are there any others that we will be following up on that are not completed or that are in their final stages now that we are into equal partnerships?
Mr. Nussbaum: What I would say, I am not sure this is where you are going with your question, but as a general rule, we are looking at this group of emerging actors as being an area that we should reach out to this group; we should encourage this type of policy dialogue with them for the reasons that I stated earlier. First, we want to have some influence, and they are looking for some assistance in terms of the evolution of their own development agencies. Second —
Senator Johnson: That is where I was going, and I do not mean to interrupt you. It is really in terms of us giving them guidance in an area as they evolve to become partners, not just with us but with other countries.
Mr. Nussbaum: I think that is right, but I think we can learn from them too in a sense that they are engaged in interesting cooperation of their own, and there are a couple of examples where we are already working with them in third countries.
Senator Johnson: CIDA will just be doing that now? There is no more aid; that is all gone, right?
Mr. Nussbaum: Not through the memorandum of understanding but, as I say, there is money through the partnership of Canadian programs that is still being spent there. I gave the AUCC as an example earlier.
The Chair: If I could follow up on one area before closing, Brazil has extended itself rather significantly into Africa, capitalizing on Angola's stability at the time and the progress in Mozambique. They have become significant players on the African continent. Are you contemplating any trilateral agreements — and if so, how — with Africa given that Canada has had a long-standing both anglophone and francophone presence in Africa and less so in the Lusophone countries?
Mr. Nussbaum: Yes. We can point to certainly one example of where we have worked with the Brazilians already, in Mozambique, which is one of CIDA's countries of focus. The expectation is that through this memorandum of understanding, we can look at the possibility of expanding that cooperation in other countries in which CIDA is active.
The Chair: Brazil has signed on with the AU for development initiatives in Africa, which I understand are open for bids. It has been put under south-south premise, but it is a significant pot of money. I understand that would also go to developing their philosophy and their entry into Africa as aid donors. Are we aware of that? Are we discussing what to coordinate with them?
I ask that because as we have studied BRIC, China has a significant presence in Africa, and I do not believe we factored it in quickly enough and understood the consequences of China on ground, not just economically but in so- called donor areas. I am wondering what we are doing to ensure that we have some cooperation and coordination with now the Brazilian initiatives in Africa.
Mr. Nussbaum: The short answer is that through the memorandum of understanding, we will have a more formalized mechanism of cooperation.
Quickly, on context, you are absolutely right, Madam Chair, to point to the fact that what is called south-south cooperation is really expanding, and certainly you pointed to the activities of the Brazilians in Africa, the Chinese and other emerging players. That is clearly a reality. I think the way in which Canada can be involved in that is through working with willing partners in Africa through these types of mechanisms.
The Chair: We have NGOs with great interest in Africa. Are they aware of these changes in the development aid? Are they factoring it into their work? Certainly, from my own personal experiences, we would always factor in Europeans, whether it was the Swedes or the French doing something. Now it is a whole different issue, and the African response is different and the whole field of activity is different. You are saying you are aware of it. Are all your players in Canada aware of this changing scene and how rapidly it is developing?
Mr. Nussbaum: I would have to think yes because, as you have rightly pointed out, this is a huge trend. It is an area of an amazing amount of expansion and increased activity. It would be hard to not notice if you were any organization working in the field.
I think it behoves us as established donors to try and work closely with them, because there is now a long history of established principles of aid effectiveness. I think it is fair to say that we would hope that emerging actors work with us to ensure that the progress we have made in this area continues. There is an important meeting on aid effectiveness at the end of November in Busan, South Korea, and I expect that this issue of bringing the emerging actors into a larger tent where we have the opportunity to talk through a lot of these issues will be a majority priority and objective of that meeting.
Ms. Giroux: In my current position, which is with Partnerships with Canadians branch for just over a month, I am meeting with a broad range of Canadian civil society organizations, whether they be NGOs universities, foundations, et cetera. That is very much part of their discourse in terms of the new partnerships that are emerging in development cooperation and how they can position themselves and the kinds of parameters surround these new partnerships. It is very much part of the discourse.
The Chair: Ms. Sinclair, Brazil has a long coastline, and you have mentioned a number of things on security. Are we cooperating in any way and maximizing our naval and port experience with Brazil in your discussions, both from economic opportunities but defence opportunities?
Ms. Sinclair: Yes. Again, we just discussed this over the last couple of days, and the chief of our maritime staff of the Royal Canadian Navy has had discussions with his counterparts in regional meetings. The Brazilians face many of the same challenges that we do — massive coastline, as you say, everything from piracy, transnational organized crime, environmental considerations, all of those sorts of issues. It is very much part of our discussion, and it is on our forward agenda with the Brazilians.
Senator Nolin: Miss Sinclair, I do not know if you were here when I was asking the previous panel of witnesses a question on the Truth and Reconciliation Commission created by President Lula two years ago. Are you familiar with that situation?
Ms. Sinclair: Yes.
Senator Nolin: To what extent is it putting some kind of cloud over our quality relationship with the military in Brazil?
Ms. Sinclair: The commission is looking at allegations from 1964 to 1985, I believe, and the role of the military during what was a very dark period in Brazil's history. Our only view of this is that we are glad that they are having the discussion amongst themselves about this issue. In terms of our dialogue with the Brazilian Armed Forces now, as I say, so much of what we are discussing is how do you have civilian control of the military, how do you deal with the governance issues and what are the reporting relationships. The Brazilian military is still getting used to having a civilian defence minister, but they have had two very strong individuals, Minister Jobim has just been succeeded by Minister Amorim, who was a former foreign minister. This is something for the Brazilians to come to terms with themselves. We will do everything to help them professionalize, and that is what a lot of our training programs are about.
Senator Nolin: I asked you that question because I cannot help but compare, and I am sure you must have intelligence on this, how Canada is still dealing with our relationship with Eastern Europe. We have kept information and intelligence on what happened 20 years ago in Eastern Europe, and we are still quite informed of the evolving democracy in Eastern Europe. Compared to what is happening in Brazil, I see some kind of a parallel. That is why I am asking those questions, and I am sure you are maintaining quite informed information and intelligence on individuals and how it can affect the relationship we have with Brazil.
Ms. Sinclair: Senator, I must say that I cannot confirm to you that we are maintaining intelligence and information on these individuals. What I do know is that we have a pretty good sense of the people that we are dealing with, and we are watching the progress of democratization, which is still a work in progress in Brazil. There is no question of that, and Brazilians would be the first to say that. We are trying to facilitate their transition. It is all about rule of law and democracy. When they speak with us, whether on the military or the civilian side, it is hard to get through a sentence without those issues coming to the fore. What they are doing with regard to their own Truth and Reconciliation, they have to do as their Brazilian family, obviously.
Your example of Eastern Europe is interesting. I did work in that part of the world for a little while. NATO established partnership for peace, and it was a very long journey to be able to get the militaries and the governments of Eastern Europe into a position to be able to meet the criteria for joining NATO, which is obviously an alliance of democratic countries with the rule of law and all the accountability mechanisms. That same dynamic does not exist with Brazil. They are not seeking to join any alliance relationship.
Senator Nolin: They are trying to have an alliance with us.
Ms. Sinclair: No, not an alliance, not at all. They would like to have an arrangement. I was going to see you afterward, had we not been able to get back to it, on the point that was made about the defence cooperation arrangement that was mentioned in the record from the Prime Minister's visit in August. This is an umbrella agreement that Brazil requires. We are much more flexible. Canada is willing to get into relationships based on being more functional in the sense that if there is practical cooperation and it is a partner that meets our criteria and there are things we want to do, we will do that cooperation with them in measured ways through memoranda of understanding. There are a number of countries, and Brazil is one, that comes from a legal tradition.
Second, their congress has a clear oversight function. Since Brazil comes from a tradition of non-interference in the internal affairs of countries and all of that, they did not want the military or the defence establishment dealing with any country if the congress had not had a view over what was going on. The defence cooperation arrangement is very much something Brazil would like, and we are just beginning to start now to shape the arrangements. It is not an alliance by any means at all.
Senator Nolin: They want to be friends.
Ms. Sinclair: They want to be friends. They would like to be partners. We have said sure, but we have our terms and conditions.
Senator Nolin: ``Know your friends'' is an important motto.
Ms. Sinclair: Exactly, and we do.
Senator Downe: You mentioned the future agenda working with Brazil on defence issues. Projecting forward, where would Canada see Brazil in the future? Will they be the regional power in South America, which I assume they already are on the military side, but would we see them being a country that could intervene if a situation goes badly in some South American or Central American country, or would we still expect the United States to do most of the heavy lifting?
I am also curious about the domestic defence production. Do we see Brazil growing that over the next number of years, producing a lot more arms that they may not only use locally but sell to other countries around the world?
Senator Nolin talked about alliances. They are obviously not interested in joining the North Atlantic Treaty Organization, but are they interested in some other alliance with non-aligned countries if you will?
Ms. Sinclair: As you have said, Brazil is by definition a regional power in terms of its economic weight, its population, its military strength and I would say its own view of itself in the region. That is a given, and given where Brazil is going in terms of democratic transition and all of that it is something we welcome. We obviously want to help shape it and be a good partner and friend to them, but that is something we welcome.
In terms of their engagement in the region, again, you have been studying Brazil and the Americas for a bit so you will know this non-interference, the whole point of sovereignty and the dignity of the sovereign state is absolutely the starting, I say an ending point with regard to where Brazil fits into this.
It is interesting, if you recall, President Lula launched UNASUR and then there was a defence component of that, which is the South American Defence Cooperation. It is a setting. Those defence ministers have met twice to sort of discuss regional issues. As Brazil talks about it — and I do not think it is their rhetoric because we have talked to some of the partners in that organization — it is designed to build confidence and to establish dialogue where it does not exist already. It is designed to reinforce regional security and regional stability.
As I mentioned, but very quickly, the Brazilian military is not permitted to deploy outside their borders except under a UN Security Council resolution. I do not see any proactive engagement of the military.
Brazil did try to help mediate more on the political side some of the border disputes between and amongst their neighbouring countries. They may have had a bit of a positive effect. Their mere model and their desire for stability is an extremely important development.
You are asking about U.S. heavy lifting in the region. Concerning the role of the United States and the Americas, Canada is playing a role in the Americas. It is a much more diverse region now with much greater diversity of partnerships, including countries like Canada that has no particular agenda except to build democracy and prosperity.
In terms of domestic defence production, I do not have a lot of detail. I can simply tell you that as a kind of strategic goal Brazil has a great sense of its own nationhood and its own kind of nation and it was a little bit in the question about the role of the bank and the development bank. In Brazil's domestic defence procurement, if they can buy Brazil and if they can produce it in Brazil they are going to give preference to Brazil. It does not mean there are not openings for folks, but you really have to partner with a Brazilian company if you want to get in on that.
Finally, in terms of alliances, I think they are still in a non-aligned kind of mode. I do not think they are seeking alliances with anyone, in particular not formal alliances, because they bind you in all sorts of complicated ways, but they are just going to seek to exert influence in different ways and partner with countries that are members of other alliances.
We have the Inter-American Defence Board, we have the Conference of Defence Ministers of the Americas and we have the Organization of American States. That is kind of as close to a compact that we get to and it is a loose series of arrangements I can tell you. It reflects the dynamics of the region.
The Chair: Thank you.
Your opening statements were short but the content that we were looking for certainly came through in the questions. It was very helpful. These were two areas of interest and concern as we develop our report and our own opinions about possibilities between Canada and Brazil, so thank you for coming, thank you for the information. If there is anything else you wish to add please provide it for the clerk and, again, on behalf of the committee I thank you for your testimony.
(The committee adjourned.)