Brazil’s Lula eyes mediation role on trip to Iran
BRASILIA, May 12 (Reuters) – President Luiz Inacio Lula da Silva’s visit to Iran this weekend to help mediate a standoff over the Islamic country’s nuclear program may be Brazil’s biggest gamble yet in its quest for more diplomatic clout.
The Latin American giant, which has a rotating seat on the U.N. Security Council, opposes more sanctions against Iran over its uranium enrichment plans, saying such measures usually hit the poor and could push Tehran to radicalize further.
“It is not prudent to push Iran into a corner,” Lula, who has traveled to more than 80 countries as president in a bid to raise Brazil’s profile, said recently.
On his two-day trip to Tehran, the charismatic Lula will try to persuade his Iranian counterpart Mahmoud Ahmadinejad to revisit a stalled proposal by the International Atomic Energy Agency, or IAEA, under which Iran would send low-enriched uranium abroad and receive a higher grade uranium in return.
The Obama administration accused Iran last week of trying to buy time by accepting Brazilian mediation. [ID:nN06268859]
If the efforts bear fruit, Lula could claim credit for helping to defuse a global security crisis. But if Iran balks, skeptics are likely to claim that Tehran was simply exploiting Brazil’s dreams of global grandeur to delay new sanctions.
“Good offices are always welcome, but if Brazil helps block sanctions, it’ll be a serious problem,” said Rubens Barbosa, a former Brazilian ambassador to Washington. “Right or wrong, the issue is on the global agenda and Brazil is in the middle.”
Brazil’s Serra vows activist govt, raps central bank
BRASILIA, May 10 (Reuters) – Brazilian presidential candidate Jose Serra gave some hints on Monday about what his economic policies might look like, criticizing the central bank and urging an overhaul of the country’s costly pension system.
In a live interview with Brazil’s CBN radio, the opposition candidate also defended a strong government focused on economic development, but stressed that as president he would respect the central bank’s autonomy even if he disagreed with its interest rate policy.
The comments offered some rare insight into Serra’s thinking. With less than five months until Brazilians go to the polls to elect a successor to President Luiz Inacio Lula da Silva, Serra has been guarded with his views on policy.
“I favor a national development project for Brazil with government activism,” Serra, a veteran politician from the centrist PSDB party, said in the interview.
“I defend a strong state, not obese but muscular, with the capacity to promote our development with social justice.”
An accomplished economist with a long track record in government, Serra’s politics have often placed him to the left of the mainstream of his party. As a result, some investors fear that, if elected in October, Serra could push for a stronger government hand in the economy.
Serra’s main rival, Dilma Rousseff of the center-left ruling Workers’ Party, also sees the government as a key player in the economy. But in recent weeks she has gone to great lengths to reassure investors with pledges of fiscal discipline and central bank autonomy. [ID:nN05631353]
Brazil says Iran willing to advance talks
BRASILIA (Reuters) – Brazil sees a window of opportunity and a willingness by Iran to reach a negotiated solution over its nuclear program, Foreign Minister Celso Amorim told Reuters on Friday.
“I think there’s room (for dialogue). I noticed more pragmatism in the Iranian leadership, an interest in moving forward,” Amorim said in an interview.
He met last week in Tehran with President Mahmoud Ahmadinejad and other Iranian leaders.
Brazilian President Luiz Inacio Lula da Silva will travel to Iran at the end of next week to also work toward a negotiated solution with Iran, Amorim said.
Ahmadinejad said on Wednesday he accepted Brazilian mediation in principle.
Western nations fear Iran is developing nuclear arms, while Tehran says its nuclear program is intended solely for peaceful purposes such as power generation.
Despite signs of willingness, Iran has to more clearly show flexibility in accepting a United Nations uranium swap proposal to solve the long-standing impasse, Amorim said.
Brazil’s Rousseff will cut debt, respect contract
BRASILIA (Reuters) – Brazilian presidential candidate Dilma Rousseff said on Wednesday she would maintain strict fiscal discipline to push down public sector debt and revamp the country’s tax code if she wins October’s election.
Speaking at the Reuters Latin American Investment Summit in Brasilia, the candidate from the ruling Workers’ Party (PT) said her government would keep a primary budget surplus target of 3.3 percent of gross domestic product until net debt falls to 28-30 percent of GDP from about 42 percent currently.
President Luiz Inacio Lula da Silva’s former chief of staff also said she would strengthen state-owned companies such as oil giant Petrobras <PETR4.SA><PBR.N> and Banco do Brasil <BBAS3.SA> without encroaching on private firms.
“We will never weaken our (public banks). But no way do we want them to become an octopus gobbling up private financial institutions or the space of foreign banks — on the contrary,” Rousseff, 62, said in an interview at her campaign headquarters.
“State banks alone aren’t enough to finance economic expansion,” she said, adding that private banks are needed to finance investment and keep state banks on their toes.
“I’m in favor of competition.”
A trained economist and career civil servant, Rousseff said she would not abandon the central bank’s current policy of building international monetary reserves, which have climbed to an all-time high of more than $248 billion.
Brazil’s PT sees continuity with Rousseff
BRASILIA (Reuters) – Brazilian presidential candidate Dilma Rousseff will maintain the current government’s economic policies and bolster the role of state companies if she wins October’s election, the head of the ruling Workers’ Party said on Tuesday.
Speaking at the Reuters Latin American Investment Summit in Brasilia, Jose Eduardo Dutra also ruled out large-scale budget cuts or direct intervention by the government to target a specific exchange rate if Rousseff were to become Brazil’s first female president.
“Expenditure cuts … that won’t happen,” said Dutra, a former chief executive of state oil company Petrobras <PETR4.SA><PBR.N>, who took over as president of the Workers’ Party, or PT, in February.
Rousseff’s main rival, former Sao Paulo state Governor Jose Serra of the opposition PSDB party, has pledged fiscal austerity and improved government efficiency in order to heighten public investments.
Serra leads opinion polls by as much as 10 percentage points over Rousseff, who stepped down last month as President Luiz Inacio Lula da Silva’s chief of staff.
Michel Temer, president of the centrist PMDB party, will soon be announced as Rousseff’s vice-presidential candidate, Dutra said. Temer and Rousseff are expected to discuss the potential alliance at a private dinner on Tuesday evening.
“I have no doubt,” Dutra said when asked whether Temer would become her running mate.
Key political risks to watch in Brazil
BRASILIA, May 3 (Reuters) – Brazil’s presidential election in October looks less risky to investors than any other in the last quarter of a century and the economy has bounced back after a brief recession, but there are still investment risks to watch in Brazil this year.
PRESIDENTIAL ELECTION
President Luiz Inacio Lula da Silva’s leftist chief of staff, Dilma Rousseff, is the ruling Workers’ Party candidate to succeed him. She trails her main rival, Sao Paulo state Governor Jose Serra of the centrist opposition PSDB party [ID:nN27217099]. But most analysts make Rousseff the favorite because she can count on support from the hugely popular Lula and will be helped by the rebounding economy [ID:nN18249294].
Unlike previous elections, there is no clear market favorite because neither of the main contenders is expected to break with the mostly market-friendly policies in place for the past decade: a free-floating currency, inflation control, and fiscal discipline. Some investors prefer Serra for his party’s centrist stance and his managerial experience.
But Rousseff and Serra both believe in a strong government role in the economy and could tighten regulation in financial markets. Though both candidates will try not to unsettle investors, such proposals could weigh on debt and equity markets in a country that has a history of election-year volatility.
They have also both called on the central bank to look at the broader economy and not just inflation in making its monetary policy decisions. Serra urged larger rate cuts instead of the incremental easing during the 2008 global financial crisis. Rousseff, who was endorsed by the Workers’ Party in February [ID:nN20146094], has said the bank should consider economic and job growth when setting policy.
There is also some doubt about how firmly the candidates would push for a second generation of structural reforms to ensure Brazil’s international competitiveness if elected. These include proposed reforms to tax, pension and labor laws.
Brazil completes controversial Amazon dam auction
BRASILIA, April 20 (Reuters) – Brazil awarded a domestic consortium on Tuesday rights to build the world’s third-largest hydroelectric dam in the Amazon rain forest in a chaotic auction amid criticism the dam is an environmentally hazardous money loser. President Luiz Inacio Lula da Silva likely faces a prolonged battle over the 11,000 megawatt Belo Monte dam that he has heavily promoted despite opposition from a range of critics including Hollywood director James Cameron. Government leaders say the project, due to start producing electricity in 2015, will provide crucial power for Brazil’s fast-growing economy, but environmentalists and activists say it will damage a sensitive ecosystem and displace around 20,000 local residents. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a factbox, please click on [ID:nN20202737] For a graphic click on link.reuters.com/fum77j ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> State power regulator Aneel said a consortium including state electric company Eletrobras <ELET6.SA> and a group of Brazilian construction companies — considered the weaker of the two consortia that participated — won the bid. Those results were blocked from being announced for more than two hours because a last-minute injunction trying to halt the project on environmental grounds. The results of the auction are unlikely to affect overall electricity rates in Brazil because most of the electricity is already set aside for specific clients, with only a small remainder entering power markets. PROTESTS Financial analysts say the government set an artificially low price for the power to be generated by the dam, adding it faces considerable risks including cost overruns and the likelihood that protests will frequently halt construction. Native Indians in the area are already promising just that. Luis Xipaya, a local leader speaking to Reuters from the city of Altamira near the proposed dam site, said 150 Xikrin Kayapo Indians will move to a new village on the construction site by Wednesday. "There will be bloodshed and the government will be responsible for that," Xipaya said. Environmental activist group Greenpeace organized an early morning dump of several tonnes of manure at Aneel’s gate to visually demonstrate "the legacy that the Lula government is leaving by insisting on this project." The auction has for weeks been a stop-and-start process that by Tuesday had already been halted twice by court orders that the government quickly overturned. The winning consortium, known as Norte Energia, will sell the power for 78 reais ($44.5) per megawatt hour, below the maximum price of 83 reais established by the government as the maximum. Earlier this month two of the country’s biggest construction firms walked away from Belo Monte, saying it financial returns were too low — threatening the leave only one consortium in the running. The Norte Energia consortium was formed at the last minute after the government added sweeteners including a 75 percent income tax write off and longer-term financing from the state development bank BNDES, which will finance 80 percent of the estimated cost of the project. Slack investor interest also created the unusual situation of Eletrobras bidding in both consortia, though authorities said this was allowed under the bidding rules. Official estimates put the construction costs at 19 billion reais ($11 billion) though private sector estimates go as high as 30 billion reais ($17 billion) for the project. Originally conceived 30 years ago, progress on Belo Monte has been slowed over the years by protests, including an incident last year in which Kayapo Indians armed with clubs and machetes attacked a state electricity official. ($1=1.75 reais) (Additional reporting by Fernando Exman and Carolina Marcondes in Sao Paulo; Writing by Brian Ellsworth; Editing by Cynthia Osterman)
BRIC group urges swift reform of financial system
BRASILIA (Reuters) – The world’s leading emerging powers are expected on Thursday to urge swift reform of international financial institutions to give developing countries a greater voice, according to a draft of the communique from the so-called BRIC summit.
The leaders of Brazil, Russia, India and China will also reiterate their call for the G20 group of major advanced and emerging economies to play a central role in global decision-making and urge a broader discussion of international trade in local currencies, according to a Brazilian government official with access to the document.
The increasingly influential BRIC countries will push for more say in global financial institutions, such as the World Bank and the International Monetary Fund, at this month’s G20 finance ministers’ and IMF meetings in Washington.
Leaders from the four countries were meeting in Brazil’s capital of Brasilia on Thursday night after their second top-level summit was scaled back due to a major earthquake in China.
Chinese President Hu Jintao decided to go home early to oversee the relief effort following the quake, which killed more than 600 people in western China, forcing the BRIC summit to be shortened into a one-day event that will end late on Thursday.
Hu also canceled visits to Venezuela and Chile.
China and Brazil, the largest economies in Asia and Latin America, used the summit to bolster growing ties with trade and investment agreements.
China, Brazil sign deals at shortened BRIC summit
BRASILIA, April 15 (Reuters) – China and Brazil signed a series of trade and investment agreements on Thursday before a summit of the world’s top four emerging markets that was shortened to a few hours after China’s president decided to return home to deal with a deadly earthquake.
Hu Jintao canceled visits to Venezuela and Chile, and his early return forced the so-called BRIC summit with Brazil, Russia and India to move forward by a day to Thursday evening.
Hu oversaw the signing of deals with Brazilian President Luiz Inacio Lula da Silva aimed at boosting trade and energy cooperation between the two emerging giants. Lula said a Chinese pledge to build a steel plant at a Brazilian port was also likely and that it would be China’s biggest investment ever in the Latin American country.
The leaders gave no details, but Brazilian media reported that China’s Wuhan Iron and Steel <600005.SS> will build a plant in a port in Rio de Janeiro state with Brazilian logistics firm LLX Logistica <LLXL3.SA>, controlled by billionaire Eike Batista.
China’s Sinopec and the country’s development bank signed a strategic development agreement with Brazil’s state-run oil giant Petrobras <PETR4.SA><PBR.N>, Sinopec Chairman Su Shulin told Reuters. [ID:nN15230307]
Su said the deal will cover the development of Brazilian oil resources and trade with China but declined to provide further details.
Brazil and China also agreed to boost Brazilian beef and tobacco exports to the Asian country, and to move forward with cooperation on satellite launches.
BRICs divided on global agenda, look to mutual trade
BRASILIA, April 14 (Reuters) – The leaders of the world’s top four emerging markets will renew calls for a greater say in the global economic order when they meet in Brazil’s capital this week but they may struggle to come up with clear proposals to advance a common agenda. At their first summit last year in the Russian city of Yekaterinburg, the so-called BRIC countries of Brazil, Russia, India and China were at the forefront of a push to overhaul global financial regulations and move toward a new international reserve currency. But with the worst of the global economic crisis now over, differences between the four countries have become more evident, exposing the limitations of the group’s ambitions. "Don’t expect the BRICs to make bombastic or revolutionary proposals because it’s not going to happen," said Roberto Jaguaribe, undersecretary of political affairs at Brazil’s foreign ministry. Finding alternatives to the U.S. dollar as a global reserve currency and using local currencies for trade are not on the official agenda of the leaders’ two-day meeting in Brasilia that begins on Thursday, although they will be discussed. The BRICs, a term coined by Goldman Sachs economist Jim O’Neill in 2001 to describe the growing influence of big emerging economies, represent 40 percent of the world population and around 20 percent of global economic output. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For details on the BRIC economies, click on [ID:nN14154716]) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The foursome is sure to cite that growing clout to push its demands that the BRICs and other developing countries be given more say in global financial institutions such as the World Bank and the International Monetary Fund. While the BRICs share concerns on global governance issues, they have little in common besides being large, fast-growing economies with massive domestic markets. China’s relations with Russia and India are complicated by security tensions, and Beijing and Moscow are not enthusiastic about Brazil and India’s push to broaden the United Nations Security Council. Differences abound on climate, trade and currency issues. "On trade and climate, it’s difficult to see more than a generic statement to advance global talks," said Andre Nassar of the Institute for International Trade Negotiations, a research group based in Sao Paulo. As a major food exporter, Brazil wants to cut trade barriers on agriculture, something that India has been reluctant to do. Russia, a major oil producer, is unlikely to embrace any ambitious emissions reductions. China’s undervalued currency, the yuan <CNY=CFXS> <CNY=SAEC>, is also a point of tension since it erodes the competitiveness of domestic manufacturers in other BRIC countries. Last week, Brazilian Finance Minister Guido Mantega backed calls for China to revalue the yuan, saying it would be good for the global economy. [ID:nN09109651] Still, few expect the BRICs as a group to pressure Beijing on the issue. "I think they’ll leave that one to the United States to deal with," said Roberto Abdenur, a former Brazilian ambassador to China and the United States. MUTUAL TRADE In the absence of a far-reaching external agenda, the BRICs will focus on strengthening trade and investment ties with delegations of business leaders, bankers, cooperatives, and state development banks exploring business opportunities. "Greater intra-BRIC cooperation would help members, as this could in itself emerge as a strong counterweight to established powerhouses in economic and political terms," said a senior official at India’s finance ministry, who requested anonymity. China and Brazil will use the summit to sign a five-year strategic plan to further expand their fast-growing trade relationship. And Chinese companies are expected to unveil some investments in Brazil, one of China’s main suppliers of commodities such as iron ore and soybeans. [ID:nN13248277] For Brazilian President Luiz Inacio Lula da Silva, the BRIC summit is one of the last big events he will host before leaving office at the end of the year. He is expected to use the occasion to reiterate Brazil’s push for a permanent seat on the U.N. Security Council. Beijing sees the BRICs as a forum allowing it to bolster links with other major emerging economies, strengthening the perception that it is helping other developing countries as it is often urged to do. But China is keen for the BRICs not to been seen as a challenge to Washington. "We come together seeking mutual benefit … rather than confrontation with other third parties," said China’s vice foreign minister, Cui Tiankai. Still, there are concerns that China’s economic and diplomatic might may end up undermining the BRIC as a coherent group, since it doesn’t need others to effectively push its agenda. The sheer size of its economy also means that policy coordination with its BRIC peers will be difficult. "China’s power will likely provide a challenge to BRIC cooperation and the BRICs as a grouping," said Michael Glosny, China expert at the Massachusetts Institute of Technology.(Additional reporting by Abhijit Neogy in New Dehli, Emma Graham-Harrison in Beijing, Todd Benson in Sao Paulo, and Denis Demkin in Moscow; Editing by Todd Benson and Kieran Murray)
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