Saturday, February 19, 2011

The New Brazil - Riordan Roett

In short, something had changed in Brazil since the opening of the century. Was it due to luck? Careful planning? Or is Brazil’s rise best explained by one of Lula’s favorite sayings, ‘God is a Brazilian’?

The idea that university professors are isolated professionals who work in beautiful campuses isolated from real life is familiar in the Anglo-Saxon countries –though the stereotype has been adopted across the World thanks to mass media. The historical reasons behind the separation of the city and the university had for objective the isolation of academia from politics. Nowadays, as knowledge becomes increasingly complex and specialized, the isolated campuses allow construction of laboratories and facilities that would create disturbances were they located downtown. However, it is necessary to keep in mind that, one thousand years ago, when Oxford and Cambridge were in the process of being created, England was experiencing a political transformation that tried to limit the king (Magna Carta, and all that). Taking the direct control of knowledge off his hands was part of this process.

Having campuses separated from the city tends to be the rule across the Anglo-Saxon countries with the remarkable exception of three cities: London, New York, and Washington, DC.  I am not familiar with the dynamics of academic work in London or New York, but I can say that, in DC, politics shapes academia –and vice versa. This excellent article by Peter W. Singer from the Brookings Institution provides an excellent summary of the role played by think tanks in the DC political debate -and will save me some lines of dissertation. The article can be extended to the four universities located in DC that deal with politics and policy: Georgetown University, George Washington University, American University, and the School of Advanced International Studies (SAIS), a branch of The Johns Hopkins University.

This prelude is necessary to put Riordan Roett’s The New Brazil in context. Roett is the director of SAIS’ Western Hemisphere Program, he used to be an investment banker for fun, and received the Order of Rio Branco with the grade of Commander in 2000. The New Brazil was published just a couple of weeks before Brazil’s presidential elections in 2010 by Brookings, which is located literally across the street from Roett’s office.

Although The New Brazil describes Brazil’s past, present, and future in 152 pages, it is in reality an endorsement of Lula da Silva’s policies, and should be read as a vote of confidence for Dilma Rousseff (happily for Roett, she was elected president of Brazil; otherwise it would have been embarrassing to support a losing candidate). It should also be mentioned, however, that Roett has advised the US government in various capacities. More recently, he did consulting for the Obama foreign policy team during the transition between the election and the inauguration. Therefore, Roett tries to find a compromise between his admiration for Lula and the strategic interest of his country. From that perspective, you will only need to read the last 3 chapters (43 pages) to get the main message: Lula was good, though his foreign policy regarding Honduras and Iran were mistakes that question the idea of Brazil as a responsible world player.

Roett is right in saying that Brazil’s policy regarding Honduras and Iran was a disaster. As Jorge Castañeda has argued, Brazil cannot pretend to be a World class deal-broker player until it plays that role in South America. Sadly, Brazil is far from being in that position. For instance, Brazil has not played any role in the resolution of the pulp mill dispute between Argentina and Uruguay, just to mention a minor foreign policy issue that escalated due to the lack of an effective regional leadership.

And, as far as the economic success of Brazil is concerned, two words of caution should be mentioned. First, it is mostly a commodity story. Though Brazil has remarkably moved up in the technological production ladder, more than half of its imports are still commodities. At this point, we should know how that ends. Second, while Brazil’s net debt has decreased considerably since 1998, the level of liabilities is still high once the operations of BNDES are accounted for (Roett mentions BNDES only three times in the book; none of them to discuss its debt issues). This article by Roubini summarizes the BNDES issue. We will not see the extent of Brazil indebtedness for the next two years, while interest rates in the developed countries are low, but a spectacular crash once the Fed starts increasing the rates (say, 5 years) is not out of order.

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