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 On April 21 Brazil announced, amid much fanfare, that it was self-sufficient in oil. As a good showman, President Luiz Inácio Lula da Silva used the opportunity to fly out to the offshore Petrobras rig, which would pump up the very drop of that precious fluid that would make the difference. He dipped his hands in it in imitation of a gesture made by dictator Getúlio Vargas 50 years earlier and held them up for display.
It was a happy day for old-style nationalists of the left and right. For these reactionaries, Petrobras is a symbol of the good old days when the state ran the economy and provided cushy jobs, blocked imports and let Brazilian companies exploit a captive market with products which were often shoddy and dear. Ten days later, on May 1, Bolivia spoilt the party atmosphere by announcing that it would take control of its own energy assets. The Bolivians also said they wanted to raise the price of their natural gas on which Brazil is heavily reliant. Even though Bolivia was only doing what Brazil has been doing for 50 years there was a reaction of shock and dismay. Had the Bolivian announcement only affected American or British companies the nationalists would have been jubilant but the fact that Petrobras was included brought out an unpleasant xenophobic streak which exists among a small minority of Brazilians. Petrobras is reported to have spent US$ 18 million on marking the self-sufficiency event. Even now, almost three weeks later, it is still the highlight of the Portuguese-language version of the Petrobras home page under the headline "Brazil self-sufficient in petroleum. With the entry into operation of the P-50 platform, Brazil has become one of the few countries in the world self-sufficient in petrol; this year will go down in history." It certainly will go down in history but not for the reasons Petrobras believes. Not only did Bolivia's announcement take the gloss off the celebrations but caught the government on the hop. Lula, whom Bolivian President Evo Morales, had earlier described as his "big brother" first heard about it when the news broke, the foreign minister, Celso Amorim, was in Geneva and the energy minister, Dilma Rousseff, and Petrobras chairman, Sergio Gabrielli, were in the United States. All had to drop what they were doing and rush back to Brasília to find out what was going on. Armed Takeover Leaves Bad Taste The Brazilian side was right to object to the crude manner in which Morales made the announcement - in front of a Petrobras plant surrounded by armed soldiers - but the fact is that Brazil was completely unprepared. The solidarity and fraternity which Lula and Morales were supposed to share was shown to be a sham. The foreign policy which the Lula administration is following - cozying up to Latin America countries, like Bolivia, and trying to be a champion of the world's poorer nations - was once again shown to be seriously lacking. At the end of the day, countries act in their own interests regardless of any kind of ideological sympathy, as Lula has found to his cost in his dealing with Argentina, Russia and China. Unfortunately he seems not to have learned this basic fact yet. Lula reacted calmly (in public anyway) to the news and attended a summit meeting with Morales and Argentina's president, Nestor Kirchner. Both Lula and Kirchner announced after the meeting that they accepted Bolivia's right, as a sovereign state, to assume control of its own resources. It is difficult to know what else Lula could have done in the circumstances. However, his mild response enraged columnists and correspondents in publications like O Estado de S. Paulo and Veja, some of whom showed condescension towards Bolivians which bordered on being colonial and racist. The cover of Veja referred to the Bolivian move as "stealing Brazil's assets" while the Estado had so many leading articles and columns complaining about it that readers must have been wondering if anything else was happening in Brazil or the rest of the world. The affair allowed this section of the media to single out Venezuela's Hugo Chavez whom it sees as being Morales's mentor and, in turn, a proxy for Cuba's Communist dictator Fidel Castro. Many columnists wondered why Chavez had turned up at the summit involving Lula, Morales and Kirchner. That is a good question but, since the meeting was held in Argentina and not Brazil, it was not a question for Lula to answer. One of the few magazines to take a different view was Carta Capital which said: "The indignant, apocalyptical tone of the news about the nationalization of Bolivian gas and petroleum gave many the impression of an imminent catastrophe for the Brazilian economy and Petrobras, which is very far from being the case." Carta Capital is generally pro-Lula so one would expect it to take this tack. However, financial analysts, with no political axe to grind, were generally relaxed about the takeover. They pointed out that even if the Bolivians did manage to raise gas prices the effects on the Brazilian economy and inflation would be slight. Flying the Flag for Oil At the end of the day what we had was a coup by the Bolivians against a big foreign oil company, not an attack on Brazil. However, a certain part of the population has a curious identification with Petrobras which, for some reason, it sees as representing Brazil. One could never imagine Americans feeling patriotic about Exxon or Texaco and getting upset if their assets were nationalized. There was a similar backlash about 10 years ago when the big state-owned mining company CVRD was auctioned in the privatization program during the Fernando Henrique Cardoso government. Opponents of this sale included apologists for the military government, trade unionists and even Catholic bishops who managed to have the auction stopped in the middle of bidding through a legal injunction. In the end CVRD was sold and, freed from the shackles of the state, has become one of the world's most efficient companies. Nowadays, no-one is calling for CVRD to be returned to the state. The chances of Petrobras being nationalized are nil since it provides good dividends for the government, especially at a time when oil prices are high, and provides plenty of opportunities for patronage by the political parties in the coalitions which are the norm here. Brazil should write off this affair, learn from it and leave the details of negotiating terms and conditions to Petrobras's professional management rather than politically-appointed senior executives. Since Bolivia is still highly dependent on Brazil and its state-owned petroleum company has few resources to exploit its natural assets, Brazilian expertise will still be in demand. Ironically, while all this was going on, the Abril Group which owns Veja announced that it had sold 30% of its share capital to a South African media concern. This is the maximum amount under Brazilian law which a domestic media company can sell to a foreign partner. Since this deal means that Abril is no longer a truly Brazilian enterprise one hopes it will stop pretending to be concerned about Brazil's "assets" and concentrate on its own assets on the balance sheet. Readers can look forward to many more articles on Bolivia and, of course, South Africa in the future. John Fitzpatrick is a Scottish writer and consultant with long experience of Brazil. He is based in São Paulo and runs his own company Celtic Comunicações. This article originally appeared on his site www.brazilpoliticalcomment.com.br. He can be contacted at
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. © John Fitzpatrick 2006
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this is a true shame from Brazil government and from Lula !
And as you said the reaction would had been the exact opposite if it involved mostly foreign companies.
This demonstrate that Brazil has no friend whatsoever, despite what they say.
They are against Rich And Poor nations.
Paying the fair and free international market price for gas is unfair for them !
They do the same with HIV drugs, other drugs, software, computers,
GM seeds, just to name a few.
They are a Mercoisur member, but have big differences with every single other members.
They unilaterally decided to stop rice import from Uruguay. There are major disagreements with Kirchner.
They are against agriculture subsidizes but Brazil subsidize ALL export industries.
Brazil restricts Chinese textile , despite the textile imports are only 1 % or so of the Brazilian textile industry !
1 % is TOO much !
But they dont disagree when they can export over 60 of their porks in Russia and even threatens Russia to not vote in their favor to recognize Russia as a free market economy , should Russia reduce their purchases of Brazilian porks and switch to EU suppliers.
Brazil is puting pressure that rich nations cancels the debts to Bolivia, but brazil is against cancelling their own debts to Bolivia.
Whatever way you look at it, Brazil is arrogant, despite being a not so rich country.
No doubt that mpeople have good memories.
Time will come.
Time is on their side, not yours !
You want to play dirty, stinky, greasy and smelly at every game and negotiations ?
Just wait !