Bush Rolls Out Red Carpet for Brazil’s Lula. They Might Be Dreaming of a Green OPEC

Sugarcane plantation in Paraíba state, Brazil Brazil’s President Luiz Inácio Lula da Silva’s arrival in Washington tonight, March 30, is surrounded by high expectations, but also with considerable trepidation. President Lula will be President Bush’s guest at Camp David, his presidential refuge in the nearby Maryland mountains, just outside of Washington.

The White House invitation to Lula represents the most singular honor that has not been bestowed on any Latin-American leader since 1991, when Mexico’s President, the crafty rogue leader, Carlos Salinas visited Camp David as a guest of President George Bush Sr.

The preferential treatment being accorded to Lula may simply be an initiation of the White House’s efforts to make 2007 the "year of engagement in Latin America." However, other, decidedly less fluffy reasons may exist for Bush to roll out the red carpet for Lula’s visit.

The March 31st meeting will be the second gathering of the two presidents in a matter of weeks. On March 9, Bush and Lula met in Brazil during the first stop in the U.S. leader’s swing across the region. As a result of that meeting, Condoleezza Rice and Brazil’s Minister of Foreigner Affairs, Celso Amorim, co-signed a cooperative agreement for promoting ethanol production.

Just a few weeks earlier at the U.N. headquarters in New York, U.S. and Brazilian officials had launched an international forum for promoting the biofuels market. It is obvious that U.S.-Brazil relations have been growing markedly tighter and that ethanol is today the dominant elixir fueling the two nations’ ongoing conversation.

But, to get matters straight about ethanol, it is necessary to address the big picture. First, burning ethanol releases less carbon dioxide into the atmosphere than burning fossil fuels, whether the base is sugar-cane, corn or cellulose.

Thus, ethanol can be seen as a very effective means for addressing global warming. Second, the increased production of ethanol diversifies fuel portfolios and in this way can be a powerful determinant in lowering fuel prices in the international market.

Although both countries have professed great concern about global warming – an issue that only recently has begun to pull more weight in the U.S. politics – both Washington and Brasília appear to have their eyes primarily focused on the potential ample economic returns of ethanol production, sales and distribution.

However, while Washington clearly sees ethanol as an avenue to strengthening its energy security tabulations, Brasília sees it as a way of consolidating its position as an emerging political power broker.

Changing the World

Washington’s game seems to be based on lowering the economic costs of its ethanol production and consumption. Washington also says that after questions relating to the economy of scale are addressed and the land available for production is assessed, it will get down to dealing with the factors involved in bringing such production to Central America and the Caribbean.

With both Brazil and this array of small Caribbean Basin Countries with their legacy sugar-cane plantations puts them on the right side on this issue, the U.S. could begin weighting thoughts of championing a sort of "green OPEC."

That would entail the decrease in oil-dependency in the Western hemisphere and, at the same time, contract the bargaining power of politically fractious OPEC members like Venezuela and Iran.

Brasília’s plan is quite different and may be far more democratic in its inspiration. Brazil is the most advanced country in the world in the production of ethanol, and the current administration seems willing to share its relatively uncomplicated sugar-cane ethanol technology with the Caribbean basin nations, as Washington is requesting it to do.

But Brasília is also interested in sharing its technology beyond the hemisphere’s borders, for equally compelling geopolitical reasons. If ethanol had a broader production base, sugarcane – an agricultural commodity now widely produced by poor countries located in equatorial regions around the globe – would enjoy an increase in demand in the international market, which could have a transformative impact on the economies of many of these countries.

If these poor countries are able to develop their own ethanol production capacity, they can import less oil and the competition between fossil fuels and biofuels will most likely bring their prices down.

Thus, with a little imagination, Brasília’s move to share its ethanol technology globally might be seen as the generative spark behind a massive, if humble, methodology of poverty alleviation.

Brasília is interested in the potential geopolitical gains resulting from such a development, in line with the longstanding desire of Lula to be seen as global leader: the ‘spokesman for the developing world’.

Based on these considerations, we may expect that during his present U.S. visit, Lula will try to reinforce his image as world-class leader by putting Bush in the corner and pressuring him to demand that the U.S. Congress reduces import tariffs on ethanol.

In addition, Lula has always nursed a fixation of wanting to be seen as the protector of the underprivileged. Lula is willing to use Brazil’s sugar-cane ethanol capacity became a wedge into influencing the U.S.’s position in the current World Trade Organization discussions on agricultural subsidies (the "Doha Round").

He has been one of the leading voices among a group of developing countries (G-20) whose main objective is precisely to work for the reduction of agricultural subsidies in developed countries.

Earlier this month, over his regularly featured radio show, Lula said he would come to U.S. not only to discuss investment in ethanol research but also to talk about the need to make progress in the Doha Round.

The question here is what kind of negotiation Bush can try to carry out with a leader who seems to have an increasingly strong hand at the table.

This analysis was prepared by COHA Research Associate Thomaz Alvares de Azevedo e Almeida. The Council on Hemispheric Affairs (COHA) – www.coha.org – is a think tank established in 1975 to discuss and promote inter-American relationship. Email: coha@coha.org.

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