Turning the tide
The visiting Brazilian president strongly believes that there is plenty of room for improvement in bilateral commercial and economic relations with Egypt, writes Gamal Nkrumah
Hugely popular at home, Brazilian President Luiz Inacio Lula da Silva has now set hearts racing in the Arab world as well. Da Silva's successful whirlwind tour of five Arab countries, including Egypt, had a decidedly economic component. Brazil is on course to become a major global economic power and Lula wants to do business with Arab entrepreneurs.
Da Silva's delegation included several ministers, as well as a large contingency of businessmen and politicians. Accompanying the president were Paulo Segio Atallah, president of the Arab Brazilian Chamber of Commerce; Luiz Fernando Furlan, Brazil's minister of development, industry and foreign trade; Walfrido dos Mares Guia, Brazil's minister of tourism; and the former Argentine President and current head of the Latin American regional economic grouping Mercosur, Eduardo Duhalde.
Indeed, the Brazilian president is lobbying hard for the success of the first Arab-Latin American summit which Brazil is planning to host next year. Lula sees his tour of the region as an opportunity to galvanise support for the building of stronger ties between the two economically important, albeit developing, regions. He sees Latin America and the Arab world as economically complimentary although he stresses that a sustained effort is vital if trade and economic ties are to be strengthened. In this context, Lula sees his mission as encompassing not just various aspects of Brazilian-Arab relations, but wider Arab-Latin American interests.
With more than 10 million citizens of Arab descent, Brazil is in a unique position to do business with the Arab world. In the past, Brazilian policy-makers overlooked ways of expanding economic relations with the Arab world. Brazil is now poised to strengthen its economic ties with the Arab world, but Lula strongly believes that direct political intervention is prerequisite.
The Arab world, too, has traditionally neglected exploring the economic potential of trading with Brazil and Latin America.
"Brazilian exports to Egypt grew steadily from 1991 and reached a peak of $370 million in 1995. Afterward, it fluctuated, recording its maximum peak in 2001 ($425 million), and unfortunately dropped again in 2002," Gamal El-Nazir, the chairman of the Egyptian Businessmen's Association (EBA) told Al-Ahram Weekly.
El-Nazir said that Brazil exports sugar, iron ore, beef, vegetable oils, tobacco, corn and other grains to Egypt. He added that Brazilian imports from Egypt have been minimal in the past decade, peaking at $47 million in 2001.
The paucity of information about the Brazilian economy in Egypt and the Arab world explains the sluggish nature of past trade relations.
Luiz Inacio Lula da Silva
photo: AFP
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Lula is especially interested in advancing the interests of developing countries at international forums such as the World Trade Organisation (WTO). He strongly believes that solidarity among developing countries is the surest way to advance their common interests. "In unity lies strength," he insisted at a Brazilian-Egyptian business meeting organised in conjunction with the EBA.
Brazilian businessmen and politicians took the opportunity of the president's tour to highlight the economic potential of Brazil.
Brazil is no longer simply the country that exports coffee. It is the world's fourth largest aircraft producer and exports $1.5 billion in cell phones.
Brazil is a gigantic country, larger in land mass than the continental United States. It takes up more than 50 per cent of South America, is 15 times the size of France and borders 10 other countries. It is a multi-racial country that has the world's 10th largest industrial base. Brazil is the world's eighth largest producer of steel and produces 50 per cent of Latin American's steel.
Egypt might have invented paper but, ironically, Brazil now exports this commodity to Egypt. Brazil is the fourth largest exporter of pulp and paper and its vast Amazonian jungle is the source of some of the world's most valuable tropical hardwoods. Despite its vast timber resource, however, Brazil has largely missed its opportunity to increase timber exports to Egypt, a country with a very limited timber supply.
Brazil and Egypt have much in common but the volume of trade between the two countries is very small considering that the two countries' economies are complimentary. Brazil has a food surplus, while Arab countries, with a few exceptions, often run a food deficit, Egypt included.
Bilateral trade is lopsided and heavily favours Brazil. Lula said he wants to redress the balance and see more Brazilian tourists visit Egypt. He noted that at present there are no direct flights between Egypt and Brazil or between Brazil and any other Arab country. Passengers from Egypt and the Arab world have to first fly to Europe before continuing on to Brazil or other Latin American countries. Lula said that trade and tourism between Brazil and the Arab world cannot improve without direct flights between the two. He also said that maritime transport networks between Latin America and the Arab world must improve.
Agriculture is also very well- developed in Brazil. Agribusiness is highly profitable and is responsible for the country's current account surplus. Brazil is the world's largest producer and exporter of coffee, sugar-cane and oranges. It also has the largest herds of beef cattle in the world, numbering some 175 million head of cattle. Egypt, and many other Arab countries, regularly import beef and other meat products.
Brazil is the world's fifth largest consumer market and thus the potential for exporting Egyptian goods to Brazil is enormous. The country also has 22 per cent of the world's arable land. Brazil is one of the world's fastest growing markets, but Brazilian consumers are discerning. This consumer sophistication and the prospect of sustained long-term growth make Brazil an especially challenging market.
With 24 million Brazilians connected to the Internet, Brazilian consumers are familiar with shopping on the Web. More than 60 per cent of Web sites created in Latin America are Brazilian and e-commerce is an established way of doing business in the country. More than 40 per cent of all Internet users in Latin America are Brazilian and the production of computer software is a big business in Brazil.
Brazil has the world's most advanced electronic computing system and the country is a pioneer in nanotechnology in Latin America. There is thus ample room for joint venture projects between Egyptian and Brazilian companies in the high-tech industries.
Nevertheless, Lula was quick to point out that Brazil is still an underdeveloped country. He said that 40 million Brazilians live below the poverty line.
Brazil, however, has made enormous strides in education, with 50 per cent of secondary school students now using computers. Lula stressed that 97 per cent of children between the ages of seven and 14 attend mandatory public schools.
Brazil has also achieved great strides in the area of land reclamation. The area under cultivation is constantly being expanded, much to the dismay of environmentalists who warn that the global ecosystem is intricately affected by what happens in Brazil. Deforestation of the world's most important ecological region -- the 91 million hectare Amazon forest -- is under threat. Deforestation of large tracts of the Amazon forest, ecologists warn, might negatively impact climate behaviour around the world. For millions of landless peasants and urban unemployed in Brazil, at issue is access to undeveloped arable land. Land hunger has meant that farmers and ranchers have moved into the states of Amazonas and Matto Grosso where they literally hack down entire forests in order to make a living. Some 800,000 Brazilian families have been resettled in an area five times the size of Switzerland, Lula said.
During his presidential campaign, Lula vowed that poverty alleviation was at the top of his agenda and pledged to fight the root causes of poverty -- gross income inequalities and an unfair international trading and economic system. Lula did not downplay the critical importance of reducing poverty in his keynote address to Egyptian-Brazilian business meeting. "Poverty reduction increases the chances of improving the business climate," he stated.
