A Cuban American Position on Dilma and Spying from the online Miami Herald, Sept. 25




President Dilma Rousseff of Brazil canceled her visit to President Obama. She was offended because the United States was peeking into her electronic mail. You don’t do that to a friendly country. The information, probably reliable, was provided by Edward Snowden from his refuge in Moscow.

Intrigued, I asked a former U.S. ambassador, “Why did they do it?” His explanation was starkly frank:

“From Washington’s perspective, the Brazilian government is not exactly friendly. By definition and history, Brazil is a friendly country that sided with us during World War II and Korea, but its present government is not.”

The ambassador and I are old friends. “May I identify you by name?” I asked. “No,” he answered. “It would create a huge problem for me. But you may transcribe our conversation.” I shall do so here.

“All you have to do is read the records of the São Paulo Forum and observe the conduct of the Brazilian government,” he said. “The friends of Luis Inácio Lula da Silva, of Dilma Rousseff and the Workers Party are the enemies of the United States: Chavist Venezuela, first with (Hugo) Chávez and now with (Nicolás) Maduro; Raúl Castro’s Cuba; Iran; Evo Morales’ Bolivia; Libya at the time of Gadhafi; Bashar Assad’s Syria.

“In almost all conflicts, the Brazilian government agrees with the political lines of Russia and China, as opposed to the perspective of the U.S. State Department and the White House. Its more akin ideological family is that of the BRICS, with whom it tries to conciliate its foreign policy. [The BRICS are Brazil, Russia, India, China and South Africa.]

“The huge South American nation neither has nor manifests the slightest desire to defend the democratic principles that are systematically violated in Cuba. On the contrary, former president Lula da Silva often takes investors to the island to fortify the Castros’ dictatorship. The money invested by the Brazilians in the development of the super-port of Mariel, near Havana, is estimated to be $1 billion.

“Cuban influence in Brazil is covert but very intense. José Dirceu, Lula da Silva’s former chief of staff and his most influential minister, had been an agent of the Cuban intelligence services. In exile in Cuba, he had his face surgically changed. He returned to Brazil with a new identity (Carlos Henrique Gouveia de Mello, a Jewish merchant) and functioned in that capacity until democracy was restored. Hand in hand with Lula, he placed Brazil among the major collaborators with the Cuban dictatorship. He fell into disgrace because he was corrupt but never retreated one inch from his ideological preferences and his complicity with Havana.

“Something similar is happening with Profesor Marco Aurelio Garcia, Dilma Rousseff’s current foreign policy adviser. He is a contumacious anti-Yankee, worse than Dirceu even, because he’s more intelligent and had better training. He will do everything he can to foil the United States.

“To Itamaraty — a foreign ministry renowned by the quality of its diplomats, generally multilingual and well educated — the Democratic Charter signed in Lima in 2001 is just a piece of paper without any importance. The government simply ignores the election swindles perpetrated in Venezuela or Nicaragua and is totally indifferent to any abuses against freedom of the press.

“But that’s not all. There are two other issues about which the United States wants to be informed about everything that happens in Brazil, because, in one way or another, they affect the security of the United States: corruption and drugs.

“Brazil is a notoriously corrupt country and those ugly practices affect the laws of the United States in two ways: when Brazilians utilize the American financial system and when they compete unfairly with U.S. companies by resorting to bribery or illegal commissions.

“The issue of drugs is different. The production of Bolivian coca has multiplied fivefold since Evo Morales became president, and the outlet for that substance is Brazil. Almost all of it ends up in Europe, and our allies have asked us for information. That information sometimes is in the hands of Brazilian politicians.”

My two final questions are inevitable. Will Washington support Brazil’s bid for permanent membership in the U.N. Security Council?

“If you ask me, no,” he says. “We already have two permanent adversaries: Russia and China. We don’t need a third one.”

Finally, will the United States continue to spy on Brazil?

“Of course,” he tells me. “It’s our responsibility to U.S. society.”

I think that Doña Dilma should change her e-mail addresses frequently.

Read more here: http://www.miamiherald.com/2013/09/25/3650784/why-we-spy-on-brazil.html#storylink=cpy

Spying Reaction: Mexico vs Brazil

Brazil’s president formally postponed her state visit to Washington scheduled for October.  Dilma is beginning an election campaign and her popularity has fallen significantly since the June protests.  Standing up to Big Brother USA spying is certain playing well with Dilma’s supporters.

Mexican President Enrique Pena Nieto, on the other hand, is only at the beginning of his six year term.  As such, his indignation has been more muted.  He has no state visit to cancel and Mexico’s nationalism, traditionally stronger than Brazil’s, has been eroded on the right by the success of NAFTA.

About 80 percent of Mexico’s exports go the the US.  But less than 20% of Brazil’s foreign trade is with the US.  It has already been three years since China overtook the US as Brazil’s largest trading partner.  Still, the US is Brazil’s main source of foreign investments and as the country is currently facing a decline in Chinese demand for commodities, US direct investment has become more significant in maintaining the balance of payments.

There is a curious mixture of pride, hubris and politics in the whole spying scandal.  On the US side, Brazil and Latin America have never been at the top of Obama’s priority list.  At the same time, the President Obama has been inept at gaining control over the U.S. security apparatus. The NSA and other U.S. intelligence agencies seem to be operating autonomously based in part on the successful assassination of Osama Bin Laden and the prolonging of the so-called war on terrorism.  In such a scenario, all macro snooping and meta data become confused and anything goes.  I don’t think Obama has any personal stake in spying on Petrobras.  This actually wounds Obama and hurts relations with Latin America.  But, who cares?  It is not a top priority.   The NSA scandal was tremendously amplified in Brazil and Latin America because the Guardian journalist reporting on Snowden happens to live in Rio de Janeiro and has a Brazilian boyfriend who was stupidly mistreated by British security agents (perhaps at the behest of the US).

Brazil and Mexico should certainly take offense but neither country should feign naivete about espionage.  Dilma is playing to her supporters.  Pena Nieto is as well in his complaints.  Dilma has been more strident but her careful postponing of the state visit to Washington D.C., rather than outright cancellation, gives her room to backpedal.

Overall, I think the whole episode is much ado about very little.  The main issue is atmosphere and distrust and here Brazil has more to lose than the US.  It is true that Dilma might instruct the military not to buy US fighters but the Brazilians also know that the French Rafaeles aircraft fighters or other options will not match up in the long run.

Both Brazilian and US business people already in the game will not be put off by the ideological loggerheads.  However, it is bad for new business and only reinforces the image of Brazilian petulance and recalcitrance, which many see manifest in the challenges of doing business in Brazil.  Mexico stands to gain as it appears more welcoming and less put off by the inefficient and fairly irrelevant NSA activities.

Supreme Court Corruption Decision, Investment Seminar, and Rules of the Road

Brazil continues its fitful and jerky movement to institutional stability and economic development.  On Wednesday, Sept. 18, Supreme Court Justice Celso de Mello is scheduled to cast a deciding vote in the Mensalao scandal.  De Mello will either vote for confirming the condemnation of those that have been convicted, including Jose Dirceu (Lula’s original choice as his successor) or for a review of the whole case on a technicality.  If he chooses the review option, there will be plenty of demonstrations and more cynicism as everyone will conclude that “pizza” has been served.  Justice will have been denied and it will be back to institutionalized corruption as usual.

The Mensalão scandal involved vote buying in 2005 during the administration of former Brazilian President Luiz Inacio da Silva, or Lula as he is known in Brazil. Mensalão means ‘big monthly payment and comes from salário mensal (monthly salary) or mensalidade.

On June 6, 2005, Roberto Jefferson, announced to the Brazilian press that Lula’s ruling party, Partido dos Trabalhadores,  had paid numerous members of Congress 30,000 reais (about $12,000 dollars then) in monthly payments to vote for legislation favored by the PT, or Workers’ Party. The money was said to have come out of state-owned companies’ advertising budgets. It was funneled through an advertising agency.

Many of Lula’s advisers resigned in the wake of the scandal. Several deputies were told they could either resign or be kicked out of Congress. Lula, meanwhile, went on to be re-elected President of Brazil in 2006.

I cannot predict de Mello’s desicion. But I would hope the conviction will be upheld. This should strengthen Brazil’s institutions in general and the Supreme Court in particular.  But it will be a close call.

One of the things that the protesters and analysts agree on is the need for rules of the road and a level playing field for all participants in Brazil.  Brazil is just too big and too complex to be ruled by elitist distribution of favors and concessions.  The system needs clarity and procedures so that business can be done without a lot of mystery and hullabaloo.

Too many current or potential investors are walking away from Brazil now as the nation consistently ranks in the bottom half of all countries in terms of corruption and transparency. This has consequences and costs Brazil a lot in lost economic growth.  Just last week, the Economist showed a calculation that Brazil’s economy could be at risk if international investors start walking away.

The whole thing is interesting as the Sept. 13th Bay Brazil seminar in the San Francisco Bay Area shows.  A couple of hundred investors in high tech and bio tech met and listened to experts, both Brazilian and from the US.  Many came away scratching their heads.  On the one hand, the government and a very competent technocratic group are pitching consistently the attractiveness of Brazil, the size of its market and the new emerging consuming classes.  However, people are still confused by reasoning and less than transparent ways that business takes place in Brazil.  An example is the recent bidding process for highway construction.  Bidders shied away from major projects because they could not understand how the concessions, if won, might be profitable because the rules of the road have not been well defined.  A similar situation holds in the government bidding process for offshore oil fields and gas reserves.

Protests and the rules of the road for business intertwine in Brazil.  The hard part is to wrest power from established interests who see no advantage in overturning the apple cart.  Although almost everyone publicly advocates for clarity, those on the inside know that the old ways work to their advantage.  The PT, in its 10 years in power, has learned this and while ideals are in tact at a certain level, the political pressure to accommodate  and coopt are part of the tradition that impedes institutional advance. The party has had to loosen up on its idealism and conform to the old realities of patrimonial politics and ad-hoc manipulation.  The result is a mix of protest and cynicism on the streets and suspicion, as well as confusion or amusement on the part of international investors.

Article by Ex-President Fernando Henrique Cardoso

This article was originally published in the Estado de Sao Paulo and republished by Brazzil.com

Unfortunately, it reads like Google translate but if you know Portuguese you can read it profitably to the end.  The trouble is that FHC is engaging in the 2014 political campaign and raises issues that his administration could have and should have addressed better especially those ideas and issues related to infra-structure and Brazil cost.  Brazilians like to say this is the dirty talking about the unwashed (o sujo falando do mal-lavado). 

The debate between the PT and the PSDB or between the center left and the left of center is not really producing any results.

Here is the text:

Can’t We All Get Along in Brazil? Otherwise We Will All Sink Together PDF Print E-mail
2013 September 2013
Written by Fernando Henrique Cardoso   
Tuesday, 03 September 2013 15:34

Fernando Henrique CardosoIt does not take a lot of imagination, and you won’t need to get into details, in order to realize that we are experiencing a difficult phase in Brazil. Let’s start, however, by the international situation.

The events open increasing spaces for the emergence of important regional influences. Even the mess in the Middle East, from which the United States come out with less and less influence in the region, increases the Gulf monarchies’ capacity for action.

They have money and want to preserve their authoritarianism, the same going for Iran, which makes a counterpoint. The struggle between Wahhabis, Shias and Sunnis is behind almost everything. And Turkey, on the other hand, finds gaps to dispute hegemonies.

Meanwhile, we keep losing spaces of influence in South America. Our diplomacy, paralyzed by the undeniable fondness of the “Lulopetismo” for the “Bolivarianism,” zigzags and stumbles. Now we give in to illegitimate pressures such as the recent one from Bolivia, which wouldn’t give a safe passage to someone who asked asylum in our embassy.

Sometimes we are the ones putting undue pressure, as in the case of Paraguay’s withdrawal from Mercosur and Venezuela’s entry. At the same time, we pretend not to see that the “Pacific Rim” is a counterweight to the Brazilian inaction. Diplomacy and government without a clear will for regional power, stunned officials and fiascos everywhere – this is the balance.

What about the energy issue? The plants expansion is delayed and there’s no real support from the private sector, except for building them. Electricity companies are broken, thanks to regulations, which even when necessary are done haphazardly and without looking at the long-term interests of investors and consumers.

Petrobras, now in the hands of someone more competent, has very little credit available to invest and has little money due to the low price of gasoline. What was loudly proclaimed by president Lula, the self-sufficiency in oil, vanished with the increase in the deficit of gasoline imports. Now, with the American revolution of the shale gas, who knows where it will stop the equilibrium price of oil to be extracted from the pre-salt?

As for the issue of infrastructure, after a decade of delay in the submission of tenders for roads and airports, besides some botched attempts, the government became inventive: now privatizations are made, disguised under the name of concessions, with the government offering cheap credit to interested private companies. Money, it should be said, from the National Bank of Economic and Social Development (BNDES) – with interest subsidized by the taxpayer – and, moreover, the government offers to use private banks for the undertaking.

Who knows what kind of benefits they have to be offered in order to get into the PAC’s (Growth Acceleration Program) rhythm, ie, slow and poorly done. These are all unheard of: concessions receiving pecuniary benefits yielding nothing to the government, like the railroads whose builders received cash allowances per mile built. There is only a place where this could happen: Gabriel García Márquez’s surrealist Macondo. I hope that, here, the solitude of executive disability and financial mismanagement will not last one hundred years…

If we turn to macroeconomic management, the back and forth is no different. The industry, they used to say, does not export because the exchange rate is unfavorable. Now we had a megadevaluation of over 25%. If we don’t do anything to reduce the structural weaknesses and inefficiencies of the Brazilian economy, and if the government does not have the courage to prevent that the devaluation become inflation, the new level of the nominal exchange rate will be of little help to the industry.

Before, the pro-government crowd used to boast about low interest (“Ah, these tucanos – toucans, PSDB party politicians – always hand in hand with high interest rates!” They used to say). Suddenly, it’s the PT (Workers Party) administration that leads the new onslaught of interest. And they won’t learn that it is not the will of the ruler that dictates the rules on interest, but many conflicting wills battling it out in the market. They can’t look at their own navel.

I’m tired of writing about these and other evils. Every day the media reminds us of the deficiencies in providing services in the areas of education, health and safety. Let’s not even talk about the follies about political party’s life. Just look at the last one, keeping a congressman in the House who has been sentenced by the Supreme and is already in jail!

Nevertheless, given the extent of the breakdowns, it seems inevitable to recognize that the central issue is leadership. I say this not to accuse a person (it’s always easier to blame the president or the government) or any party specifically, although it is possible to identify responsibilities.

It is fair to recognize, however, that the mismatch, the knocking of heads within and between the parties, leads more to uproar than to the creation of paths. This brings a naive question: can’t you utter a collective mea culpa while keeping our political and even ideological differences, realizing that when the ship sinks we all go down together, government and opposition, employers and employees, those who are at the helm and those who are at the stern?

It  takes greatness to put people’s and the country’s long-term interests above the disagreements and to agree on some reforms (a few, not many, just partial, not global) capable of creating a better horizon, starting with the one dealing with parties and election since the ukase presidential failed in this matter, as expected.

If those who lead the government have neither vision nor the necessary strength to talk to and in the name of the country, at least the opposition starting now should cease the infighting and bridge the differences between parties. Only thus, forming a reliable block with a strategic vision and able to follow practical paths, we will build a more prosperous, decent and equitable society.

Fernando Henrique Cardoso was the president of Brazil from January 1, 1995 to December 31, 2002. This article appeared in O Estado de S. Paulo.