OPERATOR: I want to thank you for your patience in holding. We now have your speakers in conference. (Gives queuing instructions.)
I'd now like to turn the conference over to Anya Schmemann. Ma'am, you may begin.
ANYA SCHMEMANN: Thank you.
And thank you all for joining us. This is Anya Schmemann. I'm director of communications with the Council on Foreign Relations.
We're here today to discuss President Obama's upcoming trip to Latin America. I'm joined by two colleagues: Julia Sweig, who's the Nelson and David Rockefeller senior fellow for Latin America Studies and director for Latin America Studies; she has a recent piece in Foreign Affairs Magazine on Brazil, "The New Global Player: Brazil's Far-Flung Agenda." And Shannon O'Neil, the Douglas Dillon fellow for Latin America Studies; and Shannon has been writing a blog, "Latin America's Moment" on CFR.org. Thank you both for joining me today.
White House officials confirmed today that President Obama and his family will in fact travel on Friday to Brasilia, Rio de Janeiro, Santiago and San Salvador as planned. The trip with highlight, we are told, economic and trade issues and energy and security cooperation, among other issues.
Julia, if you could just take a minute to give us an overview -- the president has been criticized by some for not being engaged enough in Latin America. What does he hope to achieve on this trip?
JULIA SWEIG: Thank you, Anya. And thanks to everyone for calling in. The last two years -- well, the first two years of the president's administration have focused largely on a domestic agenda, of course; and on the international front on issues in the Middle East and, of course, Afghanistan and Iraq and Iran and the big international security issues.
And so as is usually the case, the Americas, Latin America, have not been at the top of the agenda, I would say, other than Mexico. Presidents are routinely criticized by Latin Americans and by Latin American watchers as never paying enough attention to Latin America. In this recent case, you know, probably the lack of intensive engagement by President Obama hasn't really hurt Latin America.
This visit now, however, after getting off to a pretty good start with the original summit and his speech in Trinidad and Tobago at the Summit of the Americas in the beginning of 2009, allows the president to really pick up where he left off. And by starting in Brazil and then following that with a trip to Chile and El Salvador -- kicking this off in Brazil is really sending a number of signals; one, that the administration seems to understand the importance of Brazil not just as the strategic anchor of South America but also as a very important and potentially important global player and global partner for the United States on a bunch of issues: climate change, financial architecture, dealing with China's artificially low currency, cooperation in Africa. You'll hear all about this on the trip. I'm sure many of you are going. And some of you might have heard of it -- about it a little bit today.
The economic and trade and energy agenda that Mike Froman emphasized in his briefing just now in the White House with respect to Brazil is important, and I'll let Shannon say more about the intention behind the choices that go to Salvador and to Chile.
But on the Brazil piece, before we take your questions, I've got to say that I'm just struck in a very positive way at the symbolism of the meeting between President Barack Obama and President Dilma Rousseff. If you think about Lula having broken Brazil's class barrier and Dilma Rousseff breaking Brazil's gender barrier and Barack Obama breaking the United States race barrier, the meeting of these two presidents at the beginning of Rousseff's administration, at a time of incredible optimism in Brazil, which I think is quite a bit different than the mood in this country, is just really remarkable.
And some of his itinerary, especially in Rio, where he's going to give a big speech in a very famous downtown central plaza, and visit the "City of God" favela, and be present at a capoeira and drum performance, the -- that will make an enormous impact on Brazilians to see President Obama in that milieu. And I would just want to note that it's just very cool that he's doing that.
It's not about the economic or export agenda, which is very important, but it is about a big symbolic cultural bridging that he will clearly be making an effort to do.
SCHMEMANN: Thanks, Julia.
Shannon, as Julia noted, White House economics adviser Michael Froman, you know, emphasized today that the trip to Latin America is part of Obama's domestic and political priority of reviving the U.S. economy. Clearly the agenda is broader than that, but I wonder if you could say a few words about that economic agenda and then also what he hopes to -- what he hopes will result from his stops in Chile and El Salvador.
SHANNON O'NEIL: Well, we heard in the State of the Union, like I said, one time ago, that a big focus is going to be on increasing exports and the idea that the United States -- the way it's going to bounce back is through exports. And so when you start thinking about exports, you look to countries with growing economies, growing middle classes and many people to buy our products.
And you know, countries in Latin America fall into those categories. They've been hit less hard by the economic recession that swept the world, and particularly Brazil, as we were talking, was one of those that fell the least and came out of it the fastest. So it is a quite large and attractive market for the United States, as are other nations in Latin America, particularly when you think about it in aggregate, when you're thinking about almost 600 million people with increasing purchasing power.
Let me just talk briefly about the other two countries that are on the list, because they're obviously -- they're less obvious choices than Brazil is at this moment, but they're arguably as important in terms of the Obama administration speaking to the region.
And here, looking at Chile and El Salvador, they're two countries that are led by leaders on opposite sides of the political spectrum -- Chile comes from a center-right government now; El Salvador from a -- you could say a center-left, a reformed revolutionary leading that government -- but both have been very committed to what you might call sort of an inclusive market-based democracy and how to push that forward.
So that's something that's quite important to this administration. And they're also countries that we've had quite good relationships with as the U.S. government. And so in both of those places we'll see economic issues on the table, probably in the sort of context of what's important for the domestic local platform in the United States, because this also dovetails nicely with what's important in those countries. So particularly in Chile, issues of innovation, of improving education, of clean energy, those sorts of things are important for the president of Chile as much as for our own president, and will be on the table.
We also expect there'll be a big speech in Chile, sort of an Egyptian-style speech to the region and to the world, which the Chileans are very proud about. And it's a place, too, to speak again to all the citizens of these countries.
In El Salvador, economic issues will be on the table which are quite important, given our free trade arrangements with both these countries, but with El Salvador in Central America. And we'll see security especially brought in here. The United States has been increasingly engaged in Mexico and Central America in terms of security and fighting drug-trafficking organizations. And as more and more resources and attention have gone into Mexico, we've seen the cartels move more and more into Central America. So U.S. attention, as well as Mexican attention actually, is going more and more to Central America, how to bolster these governments and how to have a regional approach to security. So that will be on the table.
And in some ways, this fits into the economic agenda as well, because the Merida Initiative -- this is the initial approach -- has transformed over the last year to be much more comprehensive and wholistic. It includes things like socioeconomic factors, community factors that lead to increased violence and drug cartels, allowing them into communities, and how to deal with that. So that, too, will be talked about and probably translated into the way the United States works with countries like El Salvador.
And then before just turning it back to you, Anya, I just want to point out an interesting footnote, historical footnote to this trip; in that it's 50 years to the month for the Alliance for Progress in Latin America. So in March 1961, the Alliance for Progress was announced, and it was a very different time and it was a very different region. And so undoubtedly, in Obama's trip there'll be very different issues on the table and a different speech that he'll be giving to the world, but to the region particularly.
But I would say that, like then in -- 50 years ago, it is an opportunity to set a new path forward that will continue perhaps for several years. And this path ideally -- and it seems the one that the Obama administration is trying to push -- but it's a path that's going to be based on concrete opportunities. It's one that's going to be based on dealing with challenges in a mutually acceptable way, so mutual challenges. And hopefully, this is going to be a path that engages the countries in Latin America not just on a regional level, but on a global level for the important issues that all of these countries face.
SCHMEMANN: OK, thanks, Shannon. For any of you who have called in a little late, this is a CFR media call on President Obama's trip this weekend to Latin America. I'm joined by Julia Sweig and Shannon O'Neil.
And operator, we'll be ready to take some questions now.
OPERATOR: Thank you. At this time, we will open the floor for questions. (Gives queuing instructions.)
Our first question comes from Laurie Meckler, with The Wall Street Journal.
QUESTIONER: Hi. Thanks very much for doing this call. My question is about, you mentioned earlier -- I think Julia was talking about the -- sort of President Obama's personal engagement and how he's going to sort of go over, you know, very powerfully with the Brazilian people. Wondering if you can make any kind of connection, if you think there is a connection, between that piece of his visit and the issues, the economic issues and the -- sort of the global, political and economic issues that are on the table in terms of the U.S. agenda, and if you think there is a relationship between that. In other words, will -- is the fact that -- if he goes over so well, will that make a -- make it more likely that the U.S. achieves its other goals?
SCHMEMANN: Thank you. Julia Sweig, you are just back from Brasilia, where you had a number of conversations with top officials. What was your sense from the ground there?
SWEIG: Well, my sense -- and you ask an excellent question and one that doesn't necessarily have an easy answer. But my sense from the senior officials around President Rousseff is that her domestic agenda is front and center. And that agenda is -- you know, now that in the last 10 years 30 million people have moved into the sort of lower middle class out of poverty -- her agenda of inclusive growth; a social agenda from all of those conditional cash transfer programs, housing programs, programs to design to grow a middle class; universal education, although the quality is quite poor still; and now an agenda that has to do with citizen security -- moving to Rio in the favelas there, for example.
Of course, awakening 30 million people to being able to participate in the life of their societies as consumers is not the same as doing so as producers. This is a democratic environment. Her big sort of next generation of reform on the agenda is education and innovation, so that those new 30 million consumers aren't just buying stuff, our stuff, Chinese stuff, Brazilian stuff, that they're actually helping Brazil move up the value-added chain.
When Obama goes to Rio and he goes to the favelas where he'll see that people living in favelas have cell phones and televisions and access to computers and access to running water and electricity, although it's a very tangled mess and they pay higher prices often, because organized crime is there and is taking pieces of what they have to pay in order to guarantee the service, sort of complicated way of living for Brazilian poor.
Her domestic agenda that links to the president, and I would argue vice versa is, you know, for -- sorry for the poor metaphor -- for the boats to start rising together. So him reaching out, if the question is, you know, is that going to help, is him reaching out to Brazilians in favelas going to help to convince the U.S. Congress to reduce our tariff against Brazilian ethanol exports? I don't think so. But it is going to start helping Rousseff, herself, explain to her domestic audiences why it's in Brazil's interests to connect to the United States. And it's also, I hope, going to help Obama start to make the case, to the extent that it gets any airtime in the United States, to Americans about how connecting to Brazil can actually help our economy grow.
And that's where the trade, the politics of the trade agenda get very, very complicated. Fortunately, in the case of Brazil, there's no free trade agreement on the agenda. But just the, sort of, the cultural outreach and connectivity, I think, helps both presidents to lay the groundwork for connecting to one another's countries down the road.
SCHMEMANN: OK. Thanks. We'll take another question.
OPERATOR: Thank you. Our next question from George Condon with The National Journal.
QUESTIONER: Thank you. You know, we're accustomed on presidential trips for the staff to have all sorts of deliverables, things that will be signed to make it look like a great success. We get the sense on this trip that -- and also from what you said that this is more symbolism, more of the United States and Brazil really recognizing each other as partners.
Can you talk about that? And also, Julia, as you can develop what you were just saying about free trade not being on the agenda. Is this something that's going to be added to the bilateral talks?
SWEIG: I think Shannon can start to address sort of why in the Latin America context that, like, concrete deliverables Americans are accustomed to asking for might not actually be the best thing to get out of these trips.
But on the Brazil -- or if she has a different view, obviously, you'll hear that as well. But on the Brazil piece of it, I wasn't saying there's going to be no concrete deliverables. I was just trying to emphasize another piece of what's happening. I mean, I think, in fact, that there's going to be maybe a dozen MOUs about civil aviation and visas and energy and innovation and education, and all kinds of, sort of, different sectors that are loosely connected to one another now, but that really could bear developing. I think in Brasilia, there will be, from what I can tell, probably a long list of those that you could call a deliverable.
With respect to Salvador and Chile, I'm not as sure, but on the trade thing, no, as far as I know, it would be hard for me to imagine that they would be formalizing talks around a formal FTA, but you know, there is kind of a trade dialogue that's been going on for the last couple of years that maybe they'll attempt to elevate a bit.
SCHMEMANN: Shannon, let me -- let you take a stab at that and also an observation that Obama is going to be traveling with quite a large delegation, including several Cabinet secretaries. He's got Treasury Secretary Timothy Geithner, Ron Kirk, Lisa Jackson, Steven Chu and others coming along.
So what is your opinion? What does that signify in terms of actual concrete deliverables?
O'NEIL: We both think there will be, as Julia mentioned, there will be some concrete deliverables which will be visa things and other issues on the energy side, on deepening our memorandum of understanding perhaps on ethanol. There'll be little things there.
In Chile there -- at least until the last couple of days there was a nuclear deal that was on the table that was going to be signed, potentially an IP agreement getting Chile back off of the watch list in terms of protection of intellectual property rights. We'll see maybe advances in El Salvador, signing agreements on entrepreneurship and remittances and programs that channel remittances into economic development.
There are some of those things on the table. There's not going to be a huge, you know, groundbreaking effort like a free trade agreement announced. But what's interesting about this trip is it's decidedly not about free trade agreements. The two countries in Latin America that the United States has pending free trade agreements with, Colombia and Panama, the president is not going to those countries basically because he doesn't have any good news, or in part because he has no good news to provide the leaders of those two countries.
And that agenda, I think we'll see a move away from it just because of how difficult it is for U.S. domestic politics. But for Latin American nations, because there is a lot of trade already between the United States and these countries going both ways, some of these other issues that seem smaller are important for deepening the relationship and really keeping it on track, and that too, it attests to the importance the fact that all of these cabinet ministers are going along for parts of this trip, in terms of their particular area, where -- they're areas where the U.S. feels they can work with Latin America, be it energy, be it commerce, be it climate change issues, the environment and such.
SCHMEMANN: Okay, thank you. We'll take another question.
OPERATOR: Thank you. Our next question comes from Ari Shapiro with the National Public Radio.
QUESTIONER: Hi, thanks for doing this briefing. There's been a lot of talk about the specific goals in Brazil in terms of economics and trade and in El Salvador about security, immigration and the drug trade. In Chile people have talked about this sort of broad speech to Latin America generally, but I wonder if you could talk more specifically about why Chile, what the U.S. relationship there is, and what specifically President Obama is doing there.
O'NEIL: Well, Chile is important in the sense that it is -- by many accounts it's this market-based inclusive democracy. It can be proudly -- say it's quite inclusive as a democracy, it's proud about its human rights records. It's one of the most open economies in the world, it has free trade agreements around the world including with the United States and it really is a model of a country that's moved in terms of stable -- becoming a very quite stable democracy and really, you know, symbol around the world. It has also been quite successful in reducing poverty and somewhat inequality and things that also matter for, you know, one, people in Chile, but really the way the United States looks at Latin America, or has for many decades: how do we help these countries climb up the economic ladder, to, you know, middle income and emerging economies overall?
So in that sense it's an important symbol for Latin America about how you can move and really become, you know, a shining example of all these -- all around.
So that's one important aspect of what Chile is.
You know, it's also a country that for a long time now has been quite a friend of the United States, so that also helps in terms of one, being a model, and then two, often being friendly to the United States. And it's a country that you know, if you're trying to get a -- Latin America is an incredibly diverse group of countries, so if you're trying to put together a trip that touches many different places and many different parts of the region, it's a good counterweight to Brazil within the Southern Hemisphere and then moving on to Central America.
Now, what Obama wants to say in this -- you know, I believe it will probably be a follow-on in many senses from what he stated at the Summit of the Americas, now almost two years ago, and that is that the United States wants to work with Latin America as an equal partner on many of these issues, it's no longer a senior-junior type relationship, that we're going to work with these countries on issues of mutual concern, that we will go look for areas of mutual opportunity and cooperation. But also that Latin America and particularly certain nations in Latin America really are part of the world stage of global concern, be it Brazil, or Mexico, or others, in particular issue areas, and that they're important to consult as we move more and more towards a -- the importance of multilateral institutions in reaching solutions. So, that -- I think are some of the themes that we're going to see in this speech.
SCHMEMANN: Julia, do you have --
SWEIG: Just a turning point that just occurred to me is this, on this issue of friendliness.
You know, traditionally the United States has expected all of the countries of Latin America and South America to vote with us and be like us and, you know, take our positions on major international security issues. And I think what's really notable about this modern and very, very diverse Latin America that Obama is visiting is that there is not a kind of expectation of that kind of deference. Latin Americans now have an independent foreign policy that doesn't necessarily toe the American line no matter what the issue.
So Chile, for example, is a great case in which the United States got involved in the war in Iraq, Chile, as with Mexico, two close friends of the United States, opposed the United States. Right now in the lead-up to the trip, the -- right on the weeks before Obama's visit the foreign minister of El Salvador visited Cuba. And I am sure the visit was not to make a point, or wag a finger in America's eye vis-a-vis Cuba. Probably nobody in Washington particularly noticed, and that's a really big deal.
You've got big ideological differences and Washington quite ably figuring out how to live in this new, very diverse neighborhood.
SCHMEMANN: Okay, we'll take another question.
OPERATOR: Thank you. Our next question comes from Peter Nicholas with the Tribune, Washington Bureau.
QUESTIONER: Hi, thank you for doing this.
I just had a question about the president's personal relationship with Lula and whether an improved personal relationship with Roussef might help the West achieve its interests. I guess my question is, it seemed like he got along just fine with Lula, who gave him a soccer jersey at one point. Obama called Lula one of the most popular politicians in the world, but Brazil certainly did not do the United States' bidding with respect to Iran or Cuba.
Is there any reason to believe that because both Obama and Roussef are trailblazers, pioneers, Obama the first African-American president in the U.S., Lula -- and Roussef the first woman president in Brazil, is there any reason to believe that they'll have a better partnership?
O'NEIL: You're right to ask and sort of state with your question that there's no foregone conclusion that a personal relationship will breed a better partnership. Having said that, if they signal to their bureaucracies that they want them to forge ahead in trying to build a better -- not just a better relationship, but a functional, more connected relationship, that will be a great step forward.
And because President Roussef has very explicitly and clearly signaled since she took office that she wants to have a stronger relationship with the United States, and has differentiated herself in a couple of key ways from Lula, that lays the groundwork for both the personal relationship to move forward, but also for that personal relationship to be reflected in the momentum that they might encourage their governments and their cabinets and the bureaucracies to take up going forward. So it's no guarantee, but it's definitely very important.
SCHMEMANN: Thanks, we'll take another question.
OPERATOR: Thank you. Our next question comes from Eric Martin with Bloomberg News.
QUESTIONER: Hi, thanks for including me in this.
I wanted to ask you about the -- more specifically on the U.S.-Brazil economic relationship. How has it changed and what companies and industries in the U.S. are benefitting most from that Brazilian economic growth?
SCHMEMANN: Okay, I'll go to both of you. Shannon, do you want to start on that?
O'NEIL: Sure. I mean, it's quite broad. I mean there are things from consumer products, to industry, to others that are producing down there. Looking forward, one thing that you will see talked about on this trip and could be a huge area of potential growth in terms of quote-unquote "U.S. exports" is Brazil's infrastructure needs, and particularly Brazil's infrastructure needs coming up on both the World Cup and the Olympics, which have been a focus, one, to build the physical infrastructure for those events, but also as an impetus to fix other things, roads and subways and expanding public infrastructure that will last for decades to come.
And so we've seen great interest in U.S. companies, be it ones that provide materials, or provide -- or build things, or construction companies, or others to get in on what will be billions and billions of dollars.
And we've seen strong support too from the U.S. government in facilitating this. In particular the Ex-Im Bank has taken quite a strong look at it and will be providing incentives to help U.S. companies that will be exporting for this particular type of activity.
So, in terms of the overall U.S.-Brazil relationship, it's quite varied and all sorts of companies are down there. But this, in particular, will be -- will be potentially a huge market, you know, looking forward over the next, say, you know, four to six years.
SCHMEMANN: Thanks. Julia?
SWEIG: I would just add to that, that the pre-salt findings in the South Atlantic have set Brazil to become the 10th largest producer of petroleum in the world once it goes online. And there, I know that U.S. companies and the United States and Brazil are looking for ways to allow -- to get U.S. companies access to investing in that, those new finds. So the energy industry is a very big, potential, strategic component that American companies would benefit from.
SCHMEMANN: Thanks, we'll take another question.
OPERATOR: Thank you. Our next question comes from Claudia Antunez (ph) from Fahad de Sao Paolos (ph).
QUESTIONER: Yes, can you hear me?
SCHMEMANN: Yes, go ahead.
QUESTIONER: Yes, well, I have two questions, indeed. I was wondering from the point of view of Brazil if putting too much focus on trade can be in terms of public relations not very good, because you know that today Brazil, for the last years, has had deficits in its trade with United States. And also I think that the Brazilian companies want to export more to the United States, so there may be a clash of interests in this, because the United States wants to export more to Brazil, but the Brazilians also want to export more to the United States.
And the second question is about the Security Council. You know that they -- at the beginning of -- when this visit was announced the Brazilian government was very much not focused on this, but I think since the Minister of Foreign Relations Patriota went to Washington last month, then Brazil -- I think he came thinking that some kind of -- Obama will do some kind of declaration supporting Brazil's bid to permanent chair in the Security Council, and I wonder what you think of these both aspects of the visit.
SCHMEMANN: Okay, thank you. Yeah, Julia, you heard a bit about the Security Council in your trip to Brazil. Maybe say a few words about that, and then Shannon'll -- (inaudible) -- you on the trade question.
SWEIG: Hi, Claudia.
QUESTIONER: Hi, hi Julia.
SWEIG: You know, I think that Secretary Clinton's statement when Patriota was in Washington a couple of weeks ago with respect to the Security Council seemed to me, at least, to be a wide open door. It was more forward leaning that I expected. She stated, and this won't be verbatim, but close, that the United States recognized the legitimacy of Brazil seeking to have a seat on the Security Council and of Brazil's broader participation in global governance issues.
That was, to me, a recognition that within the -- in Washington, within the administration, a debate that's been taking place for the last several months has moved in a favorable direction with respect to U.S. support for the seat -- which doesn't mean, importantly, and I have no idea whether as with the president's visit to India, he's going to sprinkle holy water on the aspiration for a seat and say explicitly that the United States is ready to support it. I don't know that to be true.
My personal view is that there is no foreign policy downside for the United States to supporting Brazil having that seat, in my view, but I don't know if Washington, if the administration is quite so far along.
SCHMEMANN: Shannon, on the trade agenda and what that might mean for public opinion.
O'NEIL: Sure, let me say just a few words on the trade.
You know, trade obviously is important between Brazil and the United States. It's one of the bases of the relationship and of the relationship between the two biggest economies in the region. But that said, I don't think we should overstate its importance or its priority in this general trip.
For those of you who listened in today on the press call by Jay Carney, because of who was there talking about it, Mike Froman was only talking about economic issues on the trip and leaving all the other issues, the other themes that President Obama will be touching on, to a further call, a further meeting that's going to happen tomorrow. So that divide isn't because trade is the only issue, or economic issues are the only issue that this trip is about, but it's because of the functional space that he fills, versus the other people who are going to talk to the press and others.
And I would also say that as important as trade specifically, on the economic agenda that we are going to hear about on this trip, are issues of innovation, issues of investment -- I mean, those fall generally under trade but really those are issues that are important for Brazil domestically, for the United States domestically, for Chile, for El Salvador, for all these countries and those are -- those are much broader economic issues than just trade specifically.
But I would reiterate that there are a lot of issues that are going to be on the table including energy, security, environmental change, all sorts of issues, so I wouldn't -- I wouldn't see the U.S. visit to Brazil in particular just about trade, thought about quite narrowly.
SCHMEMANN: Thank you. We'll take another question.
OPERATOR: Thank you. Our next question comes from Sam Logan with the International Relations and Security Network.
QUESTIONER: Hi, thanks for your time today.
I just wanted to swing north, back to El Salvador, and recalling when President Bush went to the region -- I believe he went to Guatemala -- he was met with a lot of ugly faces and big signs in the street. I think the same may be true for Obama, to a lesser extent. But more to the point, my question is focused on to what extent can relations with El Salvador be strong, considering that deportations to El Salvador have gone up under his administration, Obama's administration?
And on the Salvador side, the president has the -- you know what they call in El Salvador the three little pigs, the Casadas (ph) brothers and the uncle, Jerry Casadas (ph) and sort of this shadowy cousin figure in Medellin, Colombia, and sort of their alleged dealings in crime. I was wondering if you all could speak to either the deportation side or concern within the Funes administration and whether or not that may surface while Obama is in El Salvador?
O'NEIL: Let me say, hi, Sam.
I would say, you know, relations are never perfect with any country. And so while some people may be happy to have the president there, obviously there's always people who are not happy.
One issue that I didn't mention but that will be on the agenda, at least from the Funes side, is the issue of immigration. You know, there are over 3 million El Salvadorans living in the United States. Many are under the temporary protected -- what is it, TPS, Temporary Protected Services. He would like it passed to more permanent residency so something doesn't have to be renewed year-in and year-out in terms of people living here and how the relations with their relatives and those back in the United States.
And as you mentioned, with deportations increasing across the board, but for those from El Salvador, insuring that El Salvadorans that are here leave when they want to leave and not when they are forced to leave is something quite important to this president.
You know, when you look at Central America, which, you know, given rising violence in Mexico and Central America and you look at the other nations that are there, El Salvador, for all the potential warts that you do bring up, is probably the strongest ally in Central America for the United States today. And it is quite important that in dealing with the security, thinking about security issues and intelligence and what have you, that the United States takes more of a regional approach.
So with some of these, you know, caveats and worries I do think the United States will continue to reach out to El Salvador in trying to work with them and have them actually be a leading voice, or a leader within Central America on creating this sort of regional security -- regional security approach going forward.
And you've seen Funes respond. I mean, he asked Secretary Clinton back last fall to up Central American, and particularly El Salvador's money that they get under the Merida Initiative by incredible amounts. I could see actually, one of the announcements on this trip perhaps, or if not on this trip, later, is really an increase in the resources that are going towards that.
So I see, even with the problems you mentioned, I see El Salvador remaining a partner for the United States on these issues and that's partly what we're -- the reason you're seeing Obama go there is to validate that.
SCHMEMANN: Okay, thanks. We'll take another question.
OPERATOR: Thank you. The next question comes from Fernando Silva Pinto with TV Globo.
QUESTIONER: Hi, thanks for taking the call.
Since Brazil has -- for a long time has had the interest of reducing the taxation on Brazilian ethanol in the American market and the United States has shown interest in participating on the exploration of the oil in the pre-salt in Brazil, do you believe that there will be, or should be a linkage between the two issues, and if there isn't, the fact that the United States would be interested in participating in the exploration of the Brazilian oil but at the same time the impediments for exportation of Brazilian ethanol to the American market -- could that create a little bit of a tension point? Thank you.
SCHMEMANN: So Julia, a tariff on ethanol and oil exploration?
SWEIG: Well, they are of course both linked because ethanol and oil are both energy resources. But if you're asking whether Brazil should -- that whether American investment in Brazilian oil should be contingent upon the U.S. Congress eliminating the ethanol tariff, I think that's apples and oranges in the sense that although the Brazilian Congress does have some say, of course, in shaping the legislation that will govern the pre-salt, including foreign investment, the Brazilian president and executive regulations also have jurisdiction over that, whereas President Obama can certainly go to the U.S. Congress and make a case with respect to reducing the oil duties, but the U.S. Congress, as you know, is quite a bit less friendly to President Obama than the Brazilian Congress is to President Roussef.
So the domestic politics in both countries, I think, you know, the Brazilian government executive bears that -- is keenly aware of the domestic politics that President Obama faces and President Bush faced, quite frankly, with respect to ethanol. And so while they are linked in that they are both energy and they are both hot button domestic issues, disentangling each in order to allow access to one another to invest and to one another's market is not the exact same path.
SCHMEMANN: Okay, thank you.
Operator, if you could give a reminder about how to queue up for questions, and we'll take another question.
OPERATOR: Yes, ma'am. As a reminder, if you would like to ask a question please press star, one now.
Our next question comes from Anna Stzerenfeld with the Economist Intelligence.
QUESTIONER: Hi, thank you very much.
You only mentioned China in one word early on in the presentation and I --
O'NEIL: Yes, I've been waiting for China, too.
QUESTIONER: (Laughs.) As we know, China has been increasing its footprint in Latin America and particularly in Brazil, where last year it was the single largest foreign direct investor and in the previous year became the major -- the biggest trading partner for Brazil. So I'd like to know if you think that the trip, Obama's trip is in some way designed to address the concern that China is becoming too important to the region and the U.S. is becoming less important as most countries start diversifying their trading and investment relations?
SWEIG: You answered your question within your question.
You're right. We didn't address China on the front of this discussion, but you know, of course the fact that China has become the number one investor in Brazil and the fact that Brazil competes with China at the same time that it exports massively to China, and that the American footprint has lightened as China's has deepened are all environmental aspects of the environment in which this trip is taking place.
But I don't think that there is an explicit agenda, or that the choice to go was about making a point with respect to China. China is a fact of global life for the United States, for Brazil, for El Salvador, for Chile, for all of the Americas and I don't know whether a visit by the president is and of itself going to have the effect of rolling China back, but it's certainly on the minds of the presidents of all of these economies in a serious way.
SCHMEMANN: Shannon, do you want to add on that?
O'NEIL: No, I would agree with that. China has come into Brazil, it's now the largest trading partner for Chile as well, it is for many other countries. But this trip isn't to counter China. This is a trip because the United States has vital interests in Latin America, for our economy as well as for so many other issues. And so that's why the president is going.
SCHMEMANN: Maybe I could add onto that, Julia, with a question about Africa as well. Part of the trip, it sounds like, will be to announce perhaps some joint financing on some joint projects, Brazil and the United States in China, and of course that's an area where -- in Africa, sorry -- and that's an area where China has an interest as well, so if you could address that.
SWEIG: Yeah. There was on my recent trip a lot of -- to Brazil, a lot of discussion about opportunities for the United States and Brazil to do things together in Africa. China is -- the scale of China's involvement in Africa very much dwarfs that of Brazil's and the Brazilians do things differently than the Chinese do in Africa.
The co-financing that Brazil and the United States are now considering for their companies for infrastructure projects in Africa, for resource-related projects are sort of coming on the heels of what they already have in place in terms of developing public health, agriculture, education and capacity building in Africa.
Arica is going to continue to be a big part of Brazil's global portfolio. With the Lusophone-speaking countries in Africa, Brazil has, under Lula built 25 embassies and consulates in the region. Brazil is -- for example, Petrobras is making major investments in the oil producing countries of Africa. This is a burgeoning market for Brazil. It's a way of competing with China, but from China's perspective Brazil is no competition in Africa.
SCHMEMANN: Okay, we'll take another question.
OPERATOR: Thank you. Our next question comes from Veronica Sardon with the German Press Agency.
QUESTIONER: Hello. My question is specifically about Iran, the way that the Roussef government appears to have backtracked somehow, at least from their human rights front, with respect to the Lula government's take on this. Is that -- could that be a common ground -- lead to a common approach insofar as Brazil has been a key player -- or at least sort of minor/major key player on the issue of Iran? And also, the same would go to the issue of Palestine. Brazil moved to recognize Palestine, the United States didn't like that, that was under Lula. What can we expect under Roussef and what can we expect the common relationship to be like on those issues? Thanks very much.
SCHMEMANN: Thank you. Julia?
SWEIG: You know, on Iran -- I think Iran has -- I am not sure that we're going to see Brazil on the security side of the Iran issue be quite as involved as Lula and Amorim attempted to have last year. There was a big cost that Brazil paid for the fact that the United States was so unhappy and there was such a great deal of miscommunication, misperception, misunderstanding in the lead-up to and in the immediate aftermath of the Tehran agreement last May.
Having said that, you know, President Roussef, in her first interview with a foreign journalist and that was with the Post, with Lally Weymouth, made a point of saying that she had disagreed with her government's vote with respect to human rights in Iran. And on the recent Human Rights Council vote her government abstained with an explanation, which is very consistent with Brazilian foreign policy of abstentions with explanations.
I think that Iran -- that the conflict between the United States and Brazil over Iran is going to give the two countries and these two presidents a chance to actually talk a little bit, not to sort of go back and revisit the play-by-play, but to actually, I would hope, put that in a context of issues on which we are sure to disagree, but that we need to figure out how to address when there is tension, because Brazil -- you know, I mentioned before the Security Council votes on -- when Chile and Mexico were on the Security Council in their temporary positions and Brazil's vote was probably against Iraq too.
There's going to be disagreements in Brazil over American foreign policy, on big international security issues. Those are going to continue to come up, so Iran may continue to be one of those, but perhaps not quite as contentiously expressed under Roussef.
And in the case of the Middle East and in regard to Palestine, when Lula recognized the pre-1967 borders, he joined about 104 other countries and then several other Latin American countries, including Chile, did so right thereafter. And the Israeli government made its unhappiness known, the Americans less so. You know, I think the Brazilians will tell you that they were invited by the Palestinians to be present at the first Annapolis Conference. They may well continue to be present.
They see themselves -- and I don't think this will change under Lula (sic), this will continue as a feature of Brazilian foreign policy -- to see themselves as bridgers, as interlocutors, as good at dialogue. And they might not do it in such a high profile way as Lula and Amorim did, but my guess is that without tweaking the Americans, or appearing to want to tweak the Americans, they will continue to play on big international security issues.
SCHMEMANN: Okay, thanks. We'll take another question.
OPERATOR: Thank you. Our next question comes from Tom Murphy with Dow Jones.
QUESTIONER: Hi, I have a China question.
The U.S., as you know, has been very strident about the issue of the controlled Chinese currency. The controlled Chinese currency affects Brazil in many ways, in ways that are similar to the way it affects the U.S., and there is certainly no dearth of complaints from the private sector in Brazil about the particularly manufacturers here in Brazil about the controlled Chinese currency. However, the Brazilian government has seemingly been rather reluctant to criticize China on this issue or to propose possible solutions or actions that China should take.
I am wondering if in your view this visit, which will include U.S. Secretary Geithner, might move Brazil, might make Brazil budge a little bit on this and perhaps make a more -- a stronger statement about the issue of the Chinese currency?
SCHMEMANN: Shannon, if you could take that on.
O'NEIL: Sure. Well, there have been a couple of rumblings in the last week or so, some various government officials inching towards a bit more critical policy towards China from within Brazil. And as you probably know, Dilma is headed to China in April, so you know, that will be a time when the leaders there will talk about things.
You know, we saw Geithner down in Brazil a few weeks ago, I guess in February, to talk about exactly these among other issues. So, you know, this is going to be an ongoing dialogue with the United States and other countries on how to deal with these issues because manufacturing sectors, you know, across the world are hit by China's, you know, what many would say, undervalued currency.
But you know, I think this is actually though a larger -- for Brazil this is a larger quandary, particularly under the Lula government. Much of the diplomacy was the South-South diplomacy, and organizations like the BRIC organization and the annual meetings they had were quite important for the way he helped position Brazil on the world stage.
You know, we're starting to see a reconfiguring, or re-evaluating, perhaps, on the Brazilian side about how to go about projecting Brazil on the world stage, whether the South-South is the priority and those relations are more important than some of, perhaps, Brazil's self-interests, or whether you know, there can be a mix-and-match in terms of where real interests lie, such as these manufacturing, economic interests. And so I think we'll start to see a change, but I wouldn't expect a huge, 180 degree turn on where Brazil stands with China.
SCHMEMANN: Okay, thanks. Next question.
OPERATOR: Our next question comes from Eric Martin with Bloomberg News.
QUESTIONER: Yeah, I just wanted to ask, it seems like the administration has had its hands full with the, you know, the Columbia, South Korea and Panama FTAs, but I've been hearing some chatter that a trade and economic cooperation agreement is something that has been discussed and that could be a first step leading to a Brazil FTA, rather than just approaching Brazil through Doha and multilaterals.
What are the chances that we get something concrete as far as cooperation out of this trip, and what are the chances that the U.S. would take on another FTA while these three are still pending?
O'NEIL: Yeah, no, I mean, you raise a great point. I hope I didn't suggest that another FTA, not (least of which with ?) Brazil was in the offing, but you know, the trade -- the economic cooperation agreement sorts of things, that I've heard the chatter about as well and perhaps something like that will come out.
You know, the U.S.-Brazil CEO Forum, the CEOs from Brazil and the United States associated with that have, for the last three or four years, tried to push their governments on just having a bilateral tax treaty. It doesn't exist yet. There's something in the Brazilian Congress now about the merits of sharing information with the United States along those lines. So it's quite slow going.
But I think that you're right, that we'll see an attempt to try to extract as much market liberalizing measures as possible without something that the U.S. Congress would have to sign off on at this stage. I mean, there's no bandwidth for that.
SCHMEMANN: Okay, good. We have a few minutes left. I'd like to squeeze in a few more questions.
I've noted as well that the question of Chavez hasn't come up yet, so -- (laughter) -- if the question comes up.
Any more questions?
OPERATOR: Our next question comes from Helen Joyce with The Economist.
QUESTIONER: Hi, I'm wondering if you think there is anything at all to discuss on Honduras on this trip, either when Obama is in Brazil, or indeed in either of the other two capitals.
SCHMEMANN: That's Honduras. Shannon?
O'NEIL: You know, I would say there is probably little to gain in terms of Brazil on Honduras. But I'm sure Honduras will come up in the meetings in El Salvador, but more in this context of how do the Central American nations work together on issues of security as well as economic exchange and such.
So, you know, Honduras has been brought back into the Central American community since its -- you know, since the events that happened almost two years ago. And so, how do we move forward particularly given their -- you know, in Honduras while things have improved, has been incorporated into the community, there are still tensions within Honduras between the different factions and what should happen to the former president, Zelaya, should he come back and such.
So, I do think there will be discussions there, but probably more about how to manage what is now a quite still unstable country in some ways politically, unstable country given these larger, regional issues and goals that the U.S. and Honduras' neighbors face.
SWEIG: Look, one of the things that I observed from my trip to Brasilia the week before last was from this new government a real emphasis on the importance of South America for Brazil. And you know, it was just last year and the year before that the tension over Colombia bases, on Honduras, between the United States and Brazil was pretty high and I would hope and think actually that like Iran, not to sort of revisit in a blow-by-blow way, but that the two presidents would at least have -- or at least their immediate deputies, a brief discussion to recognize that those are the kinds of issues that do cause tension.
You know, Brazil is still the main obstacle to Honduras returning back to the OAS. And so, Zelaya's return to the country, or at least his ability on paper to go back has already been asserted as -- by Brazil as important as are the human rights issues that Shannon alluded to there.
So, like Iran it's possible the issue will come up, but as a way of putting it to rest, rather than stirring up the pot, but also acknowledging that the United States and Brazil are now pretty substantial diplomatic and economic -- or economic but also diplomatic players in the Americas.
SCHMEMANN: All right, thanks. I think we can take one last question.
OPERATOR: Our next question comes from Anthony DePalma with Americas Quarterly.
QUESTIONER: Hello, Julia and Shannon.
Just quickly a follow-up on that last question about the OAS and Honduras. And I wonder if the problems that came up within the organization in dealing with Honduras and now in dealing with the aftermath of it sort of reflect divisions so deeply within the organization and so deeply reflect the divisions within the region that the OAS as a multilateral organization that includes the U.S. is no longer going to be effective and will be replaced by UNASUR and the other organizations that are forming that do not include the U.S.?
So in other words, will the U.S. be dealing with these nations only on a one-to-one basis or is there still a possibility for multilateralism in the future?
SCHMEMANN: Okay, a big question, but Shannon, we only have a minute.
O'NEIL: You know, let me just say quickly that I think there's always a place for the OAS and in a place where all these nations, representative nations come together and talk about issues. They may not agree on things, so the consensus the OAS needs may not be achieved, but the fact that there's a place for everyone to come together is important.
As you mentioned UNASUR, which just officially came into being last Friday, these new organizations may be quite important in taking active measures on issues, particularly if there's divisions between countries or groups of countries. But I do think there's always going to be some role for the OAS, just perhaps not what it has been in the past.
SCHMEMANN: Good, thanks. Julia, any last words of wisdom?
All right then, thank you all.
Thank you all for joining us. Once again, this was a Council on Foreign Relations media call on Latin America with Julia Sweig and Shannon O'Neil, senior fellows for Latin American studies.
And I commend to you Shannon O'Neil's blog, The Latin America Moment, which is on cfr.org along with other resources, and also Julia Sweig's recent article in Foreign Affairs Magazine. That piece is available by subscription but we will be emailing it to all of you on this call after -- in the next few minutes.
If you have any questions feel free to be in touch with me, Anya Schmemann, and again, thank you all for joining.
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