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Sotero: Hope and Concern about U.S. Business Ties with Latin America

Interviewee: Paulo Sotero, Director, Brazil Institute, Woodrow Wilson Center
Interviewer: Bernard Gwertzman, Consulting Editor
October 7, 2008

Paulo Sotero, a veteran Brazilian commentator and lecturer, says there is great interest in Latin America about the impact of the U.S. presidential elections, especially on business relations. Sotero noted regional concern about the U.S. financial crisis and the hope for a new administration to capably steer through the crisis. In the case of Brazil, he said, "there is growing interest in the business community for the deepening of a relationship that ... has been very correct but also kind of shallow."

What is the general feeling in Latin America toward the U.S. presidential elections?

A lot of interest has been generated by the [Senator Barack] Obama phenomenon. On the popular level, he is viewed more favorably by the countries that I know by overwhelming margins. Now, if you go deeper, to the business community especially, which has more intense relations with the United States, here you saw a more divided picture until this current financial crisis. Among the business people, there has been a tendency, and this is particularly true in Brazil, to view the Republican candidate more favorably because the Republican candidate is viewed as more of a pro-business candidate. Senator John McCain, on issues of particular interest to Brazil, has made some statements against subsidies for corn ethanol, against the Farm Bill, for more liberalized trade. All those statements sound very well for the business community.

Has the financial crisis in the United States affected perceptions?

I think now that the view probably is changing, and people are just tremendously concerned. Even in countries that have maintained good relations with the United States, despite President Bush's unpopularity, like Brazil, Peru, Colombia, even Chile, there is a hope that the United States will elect a person that is able to surround himself with people that understand the nature of this crisis and can stabilize the crisis because of the negative impact of this not only for Americans, but for everyone else. The countries that are playing the more anti-American card are relatively smaller countries, like Bolivia and Ecuador, and obviously Venezuela, which is a very peculiar gray case because Venezuela supplies a lot of oil to the United States. They may have a more sympathetic view of one candidate or another. But I think they are not the big players, actually, in the region.

Neither Obama nor McCain has said much on Latin America. I've noticed that both of them have spoken to the Cuban-American community in Florida. And Obama seems softer on resuming family visits to Cuba. But I think generally he's shifted to a harder line on Cuba as the election grows nearer. And of course McCain has been tougher on Cuba, wanting more democracy before he does anything.

That is an issue where I think the sympathy in Latin America would be on the side of a candidate that breaks with the historic pattern of embargoes, or isolation of Cuba, and tries to have a more constructive attitude and understanding that Cuba is already in transition. This transition will take time. And it's important for the United States to play a positive role. In this regard, despite their positions in the campaign, I think that most would look with more sympathy to what the Democrats have been proposing in terms of starting a process of normalization with Cuba.

Obama in his primary campaign called for revamping of the NAFTA agreement, which is very sensitive in both Canada in Mexico. Does free trade play much of a role in attitudes of the business community in Latin America?

It really does. Senator McCain has had the more pro-trade posture, went to Iowa to criticize the program on corn ethanol, has denounced the Farm Bill, which is particularly unpopular in Brazil, which is a direct U.S. competitor in agriculture. Now, the question is, as I told you, for those that are better informed in Brazil about the situation, the question is not about really the convictions of the candidates, but what the political realities will allow the next president to do. There are two theories. You have McCain elected and completely paralyzed by a Democratic Congress that will not give him fast-track authority [on trade promotion], and would be very hostile to any new opening on trade. You could, paradoxically, have an administration led by Obama that would be able to negotiate the domestic issues that apparently need to be negotiated, in order to deal with the sense of economic insecurity in the United States.

When I am asked in Brazil, who is the best candidate for Brazilian interests, my standard answer is that we better define our Brazilian interests, or Mexican interests, vis-a-vis the United States, because the United States will make this decision regardless of what we think. So we have to be ready to engage. In the case of Brazil, there is growing interest in the business community for the deepening of a relationship that, as you mention, has been very correct but also kind of shallow. There are demands in Brazil by the business community, and I believe there are also demands and pressures here in the United States, that we do something useful with this good vibe, with this good relationship that exists, and go for a deeper kind of dialogue.

I guess the big political issue in Brazil is whether the United States will allow the import of ethanol made from sugar with the very heavy restrictions we have right now. Also, how far along is Brazil in this oil business?

What I think Brazil looks for is not that the United States opens its market for Brazilian sugarcane all of the sudden. By the way, we do not have the sugarcane ethanol to sell you; most of our sugarcane ethanol is for use in Brazil. What I think people would like to have is that there would be more space here for sugarcane ethanol from Brazil, so there would be some predictability and people could make the investments there necessary to supply the United States and do this gradually. The two countries can work together to create an international market for this type of fuel. Now, on oil, Brazil is close to self-sufficiency. We have found what looks like lots of oil, and if the investments are made that are needed to get this oil out-it's very deep down under the ocean-the estimates are that we would start production in three to four years, and that eventually in ten to fifteen years, Brazil would emerge as a major oil-producing and exporting country.

Is there much concern in Brazil about the Russian activity in Venezuela?

Yes, the notion that countries that are neighboring countries to Brazil would bring actors from other parts of the world to play in the region is generally not very welcomed by Brazilians. Brazil is in the process of asserting its own leadership position in South America. This government, or any government in Brazil, would not see this type of activity favorably. We have normal diplomatic relations with those countries. I think that those connections with Venezuela and Bolivia are quite forced, quite unnatural. Brazil's interest in South America is mostly geared toward development, political stability, things that would be beneficial, we believe, to Brazil, to the neighboring countries. I would say the United States' interest is exactly the same. We go about it in different ways. We are there in the region, and I think President Lula [Luiz Inácio Lula da Silva] has been quite successful in the way he deals with Venezuelan President Hugo Chavez and others.

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