The growing India-Brazil
axis By Sudha Ramachandran
BANGALORE - While their shared ambitions
of getting permanent seats on the United Nations
Security Council brought India and Brazil
together, their common aspirations of becoming
global powerhouses has contributed to the two
countries joining hands to energize their
economies. This was the unambiguous statement that
come out of Brazilian President Luiz Inacio Lula
da Silva's three-day visit to India.
India
and Brazil signed seven pacts during Lula's visit, covering
areas ranging from oil
exploration to cultural exchanges, trade,
education, space, and audio-visual co-production.
Of the seven pacts signed, it is the
energy-exploration deal signed by the chiefs of
India's state-run Oil and Natural Gas Corp (ONGC)
and its overseas arm, ONGC Videsh Ltd, and
Brazil's Petroleo Brasileiro SA (Petrobras) that
has generated the most excitement in the two
countries.
ONGC is said to have offered
Petrobras a 15-40% stake in its three deepwater
blocks in the Mahanadi, Krishna-Godavari and
Cauvery basins off India's east coast. Petrobras
has offered a 25-30% stake to ONGC in three blocks
in the Barrierinhas, Sergipe-Alagoas and Santos
basins off the east coast of Brazil. The deal will
give ONGC Videsh an increased presence in Brazil
and marks the entry of Petrobras into India.
The two sides launched a chief executive
officers' forum, similar to a US-India business
forum that includes top business leaders from the
two countries. This is a step to boost bilateral
business. India and Brazil are hoping that
bilateral trade will grow from the current US$2.4
billion to $10 billion by 2010.
Although
India-Brazil trade is growing - it stood at a mere
$488 million in 2000 - it accounts for less than
1% of each country's total trade with the rest of
the world. Analysts have blamed geographical
distance and cultural barriers for the low
volumes. The CEO forum will now explore
opportunities for joint ventures and recommend
measures to boost trade.
Despite failure
to reach targets set in previous years, the two
sides are optimistic about economic cooperation.
Both Brazil and India have expertise that the
other would like to use. The two economies are
complementary, not competitive, and this is a
natural incentive for greater trade, analysts say.
Brazil has offered India its expertise in
biofuels and farming. It is the world leader in
processing ethanol, producing 16 billion liters a
year. India, which imports 70% of its fuel
requirements, sees biofuels as a major solution to
its energy problem. Already it is Brazil's largest
customer of ethanol. Brazil is keen to draw on
Indian expertise in pharmaceuticals and
engineering.
Cooperation in the field of
civilian nuclear energy is another potential area
where the two sides expect to work together. But
before the potential in that field can be tapped,
India needs to get restrictions on its engaging in
nuclear trade lifted. India is seeking the support
of Brazil, a prominent member of the Nuclear
Suppliers Group (NSG), to that end.
Brazil
has assured India that it will take a positive
position on the India-US nuclear deal when it
comes up before the NSG. All 45 members of the NSG
will have to give their nod for its guidelines to
be amended to allow nuclear trade with India.
Brazil has some of the largest uranium reserves in
the world. It is eyeing the large Indian market
that will open up once the NSG restrictions are
lifted.
The seven agreements signed will
take to new levels the strategic partnership that
was formalized last September when Indian Prime
Minister Manmohan Singh visited Brazil. Analysts
have pointed out that the exchange of visits at
the highest level within a span of nine months
indicates the priority the two countries are
according to building bilateral ties.
For
decades, India ignored South America. It has in
recent years woken up to the continent's potential
and is now correcting its neglect of the region.
Geographically, Brazil is 2.6 times as big
as India. Its per capita income is five times that
of India. It is rich in natural resources. The two
countries are continents apart and culturally
different. Yet they are drawn to each other
because they have much to gain from cooperating
economically.
More important, India and
Brazil have found that as emerging giants of Asia
and Latin America, they have similar aspirations
and are having to contend with similar obstacles
in realizing their ambitions. They have realized
that they are in a better position to tackle the
challenges by pitching together their skills and
resources.
They are working together in a
range of multilateral forums, including the World
Trade Organization, to ensure that their voices
are heard.
As part of the group of four
countries bidding for permanent seats in the
Security Council, India and Brazil (the other two
are Germany and Japan) have pooled their
diplomatic resources. Their joint effort has
failed to bear fruit yet, and the bid has been put
on the back burner for now. However, the shared
ambition of sitting at the UN's high table remains
very much alive.
India and Brazil are
engaged in trilateral cooperation through the
India-Brazil-South Africa (IBSA) forum. IBSA has
often been dismissed as a "poor man's G8", a
reference to the Group of Eight developed nations.
Indeed, poverty is among the important issues that
its three members are grappling with. But the
three countries are also powerful players in their
respective continents and emerging economies too.
Both India and Brazil have lots of poor
people who need inexpensive drugs, and it is
another area of common interest. Not surprisingly,
they are both in the forefront of a push back
against global, mostly US, pharmaceutical
companies.
A month ago, Brazil decided to
break a patent on Efavirenz, an HIV (human
immunodeficiency virus) drug made by US
pharmaceutical giant Merck and to import instead a
generic version from India. Brazil, which was
paying US$1.60 per pill, will now get the generic
Indian version for as little as 45 cents per pill.
Supplying an HIV patient with Efavirenz for one
year costs Brazil $580, compared with $166 for a
similar generic drug. Importing the generic drug
from India would save $30 million this year and
$236.8 million by 2012, the Brazilian Health
Ministry has said.
India and Brazil are on
the same side on the climate issue as well. They -
together with China - have been insisting that the
rich countries must own up to their dominant
historic role in greenhouse emissions, which are
believed to contribute to climate change. They
insist that it is these rich countries that must
clean up the mess and bear the burden of reversing
global warming.
Talks between Lula and
Manmohan in Delhi included the strategy they would
adopt on climate change. India and Brazil
underscored that "the solution to the problem of
climate change, which is essentially the outcome
of unsustainable production and consumption
patterns in the developed world, cannot lie in the
perpetuation of poverty in developing countries.
Developing countries cannot accept approaches that
impede growth and retard poverty-alleviation
obligations."
The declaration issued by
India and Brazil at the end of the visit has sent
out a loud signal regarding the stand they would
take at the G8 summit in Germany. But it is
unlikely their voices, however loud they might be,
from the sidelines of the summit, will impact any
G8 decisions.
Sudha Ramachandran
is an independent journalist/researcher based in
Bangalore.
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