European Crisis

European crisis could "deepen Brazilian dependence on China"

The economic crisis in the European Union may increase Brazil’s dependence on China’s market, warned specialists who attended on Monday (5) a public hearing on the theme, held by the Committee on External Relations and National Defense. However, despite the difficulties faced by the Old Continent, Europe still remains being Brazil’s main partner, as recalled the French ambassador in Brasília, Yves Saint-Geours.

In the beginning of the hearing, chaired by senator Fernando Collor (PTB-AL), professor José Augusto Guilhon Albuquerque, from the Center for Advanced Studies of the University of Campinas, predicted that the main impact of the European crisis will be the “loss of a qualified market” for the Brazilian economy, considered by him increasingly more focused on commodities.

“The reduction in the import capacity of the United States and the European Union immensely increases our dependence on China. The ideal would be to keep a balance between the United States, Europe and Asia,” he suggested.

The possibility of depending more on China was also highlighted by professor Creomar Lima Carvalho de Souza, from the Institute of International Relations of the Catholic University of Brasilia. This would be, in his opinion, one of the “tangible consequences” of the European crisis, as well as the “freezing” of negotiations for a free market agreement between Mercosul and the European Union. He also pinpointed “intangible consequences,” such as questions being raised on Europe as an integration model reference.

Multipolar world

Before talking about the European crisis at length, professor Francisco Carlos Teixeira, from the Federal University of Rio de Janeiro, announced good news he had read a little earlier: the world is to grow 4% in 2012, on average, and emerging countries are to grow above 6%. Besides, he added, world trade will grow 6.7%, despite the European crisis.

“Sometimes, struck by the media and by our emotional relation with Europe, we forget the world dimension. Today there is an asymmetric globalization heading towards growth. We have a novelty, a multipolar world. We do not need to dive into pessimism because of a, currently, small Eurasian peninsula,” said Teixeira.

Thereafter, in response, ambassador Saint-Geours mentioned “unquestionable and simple facts” regarding the “small Eurasian peninsula,” as he repeated the term ironically. The E.U., he recalled, is still Brazil’s first trade partner. In 2011, mentioned the diplomat, the bloc was responsible for 20.5% of Brazilian imports against 14.5% to China, and for 20.7% of exports against 17.3% to China. Brazil’s surplus in the trade with Europe, he concluded, was of US$ 6 billion.

“There are many obstacles to an agreement between the European Union and Mercosul due to different interests. But we cannot underestimate our relations. In 2012, once again, we are to be Brazil’s first partner,” he predicted.

‘Financial tsunami’

During the debate, senator Ana Amélia (PP-RS) regretted the delay in achieving an agreement between Mercosul, in her opinion, a “competitive” region , and Europe, yet “very subsidized.” In his turn, Europe, as senator Cristovam Buarque (PDT-DF) remarked, can be considered “the greatest experience of a civilizing process in the world.” However, he proposed the search of a “new concept of progress,” which takes into account human welfare and the environment.

Senator Eduardo Suplicy (PT-SP) recalled the concern shown by president DIlma Rousseff, on the same day in Germany, about a “financial tsunami” due to the large capital flow from rich countries towards emerging economies. Yves Saint-Geours said in answer that he understands Dilma’s concern, but he remarked that, in this case Europe’s and Brazil’s interests are “a little different.”

“Dilma is concerned about Europe’s crisis. If we have a credit crunch in Europe, we will not be able to leave the crisis behind. The current proposal is to irrigate the economy, providing it with the possibility to grow. But interest rates in the world are not the same, and Brazil is very attractive,” he stated.

At the end of the hearing, Fernando Collor remarked that the current economic models have not been reaching the expected results.

“We have to rethink the future. The current models are drained, and what is going on in Europe is something tragic,” he regretted.