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Global Insider: New Presidents in Brazil, France Expand Cooperation Despite Obstacles

Wednesday, Jan. 9, 2013

In mid-December, Brazilian President Dilma Rousseff made her first official visit to France amid speculation that the French-made Rafale might beat out competition from the U.S. and Sweden for a Brazilian fighter jet tender. In an email interview, Antonio Ramalho, an expert on Brazil-European Union relations at Brasilia University, explained the obstacles and opportunities facing the France-Brazil bilateral relationship.

WPR: With new presidents in office in both countries, what are the main opportunities and obstacles facing the bilateral relationship?

Antonio Ramalho: The main opportunities relate to their common views regarding the role of government in actively promoting economic growth through public investment and inducements to the private sector. The two presidents are seeking possible joint ventures in the sectors of energy, defense and infrastructure, mainly based on public financing, besides working on the vitalization of the long border between Brazil and French Guyana -- France’s longest, in fact. Among the obstacles, three deserve greater attention: first, the extremely limited margin for maneuver in domestic politics, particularly for the French government; second, the rigidities inherent in Brazil’s economy, which the government is working on, but which will not fade in the short term; and third, the perception of stagnation in France, as a result of the worsening of the European Union crisis and of France’s fiscal constraints.

WPR: What are the two pro-growth presidents doing to expand economic ties?

Ramalho: They have intensified cooperation in research and development, particularly in the fields of green energy and water resources, which already constitute huge French interests in Brazil. They increased the exchange of students and instructors, consolidating their traditional cooperation on education. The two countries also intend to set up a forum to discuss additional public investment and to stimulate private endeavors. By continually reaffirming the strategic character of their bilateral relationship, they are trying to convince the private sector that public investments will produce positive externalities, encouraging additional investments in sectors that are connected to those that receive major investments, especially defense and infrastructure. The next frontier is services, mainly those related to cyber and to the maintenance -- including the trade of spare parts -- of sophisticated equipment in the oil, defense and energy sectors.

WPR: What are the prospects for the sale of Rafale fighters to Brazil?

Ramalho: Objectively, the Rafale faces four obstacles to becoming Brazil’s official selection. First, the alternatives to the Rafale are far cheaper in their maintenance and in their operational capacities over the long run. Second, both Boeing and Saab have signaled a willingness to transfer more-sophisticated technology -- or are in favor of its development in Brazil. Third, on one hand, Boeing’s F-18 is far more tested, and more successful, than the Rafale; on the other, Saab’s Grippen NG is also a business opportunity in terms of future sales in world markets. Meanwhile, though updated, the Rafale is an old project whose prospects are not encouraging even for the French military, which has placed its main bets elsewhere. Finally, the fact that Brazil already has an important cooperation agreement with France on defense highlights the importance of diversifying France’s partners in this sector, for strategic reasons.

Photo: Brazilian President Dilma Rousseff (Agência Brasil photo by Wilson Dias, licensed under the Creative Commons Brazil 2.5 Attribution).