With a pandemic, Russia’s invasion of Ukraine and fiercer tensions between the US and China, the world is more uncertain, which generates economic costs for everyone. In the case of emerging countries like Brazil, the tendency is for investors to resist putting their resources here and prefer destinations considered safer. But “each case is different”, says the chairman of the board of Goldman Sachs International, José Manuel Durão Barroso, and Brazil is, at the moment, a country with great potential – but underexploited.
According to Durão Barroso, Brazilian opportunities lie in commodities and natural resources, especially at a time when the world is focused on sustainability issues. Thus, the country could be a global leader in the energy transition. “Perhaps this is not being used as it should yet because there are certain decisions in this (environmental) area that have not yet been taken on as a national priority.”
Prime Minister of Portugal between 2002 and 2004 and President of the European Commission between 2004 and 2014, Durão Barroso avoids dealing with Brazilian domestic issues, but emphasizes that the important thing is not to have extremism in the future government.
Below are the main excerpts from the interview.
After the pandemic and the invasion of Ukraine, we now have the US-China relationship deteriorating. What economic impacts can we expect from this geopolitical instability?
Uncertainties have costs. In this case, we are witnessing an increase in costs. We also have a situation of supply chains going to areas closer to consuming countries. Therefore, additional costs arise, as much of the so-called globalization was to maximize savings and reduce costs. Now, when part of the production that was made in Southeast Asia passes to Europe, the costs increase. Another dimension of this crisis is the cost of energy. Russia’s invasion of Ukraine has led to an accelerated increase in costs. Uncertainty itself also causes investment to pull back. Investors wait longer looking for some clarification. All this leads to a harmful picture for the economy.
Mr. Do you see this scenario as short or medium term?
I think it will last some time. Inflation, in addition to this issue of increased energy, had more pronounced structural factors: the geopolitical situation itself can generate an increase in prices. I don’t use the word deglobalization much, because international trade and cross-border investment continue to increase, but at a slower pace. At the moment, there is not a complete reversal of globalization, but there is a reglobalization, with greater uncertainty and a more fragmented economic order. This will continue because the important background data is the competition between the US and China, which tends to get worse. We must be prepared for this scenario in the medium term. I also think that Russia’s invasion of Ukraine will unfortunately last for some time.
If it is not a deglobalization, what is this change that we see in the world organization?
Perhaps it is premature to speak of deglobalization. But there is this characteristic of (increasing) regionalization. In Europe, for example, this already exists, there is an import of supply chains. A scenario is likely in which geopolitical friction between the US and China leads, for example, Western companies to be more cautious about China.
How are emerging countries in this new order?
It is much more challenging because, in a moment of uncertainty, investors become more cautious and like the so-called emerging countries less. They go after safe investments, and there is a tendency to focus on the so-called more developed economies. But each case is different, and I also think that each country should see the opportunities that exist. There is greater demand for some commodities, and Brazil is a major producer. The country has the potential for renewable energies, and I would say that the climate transition is one of the great challenges.
What does the country need to do to make the most of this potential?
An example I know well: the agreement between Europe and Mercosur. It is obvious that Brazil could have much greater access to the European market. The country could increase performance, performance. Brazil is perhaps the country in the world with the greatest wealth in biodiversity. Brazil can be a global leader in the energy transition, negotiating conditions for this transition, and it can also make a contribution towards a lower carbon future. I hope Brazil takes advantage of these opportunities.
Mr. spoke about the environmental issue and Mercosur. One of the reasons that have hindered the Mercosur-European Union agreement is Brazil’s attitude towards the environment. How is the image of Brazil abroad today in relation to this?
Basically, this is what I’m saying: there’s a lot of potential that’s not being fully exploited. I want to be very cautious in what I say, because it’s a question of sovereignty. I also don’t like it when I see someone from outside my country saying what I should or shouldn’t do. At the same time, I think it makes sense, from the Brazilian point of view, for the country to be a leader in environmental discussions, as it has natural resources, and not appear, as it sometimes does, as a reluctant partner. Brazil must think: what does it do best for itself and for the planet, as a global leader that it is? Brazil is one of the largest economies in the world and therefore has responsibilities as well. Dimension brings with it responsibilities. There is goodwill towards Brazil. If we compare with other so-called emerging economies, no other has this. But perhaps this is not yet being used as it should be, because there are certain decisions in this (environmental) area that have not yet been taken on as a national priority.
When mr. was ahead of Portugal and the European Commission, there was a force of the left in charge of the countries of Latin America. Now, she seems to be making a comeback and, in Brazil, former President Lula is the best-placed candidate in the electoral race, according to polls. like mr. see the return of the left in the region and what can change in the global order with that?
Once again, I don’t want to interfere in internal affairs. Today I’m not in politics, but I was known as a center-right politician, in European terms. That said, I don’t see a problem on the right or left. I see a problem with extremists. If the future of Latin America is a moderate, reformist left that fights for more social justice, it seems legitimate and acceptable to me. Now, if we go to a left that is populist, protectionist or even with totalitarian ideas, as we have in non-democratic situations, like Cuba and Venezuela, obviously that is not good, at least in my view of the world.
Does this also apply to the right?
Same thing with the right. If it is reformist, modern, seeks to develop a more competitive economy, it is valid. If we have a nationalist, revanchist, xenophobic right, from the point of view of my values, that is negative. The big problem is not a conflict between left and right. In democratic systems, this is positive. The problem is radical views of a certain left or a certain right. This can happen not only in Latin America, but in other parts of the world.
Mr. Do you see Lula and Bolsonaro as extremists?
I’m not going into that qualification. It is up to the Brazilian people to choose the president. But there is one thing I want to say: I continue to believe that Brazil is a great democracy and I have great confidence in the strength of Brazilian civil society, in part because of the media.
The information is from the newspaper. The State of São Paulo.
#great #potential #Brazil #exploited #Durão #Barroso #ISTOÉ #DINHEIRO