Brazil as a Key Player

"Bit by bit, quietly, like a spider weaving its web in the middle of the night, an impressive military circle threatens Venezuela and, by extension, the entire group of progressive governments in Latin America," writes Ignacio Ramonet in the January issue of Le Monde Diplomatique. A recent study by the United States Geological Survey (USGS) [1] established that the Bolivarian Republic of Venezuela, thanks to recent discoveries in the Orinoco Belt, now possesses 513 reserve billion barrels of crude, accessible with "current technology." Venezuela thus replaces Saudi Arabia, which "only" has 266 billion barrels, as possessor of the world’s largest oil reserves.

The article by Ramonet and the USGS conclusion are based on solid evidence. It is not the first time that it has been estimated that Venezuela’s reserves have are truly enormous. The crucial difference is that this time the confirmation comes from a North-American agency, not just from the Bolivarian employees. In effect, the USGS report effectively doubles the reserves in Venezuela’s domain. As for Ramonet’s contention, various developments in the region in recent months seem to substantiate it: in March 2009, we discovered that Colombia had allowed the United States to take over and control seven military bases; in June 2009 political turmoil resulted in the coup in Honduras where the United States has the military base of Soto Cano; in Oct. 2009 the president of Panama, Ricardo Martinelli, announced the concession of four military bases to the Pentagon. The total number of U.S. bases, including the two bases in Aruba and Curacao (Dutch Antilles), to the north and east of Venezuela to date number 13. The current rapid conversion of Haiti into a gigantic aircraft carrier incorporating the 4th Fleet will no doubt soon add another.

Aiming South

The intervention in Haiti is so blatantly militaristic that the China Daily (Jan. 21, 2010) asked whether it was the intention of the United States to make Haiti the 51st state of the Union. The newspaper quotes TIME Magazine which categorically states that "Haiti is being turned into the 51st state, and while the process unfolds, it already is America’s backyard." In one week, the Pentagon had mobilized one aircraft carrier, 33 rescue planes, numerous war ships, and 11,000 marines. MINUSTAH, the UN stabalization mission in Haiti, consists of 7,000 soldiers. According to the Folha de Sao Paulo (Jan. 20, 2010), the Brazilian military, which had, up until the earthquake, been in charge of the UN mission and thus been the main military presence on the island, will have been outnumbered by the United States with projected numbers in a few weeks reaching 16,000 soldiers, or "12 times more military personnel than Brazil."

In the same issue of the China Daily, an article about the American influence on the Caribbean asserts that the military intervention in Haiti will have a long-term effect on U.S. strategy in the Caribbean and in Latin America, given that it maintains a long-running confrontation with Cuba and Venezuela. According to Beijing, the region is "the door to its backyard," which it seeks to "control tightly and exclusively" in order to "extend its influence south."

To the south is the whole Andean region, which includes not only Venezuela but above all, Brazil. It is beyond doubt that any nation, especially one that sees itself as a world leader, prioritizes the importance of oil. This is not to say, as does Le Monde Diplomatique, that "Caracas is the lynchpin." Venezuela is indeed a vital component. But key to American dominance is stopping Brazil, given that it is clear that it can no longer pressure and control it.

In the last few weeks, a few important issues have come to light which provide important clues. On Jan. 20, 2010, the British newspaper The Financial Times published a comparative list of the 10 top banks in the world in terms of market capitilization for the year 2000 and again for 2009. The results are shocking. In 2000, five of the top 10 were American: Bank of New York, Mellon, Morgan Stanley, Citigroup, Wells Fargo, and Goldman Sachs were placed in first, third, fourth, and fifth respectively. In second place was the British bank Lloyds. In other words, out of the top 10, the top five were American and British. The crème de la crème of financial power rested in Wall Street and the City of London, and in other Western countries.

Only nine years later, the view has changed dramatically: in the top 10 banks five are Chinese: China Merchants Bank, China Citic Bank, ICBC, and China Construction (nos. 1-4), Bank of Communications (no.6), and three Brazilian banks: Itau Unibanco (no. 5), Bradesco (no. 7) and Banco do Brasil (no. 9). The former giants of banking have sunk. Goldman Sachs now sits at no. 22 on the list and JP Morgan Chase at 31. While the Wall Street banks dropped massively in value, the Chinese banks doubled their value in 2009. "The result of the turbulence is the dramatic shift in the financial center of gravity," concludes the Financial Times.

A large proportion of these banks, like Banco do Brasil and three of the Chinese banks, are state-owned, an interesting Copernican twist to this financial adjustment away from the capitalist nucleus which had its base in the United States. To complete the picture, it is necessary to look at the vulnerability of countries regarding their public and private debt and their GDP (gross domestic product), as tabled by LEAP (the European Laboratory of Political Anticipation) in December 2009. In first place in terms of vulnerability is Iceland, followed closely by various smaller Baltic and Eastern European states, Greece in fifth place, and Spain in sixth. In ninth and tenth places are Great Britain and the United States, where the federal debt is dangerously close to 100% of GDP. In the United States, the combined private and public debt is triple the annual GDP. If these countries had been South American, they would have defaulted on their sovereign debt, and some analysts predict that this eventuality is not far off.

A Superpower in the Back Yard

While Barack Obama’s administration attempts to put some kind of tax on banks so that they are forced to return at least some of the bailout money given to them in 2009, the consultancy firm Pricewaterhouse Coopers released figures that indicate a dramatic twist on the global stage. It predicts that in 2020, the G7 (the United States, Japan, France, Germany, the UK, Italy, and Canada) will have an economic weight equal to that of the emerging nations, recently christened the E7: China, India, Brazil, Russia, Mexico, Indonesia, and Turkey.

This year, the difference in favor of the G7 is about 35% (in 2000 it was 70%). This margin of advantage will have evaporated in less than a decade. By 2030, China will have overtaken the United States and be first place in terms of economic power. The United States will be closely followed by India, Japan, and Brazil (Folha de Sao Paulo, Jan. 22, 2010). In the new economic map of the world, there will only be two "Northern" economies in the top five, and only two "Western" ones—as long as Brazil is included in this category.

In this global power reshuffling, Brazil is very well positioned. Its enviable situation in terms of energy self-sufficiency, due to possessing large untapped reserves of both oil and uranium, makes it unique in the global superpower game.

Brazil has the sixth-largest uranium reserves in the world, and this figure relates to only the 25% of Brazilian territory that has been surveyed. Once the reserves in the basin of Santos are adequately calculated, it is estimated Brazil will own one of the five largest oil reserves in the world (more than 50 billion barrels). Brazilian multinational companies are already some of the biggest in the world: Vale do Rio Doce is the second largest mining company in the world, and produces the most iron ore; Petrobras is the fourth largest producer of oil and the fifth largest company in terms of market value; Embraer is the third largest aeronautical company behind Boeing and Airbus; JBS Friboi is the largest beef producer in the world; Braskem is the eighth largest petrochemical company in the world; Brasil Foods is the largest exporter of processed meat; Votorantim is the fourth largest cellulose producer in the world.

The Brazilian Development Bank, BNDES, has been playing its cards close to its chest in favor of Brazilian capitalism. It is the largest development bank in the world, and has "transformed itself into the most powerful tool for the restructuring of Brazilian capitalism."* It is the force behind the large mergers and has the objective of enabling Brazilian capital to compete on an international scale. Lula’s government has pushed a policy that "ensures the active participation of the state in the building of new global players in a wide range of economic activity."

BNDES played a decisive role in the recent acquisition of Quattor by Braskem, in the mergers between Oi and Brasil Telecom, that of Sadia and Perdigao which created Brasil Foods, the aggrandizing union of Marfrig and Bertin with JBS Friboi, as well as the mega-merger of Itau and Unibanco, which resulted in a global powerhouse. "The creation of strong and competitive national companies, with an output that gives them a significant platform in the global marketplace, has been one of the primary objectives of BNDES in the era of Lula." This is why it can be said that for a substantial amount of Brazilian multinationals, "the workings of the state can be seen in almost all the large Brazilian companies."

Among the top 10 large economies of the world, only Russia shares Brazil’s energy self-sufficiency. But alongside this, Brazil has developed, over the last few decades, an admirable interconnected network of privately and state-owned companies capable of competing on equal footing with the largest companies in the world. These straddle a wide variety of areas—from finances, to aeronautics, to hydrocarbons and mining, petrochemicals, and food production. Brazil has become a mature power, more than capable of holding its own.

It does have an achilles heel, of course. Its armed forces shoulder the responsibility for the defense of its rich and coveted Amazon area and now the protection of the recently discovered vast oil reserves in its seas. The Exclusive Economic Zone of Brazil (ZEE) also known as the Blue Amazon, is an area of 3.6 million square kilometers which may be extended by another 900,000 square kilometers if the application to the United Nations is successful.

Both the Brazilian military and economic strategists predict that the expansion of the maritime territory, which incorporates the deep sea reserves of Santos, Espirito Santo, and Campos, signals future threats for the country. Salvador Raza, professor of the National Defense University, thinks the reserves are key to the future of the country, but warns that "where there is oil, there are conflicts, and we must be prepared" (Brasil Economico, Oct. 2009).

The Brazilian Navy has designed an ambitious modernization program over 20 years which includes the purchase of 30 coast guard ships, the construction of a submarine base in Rio de Janeiro, the upgrading of Skyhawk fighter jets and Neptune patrollers, in addition to the purchase of four new conventional submarines (to add to the four it already has) and one nuclear submarine. The minister of Defense, Nelson Jobim, stated that Brazil would build three nuclear submarines to "protect not only the Brazilian coastline and the southern Atlantic, but as well to provide assistance to African nations" (Rosendo Fraga, La Nación, Oct. 29, 2009).

The investment will be enormous: the five submarines will cost 10 billion dollars alone. To carry out its program, the navy predicts increasing its personnel from the current 60,000 to 80,000 by 2030 (www.naval.com.br).

Contentious Politics

Brazil has no option but to fortify its defenses, given that its power as a nation shows no signs of slowing. The National Strategy for Defense, signed by Lula on Dec. 15, 2008, clearly states that the navy must "guarantee to use its power to deny an enemy the use of the sea," singling out the "proactive defense of the oil platforms." That is why the strategic alliance with France allows Brazil not only to count on an ally with a powerful submarine force, but, more importantly, allows Brazil to "engage in the research, development, and construction of both conventional and nuclear submarines," (National Strategy for Defense, p 21).

Brazil has understood the essence of the game plan of the United States. The Pentagon has dedicated to Brazil the same strategy it uses to contain China: to fan the fires of conflict on its borders in order to destabilize and prevent its ascent. It is the same logic which has transferred the center of military gravity from Iraq to Afghanistan and Pakistan. Seen in this context, it is easier to understand what is happening in Latin America, of which the massive militarization of Haiti is the latest chapter. Haiti is the first step in the operations of the 4th Fleet. Taking the predicted calamities caused by climate change in the near future into account, the operation in Haiti will provide a template for what is to come in this decade.

In South America, the United States Southern Command military installations surround Brazil in the Andean region to the west and south. The powder keg lies in the Colombian-Venezuelan and Colombian-Ecuadorian conflicts, which have the potential to ignite the whole region. The tension generated by the Colombian attack on the encampment of Raul Reyes on Ecuadorian soil has been exacerbated by the de facto occupation of Haiti. Latin America is marching toward an unprecedented increased militarization of international relations which, with the exception of Brazil, it is neither psychologically nor physically prepared to defend itself from.

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(*) The reorganization of Brazilian capitalism, Instituto Humanitas Unisinos, Nov. 11, 2009.