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    South Asia
     Jun 9, 2007
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.

(Copyright 2007 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)


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