March 4, 2024

Brighton Journal

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Brazil is at an impasse in two key negotiations for its future: the EU-Mercosur deal and the Itaipú hydroelectric plant.

Brazil is at an impasse in two key negotiations for its future: the EU-Mercosur deal and the Itaipú hydroelectric plant.
French President Emmanuel Macron (i) and Brazilian President Luiz Inacio Lula da Silva in a file photo. EFE/Christophe Petit Tesson
EFE

(From San Pablo) Last December, at the end of his rotating presidency MercosurPresident of Brazil Luis Inacio Lula da Silva was defensive about the possibility of an agreement with European unionhas been under debate for over twenty years. “If no deal, be patient”, he had contradicted his election promises, in which a good result was certain, he had come to propose the hypothesis of signing the agreement in the first six months of his presidency. A Latin American trade group was created Argentina, Brazil, Paraguay and Uruguay It was formed in 1991, and the trade between the members of the group was 4.5 billion dollars annually. 32 years after its creation, the trade is worth 46 billion dollars a year. An enormous potential that, at least until now, remains untapped Europe.

In fact, the France of Emmanuel MacronAnd pressured by the enraged Their farmers struggle, has resisted. A few days ago, at the end of the EU summit, the French president said that he would “continue to oppose” the agreement with Mercosur, and announced that he had already communicated his position to President Lula. He also said he “doesn't need a contract” to trade Latin America And any contract proposed must be “honest”. Macron, who defends “food sovereignty”, criticized the potential deal as allowing Mercosur products to enter the European market without the same production rules as in France. One of its demands is to accept that Europe can control how agricultural production is carried out in Brazil, on phytosanitary and environmental grounds, and that these products can access the European market.

Brazil is a large consumer of pesticides, some of which are banned in Europe. and genetically modified organisms such as HB4, a wheat seed genetically modified to withstand drought, which has generated great debate in the country, is only approved in Argentina and Brazil, due to potential health concerns. Hazards and environment. EU negotiators arrived in Brazil and accepted Lula's counter-proposals regarding public tenders, where the Brazilian president did not want bilateral relations with the EU. Its personality as suggested by the sources Brazil. Public auctions are a sector that moves 114 billion dollars in Brazil. However, other EU countries such as Spain and Germany are in favor of signing the agreement. By the way, the weight of France is significant. Meeting Lula Macron in Brasilia in March was no coincidence. “I will come in March,” the French president confirmed. “But not because of this trade deal. “We can trade without an agreement,” the French president said.

A very serious section Labor Party (PT) representation Landless Rural Labor Movement (MST), especially its historical leader Joao Pedro Steadle, is against the deal, which does not benefit small farmers, but rather “European industry and Brazilian agribusiness” and asks Lula to back off. “Colonial diplomats continue to insist on negotiations, and all other sectors of society lose,” Steidle wrote on his social networks.

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The Brazilian government, for its part, is trying to minimize the potential economic impact of a failure in the negotiations. Let us remember that this agreement was signed by the government in 2019 Jair Bolsonaro But not approved and later questioned by Lula on the point regarding public tenders. The agribusiness sector does not share the same view and believes that Brazil has a lot to lose from this aborted negotiation. Many point out that without the deal, Brazil will see the potential to diversify its trading partners and reduce its size. Dependence on China, imports most of its agricultural products, about 36%. Beijing, due to its economic crisis, may cut imports from the Latin American giant, creating serious problems for the Brazilian economy.

Brazil's president, Luiz Inacio Lula da Silva (R), congratulates his opponent, Santiago Pena of Paraguay, in a file photo. EFE/ Antonio Lacerta
(EPA) EFE

As if that wasn't enough, another deal has caused headaches for Lula's government. This is an agreement between Brazil and Paraguay On that day Intermittent hydroelectric power station, which provides 10% of all Brazilian electricity. rate, that Cues (Unit Cost of Electricity Services), Annually established between the two countries that built the hydroelectric power station together Triple Frontier 50 years ago. Each is entitled to 50% of the energy produced by the plant. By settling the plant construction debt last year, the governments of Brazil and Paraguay formally began negotiations to renegotiate the so-called “Annex C.” Interim agreement.

The value of kilowatt hour is set by Brazilian National Electric Energy Agency (ANEEL), It is $16.71, but Paraguay, which uses only 15% of the energy produced by hydropower, wants to increase it to more than $20. President of Paraguay, Santiago pen, has announced that if Brazil does not accept its terms, its country may sell the surplus to other interested parties at a reasonable price. The Brazilian Foreign Ministry, from the Itamaraty Palace, denies that a diplomatic crisis is underway and the Minister of Mines and Energy Alexandre Silveira Lula's government has denied it is considering breaking the deal with the neighboring country. “Reviewing the links of the Idaibu Treaty, if you look back in history, there are always natural and reasonable tensions, because the characteristics of Brazil and Paraguay are different,” Silveira said, adding that Brazil was simply “in” a diplomatic negotiation. Itaipu's shared management model is a successful model.

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However, Lula will even consider the possibility of going to Paraguay to defuse the situation with his colleague Santiago Peña, while the Brazilian general director of Itaipú Binacional, Ennio Verri, announced last weekend that this will take at least two months. In reaching an agreement. According to Verri, the discussions have become a “diplomatic problem” and do not take place in the “short term of international relations”, which worries the Brazilian part of the energy producer. In addition to the impasse with Paraguay, ministers of the Brazilian federal government have been warned by the technology sector that bilateral transparency has problems with recent socio-environmental investments on Brazilian soil. Last year, the Itaipu Mais que Energia (Itaipu More than Energy) project was launched, with 1 billion reais, 201 million dollars, to 434 municipalities in Paraná and Mato Grosso do Sul, according to the Brazilian weekly Hero “with little bureaucracy,” among projects approved by the technical department of hydropower. Investment should be made.

The Itaipú Dam provides 10 percent of Brazil's electricity

On the other hand, an MoU was signed with the government at the end of January Bolivia Fertilizer production should be expanded collectively Brazil Import should be changed RussiaReduced due to conflict Ukraine. The agreement includes construction of nitrogen fertilizer factories, geological mapping and mining research, as well as measures to expand and facilitate trade. The areas to be studied by the task force to be established by the two countries are, on the Brazilian side, Mato Grosso do Sul and Tres Lagoas in Guayaba. Mato Grosso. However, on the Bolivian side, feasibility studies will focus Puerto Quijaro In Santa Cruz, Yuuni In the field of Potosí, Kopaisa Oroville and Santivaness In Cochabamba. In addition, at the end of 2023, Bolivia reviewed the terms of its natural gas export agreement with Brazil's national oil company, Petrobras. The Bolivian president, Luis Arce, went so far as to say that his country's natural gas reserves, which Brazil relies on, had “hit the rocks,” so he asked the Lula government for more investments from Petrobras in Bolivia. Guaranteed production.

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However, many wonder if Brazil can do more to bring home its best. Many analysts are asking the Brazilian government to use these diplomatic negotiations to resolve other issues caused by the countries it is dealing with. One of the important issues, for example, is that The fight against drug trafficking, creates a wave of Violence Unprecedented in Brazil, Lula periodically tried different strategies and fought back without much success.

“When Bolivians come to Brasilia to demand an increase in the price of gas exported to Brazil, The government can't pretend Bolivia isn't flooding Brazil with cocaine and crack. If one wishes, one can add the objectives of negotiations to reduce cultivation and trafficking,” suggests investigative journalist and researcher Leonardo Coutinho, “Brazil pours billions of dollars into Paraguay's public coffers through Itaibu Brazil contracts. Why not include negotiating assistance for Paraguay to eradicate cannabis plantations? “It would be cheaper than the urban warfare that Brazil is doing.”