Quietly, Brazil Eclipses an Ally

The New York Times
By SIMON ROMERO and ALEXEI BARRIONUEVO
Published: July 7, 2008
CARACAS, Venezuela — President Hugo Chávez of Venezuela and President Luiz Inácio Lula da Silva of Brazil clasped hands here at a summit meeting late last month, as employees of Venezuela’s state oil company raised their fists and shouted Cuban-inspired socialist slogans before the cameras.
It was an image of solidarity that might once have alarmed Washington, which has seen the United States’ standing steadily eroded by a shift toward left-leaning, populist leaders across the region in the last decade.
But the carefully orchestrated event disguised a more recent turn in Latin America that presents new opportunities for the United States: Mr. da Silva has steadily peeled himself away from Venezuela’s leader and quietly supplanted him as he nurtures Brazil into a regional powerhouse.
Today the two leaders, often partners but sometimes rivals, offer starkly different paths toward development, and it is Brazil’s milder and more pragmatic approach that appears ascendant. Amid the decline of American influence in the region, the Brazilian president is discreetly outflanking Mr. Chávez at almost every turn in the struggle for leadership in South America.
Mr. Chávez has been nationalizing foreign companies and trying to assemble an anti-American bloc of nations. His regional credentials suffered last week, though, when his ideological rival, President Álvaro Uribe of Colombia, organized a dramatic rescue of 15 hostages held in the jungle by Colombian rebels.
Mr. da Silva has diversified Brazil’s already strong industrial base and created an ample political coalition with almost a dozen neighbors. Huge recent oil discoveries in Brazilian waters have allowed him to blunt Venezuela’s efforts to use its oil largess to win influence. Venezuela’s economy has shown signs of stumbling, while its dependence on trade with Brazil has intensified.
The key to Brazil’s success has been a lucky confluence of global economic trends, like rising demand for commodities like soybeans and sugar-based ethanol, but also the quiet stewardship of Mr. da Silva, a former auto plant worker. He has raised Brazil’s profile across the region in part by adopting a less confrontational approach to Mr. Chávez than that of the United States.
Instead of publicly squaring off with Mr. Chávez, even when he has threatened Brazilian interests, Mr. da Silva taps into the kinship of the left and lavishes praise on him. Mr. da Silva went so far as to describe Mr. Chávez recently in the German magazine Der Spiegel as Venezuela’s “best president in a century.”
“The pragmatic side of Lula, the union leader who was always a negotiator, has paid off,” said Kenneth Maxwell, a historian at Harvard University and a columnist for the Brazilian newspaper Folha de São Paulo.
“While Chávez grabs the headlines, the debate over whether Brazil is becoming a regional power is moot,” he said. “Brazil has actually made it to that level, but in a very nonbombastic way.”
While high oil prices have bolstered the theatricality of Mr. Chávez’s maverick policies, Venezuela’s most pervasive influence remains limited to a handful of the region’s poorest nations — Bolivia, Cuba, Dominica and Nicaragua — members of ALBA, a trade alliance championed by Mr. Chávez. Another Chávez ally, Ecuador, is not a member. Meanwhile, Mr. da Silva’s unexpected embrace of the market-friendly ideas begun by his predecessor, Fernando Henrique Cardoso, has emphasized how heterogeneous political thinking has become in Latin America, even on the left.
Publicly, the Brazilian president has been quick to defend Mr. Chávez, even as privately he has sought to temper the Venezuelan president’s sometimes inflammatory remarks.
In an interview in September, Mr. da Silva said that the rhetoric “worked with the reality of Venezuelan politics” and that Mr. Chávez’s anti-Americanism was rooted in the Venezuelan leader’s unshakable belief that the Bush administration was behind a 2002 coup attempt. “He has his reasons,” Mr. da Silva said.
But while Mr. Chávez turned harder to the left after his brief ouster in 2002, Mr. da Silva shifted to the center once in power, surprising many skeptics. His lighter touch has greased the way for Brazil in countries as varied as Cuba, the Socialist bastion to which Venezuela provides a lifeline of subsidized oil, and Colombia, a top United States military ally whose relations with Venezuela have been frosty in recent months.
In June, Brazil’s foreign minister, Celso Amorim, declared during a visit to Havana that Brazil wanted to extend credits for Cuba to import Brazilian agricultural products in hope of surpassing Venezuela as Cuba’s top partner.
In Colombia, Brazilian investors recently took control of Avianca, Colombia’s largest airline. And Colombian authorities drew inspiration from Petrobras, the state-controlled Brazilian energy giant, in retooling their own state oil company to expose it more to market forces.
Venezuela itself has grown more economically dependent on Brazil. Last month Brazilian agribusiness concerns forged deals to export more food to Venezuela, exploiting the persistent shortages in Venezuela’s economy caused by mismanagement and price controls.
Brazilian companies have won contracts for projects in Venezuela like expanding the Caracas metro system and building a bridge over the Orinoco River. Recently Brazil surpassed Colombia to become Venezuela’s largest trading partner after the United States.
In some countries where Venezuela and Brazil have emerged as rivals, like Bolivia, Mr. Chávez still has the upper hand. Bolivia, Brazil’s chief natural gas supplier, shocked Brazil in 2006 by nationalizing the energy industry, with Venezuela’s help. Last December, Mr. da Silva tried to enhance Brazil’s stature in Bolivia, South America’s poorest country, by extending a $600 million credit line for infrastructure projects there.
Meanwhile, Brazil’s trade surplus with the 11 other countries forming the Latin American Integration Association climbed to $16 billion in 2007 from $1.7 billion in 2002, with these nations buying about a quarter of everything Brazil sold abroad.
Venezuela’s attempts to assemble an alliance of countries remains limited to its ALBA trade bloc. But Brazil hosted leaders of 12 South American nations in May to create Unasur, a continental bloc modeled on the European Union that unites the region’s two main trading groups, Mercosur and the Andean Community.
Brazil has often publicly lauded Mr. Chávez’s efforts to unify South America, while subtly strengthening institutions that serve as a check on ambitious Venezuelan-backed ventures, like a gas pipeline across the continent or the Bank of the South, a development bank conceived to compete with the World Bank.
The Bank of the South remains little more than a grandiose idea. Last December, just nine days after Mr. Chávez announced the formation of the bank, which Brazil is expected to join, Mr. da Silva attended a low-key event in Uruguay to inaugurate a new branch of Brazil’s development bank, B.N.D.E.S.
The Bank of the South would be hard-pressed to catch up to B.N.D.E.S., which financed $4.2 billion worth of investments worldwide last year, including loans for the expansion of the Caracas metro.
Brazil’s energy discoveries have also challenged Venezuela’s power. Mr. Chávez seemed particularly shaken last November by new estimates of the magnitude of an oil field off Brazil’s southeastern coast, known as the Tupi field, gently chiding Mr. da Silva for becoming an “oil baron.”
Today Brazil sits on the threshold of joining the global oil powers, and the Tupi find led Mr. da Silva to announce plans to join the Organization of the Petroleum Exporting Countries in a few years. Venezuela has long been Latin America’s main representative there.
Petrobras is setting production records, drilling for oil in Africa and the United States, as well as Brazil. Venezuela’s national oil company, on the other hand, has been stymied by stagnant production since Mr. Chávez gutted the company of executives he considered to be disloyal several years ago.
While some announcements point to greater cooperation between the two countries, like an agreement last month to consider shipping liquid natural gas from Venezuela to Brazil, they also underscore Brazil’s ability to thwart politicized projects, like Mr. Chávez’s plan for a 5,000-mile pipeline.
“Nobody knows if gas cargoes from Venezuela will ever reach Brazil when the Brazilians can get gas from more reliable sources like Trinidad,” said Pietro Pitts, an oil analyst here who publishes the magazine LatinPetroleum. “Brazil tactfully put another nail into the coffin of Chávez’s pipeline plan.”
In the security realm, Mr. Chávez was upstaged on Wednesday when the Colombian military executed an elaborate rescue of 15 hostages, among them three American military contractors and Ingrid Betancourt, a former Colombian presidential candidate who was considered a key bargaining chip for the rebel group known as FARC.
The Venezuelan leader has successfully negotiated with the FARC for the release of six hostages since January. But his own ties with the group have come under such scrutiny that he has found himself calling for the FARC to give up its armed struggle.
Mr. da Silva seemed to steal the spotlight from Mr. Chávez in March when Brazil proposed a South American defense council that would serve as a southern version of NATO. Mr. Chávez hailed the effort, though his own efforts in 1999 to create such an alliance fell on deaf ears.
Secretary of State Condoleezza Rice expressed support for the idea during a recent swing through Brazil, saying she trusted the Brazilian leadership to carry out the project. Brazil also leads the main United Nations peacekeeping mission in the region, in Haiti, where it has 1,200 soldiers.
Despite all of Brazil’s accomplishments in surging ahead of Venezuela in Latin America, Mr. da Silva has eschewed being labeled a leader in the region. “We are not trying to find a leader in Latin America,” he said in the September interview. “We don’t need a leader. I am not worried about being the leader of anything. What I want is to govern my country well.”