Business, Economics and Jobs

Oil will make Brazil a "great nation"


Brazil's President Luiz Inacio Lula da Silva shows his hands, dirty with the first extraction of pre-salt oil in the Tupi oil field basin, Oct. 28, 2010.


Antonio Scorza

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Another day, another immense oil discovery off the coast of Brazil. This time, the field (known as Libra) is estimated to hold 15 billion barrels and ranks as the largest oil strike in the Americas during the last 30 years. All told, Brazil has discovered 80 billion to 100 billion barrels of oil in deep water fields since 2007. Petrobras, Brazil’s the state-controlled oil firm, will lead the exploration and now claims it will become the world’s largest oil producer, as detailed nicely by The Guardian. In the article, Brazilian President Luiz Inacio Lula da Silva comes through with the money quote:  "More than carnival and more than football, Petrobras gives us the certainty and the conviction that this country will become a great nation." 

Despite all that oil, Brazil is masterly at casting itself as a green environmental leader. Climate negotiators will meet in Cancun in December for the COP-16 meeting. Look for Brazil to try to set the agenda, touting its falling deforestation rate. “Brazilwill get to COP 16 with elevated moral status. We proposed advanced targets and were a source of inspiration," says foreign minister Celso Amorim. Want to bet those 100 billion barrels of fossil fuels don’t get mentioned?

So, can Brazil innovate? The lack of home-grown technology inventions is increasingly a worry in Brazil, a country that in 2009 won just 103 U.S. patents. (South Korea, by contrast, was granted over 8,000.) This month, The Economist weighs in on the innovation question, listing some Brazilian triumphs, such as the Brazil-made airliners of Embraer, a company considered nothing less than a national treasure and profiled here. But take a closer look. Avionics are the brains of a modern plane, and Embraer buys its systems from the U.S. The jets’ engines come from Europe. The Economist thinks that Brazilians face a troubling question. “Can their country become an innovator in its own right, or is its recent growth little more than a by-product of China’s appetite for commodities?”

Brazilians are serious about their holidays, and this week, Christmas decorations began going up all around the country. The government is getting ready, too, and decided to ban airlines from overbooking flights during the holidays. The aim is to head off holiday chaos at airports. But chaos may be inevitable. According to comments made by a leading airline official, Brazil’s overstretched aviation system is a “growing disaster” and even Brazil’s sports minister says the country risks “embarrassment” if problems aren’t solved before the World Cup in 2014. Brazilian airport officials called the criticisms “vastly overblown.”

So who is Dilma Rousseff? We’ll keep asking this question, because she’s Brazil’s president-elect. According to newly unveiled files from Brazil’s dictatorship, Rousseff was once deemed the Joan of Arc of Brazil’s guerrilla resistance and was put in charge of tending a weapons cache. Former minister and Harvard professor Roberto Mangabeira Unger tells the New York Times that Rousseff will be her own woman. “Dilma will not be Lula II. She is a different person; it’s a different moment, and it’s a different job.”


In Rousseff’s first step toward forming a new government, she tapped Economy Minister Guido Mantega to stay on as head of Brazil’s Finance Ministry but gave the boot to Henrique Meirelles, the Central Bank president.  

The moves are significant. They disrupt a delicate balance of power that has existed the last few years. As the Financial Times describes it, Brazil’s “combination of loose fiscal policy (Mantega) and tight monetary policy (Meirelles) has so far delivered healthy growth.” 

Picking Mantega to stay on could reassure markets. But like Rousseff, he is a “developmentalist” who likes to use government spending and lower interest rates to goose economic growth. Meirelles was a tough inflation hawk and kept a check on such urges by defying Mantega and raising rates when Brazil’s economy began overheating. Keep in mind that Brazil’s Central Bank isn’t independent like the Federal Reserve. Meirelles, former head of Bank Boston, had made a deal with Lula that gave him de facto independence to control interest rates. According to the Brazilian press, Rousseff wouldn’t renew the independence deal. O Globo newspaper says she plans to make interest rate decisions herself.

As this summary went to press, Rousseff had invited bank official Alexandre Tombini to lead the institution. The risk to Brazil is out-of-control spending and inflation.

Brazil’s colorful multi-billionaire Eike Batista says he’s contacted the Asian manufacturers that build the iPhone, the iPad and Apple computers to establish a factory at his “super port” industrial complex north of Rio de Janeiro. Producing locally would drop costs of coveted Apple products for Brazilian consumers. “Why do Brazilians pay 2.5 times as much for an iPad?” asks Batista. Batista says he hasn’t approached Apple yet.


Formula One world champion Jenson Button escaped after his car was attacked by a gang with machine guns in Brazil.  His driver drove “like a legend” by flooring it and pinballing through traffic, says Button. Celebrities in Brazil often travel in armored cars with drivers trained in defensive maneuvers, as Button did. Here’s the television report from Sky News.In more video news, closed circuit cameras caught an impressive landslide that wiped out a port in Manaus.

Brazilis renowned for tolerance. But two soldiers are being held in connection with the shooting of a man during that city’s gay pride parade. In Sao Paulo, a march along Avenida Paulista, the city’s main avenue, protested the daylight beating (caught on tape) of three gay men on the same street.

A drought in the Amazon brought the Rio Negro River to its lowest level in a century, revealing pre-historic rock carvings. See a picture here. Such petroglyphs, showing human faces, are not uncommon in the Amazon. Their meaning remains a mystery.