EU-Brazil Relations
(Universidade de São Paulo, Brazil, 28 November 2012)
Ladies and Gentlemen,
Speaking at an academic venue is always something special. I recall the day when
I was admitted to a small private University in Britain. It was shortly after I received a
letter from HM Immigration Office that granted me asylum and a political refuge in
the United Kingdom. I was fleeing the Polish junta, the martial law regime, which
crushed Solidarity in 1981. In 1982, Poland was still under the yoke of a communist
regime, which I fled. Fleeing really intellectual oppression rather than actual
persecution. When you need consolation and a restoration of one’s faith in rationality
in the world, university venue is natural. Academics like yourselves stand at the
vanguard of the freedom of thought that we can now enjoy both in Poland and in
Brazil.
In Brazil, at that time, the process of throwing off the shackles of dictatorship was
underway, but you were still struggling with the legacy of a bleak past. In the early
1980s, neither Poland nor Brazil were fully at the top table of the world’s
democracies. Prosperity remained for many years an improbable goal for our nations.
A seat at the table for both − Brazil and Poland
But here we are, 30 years on.
The bipolar era is gone. Gone is also the post-Cold war moment of total
US hegemony. In the making, I would argue already here, is a multipolar world, in
which new actors have gained much more say.
In the span of the past three decades, our GDPs have surged. Yours of course is much
bigger. You are the world’s sixth largest economy by nominal GDP. Poland is 22nd.But
if you look at the figures for nominal GDP per capita, of course we are ahead. We are
close to being able to join the G-20 club. We hope Brazil will support us.
Not only have we become more democratic and increasingly affluent, our wealth has
begun to translate into political influence − in Europe in our case, and on the world
stage in yours. Both Brazil and the EU aspire to create a more balanced international
system that reflects the changed correlation of forces. Poland supports this. We,
Poles, being Europeans, nurture our multiple identities. It is not that difficult to
understand that because our newfound prosperity has largely to do with our
rejoining Europe. So, I speak to you both as a Pole and a European.
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EU & Brazil as natural allies
I firmly believe that the EU and Brazil are natural allies in building a 21st century world
that lives in harmony with political realities.
First of all, the EU and Brazil espouse the same democratic values. We have both
learned the hard way that standing up to populist strongmen who sow the seeds of
false ideologies is the only way to defend freedom. We are both in favour of wielding
power through arbitration and negotiation. Multilateralism, which is not always
synonymous with multipolarity, is our preferred response to any crisis situation.
But for multilateralism to take root in the world system, it must be underpinned
by a more fair representation of countries that aspire to take on more responsibility
in global organizations.
The Security Council is a good case in point. This UN body reflects − I think in Brazil
we’ll all agree on that − an outdated balance-of-power system. In no way does it bear
the realities of today. We believe the Security Council should be reformed. But we
know how difficult it is. There are vested interests that resist transformation. We
believe that the international community needs to devise a plan that will ensure a fair
representation. For example, we are in the East European Group at the UN, which
used to be the former Soviet Union bloc. There are many more countries in that
group and countries that don’t necessarily agree with one another. Some are
members of the EU and NATO. Others integrate around Moscow’s Eurasian Union.
But what is consistent is that our East European Group is underrepresented in UN
bodies and Western Europe, as you know, is overrepresented. So, when thinking
about Brazil’s aspirations to join the Security Council as a permanent member, I urge
you not to think in terms of increasing the overrepresentation of Western Europe,
because it will be very hard for us to agree. We’ll support you, if you support the EU
becoming a permanent member of the Security Council.
Secondly, the European Union is Brazil’s most important trading partner. We account
for more than 1/5 of your imports and exports. We are a market of almost 500
million people, generating one third of the world’s GDP. The EU’s wealth, we believe,
makes us a good customer for your goods and your materials. Western Europe, the
EU, accounts for almost 30% of world’s private consumption. Now China accounts for
3% of private consumption.
This, of course, is belied by what we read in the newspapers.
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The EU is here to stay
Newspapers have to sell, particularly at times such as these, when the whole industry
is threatened and the struggle for survival in the market is very tough. Titles have to
be catchy. Only bad news is news. ‘Eurozone in its final throes’; ‘The European Union
on the verge of dissolution’ − this is what we read. Because it is likely to attract higher
readership than journalists conveying a message of actual painstaking reforms that
are being implemented and countries of the eurozone at last doing what’s right to
cure the public sector and labour markets. We have those headlines too. In Europe −
our journalists getting excited and writing off Latin America as a hopeless ‘has-been’.
Which, we know, is about as true as those headlines about the EU.
I’d like to dispel some of your doubts. The EU is still in the process of overcoming
financial difficulties in some member countries. Remember that in the EU we have
some very successful economies as well. We remain an economic giant. Our total
GDP of all the member states of the EU is 17.6 trillion USD. The euro, as a currency, is
actually doing very well in international financial markets. You haven’t heard of a
devaluation of the euro, which some of my friends in the financial markets think
would be a good idea. But it hasn’t happened. Not only has there been no
devaluation of the euro, but also the euro has maintained its position as the second
reserve currency, accounting for about 25% of the international reserves of most
states, in some cases – for example Russia – 40%. I was very interested to know that
actually it’s different in Brazil. Although Europe is your biggest trading partner, euro’s
position in your currency reserves is tiny. You might want to revise that. Because the
rule of thumb is that you should have reserves in proportion to the trade you do with
the various countries and blocs.
Eurozone’s present problems are surmountable. Just in the last couple of days we’ve
heard of another – this time, I’m glad to say, generous – package for Greece. I think
this last package is finally the light at the end of the tunnel. It will allow Greece to
become solvent and return to the markets in the next few days. We’ve also heard
news of Europe’s budget negotiations, which have not been concluded yet. But we
are very close to the deal. The sums that we are arguing over are 0.1% of Europe’s
GDP. We’re talking a few billion euros difference between what’s on the table and
what some countries are able to accept. I’m confident we’ll get a deal in January.
Free trade, not protectionism
Now, on the other hand, I don’t think the rest of the world is immune from the global
downturn. The contraction may affect some of the BRICS countries as well. China,
according to some economists, is approaching ‘the Lewis turning point’, which is the
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moment when a developing economy is running out of the supply of cheap rural
labour force. Arguably, China has also overinvested in infrastructure and has huge
hidden debts in its state banking sector. In Latin America, you have considerable
accumulated experience with such boom and bust cycles, with state-driven
infrastructure development, which then leads to an imbalance in the economy.
Some economies believe it will be very challenging for China to deal with it – that in
fact, China and the United States should switch places in terms of their pattern of
spending. China should move to boost private consumption and the United States
should move to repair and rebuild its infrastructure. But that, of course, is easier said
than done. There are huge political obstacles to achieving that. Both countries are for
a great deal of trouble.
Now, when all this is happening, it is imperative, we believe, that we should maintain
the level-playing field in terms of international trade. I’m, personally, a great believer
in free economic exchange and in the competition of human talent and skill rather
than state choosing winners. And when you believe in markets, you should be
concerned when the WTO reports, as it did last May, that G20 economies have been
increasingly instigating restrictive measures on international trade. The Group of
Twenty is very important, but its credibility and legitimacy will be undermined if its
members resort to protectionism to advance short-term interests. It seems that we
are taking a step back with regard to what we managed to achieve with the creation
of WTO and other regional preferential market customs unions and others. We have
to defend international free trade, because it’s the bedrock of our prosperity.
A price to pay for wanting to play big – international security
When you are as important a player as Brazil has come, you need to start taking
responsibility for maintaining the international order from which you benefit,
including in the security area.
The EU is taking its first steps. Since 2003, the EU has launched, within the framework
of the Common Security and Defence Policy, 27 missions and operations in Europe,
Africa, and Asia; including with the use of armed forces in places as far away from
Europe as Congo or Chad. Very few people know that the European Union − not
NATO – last year, for the first time used force. Our soldiers operating off the coast of
Africa have taken short, sharp decisive action to destroy the ships that were being
used by pirates that were terrorizing shipping off the Horn of Africa. In that brief and
brutal action, we managed to cut the number of pirate incidents by 70%.
We don’t advertise this sort of thing in Europe, because military action is somehow
not in the EU DNA. But I believe that if we are to be taken seriously around the world
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and if our diplomacy is to be effective, we occasionally have to back up diplomacy
with force. That’s why Poland has been a staunch advocate of a stronger EU role in
defence.
Of course we know that Brazil also has a long-standing tradition of active involvement
in international security. Since 1948, you have participated in 33 peacekeeping
operations. Your previous President, Luiz Inácio Lula da Silva, made engagement in
the UN missions as a core component of your foreign policy. You’ve taken leadership
in Haiti, East Timor, and in the Maritime Task Force of Lebanon. The world also
appreciates your mediation efforts made at the beginning of the Syrian crisis and of
course in Iran.
Both the EU and Brazil have come a long way in making contributions to international
security, but − we have this in common too – our military capabilities lag behind our
economic strength. This is one of the areas featured in the 2012-2014 Joint Action
Plan between the EU and Brazil.
EU-Brazil Strategic Partnership & EU-Mercosur Association Agreement
Ladies and Gentlemen,
The EU-Brazil Strategic Partnership must encompass other key issues as well:
spreading the rule of law and democracy, strengthening multilateralism, increasing
people-to-people contacts and promoting sustainable development. These are all
areas, where we have interests in common.
I believe that both the European Union and Brazil should invest more in their
relations.
A big step forward would be the EU-MERCOSUR Association Agreement − a region-toregion endeavour. But you probably know better than us that the trade between the
EU and Brazil actually makes up three quarters of all EU-Mercosur exchanges.
Throughout the global economic downturn, save the one year of 2009 – the year
when countries were hit hardest by recession, the EU-Brazil trade enjoyed doubledigit growth. Poland is definitely a beneficiary of this increased EU trade with Brazil.
The plane that I jumped on this morning is made in Brazil – your famous Embraer –
and Embraer is a cornerstone of Poland’s fleet. Indeed, the Polish government planes
are Embraers.
It cannot be highlighted enough how advantageous it would be to conclude an
ambitious agreement between the EU and Mercosur. Moving forward with the FTA
would provide a unique opportunity to improve market access. Echoing the words of
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the European Trade Commissioner, Karel de Gucht, some estimates show that,
provided the agreement is signed, the trade between our regions would increase by
roughly 11.5 billion USD per annum. This is what we are denying ourselves by not
signing the agreement. So, please work with some of your neighbours even harder to
get it done.
Such an agreement would also encourage and boost foreign investment. You –
as professors and students and others, know very well how critical it is to attract
transfer of know-how in order to render the country’s services more competitive.
With its extensive experience in research and technological development, we believe
the EU is a perfect fit for Brazil. We are already Brazil’s largest investor – accounting
for about half of your FDI. In the past three years (2008-2011), the EU’s investment
inflows have tripled.
Poland and Brazil
Now, let’s take a look at not just the EU, but Poland in particular.
Why should Poland matter to you?
In 2009, at the height of the global financial crisis, Poland was the only country
in the whole of the EU to have recorded growth. In the recent Foreign Policy
magazine issue, Poland is praised, together with 6 other countries, as a break-out
nation. There isn’t an acronym for it yet, but hopefully, someone will devise
something catchy and we can compete with you on that one too. Non-academic
sources, such as the Wall Street Journal, also recognize Poland’s robust growth and
successful economic conduct in the face of the crisis. We are proud of the fact that
economically-speaking we are a success story.
Poland also speaks up for Europe − for Europe’s greater and deeper integration. We
would like Europe to emerge as a genuine political union. A Union that speaks with
one voice. A Union, whose political clout matches its economic weight. A Union that
is liberal and competitive with cutting-edge technologies. A Union that also matters
in the world. In the words of the British Prime Minister, Tony Blair: ‘not a super-state
but a super power’.
How would all that affect Brazil?
Well, you are a continent size country. I think it will be easier for you to deal with a
continent size federation. I expect that once the political union takes shape, the EU
will cease to be as inward-looking as it is at the moment and will focus more on
outside partners and its foreign policy. The strength of democratic agenda in the
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world would also be enhanced. The Union itself, internally, would have more
democratic legitimacy. If we have a directly elected leader − elected by the European
Parliament or even by the peoples of Europe − communications with Europe by
leaders of other large countries would surely be easier and it would be easier to
coordinate policy.
Poland also is a member of OECD. We will support your membership if you decide to
join.
Shale gas and shale oil as game-changers
What I think is, at this particular moment, the area where Poland and Brazil can help
each other is the field of energy.
Extracting oil from Brazilian pre-salt oil deposits entails huge investments and of
course new technological solutions. My visit is accompanied by a trade mission made
up of over a dozen energy, marine and offshore industry representatives. I am
convinced that Polish shipbuilding, ship repair, and offshore companies have a lot to
offer. They are meeting Brazilian partners and I hope they find business to conduct
together. The exploration of unconventional hydrocarbon resources should
also be a lucrative business in both countries. Shale oil and shale gas boom in the
United States has transformed the way we think about these natural resources – it
needs adapting our energy strategies. When countries with potential shale gas and
shale oil reserves begin their extraction in Asia, Australia, South America, as well as
Europe, this revolution will redefine energy relations and as a result, power relations
in the world.
When you think about shale gas, you should know that the first procedure of
hydraulic fracturing conducted in Europe was conducted last year in Poland. Poland is
at the forefront of this revolution. According to the US Energy Information
Administration’s estimate, Poland holds one of the most promising shale gas reserves
in continental Europe. These are of course estimates, but one of them says that we
sit on top of 5.3 trillion cubic meters (tcm). You, in Brazil, have more of course, but
you are much bigger –6.4 tcm. They are actually comparable.
But for it to happen, huge investments will be needed. You’ve announced your vast
investment project. We have granted a 100 shale gas exploration concessions. May
the sheer presence of so many important national and foreign companies in both
countries be the best evidence of the potential for cooperation. Shale gas reserves
pose many technical challenges. We believe that in Poland, in our academia and
business, we have some of the solutions.
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Poland – a welcoming academic hub
I’m not sure whether there are any engineering students here, but if there are or if
you are interested in joining this coming boom in exploring for new energy, we
believe that Poland has an interesting offer as regards training engineers in extractive
and energy fields. I don’t know if you know but Poland is right now the largest
producer of silver in the world. I know how strange it is for me to be able to say this
in Latin America. But this is because both in Poland and in our investments abroad,
we have deployed people trained at Polish universities.
We are very interested in your government’s initiative “Science Without Borders”.
I just wanted to tell you that Polish universities are not only open to you but are
actively encouraging you to come and take advantage of our vibrant academic
community.
Conclusion – Across the Atlantic lies also Brazil
Ladies and Gentlemen,
The fashionable buzzword in international affairs is the ‘pivot to the Pacific, to Asia’.
The US is set on concentrating more on that part of the world. But I believe that this
century could be as much an Atlantic century as Pacific. Recent discoveries of gas and
oil off the shores of Brazil, Angola, and Ghana will change the world. And these
findings will surely not be the end, because there are so many unexplored areas off
South American and African coasts.
I believe that the Atlantic, to which we are both related, still will remain very
important. In that area, Poland and Brazil will continue to be players – indeed, more
important players in the future. If the US is interested more in the Pacific, but we stay
with the Atlantic, then I think that there is room here for a partnership between
Poland and Brazil − and the EU and Brazil − that maintains our prosperity and
increases our weight in international affairs. Poland and Brazil are both aspirational
countries and in this sense, we can greatly help each other.
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