Putin To Meet Brazilian President Bolsonaro In Moscow On Wednesday

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Russia and Brazil to discuss bilateral and EAEU trade, economic development and BRICS financial issues

By Chris Devonshire-Ellis

Despite US “intelligence” suggesting Russian President Putin will give an order to invade Ukraine on Wednesday this week, Putin is actually scheduled to meet the Brazilian President Jair Bolsonaro in Moscow that day. Bolsonaro arrives in Moscow on Monday and will hold trade talks on Tuesday and Wednesday before meeting the Hungarian Prime Minister Viktor Orban on Thursday.

The United States has lobbied Bolsonaro hard not to meet with Putin amid the tense standoff between Moscow and the West over Ukraine.

Brazil is a member of the BRICS grouping and has common interests with Russia in agriculture. The country has a politically strong agribusiness lobby, and the trip is likely to focus on agricultural trade, including a possible free trade agreement with the Eurasian Economic Union (EAEU) to give Brazil access to the EAEU markets – which would be a major coup for Bolsonaro and in some areas benefit Brazil’s massive agricultural industry. The EAEU includes Russia as well as Armenia, Belarus, Kazakhstan, and Kyrgyzstan and has a population of 183 million, not dissimilar in size to Brazil’s 212 million.

Russia is the world’s largest producer of grain and would also gain access to the Brazilian market in other areas. Such an agricultural-based move would also impact on Russia in terms of Ukrainian grain exports, as it would tie Brasilia to Moscow and not to Kiev.

Bilateral Trade

In the twelve months February 2021-January 2022, Brazil imported slightly under US$5 billion of produce from Russia, mainly Fertilizers. An FTA with the EAEU would benefit Belarus in particular, as it is a major exporter of these products – yet EU sanctions have prohibited access to most EU markets since 2020.

Russia imported US$2.35 billion from Brazil in the period February 2021 to January 2022, with most imports being Brazilian Coffee, Soybeans, Ground Nuts, Poultry Meat and Raw Tobacco.

Both countries import-export flows over the past twelve months have been somewhat erratic, which is not ​conducive to production planning: a better managed trade and economic partnership will be very much part of the discussions.

A trade deal would appear imminent – Bolsonaro faces elections in October, and he needs to provide some good news for Brazil’s business lobby before then to have any chance of re-election. This is especially pertinent as he has not been getting on with the United States recently and wishes to lessen Brazilian dependence upon the US – the same situation described by the Argentinian President Alberto Fernandez when signing up to join China’s Belt and Road Initiative last week.

Argentina and Brazil are the two largest economies in South America and lead members of the Mercosur Free Trade bloc that also includes Paraguay and Uruguay and has associate trade agreements with much of the rest of South America. Collectively, it has a GDP of US$4.5 trillion. With Argentina heading into a China trade orbit and Brazil apparently to Russia, South American trade opportunities east to Russia and Asia look set to expand.

Recent 2021-2022 BRICS & NDB Bank Developments

Brazil, along with Russia, India, China, and South Africa (BRICS) are also developing trade and commercial ties. The next meeting of the BRICS grouping is set to be held in China this year, while China also holds the 2022 chairmanship of the bloc.

Part of the BRICS organisation is the New Development Bank (NDB), a US$100 billion capitalized multilateral bank working to provide financing to emerging economies. The NDB Chairman is the Brazilian strategic economist Marcos Troyjo who was appointed in 2020 and has a mandate to lead the bank’s development until 2025.

The NDB has recently welcomed an additional member in Egypt, and in September 2021 Bangladesh, United Arab Emirates (UAE) as well as Brazil’s neighbour, Uruguay also joined as members.

In Q4 202, the NDB funded US$80million of the US$100 million project cost of India’s Himachal Pradesh rural water supply, which lacks sustainable infrastructure. Around 42% of the state population have limited access to clean drinking water. This non-availability of reliable water supply also causes the rural population to spend up to 2 hours for water fetching and storing related activities. The Project will construct 24 rural water supply schemes to provide drinking water to 1,255 villages covering eight districts in Himachal Pradesh.

It is also financing 18% of the China – Qingdao Metro Line Six (Phase I). This is located in the West Coast New Area of Qingdao and has 20 stations planned over the total length of 30.2 km. The project includes interchanges with six other metro lines in Qingdao and will substantially improve the connectivity and mobility among important economic and residential areas in the West Coast New Area. Upon completion, it will help Qingdao’s sustainable development by reducing traffic congestion, increasing productivity of workforce, and improving standard of living for residents.

While the meeting will undoubtedly create criticism from many in the West, for Putin and Bolsonaro it appears to be business as normal – which much of that centered on an approach that seems to be creating, along with China and other Asian and South American nations, a new circle of mutual trade and development issues that is drifting away from US and Western influence.

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