‘When China Rules the World’

Chinese President Hu Jintao (R) shakes hands with his Brazilian counterpart Luiz Inacio Lula da Silva at the Great Hall of the People in Beijing, in May 2009. By 2050, Brazil will be the fourth economy in the world. (Xin hua/Rao Aimin)

The New York Times
Chapter 1: The Changing of the Guard

Since 1945 the United States has been the world’s dominant power. Even during the Cold War its economy was far more advanced than, and more than twice as large as, that of the Soviet Union, while its military capability and technological sophistication were much superior. Following the Second World War, the US was the prime mover in the creation of a range of multinational and global institutions, such as the United Nations, the International Monetary Fund and NATO, which were testament to its new-found global power and authority. The collapse of the Soviet Union in 1991 greatly enhanced America’s pre-eminent position, eliminating its main adversary and resulting in the territories and countries of the former Soviet bloc opening their markets and turning in many cases to the US for aid and support.

Never before, not even in the heyday of the British Empire, had a nation’s power enjoyed such a wide reach. The dollar became the world’s preferred currency, with most trade being conducted in it and most reserves held in it. The US dominated all the key global institutions bar the UN, and enjoyed a military presence in every part of the world. Its global position seemed unassailable, and at the turn of the millennium terms like ‘hyperpower’ and ‘unipolarity’ were coined to describe what appeared to be a new and unique form of power.

The baton of pre-eminence, before being passed to the United States, had been held by Europe, especially the major European nations like Britain, France and Germany, and previously, to a much lesser extent, Spain, Portugal and the Netherlands. From the beginning of Britain’s Industrial Revolution in the late eighteenth century until the mid twentieth century, Europe was to shape global history in a most profound manner. The engine of Europe’s dynamism was industrialization and its mode of expansion colonial conquest. Even as Europe’s position began to decline after the First the changing of the guard

World War, and precipitously after 1945, the fact that America, the new rising power, was a product of European civilization served as a source of empathy and affinity between the Old World and the New World, giving rise to ties which found expression in the idea of the West while serving to mitigate the effects of latent imperial rivalry between Britain and the United States. For over two centuries the West, first in the form of Europe and subsequently the United States, has dominated the world.

We are now witnessing an historic change which, though still relatively in its infancy, is destined to transform the world. The developed world – which for over a century has meant the West (namely, the United States, Canada, Western Europe, Australia and New Zealand) plus Japan – is rapidly being overhauled in terms of economic size by the developing world.

In 2001 the developed countries accounted for just over half the world’s GDP, compared with around 60 per cent in 1973. It will be a long time, of course, before even the most advanced of the developing countries acquires the economic and technological sophistication of the developed, but because they collectively account for the overwhelming majority of the world’s population and their economic growth rate has been rather greater than that of the developed world, their rise has already resulted in a significant shift in the balance of global economic power.

There have been several contemporary illustrations of this realignment. After declining for over two decades, commodity prices began to increase around the turn of the century, driven by buoyant economic growth in the developing world, above all from China, until the onset of a global recession reversed this trend, at least in the short run.

Meanwhile, the stellar economic performance of the East Asian economies, with their resulting huge trade surpluses, has enormously swollen their foreign exchange reserves. A proportion of these have been invested, notably in the case of China and Singapore, in state-controlled sovereign wealth funds whose purpose is to seek profitable investments in other countries, including the West. Commodity-producing countries, notably the oil-rich states in the Middle East, have similarly invested part of their newly expanded income in such funds.

Sovereign wealth funds acquired powerful new leverage as a result of the credit crunch, commanding resources which the major Western financial institutions palpably lacked. The meltdown of some of Wall Street’s largest financial institutions in September 2008 underlined the shift in economic power from the West, with some of the fallen giants seeking support from sovereign wealth funds and the US government stepping in to save the mortgage titans Freddie Mac and Fannie Mae partly in order to reassure countries like China, which had invested huge sums of money in them: if they had withdrawn these, it would almost certainly have precipitated a collapse in the value of the dollar. The financial crisis has graphically illustrated the disparity between an East Asia cash-rich from decades of surpluses and a United States cash-poor following many years of deficits.

According to projections by Goldman Sachs, the three largest economies in the world by 2050 will be China, followed by a closely matched America and India some way behind, and then Brazil, Mexico, Russia and Indonesia. Only two European countries feature in the top ten, namely the UK and Germany in ninth and tenth place respectively. Of the present G7, only four appear in the top ten. In similar forecasts, PricewaterhouseCoopers suggest that the Brazilian economy could be larger than Japan’s, and that the Russian, Mexican and Indonesian economies could each be bigger than the German, French and UK economies by 2050. If these projections, or something similar, are borne out in practice, then during the next four decades the world will come to look like a very different place indeed.

Excerpted from “When China Rules the World: The End of the Western World and the Birth of a New Global Order” by Martin Jacques. Reprinted by arrangement with The Penguin Press, a member of Penguin Group (USA), Inc. Copyright (c) November, 2009.

China Demands More From Rich to Unlock Climate Talks


The Copenhagen opening ceremony on Monday as the climate change summit began

By Reuters

COPENHAGEN (Reuters) – China led calls by developing nations for deeper emissions cuts from the United States, Japan and Europe at U.N. climate talks on Tuesday, as a study showed that this decade will be the warmest on record.

The first decade of this century was the hottest since records began, the World Meteorological Organisation said, underscoring the threat scientists say the planet faces from rising temperatures.

Negotiators from nearly 200 countries are trying to seal the outlines of a climate pact to combat rising seas, desertification, floods and cyclones that could devastate economies and ruin the livelihoods of millions of people.

Yvo de Boer, head of the U.N. Climate Change Secretariat, said the Dec 7-18 talks in Copenhagen were “off to a good start.” The EU said it was positive that no one had walked out of negotiation sessions.

But a rich-poor rift continued to cloud negotiations on finance and emissions cuts. Recession-hit rich countries have not yet made concrete offers to aid developing nations who also want the industrialised world to act faster to curb emissions.

China and many other developing nations urged the rich to make deeper cuts in emissions and Beijing scoffed at a fast-start fund of $10 billion (£6.1 billion) a year meant to help developing countries from 2010 that rich countries are expected to approve.

China, the world’s biggest emitter of greenhouse gases, criticised goals set by the United States, the European Union and Japan for cuts in greenhouse gas emissions by 2020.

Su Wei, a senior Chinese climate official at U.N. climate talks in Copenhagen, said the targets broadly fell short of the emissions cuts recommended by a U.N. panel of scientists. The panel has said cuts of 25 to 40 percent below 1990 levels by 2020 were needed to avoid the worst of global warming.

He said a U.S. offer, equal to 3 percent below 1990 levels by 2020, “cannot be regarded as remarkable or notable.” An EU cut of 20 percent was also not enough and Japan was setting impossible conditions on its offer of a 25 percent cut by 2020.

“LIFE AND DEATH”

“This $10 billion if divided by the world population, it is less than $2 per person,” he said, adding it was not even enough to buy a cup of coffee in Copenhagen or a coffin in poorer parts of the world.

“Climate change is a matter of life and death,” he said.

Brazil’s climate change ambassador said his country did not want to sign up for a long-term goal of halving global emissions by 2050 unless rich nations took on firm shorter-term targets — which the Danish hosts view as a core outcome for the talks.

Copenhagen was meant to seal a legally binding climate deal to broaden the fight against climate change by expanding or replacing the Kyoto Protocol from 2013.

While that now looks out of reach, host Denmark wants leaders to at least agree on a “politically binding” deal. The Danish government has said this would be 5 to 8 pages with annexes from all countries describing pledged actions.

Negotiators are also trying to whittle down almost 200 pages of draft text that is expected to form the basis of an eventual post-2012 climate treaty. While negotiators have made progress refining the text, it is still full of blanks and options.

African civil groups led a protest inside the main conference centre in Copenhagen, urging more aid to prepare for global warming. “Africans are suffering. We will not die in silence,” said Augustine Njamnshi of Christian Aid.

“PLEASING THE RICH”

A draft 9-page Danish text with annexes seen by Reuters last week drew criticism by environmental activists, who said it undermined the negotiations.

“Focus on the Danish text right now is a distraction from the negotiations,” said Kim Carstensen, head of conservation group WWF’s global climate initiative, adding the text did not lay out what would happen to the Kyoto Protocol.

He called the Danish text a weak attempt to accommodate the United States. De Boer described the text as an informal paper for the purposes of consultation and not an official part of the negotiations.

Much is riding on what U.S. President Barack Obama can bring to the table in Copenhagen when he joins more than 100 other world leaders during a high-level summit on Dec 17-18.

Washington’s provisional offer is to cut emissions by 17 percent by 2020 from 2005 levels, or 3 percent below the U.N.’s 1990 baseline.

The U.S. Environmental Protection Agency ruled on Monday that greenhouse gases endanger human health, allowing it to regulate them without legislation from the Senate, where a bill to cut U.S. emissions by 2020 is stalled.

Delegates cautiously welcomed the step as a boost for Obama.

(Additional reporting by Gerard Wynn, Alister Doyle, Richard Cowan and John Acher in Copenhagen; Writing by David Fogarty; Editing by Noah Barkin)

Latin America’s honeymoon with Obama may be over

BY ANDRES OPPENHEIMER
aoppenheimer@MiamiHerald.com

Only a few months ago, Latin American leaders hailed the Obama administration as a new beginning in hemispheric relations. But now, the honeymoon is over.

Brazil, the biggest country in the region, perhaps emboldened by its steady economic growth, oil discoveries and a recent cover story in The Economist magazine headlined “Brazil takes off,” is stepping up its criticism of U.S. foreign policy. And several of its neighbors are going along.

The U.S.-Brazilian spat over the Nov. 29 elections in Honduras is the latest in a series of recent confrontations after an eight-month love affair. President Barack Obama was widely applauded at the April Summit of the Americas in Trinidad and Tobago and got much applause in June when Washington joined the rest of the region in voting to lift Cuba’s 5-decade-old suspension from the 34-nation Organization of American States.

SUPPORT FOR IRAN

But in recent weeks, the elections in Honduras and Brazil’s open support for Iran, as well as Colombia’s decision to allow U.S. anti-narcotics troops to use its military bases, have soured the atmosphere.

• On Honduras, Brazil — supported by Venezuela, Argentina, Bolivia, Ecuador and Nicaragua, among others — has refused to recognize the recent election. On the other hand, the United States — supported by Colombia, Peru, Costa Rica and Panama — says it will recognize the Honduran vote.

Both sides have a point. Brazil and its friends argue that recognizing an election convened by a de facto government would set a bad precedent and encourage coups in other countries. U.S. officials counter that the Honduran election was planned long before the coup, and that most of the current Latin American democracies were born out of elections convened by de facto regimes.

In addition, critics of the Brazilian position point out that it doesn’t make sense to impose sanctions on Honduras, which held multiparty elections, while demanding to lift sanctions on Cuba, which hasn’t held a multiparty election in five decades.

• On Iran, Brazilian President Luiz Inácio Lula da Silva recently gave a red-carpet welcome to Mahmoud Ahmadinejad, giving Iran’s racist president a much-needed international image boost after the United States and much of the world blasted Iran’s nuclear program and Ahmadinejad’s dubious election victory earlier this year.

In a telephone interview, Arturo Valenzuela, the head of the U.S. State Department’s office of Western Hemisphere affairs, downplayed the rift in U.S.-South American relations. He said Brazil and Washington see eye to eye on most issues, although he highlighted U.S. concerns about Lula’s support for Iran.

“I don’t see a worsening of relations,” Valenzuela told me. “We are disappointed about Brazil’s vote [on Iran’s nuclear program] at the United Nations IAEA, because it was a vote in which China, India and Russia agreed, and Brazil abstained.”

He added, “We also appreciate the fact that many countries, including Argentina and Uruguay, voted in support of a Canadian-sponsored human rights resolution that criticizes Iran on human rights, in which Brazil also abstained.”

THIRD WORLD VOTES

Why is Brazil taking a more confrontational stand? Some Brazil analysts say that widespread optimism about Brazil has gone to Lula’s head, while others attribute it to Brazil’s quest for Third World votes in its campaign for a permanent U.N. Security Council seat.

Most likely, however, it has to do with Brazil’s domestic politics. Brazil will hold presidential elections in October, and Lula’s candidate, government chief of staff Dilma Roussef, is trailing Sao Paulo state Gov. Jose Serra in the polls.

Both Roussef and Serra are left-of-center candidates. Lula may be trying to make sure that his candidate is not outflanked on the left, and could be preparing the ground to cast Serra — who has criticized Lula’s embrace of Ahmadinejad — as a candidate with weak “progressive” credentials.

My opinion: Obama will prevail over Lula on the Honduran crisis. Already, the 27-nation European Union is inching toward the U.S. position. And after the Jan. 27 inauguration of President-elect Porfirio Lobo, the Honduras crisis will fade out of the headlines and more Latin American countries will quietly recognize the new government.

Still, U.S.-Latin American relations may not go back to what they were a few months ago. Obama has won many friends by departing from former President George W. Bush’s arrogant foreign policies. But not being Bush is no substitute for a proactive policy in Latin America.

Unless Obama pays more attention to the region, there will be more cracks ahead in U.S.-Latin American ties.

Brazil, U.S., OAS flunked Honduras test


Honduras former president Manuel Zelaya with members of Carter Center in the Brazil´s embassy, in Tegucigalpa

BY ANDRES OPPENHEIMER
aoppenheimer@MiamiHerald.com

Brazil, the United States and the Organization of American States deserve a gold medal each for their awful handling of Sunday’s presidential elections in Honduras.

Let’s examine how the main international players behaved in the crisis triggered by the June 28 civilian coup against deposed President Manuel Zelaya, which was the first break of the rule of law in Latin America in nearly two decades.

• The gold medal for political hypocrisy should go to Brazil. Brazilian President Luiz Inácio Lula da Silva is leading the group of nations that is not recognizing the results of the Honduran elections won by leftist-turned-conservative businessman Porfirio Lobo. Lula da Silva says, rightly, that recognizing Lobo’s election would set a bad precedent for Latin America because it would legitimize an election convened by a non-democratic government.

The trouble with that argument is that most of today’s democracies in Latin America were born out of elections called by coup-originated governments, starting with the 1989 victory of late Chilean President Patricio Aylwin in national elections organized by Gen. Augusto Pinochet’s dictatorship. Also, the recent Honduran elections were not a concoction of outgoing President Roberto Micheletti’s de facto regime, but had been scheduled before the coup.

But what makes the Brazilian position a showcase of political hypocrisy is that, only days before asking the world not to recognize Lobo’s election in Honduras, Lula da Silva had given a red carpet welcome in the Brazilian capital to Iranian President Mahmoud Ahmadinejad, giving him much-needed international recognition.

In addition to defying United Nations warnings about its nuclear program and repeatedly stating that he wants to wipe Israel off the face of the earth, Ahmadinejad has just proclaimed himself the winner of highly dubious elections. Worse, Ahmadinejad’s regime has condemned eight opposition protesters to death — something the outgoing de facto Honduran government has not even come close to doing.

Besides, how can Lula da Silva call for maintaining international sanctions against Honduras while at the same time urging the world to lift remaining sanctions against Cuba?

Brazil apparently wants to maintain Honduras’ suspension from the OAS while it recently championed the vote that lifted Cuba’s nearly five-decade suspension from the OAS. It’s a curious stand, considering that the Cuban regime has not allowed a free election nor opposition parties in five decades, something that cannot be said about Honduras’ de facto government.

Granted, Brazil may be forced to be louder than others in defense of Zelaya’s position because the ousted Honduran president is holed up at the Brazilian Embassy in Tegucigalpa. But Brazil’s handling of the Honduran crisis has been a joke.

• The gold medal for flip-flopping — and keeping all of us scratching our heads — should go to the United States.

At first, the Obama administration joined Brazil and other Latin American countries in denouncing the coup and cuting off development and anti-drug aid to the Micheletti regime. Then, the U.S. State Department said it would recognize the results of Sunday’s elections, arguing that it would help re-establish full democratic rule in the country.

More recently, it backtracked a little bit, suggesting that Honduras needs to create a government of national unity before the transfer of power to get Washington to lift its sanctions. If you are confused, don’t worry — so am I.

To be sure, the Honduran crisis took place while the job of head of Latin American affairs at the State Department was vacant because Republicans had delayed the nomination of Arturo Valenzuela until his confirmation last month. Still, the U.S. position has at best been confusing.

• The Organization of American States deserves a gold medal for one-sidedness. Instead of condemning the coup and simultaneously casting some criticism at Zelaya for disobeying his country’s Supreme Court rulings, the OAS in the early days of the crisis campaigned almost exclusively to support Zelaya. That made it more difficult for the 34-country group to intervene as an honest broker in the ensuing crisis.

What should all international players have done? Contrary to what right-wingers in Congress say, there should be some sanctions against Honduras for what undoubtedly was a break of the rule of law. No coup should go unpunished.

But there should be a distinction between political sanctions and economic sanctions. Holding Honduras’ president-elect accountable for a coup he did not take part in is unfair.

Furthermore, it makes no sense to call for imposing economic sanctions on Honduras, while demanding lifting them from Cuba.

Negotiators at Climate Talks Face Deep Set of Fault Lines

Countdown to Copenhagen, Parque do Ibirapuera, São Paulo, Brazil

By TOM ZELLER Jr. – The New York Times

With the scientific consensus more or less settled that human activity — the burning of fossil fuels, torching of forests, and so forth — is contributing to a warmer and less hospitable planet, one might reasonably ask, why is it so hard to agree on a plan to curb those activities?

The answer lies with the many fault lines that cut through the debate over climate change. Those deep divisions will be on display beginning this week as representatives of 192 nations gather in Copenhagen for a United Nations conference on the issue.

Organizers had hoped to emerge with an international compact to reduce greenhouse gas emissions and help countries most threatened by rising sea waters and temperatures. But the divisions between nations are such that world leaders agreed last month to put off resolving the most contentious issues until next year. They will try instead to reach a nonbinding interim agreement in Copenhagen, then work toward a binding treaty in 2010.

Just what will happen, of course, remains to be seen. Here’s a primer on some of the major themes and fissures:

RICH NATIONS VS. POOR NATIONS

Who should pay whom for what — and how much?

The Bolivias and Chads and Mauritanias of the world argue that they are more vulnerable to changes in temperature, and have little or no resources to adapt to changes in the growing seasons or increased rainfall or — worst case — to relocate large numbers of people.

They want the rich world to commit to far deeper emissions cuts than they already have, and to provide them with cash and technology so they can prepare for the worst and develop a clean energy infrastructure for themselves.

The rich world, meanwhile, is busy trying to figure out just how to calculate the cost of all this (estimates run into the trillions of dollars), and how to divvy up the bill.

DEVELOPED VS. DEVELOPING ECONOMIES

This is where postindustrial economies like the United States and Europe, which became prosperous by burning carbon-dioxide-spewing fossil fuels, face off against industrializing economies like China, Brazil and India, which resent pressure to decarbonize their energy systems now that they are growing.

The standoff between China and the United States underscores the issues. The global trade rivals were reluctant to commit to emissions targets until each had an idea of what the other planned. The two countries together are responsible for 40 percent of the world’s greenhouse gas emissions. But all players have been eyeing each other warily.

In recent weeks, bidding has begun, with Brazil, then the United States, followed by China and, last week, India, offering up individual emissions goals. But they have used different baselines against which to measure their reductions, making it difficult to determine whether there is parity.

ISLAND AND COASTAL NATIONS VS. THE CLOCK

In mid-October, ministers of the government of the Maldives, a low-lying island nation in the Indian Ocean, donned scuba gear and held a 30-minute cabinet meeting underwater off the coast of the capital, Malé.

The stunt was designed to highlight the nation’s plight — and that of three-dozen or so other small island and coastal countries — should global warming raise sea levels in the coming decades. Even a modest increase could leave a number of low-lying nations uninhabitable.

As a bloc, these countries have been lobbying for an international agreement to keep average temperatures from rising beyond 1.5 degrees Celsius — or 2.7 degrees Fahrenheit. They also want global emissions scaled back by as much as 85 percent by midcentury.

The bloc, which includes a wide range of economies, from relatively well-to-do Singapore to strugglers like Haiti, wins points for being at the front lines of a planetary problem, but its political clout at the negotiating table is uncertain.

EUROPE VS. EUROPE

Even though the European Union has been at the vanguard of renewable energy development and emissions reduction through its carbon trading scheme, it is struggling internally over each nation’s carbon quotas, assistance to developing countries and fidelity to the emissions reductions agreed to in 1997 under the Kyoto Protocol.

While Europe as a whole is on track to meet its goal of an 8 percent reduction over 1990 emissions levels by 2012, not every country has pulled its weight. Nations unlikely to meet their individual Kyoto targets include Italy, Spain and, yes, Denmark, host of the Copenhagen talks.

Poland and Estonia, meanwhile, have been bickering with the European Commission over the amount of carbon dioxide the two countries should be allowed to emit. Both rely heavily on coal for electricity.

Oil-producing nations are worried about the impact of a global climate deal, and they have increasingly argued that any agreement that would reduce reliance on fossil fuels should include compensation for their lost revenues.

Saudi Arabia has spearheaded this argument, and while environmental groups and other stakeholders have dismissed the notion as a stunt, oil producers are not without the ability to muddle negotiations if push comes to shove.

Meanwhile, developers of wind, solar and other renewable technologies anticipate a windfall if the community of nations — including mega-polluters like the United States — agree to a binding climate treaty. So, too, do global banks, which would presumably do handsomely through an expanded carbon trading market.

Lobbyists from all sides will be wining and dining delegates over the next two weeks.

CARBON TAXERS VS. CARBON TRADERS

Many experts argue that the only way to tackle climate change is to put a price on carbon. Some say the best way to do that is to create a cap-and-trade system, in which industries are issued permits to emit carbon dioxide up to a certain level, or cap. Companies that emit below the cap can then sell their permits on a carbon market, where companies exceeding the cap will, presumably, buy them so they can continue to pollute. The total number of permits would not exceed an overall emissions target.

Europe has had an emissions trading scheme since 2005. Some critics argue, however, that such systems are unnecessarily complicated and prone to manipulation. A simpler solution would be a tax on carbon, they say.

But with a cap-and-trade scheme forming the bedrock of negotiations in Copenhagen, and among legislators in Congress seeking to pass national climate legislation, the carbon-tax camp has been increasingly marginalized.

EMERGENCY VS. WE’LL FIGURE IT OUT

The idea that human beings are nudging the planet’s thermostat upward is widely accepted among climatologists. But just how rapidly things are changing, to what extent and where — and at what threshold, if any, should we abandon all hope — are far less settled questions.

In 2008, the NASA scientist and global warming guru James Hansen identified 350 parts per million as the upper limit for safe atmospheric carbon concentration. Current levels are approaching 390 parts per million.

Others argue that there is no reason for panic — nor for what they say is an economy-crushing global climate treaty. They are putting their faith in human ingenuity, arguing that planetary-scale engineering projects like blasting seawater into the atmosphere to increase the heat reflectivity of certain clouds (yes, that’s a real idea), will eventually solve the problem.

Brazil’s Sugar Rush


Photo: Reuters

by Peter Day – BBC World Service

Many people have been puzzled by “B” in BRICs; they have wondered why Brazil was included with Russia, India and China in the BRICs club of nations which the investment bank Goldman Sachs thinks will thrust their way to the global economic top table over the next few decades.
After all Brazil has been an up and coming country for the past 100 years and yet something always seems to stop it from actually getting to the top.

As I explained in a recent Global Business there are signs that this time the predictions may come true; there’s certainly an extraordinary spirit of optimism abroad in Brazil at the moment.
One of the things that may have happened is that decades of Brazilian economic isolationism have actually paid off.

For years importing foreign goods was regulated and taxed, to the extent that Brazil built up a manufacturing industries to supply its own (considerable) home market because bringing things inform abroad was impossible … even for the huge international automobile companies, for example.

And that’s one of the reason why Brazil is now well ahead in the alternative energy stakes. Figures from BP show that last year one third of Brazil’s energy was produced renewably… hydropower, wind power and ethanol largely produced from sugar cane.

Homegrown

This is a remarkable record when you compare Brazil with the other developed countries included in the club of 30 nations in the Organisation for Economic Cooperation and Development. Totalled up, OECD energy production is still only five percent renewable … 95percent non renewable. If this is a race to sustainability, Brazil is very much in the lead.

In fact sugar cane has been used to create alcohol for fuel in Brazil for some 90 years. But the use of ethanol took off in the 1970’s when the Arab oil producers in OPEC flexed their muscles and the world oil price jumped.

Brazil had its own homegrown fuel. The two 1970’s oil shocks encouraged Brazilian sugar growers to expand their acreage, refiners to build ethanol plants and those domesticated car manufacturers to producer engines which could burn both alcohol and gasoline.

When I first went to Brazil 20 years ago the distinctive smell of ethanol exhaust hung around the streets, but that now seems to have been overcome. So (I’m told) has the tendency for alcohol to induce rust in auto engines, a problem in the past.

Brazil’s car makers seem to have mastered the art of making flex fuel cars that can adapt to what they are being filled up with, and they are getting a lot of experience of a technology that may have global potential eventually.

Ethanol is obviously attractive from the diversity point of view, but some big questions remain. In a hungry world is it right to use food for fuel, or food growing land for fuel?

Reserves

What is the carbon footprint of ethanol production when you factor in things such as fertiliser, and transportation? There are plans for ethanol pipelines across the country from the main production areas in the state of Sao Paulo, but most ethanol at the moment is moved in trucks which still guzzle carbon fuel.

And (though this is comprehensively denied by Brazilian agriculturalists I’ve met) conservation campaigners in other parts of the world have big fears that the remaining Amazon forest is being devoured by demand for new land for crops such as sugar cane. Renewables are not necessarily a completely benign idea.

Meanwhile this year the Brazil energy picture has got very complicated indeed. Exploration companies have just discovered absolutely huge new reserves of oil in the Atlantic off the Brazilian coast.

And Brazil’s green campaigners are fearful that the effort of exploiting the new tricky-to-extract oil deposits will divert resources and attention from renewables such as ethanol, and then tempt governments into courting popularity with subsidised fossil fuel from the giant new oilfields.

This could be the familiar “oil curse” with a renewable twist to it. Just thinking about these things takes, well, a lot of energy.

Importing to Brazil


Photo: Matt Hintsa

© Connection Consulting 2009

It was virtually impossible to find imported products in Brazil before 1990. The Brazilian government made use of protectionist measures such as limiting quotes and extremely high taxes to discourage importing of goods. This picture however changed when ex-president Fernando Collor de Mello broke the importing barrier by reducing the average importing taxes and abolishing many limiting quotes.

Although it became easier to import products, there are still other challenges that companies will face when bringing their goods into Brazil. Besides of meeting prohibitions on the import of certain items such as used clothings, cars and machinery, importers have to deal with complex cascading taxes and charges that increase significantly the cost of importing products into the country. In most cases taxes (both federal and state) and other charges will add about 100% to the importing cost, depending on what type of product and which state is the final destination for the import.

How to start importing

All importers must be registered at Foreign Trade Secretariat (SECEX) through a system named Sistema integrado de comércio exterior (Siscomex). This system registers, monitors and controls international trades with Brazil. You will be able access to Siscomex from banks, broker agencies or terminals on foreign trading related governmental agencies. It is also possible to access the system from your office if you obtain a password at Federal Revenue Secretariat.

You will be registered at Siscomex as importer or exporter at Registro de Exportadores e Importadores (REI) the first time you are importing goods. The next step is to obtain an importing license if your product requires one. There are two types of license:

* Automatic license: Automatic Licenses are granted to most imports into Brazil.
* Non-automatic license: These are necessary for products that require approval from other ministries or agencies, such as National Petroleum Agency (ANP), Brazilian Institute of Environment (IBAMA), Ministry of Science and Technology (MCT). The list of products that require non-automatic licenses can be found here.

It is important to make sure you have the necessary license before you ship the goods, as some items are not allowed to enter the country without the documentation in place. Unfortunately, if your product is under a non-automatic license regime, it may take several months before you receive your license.
RTS – Simplified taxation regime

If you you are planning to import your products using the regular mail service or couriers, you may benefit from a simplified taxation regime when your import has a value under USD 3000. RTS however doesn’t apply for alcoholic beverages, tobacco and smoking related products.

The fixed import tax is 60% of product value declared in the commercial invoice plus the freight and freight insurance costs if these are not included in the value of the goods. The procedure to pay the tax will depend on the carrier you choose:
Regular mail

If the goods worth less than USD 500, taxes (import tax and ICMS) are paid at the post office when you are picking up the goods. For goods that worth above USD 500 and below USD 3000, you must register the import at Siscomex to obtain a Declaração Simplificada de Importação (DSI). In addition to ICMS (VAT) you will be required to pay BRL 150 for customs clearance.
Couriers

Courier will calculate and pay the necessary taxes directly to the Federal Revenue Secretariat, and the addressee will be charged later.

*Written by Connection Consulting, a business consultant boutique for foreign technology companies that want to develop business opportunities in Brazil. Connection Consulting have the HQ in São Paulo and offices in London and San Francisco. For more information see: http://connectionconsulting.com.br/ or contact them at info@connectionconconsulting.com.br

Jatropha Takes Root in Brazil

By ROBERT P. WALZERThe New York Times

A worker in Mozambique holding jatropha seeds. Efforts to make jatropha-based biofuel have met with mixed success.

A Brazilian start-up is testing the possibility of implementing a large-scale biofuels project using jatropha, a family of hardy, succulent plants.

The company, BioVentures Brasil, is getting $1 million from the InterAmerican Development Bank for a pilot project on about seven hectares (17 acres) in Bahia, in northeastern Brazil, where it hopes to eventually develop a plantation on 20,000 hectares (49,400 acres) of mostly abandoned cattle-grazing land. The pilot will determine whether the species can adapt to the area’s soil and climate, as well as other factors like how best to work with local communities.

Efforts to make jatropha-based biofuel have met with mixed success elsewhere. A project in Ghana, for example, appears to be moving forward. But in Tanzania, where hopes were also high for a large jatropha-based biofuel project, the government reportedly suspended all biofuel investments recently after concerns arose over food shortages.

Ivan Nuñez, a banker with the I.D.B. who helps vet biofuels investments, said that multilateral lenders like the I.D.B. and the World Bank had turned more cautious on biofuels after their effects on the price and availability of food became apparent. He also noted that commercial long-term financing for such projects had also diminished as oil prices declined from their heights in the summer of 2008.

Still, the I.D.B. sees promise in biofuels, according to Mr. Nuñez, and it is backing seven such projects — two involving waste, three involving sugarcane and two involving jatropha, including the one in Bahia. The bank, however, is treading carefully. It recently created a stricter “Biofuels Sustainability Scorecard’’ to help project developers gauge issues of concern like food security, water management, biodiversity, carbon emissions and indigenous rights.

“We’re very interested in biofuels as long as they don’t compete with food,’’ said Sergio Rivera-Zeballos, the I.D.B. investment officer working on the BioVentures project. “We’re interested in jatropha because it can grow on degraded lands that are not in use for food production and because if it’s successful it could lead the way for a sustainable crop in other locations.’’

BioVentures is backed by EuroVentures, a London- and Sao Paulo-based investment firm active in Brazilian energy projects, and Grupo Vigna Brasil, a Brazilian agribusiness consultancy.

BioVentures hopes to eventually raise about $150 million from investment firms that specialize in agribusiness, and from strategic investors in power production or fuel distribution and refining “who see the benefits of potential carbon credit and sustainability aspects of such a project,’’ Guillaume Sagez and Adrian Calvert, two EuroVentures partners, said in an e-mail. The company aims to sell the fuel to Brazilian and European firms, which would use the jatropha oil to generate electric power.

This month, the company is planting jatropha curcas seeds, a species cited by Goldman Sachs as having among the best potential for biodiesel production. They were supplied by Brazil’s secretary of agriculture, the partners said.

Climate talks remain alive, but so do many obstacles

By Juliet Eilperin, Washington Post Staff Writer

By offering concrete emission targets last week, the United States and China have resuscitated global climate talks that were headed toward an impasse. But the details that have yet to be resolved — including the money that industrialized countries would offer poorer ones as part of an agreement — suggest a political deal remains a heavy lift for the 192 countries set to convene in Copenhagen in little more than a week.

Negotiators aim to produce a blueprint for a legally binding international treaty that would replace the Kyoto Protocol when it expires in 2012 and govern individual countries’ greenhouse gas emissions.

Although the proposals from the world’s two biggest greenhouse-gas emitters have boosted the prospects for a deal, they demonstrate something else as well: No one wants to shoulder the blame for failure at Copenhagen, even if it means the final outcome falls short of what many had envisioned a year or two ago. The U.S. pledge to cut its emissions by 2020 and China’s offer to lower its carbon dioxide output relative to the size of its economy by the same date are more modest than what their negotiating partners had demanded.

The fact that countries are defining their climate goals in varied ways — including different baseline years and efficiency targets rather than absolute cuts — makes it hard to assess their commitments. The United States has pledged cuts that are modest in the first decade but ambitious 15 and 20 years from now, while China has set a target that could amount to a meaningful reduction if the country’s growth rate slows somewhat.

Keya Chatterjee, the U.S. director for the World Wildlife Fund climate change program, likened the developments to “a phoenix . . . rising from the ashes.” She added that, under a best-case scenario, “It’s not a deal that’s going to solve the problem of climate change a hundred percent. . . . But it is a deal that’s going to create a foundation and an international architecture for resolving this issue over time.”
A senior Obama administration official offered a more cautious assessment: “There’s a very real chance of getting this done, but hurdles remain.”

The biggest remaining obstacle is money, including how much the developed world will give developing nations to cope with the impact of global warming and to acquire technology to curb their emissions. The United States has not said how much it would pay into any global fund, which the Europeans have estimated would require at least $10 billion annually beginning next year.

And on Thursday, Brazilian President Luiz Inácio Lula da Silva said at a meeting of Amazon nations that wealthier countries must “pay the price” for protecting rain forests that are vulnerable to clear-cutting and burning by farmers and ranchers, activities that help fuel global warming.

Connie Hedegaard, the Danish minister for the climate conference, said “the decision on finance” was the most pressing issue developed countries face.

The Obama administration has allocated about $1.2 billion toward international climate programs as part of its proposed fiscal 2010 budget. Sen. John F. Kerry (D-Mass.), chairman of the Foreign Relations Committee, said in an interview that it would take at least twice as much to help seal a deal in Copenhagen.

China’s announcement Thursday that it would send Premier Wen Jiabao to the talks and improve its economy’s energy efficiency — by as much as 45 percent by 2020, compared with 2005 levels — makes it easier for other countries to commit to a treaty, but it remains unclear how the outside world would verify these cuts.

“It’s great the Chinese have come forward with a plan, but are they willing to have that part of a binding agreement?” said Stephen Eule, vice president for climate and technology at the U.S. Chamber of Commerce’s Energy Institute.

South Korea’s climate change ambassador, Chung Rae-kwon, whose country just pledged to cut its emissions 4 percent below 2005 levels by 2020, wrote in an e-mail to The Washington Post that China’s proposal was “a great step forward” but added, “The issue now is how this Chinese target can be captured in the agreement to be achieved in Copenhagen.”

Several U.S. senators have said they cannot endorse domestic climate legislation or an international treaty unless it ensures that such economic competitors as China and India will take steps to curb their carbon dioxide output.

Senate Republican Conference Chairman Lamar Alexander (R-Tenn.) said in an interview that it was hard to determine whether the Chinese announcement addresses that concern. He added that he would rather have Obama focus on building more nuclear power plants and electrifying the U.S. auto fleet than “making trips to Copenhagen, trying to convince China to make itself poorer when so many people there live on less than a dollar a day.”

Daniel Price, an international economics adviser on the climate talks under former president George W. Bush, said negotiators still must resolve a range of issues, such as protecting the intellectual property rights of technological innovators and ensuring the integrity of any carbon trading scheme created under the pact.

The need for consensus under the United Nations Framework Convention on Climate Change, which governs the talks, offers further complications. A bloc of African nations agreed this month on their bottom line for any deal but have not disclosed it. Major developing countries such as China, India and Brazil say they, too, will offer a unified position at the negotiations, but they have yet to determine it.
India’s environment minister, Jairam Ramesh, told the Hindustan Times newspaper that China’s announcement was “a wake-up call. . . . We have to think hard about our climate strategy now and look for flexibility.”

Dominick DellaSala, president of the National Center for Conservation Science and Policy, said the emerging compromise could prompt negotiators to “lock in” less ambitious emission targets in the short term.

Even Hedegaard, the Danish minister, noted that the current climate pledges by developing countries amount to an 18 percent reduction below 1990 emission levels by 2020, but the United States is pledging to cut emissions by about 4 percent by then. Europeans and many scientists have called for a 25 to 40 percent cut.
Cutting a political deal now, argued Hedegaard and environmental advocates such as Chatterjee, makes more sense than holding out for a perfect agreement.

“If we don’t resolve it now, it’s not going to get any easier,” Chatterjee said. “Time doesn’t really help resolve issues of equity.”

The Joys, and Lessons, of Traveling to Brazil

By MATTI ANTTILA/The New York Times

Photo: Lily Kesselman
Matti Anttila is president of a New York liquor company with a distillery in Brazil. He travels there often and has discovered there is a richness to the country that many tourists miss.

I’VE been flying since I was a child. I was only 8 years old when I had my first solo flight to Europe. I had to wear my passport around my neck, and I always got a lot of attention from the flight attendants. Many of them would put me in the business-class section, even though I belonged in economy.

I never really appreciated it then. Now I do. I’m a small-business owner, and flying is expensive. I try to stay loyal to one or two carriers so I can at least get upgraded out of coach. Sometimes it works. Sometimes it doesn’t.

Occasionally, some cool things happen to me during a flight.

A few years ago, I struck up a conversation with a guy sitting next to me. He talked about his skydiving habit and kept me entertained during the entire flight. When we landed, my connecting flight was delayed, and he offered to let me stay at his home. I declined because there was a later flight I could take.

We kept in touch, and later that week I got a call from him inviting me to a party. It was at the Playboy Mansion.

Of course, I went. I was single, and it was a blast.

I’m married now. But I suppose I would still go. You could make a lot of business contacts, and I have a very understanding wife. But it’s doubtful I would ever have the opportunity to go again, so just how understanding my wife would be is rather moot.

I usually don’t talk to my seat mates a lot during flights. It’s the one time I get to catch up on reading or do some work that I just can’t get to during the week.

One thing that I always have to explain is my company name. Cachaça is a Brazilian liquor, made from fermented sugar cane. It’s one of the most popular liquors in Brazil, but people outside of the country don’t know a lot about it. People always have a lot of questions about Brazil, especially since Rio de Janeiro won the 2016 Olympics bid.

Our distillery is in Brazil, and when I started the company, I was there practically all the time. Now, I try to go at least once a quarter.

What I tell people is that Brazil is a huge country. And every state within it has a different feel. That’s why you have to give yourself enough time to try to connect with the locals, who can help you discover the specific culture of each place.

The biggest mistake I see is people going to Rio de Janeiro without a specific plan and then never leaving the tourist area around Copacabana. Brazil is a whole lot more than that.

A lot of people have a very poor perception of Brazil. Most Americans go there for business or Carnival and rarely get to experience some of the lesser-known areas of the country.

When Brazil is in the news, it’s rarely for anything good. There are issues, like the shanty towns around the bigger, metropolitan areas. But I figure there are places in New York I wouldn’t go after dark. The same is true in Brazil. Therefore, I’ve never had one minute of feeling less than safe. And I think that things will only improve the closer we get to the Olympics.

Actually, the worst thing that ever happened to me regarding Brazil was that the airline lost my bags. I was in Rio, so it wasn’t tough to find clothes. And better yet: I just passed the time drinking some cachaça until my bags eventually found me.

Q. and A. With Matti Anttila

Q. How often do you fly?

A. Practically every week, both domestic and international.

Q. What’s your least favorite airport?

A. Heathrow. It’s massive and constantly congested, and they have very strict rules regarding carry-on luggage.

Q. Of all the places you’ve been, what’s the best?

A. Santa Barbara. It’s beautiful, and it’s my home.

Q. What’s your secret airport vice?

A. Buying paperback spy novels. They are a great release on long flights.

By Matti Anttila, as told to Joan Raymond. E-mail: joan.raymond@nytimes.com.