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Brian Wilson: Brazilian opportunities beckon

Life's a beach &with unemployment of less than 5% and skill shortages driving demand. Picture: Getty

Life's a beach &with unemployment of less than 5% and skill shortages driving demand. Picture: Getty

THERE are worse places to wake up than overlooking Copacabana beach – even if a hard day of talking about oil, gas and the Brazilian economy lies ahead. Such sacrifices must be made.

Actually, it is quite uplifting to talk about the Brazilian economy these days. There are few countries on earth that have had a better decade than Brazil as it proceeds along a path of democratic socialism owing more to the Third Way than the spirit of Bolivarian revolution.

Who cares what it is called, so long as it is making people’s lives better – which it is doing on a grand scale. I know few societies where evidence of progress is more obvious to the eye, not least in the form of omnipresent new housing, which is allowing people an escape from the poverty of the favelas.

Statistics back up perceptions. Three million low-cost houses are being built. Brazil is jostling with the UK to be the world’s seventh-largest economy. Ten million people a year are being lifted out of poverty. Middle-class growth is underpinning a consumer boom in everything from cars (Brazil has the world’s sixth-biggest automobile industry) to whisky, which explains why Brazil drinks more Johnnie Walker Red Label than any other country.

Unemployment stands at less than 5 per cent and skill shortages are driving demand for technical education. We have a lot to learn. The necessary caveat is that poverty, corruption and crime still exist on formidable scales. A decade is not long enough. But if ever I witnessed a society moving in the right direction, it is this one. And like other Latin countries discovering the same path, it has achieved that most elusive of prizes – stability.

Britain goes back a long way in our connections with Brazil – we built their railways, promoted its decolonisation (in our own interests), introduced football. Then when other opportunities beckoned, we largely forgot about a whole continent. It took too long to recover ground, but British companies, government and educational institutions do now recognise the scale of what is happening here.

In past ministerial roles, I travelled a lot in Latin America and heard the same story repeatedly. It went roughly like this: “Britain used to be big here but then, after the Second World War, you lost interest and left us to the Americans. But we don’t want to be treated like the Americans’ backyard, so please come back.”

Since then, political events have strengthened that opportunity. While it would be over-optimistic to declare American hegemony in the region dead, it is certainly nothing like it used to be when fragile democracies were routinely destabilised and uniformed thugs put into power in order serve the interests of the almighty dollar.

Brazil is the most profound example of that change, if not the one which attracts most headlines. When Luiz Inácio Lula da Silva of the Workers Party was elected as president in 2002, having finally defeated electoral fraud that three times cheated him of victory, the gloomy prognosis was that he would go down the polarised route of Hugo Chávez in Venezuela and Evo Morales in Bolivia, leading to economic chaos followed by a flight of capital and, in all likelihood, a return to strong-arm rule.

That proved to be about as far wide of the mark as it is possible to be. The strategy of foreign investment, education and social reform – continued under Lula da Silva’s successor, president Dilma Rousseff – looks like proving a lot more sustainable than alternative models. They have kept the poor onside on the basis that change at the current pace is a better bet than anything else that might emerge in a country which, just a decade ago, had 50 million people living on less than a dollar a day.

One of Brazil’s current initiatives is called Science Without Borders, a magnificent concept, which also reminds us of how fast we ourselves need to run in order to keep up, both educationally and economically. The Brazilian government is paying for 100,000 students, at undergraduate and postgraduate levels, to undertake part of their courses in developed countries, including the UK.

I was talking here to Albert Rodgers, vice-principal of Aberdeen University, who described it as “the best example of educational and scientific co-operation I have ever come across”. The UK has committed to taking 10,000 students and they are already arriving, with Scottish universities well to the fore. Better still, industry is piling in to sponsor them – for example, British Gas is supporting 21 PhD students at Aberdeen.

The great thing for our future interests is that another 10,000 ambassadors will go out into the world, many of them occupying key future roles in global science and technology. People who have had a good educational experience tend not to forget their loyalty to the host institution throughout their professional careers. It all makes rather a short-sighted nonsense of worrying too much about visa restrictions for friendly countries like Brazil.

The cutting edge of Britain’s commercial relations with Brazil lies in oil and gas. More than 50 companies, many of them from Scotland, are in Brazil this week for a UK Energy Showcase, which has created top-level dialogues with Brazilian government and industry. Scottish Development International is opening an office here this week, in the consulate building and working closely with UK Trade and Investment.

Incidentally, it is slightly surreal to view the pronouncements back home about future oil prices and North Sea investment from the vantage point of Rio. The Brazilians have massive new discoveries, both onshore and offshore, which they think will triple production by 2020. At the same time, their gas developments are being given new urgency by the collapse of the gas price in the United States due to fracking. Their own companies now need cheap gas to compete.

The honest answer is that the only certainty is uncertainty– there are simply too many variables at work, most of them beyond our control, in determining where investment will be made or how prices will move.

I can’t help recalling that when I first came to Rio, it was to promote exporting by Scottish companies in the oil and gas sector at a time when the price of oil had fallen to below US$10 a barrel. The perception then was that they must either learn to export or die.

Hundreds chose the latter option – and a jolly useful catharsis it has proved to be.

 

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