Seeking New Economic Partnerships

7Latin America did not start from scratch in the Middle East. Ties had long existed with Near East countries – Egypt, Lebanon, Syria, Jordan – which had established diplomatic relations with Latin American nations almost as soon as they became independent. The presence on the subcontinent of large groups from the Syrian-Lebanese and Palestinian diasporas since the early twentieth century contributed to these ties. The same is true of Israel, which started to have relations with Latin America in the first years after its creation in 1948, and for which the Jewish diaspora also served as a political and cultural bridge.

8These old connections did not always lead to strong ties, in particular on an economic level. Venezuela may be the only country to have maintained regular relations with some of the states in the region as one of the founding members of the Organization of the Petroleum Exporting Countries (OPEC) in 1960. [5] Other Latin American states, and most notably Brazil, also sought closer relationships with petroleum-producing Arab countries to mitigate the effects of the oil crisis of 1973, but these ties faded by the end of the 1980s without becoming more lasting.

9A new impetus came with the creation of the Summit of South American-Arab Countries (ASPA) for government leaders. This entity for cooperation was established between the twelve nations of the South American Community of Nations [6] and the twenty-two members of the Arab League. Lula launched the initiative from Brazil in 2003 and it took concrete form in 2005 in Brasilia. Two other ASPA summits have taken place since then, one in Doha, Qatar, in 2009 and the other in Lima, Peru, in 2012. The next one should be held in Riyadh, Saudi Arabia, in 2015. While most of the Arab representatives engaged in the process placed the greatest accent on political dossiers in terms of bi-regional cooperation, their South American counterparts, on the other hand, were motivated by an economic and commercial agenda. [7] From the first summit, Brazil set the tone by encouraging the organization of a business forum aimed at facilitating meetings between Arab and South American entrepreneurs, and to gather recommendations on cooperation.

10The importance given to economic questions is not the only reflection of the interests of the South American exporters, even though they had an important role in opening new commercial routes. It also corresponds, in particular for Brazil, to a strategy of “autonomy through diversification.” [8] The goal was to find a way to counterbalance relationships with the traditional powers of the North by expanding the number of South-South alliances, especially in economic terms. This strategy has succeeded for the most part, considering the drastic reduction of the role of the United States in the external trade of South American countries. [9] The region, however, is not without asymmetrical relations, as proven by the growing presence of China in some regional economies, but this influence varies from one country to another. [10]

Economic Diplomacy Targeting the Gulf States

11In this context, Latin American countries developed a special interest in the countries of the Gulf Cooperation Council (GCC). [11] The expansion of the Latin American diplomatic network in recent years has mainly involved these Gulf countries, where few Latin American nations had permanent representation until recently. Brazil, already present in the United Arab Emirates and Saudi Arabia, opened two new resident embassies in Qatar and Oman during Lula’s presidency. Peru established its first embassy in Riyadh in March 2013; another in Doha, Qatar, should soon follow. Since 2009, Abu Dhabi, capital of the UAE, has seen the arrival of representations from Chile, the Dominican Republic, Colombia, and Mexico, raising the number of resident embassies to seven (with Brazil and Argentina).

12The oil monarchies are attractive to Latin American countries for more than one reason. With an annual growth of around 5.2% since 1998, the GCC states possess one of the highest per capita incomes in the world. They also represent one of the biggest sources of foreign investment, in particular through their sovereign funds, which Moody’s evaluated at the end of 2012 at a total of 1,600 billion dollars. Given that South American countries are undergoing a process of reprimarization of their exports, the Gulf states, net importers of agricultural products, have the potential to be excellent economic partners. And in fact, Chile, Brazil, and Mexico have all established their respective agencies in Dubai to promote exports and investments for the Middle East. Even more significantly, President Cristina Fernández de Kirchner of Argentina went to Qatar in person in December 2011 to close a business conference on commercial opportunities between Argentina and Qatar, accompanied by a large delegation of Argentinian businesspeople.

13Certainly, the level of trade remains very low: according to the data of UN-Comtrade, [12] in 2009, Latin America only represented 0.5% of the total commerce of GCC countries. Reciprocally, in 2011, the Middle East only accounted for 1.8% of Latin American exports. However, the trend is towards growth. Commercial exchanges between the GCC and Mercosur [13] grew by 330% between 2001 and 2010. Investment from the Gulf has also increased, particularly in terms of real estate (luxury hotels) and energy. [14] Brazil is both the initiator and the primary beneficiary of this relationship. In 2012, the country represented 62.9% of all Latin American exports to the Middle East, far ahead of Argentina (21.5%) and Mexico (3.8%). [15] Brazil now provides more than three-fourths of Saudi imports of poultry and sugar.

14Ensuring food security is a strategic question for GCC countries. It is a major potential axis of cooperation between the two regions, but it can also become a source of tension when it leads to behavior that is seen as “predatory” in the real estate domain. Some Gulf funds have recently shown an interest in purchasing Latin American land. In 2011, Al Gharrafa Investment, a subsidiary of the Qatar Investment Authority (QIA), expanded its stake in Adecoagro, an agricultural land company supported by billionaire investor George Soros and based in Argentina, Brazil, and Uruguay. In 2012, the Saudi company Almarai, the largest dairy company in the Gulf, acquired the Argentine company Fondomonte and its 12,306 hectares. Land grabbing by foreign capital is hotly debated, in particular in countries that have a history of struggles over agrarian reform. Argentina and Brazil have recently adopted restrictions on the foreign ownership of land, [16] while a similar project is being adopted in Uruguay. [17]

15Latin American states would like to see Gulf investments directed more towards infrastructure. DP World, for example, an Emirati company and the world’s third-largest port operator, invested 735.3 million dollars in the port of Callao in Peru. Yet this type of foreign direct investment (FDI) remains rare. Regional leaders would like to be able to channel the Gulf’s sovereign funds into projects like the one concluded in early 2013 with China, which is contributing close to two billion dollars to a new regional investment fund in partnership with the Inter-American Development Bank (IBD). Even if the amount were small, the participation of Gulf states in a multilateral mechanism of this type would be seen as a good start. There is no indication, however, that these countries are interested in this type of investment, which is less profitable.

16Latin American countries have struggled to expand the framework of economic relationships with their Arab partners. After an enthusiastic start in November 2005, discussions over a free trade agreement between Mercosur and Gulf countries finally came to an abrupt halt a few years later, in particular because of the reticence of Mercosur members, especially Brazil, to liberalize the petrochemical sector. Chile, the country that has signed the most bilateral or regional commercial agreements in the world, also encountered problems when dealing with GCC countries. This time the obstacles came from the Arab side. Mercosur signed a free trade agreement with Egypt (2010) and Palestine (2011), but the first only came into effect this year, and the second is largely more symbolic than commercial.

17The Middle Eastern country with which Latin American countries have the most formalized economic ties is Israel. The country has signed free trade agreements with Mexico (2000), Mercosur (2007), and Colombia (2013), and is in discussions with Chile. After a golden age of cooperation in the 1970s and 1980s – multilateral and developmental aid – Israel is now placing more emphasis on commercial exchanges and investment than political relations to maintain its position in Latin America. Israel still counts Panama and Colombia among its most faithful allies, but in political terms, it has definitely lost some diplomatic footing in the region.

Brazil’s Search for Status

21During Lula’s presidency, Brazil was the most active Latin American nation in the Middle East. As a candidate to become a global player, the South American giant put its aspirations to the test. While questions of global economic governance are increasingly open to emerging powers, global peace and security issues still remain the purview of the major traditional powers. Brazilian diplomacy has tried to shake up this oligarchical division of the world order.

22On the strength of its new Arab partners and its traditionally cordial relations with Israel, Brazil first proposed its services to mediate the Israeli-Palestinian conflict by multiplying its efforts to reach out to both sides. In 2010, Lula himself went to Israel then Ramallah in the West Bank, which was a first for a Latin American president. Brazil’s main argument was to present itself as a truly neutral intermediary, as opposed to the US mediation which the Palestinian side considered to be partial. [20] In December of the same year, Brazil recognized Palestine in its 1967 frontiers, a decision that was soon followed by other South American countries, with the exception of Colombia. What Brazilian diplomacy presented as a rebalancing was not seen in the same way by the United States and Israel, who both strongly opposed this type of “unilateral” recognition of the State of Palestine.

23Lula did not limit himself to the Israeli-Palestinian dossier. In 2010, Brazil and Turkey began a dialog with Iran over nuclear management, and not without support from the Obama administration, which had set its parameters. After several years of blocked negotiations between Iran and the P5+1 group (the five permanent members of the UN Security Council plus Germany), the three countries finally signed the Declaration of Tehran in May 2010, which included a surveillance mechanism for Iran’s low-enriched uranium in Turkish territory. The agreement reached by the two emerging powers was historic and therefore had a real global impact. The United States drew back its support for this compromise, however, because it felt it was too favorable to Iranian president Mahmoud Ahmadinejad. New sanctions against Iran were passed, sabotaging the attempts at negotiation by Lula and Erdogan, who were left chastened by the experience. [21]

24Brazil’s attempts at negotiation in the Middle East were brought to a relative halt by the election of Dilma Rousseff to the presidency in 2010. Focusing more on domestic than international issues, Rousseff put presidential diplomacy on hold after Lula’s much more active role. Officially, the Itamaraty (Brazilian minister of foreign affairs) continues to follow the dossiers and promote Brazil’s role in the region, as displayed in Minister Antonio Patriota’s visit in October 2012 to Israel and the Occupied Territories. The president’s loss of interest is not insignificant, however, and Brazil has retreated to some extent from the Middle Eastern political landscape. A cooling of relations with Ahmadinejad’s Iran, notably in response to growing criticism of his regime from some sectors of Brazilian society – human rights NGOs on the one hand, and conservative groups concerned with US relations on the other – is symptomatic of this new direction. According to some diplomatic sources, Iran-Brazil relations could undergo a renewal following the election of Hassan Rohani in June 2013. He is a “moderate” with a reputation for being more pragmatic than his predecessor, [22] but any new agenda would be firmly economic and far from the strategic aspirations of Lula. What can be said about the Syrian crisis, except that Brazilian diplomacy has been conspicuous in its absence, despite its original but insufficiently developed idea of “responsibility while protecting?” This notion was introduced in 2012 by Dilma Rousseff to counterbalance the “responsibility to protect” adopted by the UN in 2005, in a direct line from the “right to humanitarian intervention.” [23]

25While the discontinuity of Brazilian foreign policy in Middle Eastern affairs is not a strong argument in favor of the South American giant’s credibility on the international stage, it must be said that Brazilian attempts to provide mediation, which have been innovative at times, have largely met with resistance from major powers that are unwilling to allow a new actor into a domain they consider their own. The United States has been particularly reticent to open issues of international security to emerging countries. And without US cooptation, Brazil, which is not a permanent member of the Security Council, has little leverage to make its diplomatic efforts in the Middle East more effective. It is also facing an unstable and complex situation where it is hard to establish strategic partnerships, even in the middle term. This is the case of its relations with Egypt, where the eviction of Egyptian President Mohamed Morsi in early July 2013 took place less than two months after his state visit to Brasilia for a bilateral meeting with Dilma Rousseff.

Venezuela and Antiestablishment Diplomacy

26The question is much different for Venezuela, the other Latin American country that has developed its own active foreign policy in the Middle East. For the Bolivarian Republic, it is important to give its “antiestablishment diplomacy” [24] a loud voice in the existing global order. Unlike Brazil, Venezuela is not aiming to join the club of world powers but wants to take its place on the international stage through opportunistic use of its disruptive power. Hugo Chávez’s Venezuela consistently took the opposite view to US diplomacy by systematically allying itself with those that the Bush administration designated as “rogue states.” In the Middle East, this policy translated in particular into closer ties with Mahmoud Ahmadinejad’s Iran and Bashar al-Assad’s Syria. Venezuela has also shown clear support for the Palestinian cause. The government broke off diplomatic relations with Israel in January 2009 as a condemnation of the military operation against Hamas in the Gaza Strip. This action was followed by Bolivia, which expelled the Israeli ambassador a few days later. Nicaragua, another member of the Bolivarian Alliance for the Peoples of Our America (ALBA), [25] joined this movement in June 2010, suspending relations with Israel after the attack on the humanitarian fleet en route for Gaza.

27These alliances, essentially based on a common rejection of US foreign policy, have led Venezuelan diplomacy not to favor the “Arab Spring” uprisings in Libya and Syria. Hugo Chávez openly defended Muammar Gaddafi against NATO intervention in 2011. And Venezuela’s support of Bashar al-Assad’s regime is even more pronounced, in line with its position with Iran. According to sources close to the Venezuelan petroleum company PDVSA, the government apparently defied international sanctions by supplying diesel to Syria in 2012. It is now firmly opposed to any military intervention against the regime, despite allegations of chemical weapons use against civilians.

28Venezuela’s closest ties, however, are with Iran. [26] While working to preserve his relationship with other members of OPEC, Hugo Chávez traveled to Iran ten times between 2000 and 2010 – including one private visit – and Mahmoud Ahmadinejad went to Venezuela four times between 2005 and 2010. In terms of cooperation, the two countries have signed 275 agreements, notably in the agricultural, energy, and petroleum sectors. Venezuela has also allowed Iran to establish ties in the region – in Ecuador, Bolivia, and Nicaragua – which has loosened the international isolation imposed by sanctions. The question now is whether these relations will continue after the death of Hugo Chávez on the one hand, and the electoral victory of the “reformer” Hassan Rohani on the other.

29This question will only be answered in the months and years to come. Nicolás Maduro, elected president of Venezuela in April 2013 and the chosen successor to Chávez, has congratulated his Iranian counterpart and reiterated his desire to consolidate the strategic partnership between the two countries.