The New Face of Russia’s Relations with Brazil

Defense Minister of Brazil, Celso Amorim, receives his counterpart from Russia, Sergei Shoigu, during bilateral meeting in Brasilia.

Defense Minister of Brazil, Celso Amorim (L), receives his counterpart from Russia, Sergei Shoigu, to bilateral meeting at the Defense Ministry in Brasilia, capital of Brazil, on October 16, 2013. Shoigu’s visit included an attempt to win a $4 billion deal to supply 18 fighter jets.

Journal of Political Risk, Vol. 2, No. 5, May 2014.

By Matthew Michaelides

Abstract

Bilateral trade, high level personal communication, and military-technical relations between Russia and Brazil have all grown significantly over the past decade. Recent weapons sales to Brazil include a $150 million contract for MI-35 helicopters in 2009 and a 2012 deal for seven Ka-62 helicopters. Moreover, the Russian defense ministry has indicated its intention to increase Russian military capacity in Brazil and Latin America more broadly. This paper examines the causes for the increasing depth of Russian-Brazilian military-technical relations and concludes that informal patronage politics play an essential role in understanding Russian actions. A detailed analysis of contemporary Russian-Brazilian relations and existing theoretical perspectives is provided, as well as a thorough examination of recent Russian arms and equipment sales from the informal patronage politics perspective.

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Shale Gas Race: Political Risk in China, Argentina and Mexico

Journal of Political Risk, Vol. 2, No. 1, January 2014.

Global shale gas basins, top reserve holders. Source: Reuters, Catherine Trevethan.

Global shale gas basins, top reserve holders. Source: Reuters, Catherine Trevethan.

By Igor Faynzilbert, CFA

As the world continues to embrace cleaner and more efficient sources of energy over the next 25 years, natural gas stands to gain a large market share at the expense of less efficient and more pollutant coal and wood. The United States is currently the biggest winner from hydraulic fracturing and horizontal drilling that allow significantly increased production of shale gas. However, China, Argentina and Mexico are also potential gainers from these new technologies if they manage to overcome political and infrastructure challenges that have considerably slowed development of new gas fields. Continue reading

Protests in Latin America: impact on investment, the economy, and political stability

Latin-America-GNI-PPP-PC-GDP-PC-and-Inflation-Argentina-Brazil-Chile-Costa-Rica-VenezuelaJournal of Political Risk, vol. 1, no. 3, July 2013.

By Evodio Kaltenecker

Over the last twelve months, it would seem that the habitants of Latin America and the Caribbean are particularly adept at protesting against their leaders and institutions, especially in Brazil, Chile and Costa Rica. Over a one-year period, Brazilian, Chilean and Costa Rican government officers witnessed hundreds of thousands of citizens protesting issues such as crime, corruption, and the lack of low-cost quality public services.

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Watch for increased socialism in Latin America

Despite the political change that just swept Venezuela — which may indicate a decrease in the promotion of socialism from that country — a more powerful influence for Latin American socialism just arose in Rome. Today Cardinal Jorge Mario Bergoglio became Pope Francis, a name he chose after a Saint known for his asceticism. While socially conservative (e.g., on abortion and gay rights), Cardinal Bergoglio was known to eschew the luxuries of his station for a simple life that included modest quarters, self-cooked meals, and hailing the bus in Buenos Aires. His sermons suggest great sympathy for social justice and the poor, and he comes from Latin America  (Washington Post).

Bergoglia’s reputed historical links to 1970s fascism in Argentina, and his political astuteness, means that he wants to prove otherwise. Regardless of his true feelings, it will be hard for him not to play to his massive constituency of poor Catholics in Latin America — the greatest number of Catholics worldwide. Nearly all of Latin America’s poor will be looking to him to address their plight. Regardless of the position he takes on poverty in the future, the lay Catholic ministry in Latin America, and political entrepreneurs farther up the hierarchy, will gain favor among their largely overlapping constituencies for presenting the new Pope as supportive of socialist endeavors. This points to a revival of the liberation theology of the 1980s, and a greater probability of socialist-inspired coups, revolutions, debt defaults, and nationalizations — especially in Latin America.

Death of Hugo Chavez

With the death of President Hugo Chavez of Venezuela today, expect increased political stability in Latin America. President Chavez was an activist in international politics, encouraging ideological conflict of the anti-Western and anti-market variety. He used his country’s oil wealth to magnify his voice and achieve these ends. Investments in Venezuela and Latin America will be safer without Chavez.

Concerns that his likely successor, Mr. Maduro, will be more radical (Wall Street Journal) are almost certainly overblown. Mr. Maduro’s comments on foreign influence in the country, and his expulsion of two US diplomats, are likely meant to solidify political support among Chavez supporters. This is a short-term political strategy on the part of Mr. Maduro, without long-term effect on the Venezuelan investment environment.