Brazil-Russia relations look for a rejig

Despite challenges, Brazil-Russia relations flourish with vast potential for collaboration, driving mutual enthusiasm and development.

Brazil-Russia relations thrive amid challenges, driven by vast collaboration potential and shared enthusiasm for future growth.

Brazil and Russia participated in a session at SPIEF to discuss bilateral relations

Brazil-Russia relations have stood the test of time and become a significant focus in international diplomacy. Both BRICS member nations have been pursuing independent foreign policies and advocate multipolarity. 

Despite existing challenges, both sides have been attempting to strengthen Brazil-Russia relations through higher collaborations in different fields. 

Recently, at a session during the St Petersburg International Economic Forum (SPIEF) 2024, the Brazil-Russia relations were discussed and experts engaged in finding solutions to enhance the collaboration between the two.

Both countries, with their eyes on improving their bilateral ties despite the US-led collective West’s sanctions on Russia, have discussed the vast potential for bilateral collaboration across various sectors and come up with solutions to existing trade problems.

The significant Brazil-Russia collaboration potential

During the SPIEF session on Brazil-Russia relations, experts exhibited optimism over the potential of bilateral collaboration.

Director of the Latin America Department of the Russian Ministry of Foreign Affairs, Alexander Shchetinin emphasised, “The development of bilateral cooperation in trade, economic, R&D, cultural, humanitarian, educational, sporting, and other spheres is based on the firmly stated political will of our leaders and our governments.” 

Mr Shchetinin reiterated that Brazil is a natural leader in Latin America and a key partner of the Russian Federation in the global south.

“For us, Brazil is one of the leaders of the global majority, the global South, and one of the natural leaders of Latin America,” he said.

Brazilian Ambassador Rodrigo de Lima Baena Soares highlighted the positive dynamics since 2001, with trade relations now surpassing US$11bn and expected to exceed $12bn this year. 

“Russia has been a strategic partner for us in the supply of fertilisers, helping us control inflation rates,” notes Mr Soares.

Alex Giacomelli da Silva, the Director of Brazil’s Ministry of Foreign Affairs’ Trade Promotion, Investments, and Agriculture, confirmed the mutual interest between business communities in both countries, extending to areas like pharmaceuticals, telecommunications and chemical products.

“Russia is Brazil’s fifth largest economic partner and has become an exporter in which we have full confidence. There is a mutual interest between the business communities of both countries in a variety of areas. This interest is also evident in areas such as pharmaceuticals, telecommunications, chemical products. Of course, we are keen to see the cooperation between the business councils and the business communities of the two countries strengthened,” he said.

Russian Deputy Minister of Economic Development Vladimir Ilyichev appreciated Brazil’s stance against the West’s anti-Russian sanctions and hailed the long-standing partnership between the two nations.

However, while outlining the strengths of Brazil-Russia relations, both sides also delved deep into the problems persisting in their bilateral relationship.

Problems of Brazil-Russia relations

During the discussion on Brazil-Russia relations, the experts from both sides narrowed on two major issues.

Declining Brazilian exports to Russia

Despite the Brazil-Russia relations built on a very strong foundation, Brazilian exports to Russia are declining. For Brazil, this is a concern.

Discussing the issue, Mr Ilyichev noted the need for more high-tech goods from Brazil, considering its actively developing sectors.

“We are interested not only in traditional goods, which are present in Brazilian exports to us but also in the supply of more high-tech goods, considering the sectors of the Brazilian economy that are actively developing. So far, we see that Brazilian exports to us are decreasing,” Mr Ilyichev said.

It isn’t clear though whether Brazil would consider Russia as an export destination for semiconductors, which the latter has an increasing need for. Though Brazil isn’t anywhere in the semiconductor supply chain, its latest industrial policy has emphasised integrating the country into the global semiconductor manufacturing chain.

Challenges in Brazilian business practices

Oleg Shiryaev, General Director of EuroChem, pointed out that European and US business models, which Russian businesses are used to dealing with, do not work effectively in Brazil, necessitating a rethink of business strategies in the Brazilian market.

What’s the way out?

Delving deep into the problems in Brazil-Russia relations, the experts presented a few points as solutions to the existing problems.

Creating an independent financial architecture

An independent financial architecture is crucial for enhancing Brazil-Russia relations. 

Mr Shchetinin emphasised the importance of creating alternative settlement mechanisms and expanding the use of national currencies in foreign trade operations.

“I would like to mention an important aspect – the creation of an independent financial architecture. The idea that President Luiz Inácio Lula da Silva once expressed, creating alternative settlement mechanisms and expanding the use of national currencies in foreign trade operations, is very important,” he said.

Mr Shiryaev, on the other hand, highlighted the current inefficiencies in financial flows and the need for mutual trade turnover.

“Financial flows between Russia and Brazil do not work. There needs to be mutual trade turnover. We are only on the way to forming such commodity flows,” he noted.

Intensifying business association cooperation

There is a call to intensify cooperation between business associations in both countries. Mr Ilyichev sees potential in high-tech industries, including nuclear and space sectors, and expanding cooperation in pharmaceuticals. Brazilian Ambassador Soares urged Brazilians to maximise opportunities in the Russian market for greater added value.

Joint resolution of logistical issues

Logistical issues require joint efforts for resolution. 

Mr Ilyichev stressed the need for stable and viable logistics solutions with Brazilian counterparts. 

“We need to solve issues with logistics, negotiate with our Brazilian colleagues to build this in a more stable, more viable way with due consideration of the new realities. Business finds solutions, but we need to look for more long-term and stable options together with our Brazilian colleagues,” he said.

Vladimir Padalko, the Vice President of the Russian Chamber of Commerce and Industry, highlighted the focus of medium and small businesses in Brazil and the necessity to solve transport, logistics, and mutual settlement problems.

“Medium and small businesses have turned serious attention to Brazil. Our task is to accumulate Russian companies and create the conditions for them to reach worthy partners…There are problems with transport, logistics, and mutual settlements, but we understand how they can be solved, and we will solve them,” he added.

Brazil-Russia relations, as discussed at SPIEF 2024, demonstrate significant potential despite existing challenges. By creating independent financial systems, intensifying business cooperation and resolving logistical issues, both nations can further strengthen their partnership. The collaboration between Brazil and Russia is set to play a crucial role in the global economy at a time when Russia is carefully navigating the treacherous terrain of unilateral sanctions.

Brazil-Russia relations in the 21st century underscore the importance of mutual growth and development, which has been a hallmark of the BRICS alliance.

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