Journal № 1 (17) 2023
The potential of economic relations between Brazil and Russia

Many years ago at the opening of the National Foreign Trade Meeting, I had the opportunity to meet Lula da Silva, who was sworn in January 2023 to become President of Brazil for the third time. During this far-off encounter I asked him jokingly «Will Russian-Brazilian relations finally reach cosmic proportions?». He laughed wholeheartedly and we began a lively discussion on the possibilities of close cooperation between Brazil and Russia. Just a few months later, we sent Brazilian cosmonaut Lieutenant Colonel Marcos Pontes into space for the first time in history – on the Russian Soyuz spacecraft.

Undoubtedly, it was an important milestone in the rapprochement of our countries, but it could have been more visible if Russian and Brazilian economic and financial agents, as well as BRICS members, had done more strategic planning (especially banks and investment agents) aimed at opening their own structures and branches in Brazil (except for China, which is already its second largest trading partner today).

According to the estimations conducted by the Brazil-Russia Chamber of Commerce, Industry and Tourism in 2022, and taking into account convergence and the current geopolitical scenario, the potential for investment relations between our countries could exceed $100 billion within 5-7 years. This requires planning for the short, medium and long term, and this work has already begun. In addition to the sectors already present in the current bilateral trade agenda (agricultural raw materials, fertilizers, oil products and low value-added products), which reached nearly $10 billion in investments in 2022, both countries (with access to the Eurasian region) should pay attention to infrastructure areas – with a focus on energy, ports and railroads, as well as technological innovations.

It should be noted that there is a need to establish branches of Russian and EAEU banks in Brazil. The goal is not only to maintain and expand the flow of bilateral trade but most importantly to support the projects in sensitive areas, where as of today Russian and Eurasian companies have opportunities for mergers and acquisitions as well as tenders in the following segments: oil and gas exploration and production, electricity, railroads, ports and airports, oil refineries, along with the segment related to the growth of grain production in Brazil.

The role of New Development Bank (NDP, formely referred to as the BRICS Development Bank) does not correspond to its vast potential and opportunities, which exist in the member countries of the Alliance, especially in view of the possible expansion of the BRICS format to BRICS+, including the possibility of the accession of the EAEU member countries. We should also emphasize that due to the current geopolitical situation, financing intended for Russia in infrastructure areas has been suspended, despite the fact that the Foreign Economic Affairs Bank (Vnesheconombank, VEB) has a special place in the NDB.

In the context of expanding trade, economic and investment relations, the role of the Brazil-Russia Chamber is relevant, especially in light of its partnerships with such organizations as the International Alliance of Strategic Projects BRICS (BRICS Alliance) and, more recently, with the Financial and Business Association of Euro-Asian Cooperation (FBA EAC). Of course, we have to take into account the asymmetry between the BRICS and EAEU member countries and focus mainly on the synergy of economies through scale and the alignment of the national interests of each country.

The key to the success of Brazil and Russia's joint actions goes beyond simple bilateral agreements or free trade zones, as it is based on the interaction of investments and the joint development of technologies that ensure the sovereignty and development of our economies. Here we should note that international economic and financial organizations predict that by 2030 the GDP of the BRICS countries and Eurasia will be higher than that of the United States and the European Union combined.

New solutions in the face of global instability

As far back as 2010, in response to the economic crisis, I pointed out the necessity of creating new instruments and platforms that would meet the growing needs of the flow of international financial compensation, while respecting the sovereignty of each country, as well as the security and secrecy aspects of transactions between commercial agents of different countries that make up the international trade arena. Even then, questions were raised about the effectiveness, credibility and representativeness of "multilateral" financial organizations.

Nowdays as the geopolitical situation has further deteriorated, this issue has become particularly pressing. For example, for decades the effectiveness of international transfers through SWIFT has never risen any doubts, but now that restrictions on the use of this system have been imposed on a number of countries, it is exponentially losing its importance and forcing the affected countries to create their own platforms.

That is exactly why there are now regular discussions about creating instruments that facilitate cross-border transactions, based on blockchain technology and cryptocurrencies. This includes the implementation of such platforms within BRICS+ and other alliances. And while these technologies for international transfers has not been fully implemented, legally Brazil is at the forefront, as a law came into force on December 22, 2022, defining the principles for the regulation of virtual asset services. The law considers a virtual asset as a digital representation of value that can be sold or transmitted electronically and used to make payments or for investment purposes. Brazil attaches great importance to integration into this new geo-economic scenario.

The present moment is seen as one of the most important in human history. It implies serious decisions that must be taken by the major global players in order to avoid new collapses that threaten the socio-economic health of countries and their resources. Particular emphasis must be placed on the humanitarian aspect, without it human civilization can never aspire to awaken a truly solidarity-based, harmonious and pluralistic consciousness.

The activities of the Brazil-Russia Chamber

The Brazil-Russia Chamber of Commerce, Industry and Tourism (CBR), established 40 years ago, is a nonprofit professional organization, which was created to promote trade, economic, investment and cultural relations between Brazil and Russia. The Chamber works closely with the governments and in dustry organizations of Brazil and the Russian Federation. For the current four-year period (2021–2024), the Chamber structure has been consolidated. It now operates on several fronts to provide a variety of business support and development services, which may vary depending on the specific requirements of each associate member and partner. Even during the pandemic, online meetings, webinars and industry events were held; face-toface meetings resumed in July 2022.

Today, the Brazil-Russia Chamber offers the following activities:

  • organization of in-person meetings (presentations, conferences, seminars) with the participation of specific target audiences, representatives of the business community, industry organizations and the governments of Brazil and Russia;
  • promoting webinars with Russian partners and affiliates, major organizations, and regional offices in view of the new post-pandemic geo-economic scenario and current business models in which B2B digital platforms are becoming fundamental to conducting business;
  • organization of regular industry meetings within the framework of the activities of executive working groups in the segments «Infrastructure», «Agriculture» and «Legal support»;
  • search for potential partners in Russia and Brazil to conduct business in accordance with the line of activities of associate members;
  • organization of joint official and business missions to Russia and Brazil;
  • preparation of branch stands at industry exhibitions in Brazil and Russia; development of special marketing research;
  • implementation of the full range of services necessary to support the opening of representative offices of Brazilian companies in Russia, as well as Russian companies in Brazil;
  • provision of a variety of services necessary for business development (translations, preparation and certification of documents, representative services, etc.);
  • consulting on structuring market research programs in close cooperation with development agencies, Russian and Brazilian banks and foundations in accordance with the needs of associate members.

Associate members can reduce some operational steps and optimize their business, using the potential of contacts with government bodies and business partners. The Brazil-Russia Chamber acts as a link between subjects, companies and the government, ensuring effective protection of the interests of its partners and affiliates in the federal, regional and municipal bodies of both countries.

One of the forms of the Chamber's activities in the capacity of such liason is holding various events (business forums, seminars and workshops) for affiliates and partners according to their specific needs, within the framework of official visits of Russian and Brazilian dignitaries, as occurs on an ongoing basis during meetings of the Russian-Brazilian High-Level Commission on Cooperation (CAN) and the Intergovernmental Commission on Cooperation (CIC), at the BRICS Leaders' Summits, and during the visits of the Russian and Brazilian heads of state and government.

In addition, the Chamber organizes events for medium and large businesses (conferences, seminars, forums) with the participation of companies and industry structures, often in partnership and with the support of both governments.

The Brazil-Russia Chamber works in close cooperation with the National Confederation of Industry (CNI), the National Confederation of Commerce (CNC), the Confederation of Commercial and Business Associations of Brazil (CACB), Apex-Brasil, as an associate member of the Federation of Chambers of Foreign Trade (FCCE) and the Brazilian Foreign Trade Association (AEB).

In Russia operational agreements were concluded with the following major organizations: «Business Russia», the Roscongress Foundation, the BRICS Alliance, the Moscow and St. Petersburg Chambers of Commerce and Industry, and the Russian section of the Russia-Brazil Business Council. In September 2022 the Brazil-Russia Chamber began its cooperation with the FBA EAC.

Through close relations with the Brazilian and Russian governments, companies, employers and business associations from different operating segments of both countries, the Brazil-Russia Chamber throughout its existence has helped its members and partners to overcome cultural, social and administrative barriers.